F-3

As filed with the Securities and Exchange Commission on September 29, 2006

Registration Statement No.           

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form F-3

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

TEEKAY LNG PARTNERS L.P.

TEEKAY LNG FINANCE CORP.

(and certain subsidiaries identified in footnote (*) below)

(Exact name of Registrants as specified in their charters)

Republic of the Marshall Islands Republic of the Marshall Islands	4400 4400	98-0454169 98-0506852
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

Bayside House, Bayside Executive Park

West Bay Street and Blake Road

P.O. Box AP-59212

Nassau, Commonwealth of the Bahamas

(242) 502-8820

(Address, including zip code, and telephone number, including area code, of Registrants’ principal executive offices)

Watson, Farley & Williams (New York) LLP

Attention: Daniel C. Rodgers

100 Park Avenue, 31st Floor

New York, New York 10017

(212) 922-2200

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copy to:

David S. Matheson

Perkins Coie LLP

1120 N.W. Couch Street, Tenth Floor

Portland, OR 97209-4128

(503) 727-2008

     Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective, as determined by market conditions.

     If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.    o

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.    x

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

     If this Form is a registration statement pursuant to General Instruction I.C. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box.    o

     If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box.    o

CALCULATION OF REGISTRATION FEE

		Proposed Maximum	Proposed Maximum
Title of Each Class of Securities to be	Amount to be	Offering Price Per	Aggregate Offering	Amount of
Registered	Registered	Unit	Price(1)	Registration Fee
Common Units, representing limited partner interests(2)
Debt Securities(2)(3)
Guarantees of Debt Securities(4)
Total:			$400,000,000(2)	$42,800

(1)	Estimated solely for the purpose of calculating the registration fee. The registration fee has been calculated in accordance with Rule 457(o) under the Securities Act of 1933. Because Rule 457(o) permits the registration fee to be calculated on the basis of the maximum offering price of all of the securities listed, the table does not specify by each class of security information as to the amount to be registered or the proposed maximum offering price per security. Any securities registered may be sold separately or as units with other securities registered hereunder.
(2)	The amount of securities registered consists of $400,000,000 of an indeterminate number or amount of common units and debt securities of Teekay LNG Partners L.P. Subject to Note 1 above, there is also being registered an indeterminate number of common units as may from time to time be issued upon conversion of convertible debt securities that may be sold hereunder. No separate consideration will be received for any common units so issued upon conversion. In no event will the aggregate offering price of all securities issued from time to time in the offering pursuant to this Registration Statement exceed $400,000,000.
(3)	If any debt securities are issued at original issue discount, then the offering price of such debt securities shall be in such amount as shall result in an aggregate initial offering price not to exceed the amount identified in Note 2 above, less the dollar amount of any registered securities previously issued.
(4)	Teekay LNG Operating L.L.C., African Spirit L.L.C., Asian Spirit L.L.C., European Spirit L.L.C., Teekay Luxembourg S.a.r.l., Teekay Spain, S.L., Teekay II Iberia S.L., Teekay Shipping Spain, S.L., Naviera Teekay Gas, S.L., Naviera Teekay Gas II, S.L., Naviera Teekay Gas III, S.L. and Naviera Teekay Gas IV, S.L. may guarantee the obligations of Teekay LNG Partners L.P. under the debt securities. No separate consideration will be paid in respect of the guarantees. Pursuant to Rule 457(n) of the Securities Act of 1933, no separate fee is payable with respect to the guarantees of the debt securities.

*  The following are co-registrants that may guarantee the debt securities:

TEEKAY LNG OPERATING L.L.C.

(Exact Name of Registrant as Specified in Its Charter)

Republic of the Marshall Islands	66-0657756
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

AFRICAN SPIRIT L.L.C.

(Exact Name of Registrant as Specified in Its Charter)

Republic of the Marshall Islands	98-0428182
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

ASIAN SPIRIT L.L.C.

(Exact Name of Registrant as Specified in Its Charter)

Republic of the Marshall Islands	98-0447129
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

EUROPEAN SPIRIT L.L.C.

(Exact Name of Registrant as Specified in Its Charter)

Republic of the Marshall Islands	98-0428235
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

TEEKAY LUXEMBOURG S.A.R.L.

(Exact Name of Registrant as Specified in Its Charter)

Luxembourg	98-0442934
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

TEEKAY SPAIN, S.L.

(Exact Name of Registrant as Specified in Its Charter)

Spain	98-0442935
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

TEEKAY II IBERIA S.L.

(Exact Name of Registrant as Specified in Its Charter)

Spain	98-0442936
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

TEEKAY SHIPPING SPAIN, S.L.

(Exact Name of Registrant as Specified in Its Charter)

Spain	98-0442937
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

NAVIERA TEEKAY GAS, S.L.

(Exact Name of Registrant as Specified in Its Charter)

Spain	98-0442938
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

NAVIERA TEEKAY GAS II, S.L.

(Exact Name of Registrant as Specified in Its Charter)

Spain	98-0442939
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

NAVIERA TEEKAY GAS III, S.L.

(Exact Name of Registrant as Specified in Its Charter)

Spain	98-0442940
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

NAVIERA TEEKAY GAS IV, S.L.

(Exact Name of Registrant as Specified in Its Charter)

Spain	98-0442941
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

      Each Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED SEPTEMBER 29, 2006

PROSPECTUS

$400,000,000

Teekay LNG Partners L.P.

Teekay LNG Finance Corp.

Common Units

Debt Securities

     We may offer, from time to time:

•  common units, representing limited partnership interests in Teekay LNG Partners L.P.; and

•  debt securities, which may be secured or unsecured senior debt securities or secured or unsecured subordinated debt securities.

     Teekay LNG Finance Corp. may act as co-issuer of the debt securities, and other direct or indirect subsidiaries of Teekay LNG Partners L.P. may guarantee the debt securities.

     The securities we may offer:

•  will have a maximum aggregate offering price of $400,000,000;

•  will be offered at prices and on terms to be set forth in one or more accompanying prospectus supplements; and

•  may be offered separately or together, or in separate series.

     We may offer these securities directly or to or through underwriters, dealers or other agents. The names of any underwriters or dealers will be set forth in the applicable prospectus supplement.

     Our common units trade on the New York Stock Exchange under the symbol “TGP.” We will provide information in the prospectus supplement for the trading market, if any, for any debt securities we may offer.

     This prospectus provides you with a general description of the securities we may offer. Each time we offer to sell securities we will provide a prospectus supplement that will contain specific information about those securities and the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. This prospectus may be used to offer and sell securities only if accompanied by a prospectus supplement. You should read this prospectus and any prospectus supplement carefully before you invest. You should also read the documents we refer to in the “Where You Can Find More Information” section of this prospectus for information about us and our financial statements.

       Limited partnerships are inherently different than corporations. You should carefully consider each of the factors described under “Risk Factors” beginning on page 7 of this prospectus before you make an investment in our securities.

     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

September          , 2006

TABLE OF CONTENTS

About This Prospectus		1
Teekay LNG Partners L.P.		2
	Partnership Structure and Management	2
Teekay LNG Finance Corp.		2
Subsidiary Guarantors		2
Where You Can Find More Information		3
Forward-Looking Statements		5
Risk Factors		7
	Risks Inherent in Our Business	7
	Risks Inherent in an Investment in Us	19
	Risks Relating to the Common Units	24
	Risks Relating to the Debt Securities	26
	Tax Risks	27
Use of Proceeds		30
Ratio of Earnings To Fixed Charges		30
Price Range of Common Units and Distributions		31
Description of The Common Units		32
	Number of Units	32
	Issuance of Additional Securities	32
	Meetings; Voting	32
	Call Right	34
	Exchange Listing	34
	Transfer Agent and Registrar	34
	Transfer of Common Units	34
	Other Matters	35
	Summary of Our Partnership Agreement	36
Cash Distributions		37
	Distributions of Available Cash	37
	Operating Surplus and Capital Surplus	37
	Subordination Period	40
	Distributions of Available Cash From Operating Surplus During the Subordination Period	41
	Distributions of Available Cash From Operating Surplus After the Subordination Period	42
	Incentive Distribution Rights	42
	Percentage Allocations of Available Cash From Operating Surplus	42
	Distributions From Capital Surplus	43
	Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels	44
	Distributions of Cash Upon Liquidation	44
Description of Debt Securities		47
	General	47
	Specific Terms of Each Series of Debt Securities to be Described in the Prospectus Supplement	47
	Subsidiary Guarantees	48
	Consolidation, Merger or Asset Sale	49
	No Protection in the Event of a Change of Control	49

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	Modification of Indentures	49
	Events of Default and Remedies	51
	Defeasance	52
	No Limit on Amount of Debt Securities	53
	Registration of Notes	54
	Minimum Denominations	54
	No Personal Liability	54
	Payment and Transfer	54
	Exchange, Registration and Transfer	54
	Provisions Relating Only to the Senior Debt Securities	55
	Provisions Relating Only to the Subordinated Debt Securities	55
	Book Entry, Delivery and Form	55
	Governing Law	56
	The Trustee	56
Material U.S. Federal Income Tax Consequences		58
	Classification as a Partnership	58
	Status as a Partner	59
	Consequences of Unit Ownership	60
	Tax Treatment of Operations	64
	Disposition of Common Units	65
	Foreign Tax Credit Considerations	66
	Tax-Exempt Organizations and Non-U.S. Investors	67
	Functional Currency	68
	Administrative Matters	69
	Possible Classification as a Corporation	71
	Tax Consequences of Ownership of Debt Securities	75
Non-United States Tax Consequences		75
	Marshall Islands Tax Consequences	75
	Canadian Federal Income Tax Consequences	75
Plan Of Distribution		77
Service of Process and Enforcement of Civil Liabilities		79
Legal		79
Experts		79
Expenses		80

      You should rely only on the information contained in this prospectus, any prospectus supplement and the documents incorporated by reference in this prospectus. We have not authorized anyone else to give you different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not offering these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of those documents. We will disclose material changes in our affairs in an amendment to this prospectus, a prospectus supplement or a future filing with the U.S. Securities and Exchange Commission incorporated by reference in this prospectus.

ii

ABOUT THIS PROSPECTUS

      This prospectus is part of a registration statement on Form F-3 that we have filed with the U.S. Securities and Exchange Commission (or SEC) using a “shelf” registration process. Under this shelf registration process, we may sell, in one or more offerings, up to $400,000,000 in total aggregate offering price of the securities described in this prospectus. This prospectus generally describes us and the securities we may offer. Each time we offer securities with this prospectus, we will provide this prospectus and a prospectus supplement that will describe, among other things, the specific amounts and prices of the securities being offered and the terms of the offering, including, in the case of debt securities, the specific terms of the securities. The prospectus supplement may also add to, update or change information in this prospectus. If there is any inconsistency between the information in this prospectus and any prospectus supplement, you should rely on the information in the prospectus supplement.

      Unless otherwise indicated, references in this prospectus to “Teekay LNG Partners,” “we,” “us” and “our” and similar terms refer to Teekay LNG Partners L.P. and/or one or more of its subsidiaries, except that those terms, when used in this prospectus in connection with the common units described herein, shall mean Teekay LNG Partners L.P. References in this prospectus to “Teekay Shipping Corporation” refer to Teekay Shipping Corporation and/or any one or more of its subsidiaries.

      Unless otherwise indicated, all references in this prospectus to “dollars” and “$” are to, and amounts are presented in, U.S. Dollars, and financial information presented in this prospectus is prepared in accordance with accounting principles generally accepted in the United States (or GAAP).

      The information in this prospectus is accurate as of its date. You should read carefully this prospectus, any prospectus supplement, and the additional information described below under the heading “Where You Can Find More Information.”

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TEEKAY LNG PARTNERS L.P.

      Teekay LNG Partners L.P. is an international provider of liquefied natural gas (or LNG) and crude oil marine transportation services. In November 2004, we were formed as a Marshall Islands limited partnership by Teekay Shipping Corporation, the world’s largest owner and operator of medium-sized crude oil tankers, to expand its operations in the LNG shipping sector. Our growth strategy focuses on expanding our fleet of LNG carriers under long-term, fixed-rate charters. We view our Suezmax tanker fleet primarily as a source of stable cash flow as we expand our LNG operations. We seek to leverage the expertise, relationships and reputation of Teekay Shipping Corporation and its affiliates to pursue growth opportunities in the LNG shipping sector. Teekay Shipping Corporation currently owns our general partner and a 67.8% limited partner interest in us.

      Our fleet, excluding newbuilding vessels, currently consists of four LNG carriers and eight Suezmax class crude oil tankers, all of which are double-hulled. These vessels operate under long-term, fixed-rate time charter contracts with major energy and utility companies. As of September 1, 2006, the average remaining term for these charters was approximately 19 years for our LNG carriers and approximately 13 years for our Suezmax tankers, subject, in certain circumstances, to termination or vessel purchase rights. We have agreed to purchase from Teekay Shipping Corporation its rights to three newbuilding LNG carriers under capital leases upon the delivery of the first vessel, which is scheduled during the fourth quarter of 2006.

Partnership Structure and Management

      Our operations are conducted through, and our operating assets are owned by, our subsidiaries. We own our interests in our subsidiaries through our 100% ownership interest in our operating company, Teekay LNG Operating L.L.C., a Marshall Islands limited liability company. Our general partner, Teekay GP L.L.C., a Marshall Islands limited liability company, has an economic interest in us and manages our operations and activities. Our general partner does not receive any management fee or other compensation in connection with its management of our business, but it is entitled to be reimbursed for all direct and indirect expenses incurred on our behalf.

      Our principal executive offices are located at Bayside House, Bayside Executive Park, West Bay Street and Blake Road, P.O. Box AP-59212, Nassau, Commonwealth of the Bahamas, and our phone number is (242) 502-8820.

TEEKAY LNG FINANCE CORP.

      Teekay LNG Finance Corp. is a Marshall Islands corporation and wholly owned subsidiary of Teekay LNG Partners. It has nominal assets and its activities will be limited to co-issuing debt securities that Teekay LNG Partners may offer and engaging in other activities incidental thereto. Teekay LNG Finance Corp. may act as co-issuer of debt securities to allow investment in those securities by institutional investors that may not otherwise be able to invest due to our structure and investment restrictions under their respective states of organization or charters. You should not expect Teekay LNG Finance Corp. to be able to service obligations on any debt securities for which it may act as co-issuer.

SUBSIDIARY GUARANTORS

      As of the date of this prospectus, Teekay LNG Partners owns, directly or indirectly, 100% of the outstanding ownership interests of the following subsidiaries, among others: Teekay LNG Operating L.L.C., African Spirit L.L.C., Asian Spirit L.L.C., European Spirit L.L.C., Teekay Luxembourg S.a.r.l., Teekay Spain, S.L., Teekay II Iberia S.L., Teekay Shipping Spain, S.L., Naviera Teekay Gas, S.L., Naviera Teekay Gas II, S.L., Naviera Teekay Gas III, S.L. and Naviera Teekay Gas IV, S.L. If specified in the prospectus supplement for a series of debt securities offered by this prospectus, the subsidiaries of Teekay LNG Partners L.P. specified in the prospectus supplement will unconditionally guarantee, on a joint and several basis, the full and prompt payment of principal of, premium, if any, and interest on the debt securities of that series. Occasionally in this prospectus we refer to Teekay LNG Partner’s subsidiaries that may provide these guarantees as the “Subsidiary Guarantors,” which term will also include any other subsidiaries of Teekay LNG Partners that may hereafter be added to the registration statement of which this prospectus is a part and may provide such guarantees.

2

WHERE YOU CAN FIND MORE INFORMATION

      We have filed with the SEC a registration statement on Form F-3 regarding the securities covered by this prospectus. This prospectus does not contain all of the information found in the registration statement. For further information regarding us and the securities offered in this prospectus, you may wish to review the full registration statement, including its exhibits. The registration statement, including the exhibits, may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, NE, Washington, D.C. 20549. Copies of this material can also be obtained upon written request from the Public Reference Section of the SEC at that address, at prescribed rates, or from the SEC’s web site on the Internet at www.sec.gov free of charge. Please call the SEC at 1-800-SEC-0330 for further information on public reference rooms. Our registration statement can also be inspected and copied at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.

      We are subject to the information requirements of the U.S. Securities Exchange Act of 1934 (or the Exchange Act), and, in accordance therewith, we are required to file with the SEC annual reports on Form 20-F within six months of our fiscal year-end, and provide to the SEC other material information on Form 6-K. We intend to file our annual report on Form 20-F earlier than the SEC currently requires. These reports and other information may be inspected and copied at the public reference facilities maintained by the SEC or obtained from the SEC’s website as provided above. Our website on the Internet is located at www.teekaylng.com, and we expect to make our periodic reports and other information filed with or furnished to the SEC available, free of charge, through our website, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus.

      As a foreign private issuer, we are exempt under the Exchange Act from, among other things, certain rules prescribing the furnishing and content of proxy statements, and our executive officers, directors and principal unitholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act, including the filing of quarterly reports or current reports on Form 8-K. However, we intend to make available quarterly reports containing our unaudited interim financial information for the first three fiscal quarters of each fiscal year.

      The SEC allows us to “incorporate by reference” into this prospectus information that we file with the SEC. This means that we can disclose important information to you without actually including the specific information in this prospectus by referring you to other documents filed separately with the SEC. The information incorporated by reference is an important part of this prospectus. Information that we later provide to the SEC, and which is deemed to be “filed” with the SEC, automatically will update information previously filed with the SEC, and may replace information in this prospectus.

      We incorporate by reference into this prospectus the documents listed below:

•  our Annual Report on Form 20-F for the fiscal year ended December 31, 2005;

•  all subsequent Annual Reports on Form 20-F filed prior to the termination of this offering;

•  our current Reports on Form 6-K furnished on May 17 and August 17, 2006;

•  all subsequent Reports on Form 6-K furnished prior to the termination of this offering that we identify in such Reports as being incorporated by reference into the registration statement of which this prospectus is a part; and

•  the description of our common units contained in our Registration Statement on Form 8-A/ A filed on September 29, 2006, including any subsequent amendments or reports filed for the purpose of updating such description.

3

      These reports contain important information about us, our financial condition and our results of operations.

      You may obtain any of the documents incorporated by reference in this prospectus from the SEC through its public reference facilities or its website at the addresses provided above. You also may request a copy of any document incorporated by reference in this prospectus (excluding any exhibits to those documents, unless the exhibit is specifically incorporated by reference in this document), at no cost, by visiting our Internet website at www.teekaylng.com, or by writing or calling us at the following address:

Teekay LNG Partners L.P.

Bayside House, Bayside Executive Park

West Bay Street and Blake Road

P.O. Box AP-59212

Nassau, Commonwealth of the Bahamas

Attn: Corporate Secretary

(242) 502-8820

      You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. We have not authorized anyone else to provide you with any information. You should not assume that the information incorporated by reference or provided in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of each document.

4

FORWARD-LOOKING STATEMENTS

      All statements, other than statements of historical fact, included in or incorporated by reference into this prospectus and any prospectus supplements are forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements that also forward-looking statements. Such statements include, in particular, statements about our plans, strategies, business prospects, changes and trends in our business, and the markets in which we operate. In some cases, you can identify the forward-looking statements by the use of words such as “may,” “will,” “could,” “should,” “would,” “expect,” “plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue” or the negative of these terms or other comparable terminology.

      Forward-looking statements include statements with respect to, among other things:

•  our ability to make cash distributions on our common units or any increases in our quarterly distributions;

•  our ability to make required payments on any debt securities we may issue;

•  our future financial condition or results of operations and our future revenues and expenses;

•  global growth prospects of the LNG shipping and tanker markets;

•  LNG and tanker market fundamentals, including the balance of supply and demand in the LNG and tanker market;

•  the expected lifespan of a new LNG carrier and Suezmax tanker;

•  planned and estimated future capital expenditures and availability of capital resources to fund capital expenditures;

•  our ability to maintain long-term relationships with major LNG importers and exporters and major crude oil companies;

•  our ability to leverage to our advantage Teekay Shipping Corporation’s relationships and reputation in the shipping industry;

•  our continued ability to enter into long-term, fixed-rate time charters with our LNG customers;

•  obtaining LNG projects that we or Teekay Shipping Corporation bid on or have been awarded;

•  our ability to maximize the use of our vessels, including the re-deployment or disposition of vessels no longer under long-term charter;

•  expected purchases and deliveries of newbuilding vessels and commencement of service of newbuildings under long-term contracts, including those relating to LNG projects that have been awarded to Teekay Shipping Corporation and will be offered to us;

•  the expected timing, amount and method of financing for the purchase of five of our existing Suezmax tankers;

•  our expected financial flexibility to pursue acquisitions and other expansion opportunities;

•  the expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards applicable to our business;

•  the expected impact of heightened environmental and quality concerns of insurance underwriters, regulators and charterers;

•  the anticipated taxation of our partnership and its subsidiaries;

•  entering into credit facilities or vessel financing arrangements for any of our vessels, and the effects of such arrangements; and

•  our business strategy and other plans and objectives for future operations.

5

      These and other forward-looking statements are subject to risks, uncertainties and assumptions, including those risks discussed in “Risk Factors” below and those risks discussed in other reports we file with the SEC and that are incorporated in this prospectus by reference. The risks, uncertainties and assumptions involve known and unknown risks and are inherently subject to significant uncertainties and contingencies, many of which are beyond our control.

      Forward-looking statements are made based upon management’s current plans, expectations, estimates, assumptions and beliefs concerning future events affecting us and, therefore, involve a number of risks and uncertainties, including those risks discussed in “Risk Factors.” We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.

      We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the effect of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

6

RISK FACTORS

      Although many of our business risks are comparable to those a corporation engaged in a similar business would face, limited partner interests are inherently different from the capital stock of a corporation. You should carefully consider the following risk factors together with all of the other information included or incorporated in this prospectus when evaluating an investment in our common units or debt securities.

      If any of the following risks actually occur, our business, financial condition or operating results could be materially harmed. In that case, our ability to pay distributions on our common units or pay interest on, or principal of, any debt securities, may be reduced, the trading price of our securities could decline, and you could lose all or part of your investment.

Risks Inherent in Our Business

We may not have sufficient cash from operations to enable us to make required payments on our debt securities or to pay the minimum quarterly distribution on our common units following the establishment of cash reserves and payment of fees and expenses.

      We may not have sufficient cash available to make required payments on our debt securities or to pay the minimum quarterly distribution on our common units. The amount of cash we have available to make required payments on our debt securities or to distribute on our common units principally depends upon the amount of cash we generate from our operations, which may fluctuate based on, among other things:

•  the rates we obtain from our charters;

•  the level of our operating costs, such as the cost of crews and insurance;

•  the continued availability of LNG production, liquefaction and regasification facilities;

•  the number of unscheduled off-hire days for our fleet and the timing of, and number of days required for, scheduled drydocking of our vessels;

•  delays in the delivery of newbuildings and the beginning of payments under charters relating to those vessels;

•  prevailing global and regional economic and political conditions;

•  currency exchange rate fluctuations; and

•  the effect of governmental regulations and maritime self-regulatory organization standards on the conduct of our business.

      The actual amount of cash we will have available for required payments on our debt securities and distributions on our common units also will depend on factors such as:

•  the level of capital expenditures we make, including for maintaining vessels, building new vessels, acquiring existing vessels and complying with regulations;

•  our debt service requirements and restrictions on payments and distributions contained in our debt instruments;

•  fluctuations in our working capital needs;

•  our ability to make working capital borrowings, including to pay distributions to unitholders; and

•  the amount of any cash reserves, including reserves for future capital expenditures and other matters, established by our general partner in its discretion.

      The amount of cash we generate from our operations may differ materially from our profit or loss for the period, which will be affected by non-cash items. As a result of this and the other factors mentioned

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above, we may make cash distributions during periods when we record losses and may not make cash distributions during periods when we record net income.

We make substantial capital expenditures to maintain the operating capacity of our fleet, which reduce our cash available to make required payments on our debt securities and for distribution on our common units. In addition, each quarter our general partner is required to deduct estimated maintenance capital expenditures from operating surplus, which may result in less cash available to unitholders than if actual maintenance capital expenditures were deducted.

      We must make substantial capital expenditures to maintain, over the long term, the operating capacity of our fleet. These maintenance capital expenditures include capital expenditures associated with drydocking a vessel, modifying an existing vessel or acquiring a new vessel to the extent these expenditures are incurred to maintain the operating capacity of our fleet. These expenditures could increase as a result of changes in:

•  the cost of labor and materials;

•  customer requirements;

•  increases in the size of our fleet;

•  governmental regulations and maritime self-regulatory organization standards relating to safety, security or the environment; and

•  competitive standards.

      Our significant maintenance capital expenditures will reduce the amount of cash we have available to make required payments on our debt securities and for distribution to our unitholders.

      In addition, our actual maintenance capital expenditures vary significantly from quarter to quarter based on, among other things, the number of vessels drydocked during that quarter. Our partnership agreement requires our general partner to deduct estimated, rather than actual, maintenance capital expenditures from operating surplus each quarter in an effort to reduce fluctuations in operating surplus. The amount of estimated maintenance capital expenditures deducted from operating surplus is subject to review and change by the conflicts committee of our general partner at least once a year. In years when estimated maintenance capital expenditures are higher than actual maintenance capital expenditures — as we expect will be the case in the years we are not required to make expenditures for mandatory drydockings — the amount of cash available for distribution to unitholders will be lower than if actual maintenance capital expenditures were deducted from operating surplus. If our general partner underestimates the appropriate level of estimated maintenance capital expenditures, we may have less cash available for distribution in future periods when actual capital expenditures begin to exceed our previous estimates.

We will be required to make substantial capital expenditures to expand the size of our fleet. We generally will be required to make significant installment payments for acquisitions of newbuilding vessels prior to their delivery and generation of revenue. Depending on whether we finance our expenditures through cash from operations or by issuing debt or equity securities, our ability to make required payments on our debt securities and cash distributions on our common units may be diminished or our financial leverage could increase or our unitholders could be diluted.

      We intend to make substantial capital expenditures to increase the size of our fleet, particularly the number of LNG carriers we own.

      During May 2005, we entered into an agreement with Teekay Shipping Corporation to purchase its 70% interest in Teekay Nakilat Corporation. Our estimated purchase commitment is $92.8 million. Teekay Nakilat Corporation has a 30-year capital lease arrangement on three LNG carriers currently under construction. The purchase will occur upon the delivery of the first LNG newbuilding carrier under lease, which is scheduled during the fourth quarter of 2006.

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      In addition, we are obligated to purchase five of our existing Suezmax tankers upon the termination of the related capital leases, which will occur at various times from 2007 to 2010. The purchase price will be based on the unamortized portion of the vessel construction financing costs for the vessels, which we expect to range from $39.4 million to $41.9 million per vessel. We expect to finance these purchases by assuming the existing vessel financing.

      We and Teekay Shipping Corporation regularly evaluate and pursue opportunities to provide the marine transportation requirements for new or expanding LNG projects. The award process relating to LNG transportation opportunities typically involves various stages and takes several months to complete. Neither we nor Teekay Shipping Corporation may be awarded charters relating to any of the projects we or it pursues. If any LNG project charters are awarded to Teekay Shipping Corporation, it must offer them to us pursuant to the terms of the omnibus agreement we entered into in May 2005 at the closing of our initial public offering of common units. In July and August 2005, Teekay Shipping Corporation announced the awards to it of a 70% interest in two LNG carriers and related long-term, fixed-rate time charters to service the Tangguh LNG project in Indonesia and a 40% interest in four LNG carriers and related long-term, fixed-rate time charters to service an LNG project in Qatar. In connection with these awards, Teekay Shipping Corporation has (a) exercised shipbuilding options to construct two 155,000 cubic meter LNG carriers at a total delivered cost of approximately $450 million, which vessels are scheduled to deliver in late 2008 and early 2009, respectively, and (b) entered into agreements to construct four 217,000 cubic meter LNG carriers at a total delivered cost of approximately $1.1 billion, which vessels are scheduled to deliver in the first half of 2008.

      If we elect pursuant to the omnibus agreement to obtain Teekay Shipping Corporation’s interests in either or both of these LNG projects or any other projects Teekay Shipping Corporation may be awarded, or if we bid on and are awarded contracts relating to any LNG project, we will need to incur significant capital expenditures to buy Teekay Shipping Corporation’s interest in these LNG projects or to build the LNG carriers.

      To fund the remaining portion of these and other capital expenditures, we will be required to use cash from operations or incur borrowings or raise capital through the sale of debt or additional equity securities. Use of cash from operations will reduce cash available to make required payments on our debt securities and for distributions to our unitholders. Our ability to obtain bank financing or to access the capital markets for future offerings may be limited by our financial condition at the time of any such financing or offerings as well as by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are beyond our control. Our failure to obtain the funds for necessary future capital expenditures could have a material adverse effect on our business, results of operations and financial condition and on our ability to make required payments on our debt securities and cash distributions on our common units. Even if we are successful in obtaining necessary funds, the terms of such financings could limit our ability to make required payments on our debt securities or pay cash distributions to our unitholders. In addition, incurring additional debt may significantly increase our interest expense and financial leverage, and issuing additional equity securities may result in significant unitholder dilution and would increase the aggregate amount of cash required to meet our minimum quarterly distribution to unitholders, which could have a material adverse effect on our ability to make required payments on our debt securities and cash distributions on our common units.

      If we were unable to obtain financing required to complete payments on any future newbuilding orders, we could effectively forfeit all or a portion of the progress payments previously made.

We derive a substantial majority of our revenues from a limited number of customers, and the loss of any customer, time charter or vessel could result in a significant loss of revenues and cash flow.

      We have derived, and believe that we will continue to derive, a significant portion of our revenues and cash flow from a limited number of customers. Compania Espanola de Petroleos, S.A. (or CEPSA), an international oil company, accounted for approximately 47%, 36%, 30% and 30% of our revenues during 2003, 2004, 2005 and the first half of 2006, respectively. In addition, two other customers, Spanish energy

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companies Repsol YPF, S.A. and Gas Natural SDG, S.A., accounted for 26% and 11% of our revenues in 2003, 18% and 21% of our revenues in 2004, 33% and 18% of our revenues in 2005 and 28% and 12% of our revenues in the first half of 2006, respectively. In addition, Unión Fenosa Gas, S.A. accounted for 16% of our revenues in 2005 and 13% of our revenues in the first half of 2006. As a result of our acquisition of the three Suezmax tankers (or the ConocoPhillips Tankers) from Teekay Shipping Corporation upon the closing of our follow-on public offering in November 2005, we derived 17% of our revenues in the first half of 2006 from a ConocoPhillips subsidiary, the customer under the related time charter contracts. No other customer accounted for 10% or more of our revenues during any of these periods. Ras Laffan Liquefied Natural Gas Co. Limited (II) (or RasGas II) will be a significant customer following the delivery in 2006 and 2007 of three LNG newbuildings that we will operate under 20-year time charters with RasGas II following our purchase of Teekay Shipping Corporation’s 70% interest in Teekay Nakilat, which owns the three subsidiaries that will lease the vessels under capital leases.

      We could lose a customer or the benefits of a time charter if:

•  the customer fails to make charter payments because of its financial inability, disagreements with us or otherwise;

•  the customer exercises certain rights to terminate the charter, purchase or cause the sale of the vessel or, under some of our charters, convert the time charter to a bareboat charter (some of which rights are exercisable at any time);

•  the customer terminates the charter because we fail to deliver the vessel within a fixed period of time, the vessel is lost or damaged beyond repair, there are serious deficiencies in the vessel or prolonged periods of off-hire, or we default under the charter; or

•  under some of our time charters, the customer terminates the charter because of the termination of the charterer’s LNG sales agreement supplying the LNG designated for our services, or a prolonged force majeure event affecting the customer, including damage to or destruction of relevant LNG production or regasification facilities, war or political unrest preventing us from performing services for that customer.

      If we lose a key LNG time charter, we may be unable to re-deploy the related vessel on terms as favorable to us due to the long-term nature of most LNG time charters and the lack of an established LNG spot market. If we are unable to re-deploy an LNG carrier, we will not receive any revenues from that vessel, but we may be required to pay expenses necessary to maintain the vessel in proper operating condition. In addition, if a customer exercises its right to purchase a vessel, we would not receive any further revenue from the vessel and may be unable to obtain a substitute vessel and charter. This may cause us to receive decreased revenue and cash flows from having fewer vessels operating in our fleet. Any compensation under our charters for a purchase of the vessels may not adequately compensate us for the loss of the vessel and related time charter.

      If we lose a key Suezmax tanker customer, we may be unable to obtain other long-term Suezmax charters and may become subject to the volatile spot market, which is highly competitive and subject to significant price fluctuations. If a customer exercises its right under some charters to purchase or force a sale of the vessel, we may be unable to acquire an adequate replacement vessel or may be forced to construct a new vessel. Any replacement newbuilding would not generate revenues during its construction and we may be unable to charter any replacement vessel on terms as favorable to us as those of the terminated charter.

      The loss of any of our customers, time charters or vessels, or a decline in payments under our charters, could have a material adverse effect on our business, results of operations and financial condition and our ability to make required payments on our debt securities and distributions on our common units.

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We depend on Teekay Shipping Corporation to assist us in operating our business, competing in our markets, and providing interim financing for certain vessel acquisitions.

      Pursuant to certain services agreements between us and certain of our operating subsidiaries, on the one hand, and certain subsidiaries of Teekay Shipping Corporation, on the other hand, the Teekay Shipping Corporation subsidiaries provide to us administrative services and to our operating subsidiaries significant operational services (including vessel maintenance, crewing for some of our vessels, purchasing, shipyard supervision, insurance and financial services) and other technical, advisory and administrative services. Our operational success and ability to execute our growth strategy depend significantly upon Teekay Shipping Corporation’s satisfactory performance of these services. Our business will be harmed if Teekay Shipping Corporation fails to perform these services satisfactorily or if Teekay Shipping Corporation stops providing these services to us.

      Our ability to compete for the transportation requirements of LNG projects and to enter into new time charters and expand our customer relationships depends largely on our ability to leverage our relationship with Teekay Shipping Corporation and its reputation and relationships in the shipping industry. If Teekay Shipping Corporation suffers material damage to its reputation or relationships it may harm our ability to:

•  renew existing charters upon their expiration;

•  obtain new charters;

•  successfully interact with shipyards during periods of shipyard construction constraints;

•  obtain financing on commercially acceptable terms; or

•  maintain satisfactory relationships with our employees and suppliers.

      If our ability to do any of the things described above is impaired, it could have a material adverse effect on our business, results of operations and financial condition and our ability to make required payments on our debt securities and cash distributions on our common units.

      Prior to entering into capital leases with respect to the three RasGas II LNG newbuildings, Teekay Shipping Corporation was incurring all costs for the construction and delivery of the vessels, which we refer to as “warehousing.” Upon their delivery, we would have purchased all of the interest of Teekay Shipping Corporation in the vessels at a price that would reimburse Teekay Shipping Corporation for these costs and compensate it for its average weighted cost of capital on the construction payments. We may enter into similar arrangements with Teekay Shipping Corporation or third parties in the future. If Teekay Shipping Corporation or another warehousing partner fails to make construction payments for any vessels that may be warehoused for us, we could lose access to the vessels as a result of the default or we may need to finance these vessels before they begin operating and generating voyage revenues, which could harm our business and reduce our ability to make required payments on our debt securities and cash distributions on our common units.

Our growth depends on continued growth in demand for LNG and LNG shipping.

      Our growth strategy focuses on continued expansion in the LNG shipping sector. Accordingly, our growth depends on continued growth in world and regional demand for LNG and LNG shipping, which could be negatively affected by a number of factors, such as:

•  increases in the cost of natural gas derived from LNG relative to the cost of natural gas generally;

•  increases in the production of natural gas in areas linked by pipelines to consuming areas, the extension of existing, or the development of new, pipeline systems in markets we may serve, or the conversion of existing non-natural gas pipelines to natural gas pipelines in those markets;

•  decreases in the consumption of natural gas due to increases in its price relative to other energy sources or other factors making consumption of natural gas less attractive;

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•  availability of new, alternative energy sources, including compressed natural gas; and

•  negative global or regional economic or political conditions, particularly in LNG consuming regions, which could reduce energy consumption or its growth.

      Reduced demand for LNG and LNG shipping would have a material adverse effect on our future growth and could harm our business, results of operations and financial condition.

Growth of the LNG market may be limited by infrastructure constraints and community environmental group resistance to new LNG infrastructure over concerns about the environment, safety and terrorism.

      A complete LNG project includes production, liquefaction, regasification, storage and distribution facilities and LNG carriers. Existing LNG projects and infrastructure are limited, and new or expanded LNG projects are highly complex and capital-intensive, with new projects often costing several billion dollars. Many factors could negatively affect continued development of LNG infrastructure or disrupt the supply of LNG, including:

•  increases in interest rates or other events that may affect the availability of sufficient financing for LNG projects on commercially reasonable terms;

•  decreases in the price of LNG, which might decrease the expected returns relating to investments in LNG projects;

•  the inability of project owners or operators to obtain governmental approvals to construct or operate LNG facilities;

•  local community resistance to proposed or existing LNG facilities based on safety, environmental or security concerns;

•  any significant explosion, spill or similar incident involving an LNG facility or LNG carrier;

•  labor or political unrest affecting existing or proposed areas of LNG production; and

•  capacity constraints at existing shipyards, which are expected to continue until at least the end of 2008.

      If the LNG supply chain is disrupted or does not continue to grow, or if a significant LNG explosion, spill or similar incident occurs, it could have a material adverse effect on our business, results of operations and financial condition and our ability to make required payments on our debt securities and cash distributions on our common units.

Our growth depends on our ability to expand relationships with existing customers and obtain new customers, for which we will face substantial competition.

      One of our principal objectives is to enter into additional long-term, fixed-rate LNG time charters. The process of obtaining new long-term LNG time charters is highly competitive and generally involves an intensive screening process and competitive bids, and often extends for several months. LNG shipping contracts are awarded based upon a variety of factors relating to the vessel operator, including:

•  shipping industry relationships and reputation for customer service and safety;

•  LNG shipping experience and quality of ship operations (including cost effectiveness);

•  quality and experience of seafaring crew;

•  the ability to finance LNG carriers at competitive rates and financial stability generally;

•  relationships with shipyards and the ability to get suitable berths;

•  construction management experience, including the ability to obtain on-time delivery of new vessels according to customer specifications;

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•  willingness to accept operational risks pursuant to the charter, such as allowing termination of the charter for force majeure events; and

•  competitiveness of the bid in terms of overall price.

      We compete for providing marine transportation services for potential LNG projects with a number of experienced companies, including state-sponsored entities and major energy companies affiliated with the LNG project requiring LNG shipping services. Many of these competitors have significantly greater financial resources than we do or Teekay Shipping Corporation does. We anticipate that an increasing number of marine transportation companies — including many with strong reputations and extensive resources and experience — will enter the LNG transportation sector. This increased competition may cause greater price competition for time charters. As a result of these factors, we may be unable to expand our relationships with existing customers or to obtain new customers on a profitable basis, if at all, which would have a material adverse effect on our business, results of operations and financial condition and our ability to make required payments on our debt securities and cash distributions on our common units.

Delays in deliveries of newbuildings could harm our operating results and lead to the termination of related time charters.

      We have agreed to purchase Teekay Shipping Corporation’s 70% interest in Teekay Nakilat Corporation, which through its subsidiaries will lease under capital leases the three RasGas II LNG newbuilding carriers, in connection with their deliveries scheduled for the fourth quarter of 2006 and the first half of 2007. The delivery of these vessels, or any other newbuildings we may order or otherwise acquire, could be delayed, which would delay our receipt of revenues under the time charters for the vessels. In addition, under some of our charters if our delivery of a vessel to our customer is delayed, we may be required to pay liquidated damages in amounts equal to or, under some charters, almost double, the hire rate during the delay. For prolonged delays, the customer may terminate the time charter and, in addition to the resulting loss of revenues, we may be responsible for additional, substantial liquidated damages.

      Our receipt of newbuildings could be delayed because of:

•  quality or engineering problems;

•  changes in governmental regulations or maritime self-regulatory organization standards;

•  work stoppages or other labor disturbances at the shipyard;

•  bankruptcy or other financial crisis of the shipbuilder;

•  a backlog of orders at the shipyard;

•  political or economic disturbances in South Korea or other locations where our vessels are being or may be built;

•  weather interference or catastrophic event, such as a major earthquake or fire;

•  our requests for changes to the original vessel specifications;

•  shortages of or delays in the receipt of necessary construction materials, such as steel;

•  our inability to finance the purchase of the vessels; or

•  our inability to obtain requisite permits or approvals.

      If delivery of a vessel is materially delayed, it could adversely affect our results or operations and financial condition and our ability to make required payments on our debt securities and cash distributions on our common units.

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We may have more difficulty entering into long-term, fixed-rate time charters if an active short-term or spot LNG shipping market develops.

      LNG shipping historically has been transacted with long-term, fixed-rate time charters, usually with terms ranging from 20 to 25 years. One of our principal strategies is to enter into additional long-term, fixed-rate LNG time charters. However, the number of spot and short-term charters has been increasing, with LNG charters under 12 months in duration growing from less than 2% of the market in the late 1990s to approximately 13% in 2005.

      If an active spot or short-term market continues to develop, we may have increased difficulty entering into long-term, fixed-rate time charters for our LNG vessels and, as a result, our cash flow may decrease and be less stable. In addition, an active short-term or spot LNG market may require us to enter into charters based on changing market prices, as opposed to contracts based on a fixed rate, which could result in a decrease in our cash flow in periods when the market price for shipping LNG is depressed or insufficient funds are available to cover our financing costs for related vessels.

Over time vessel values may fluctuate substantially and, if these values are lower at a time when we are attempting to dispose of a vessel, we may incur a loss.

      Vessel values for LNG carriers and Suezmax oil tankers can fluctuate substantially over time due to a number of different factors, including:

•  prevailing economic conditions in natural gas, oil and energy markets;

•  a substantial or extended decline in demand for natural gas, LNG or oil;

•  increases in the supply of vessel capacity; and

•  the cost of retrofitting or modifying existing vessels, as a result of technological advances in vessel design or equipment, changes in applicable environmental or other regulation or standards, or otherwise.

      If a charter terminates, we may be unable to re-deploy the vessel at attractive rates and, rather than continue to incur costs to maintain and finance it, may seek to dispose of it. Our inability to dispose of the vessel at a reasonable value could result in a loss on its sale and adversely affect our results of operations and financial condition.

We may be unable to make or realize expected benefits from acquisitions, and implementing our growth strategy through acquisitions may harm our business, financial condition and operating results.

      Our growth strategy includes selectively acquiring existing LNG carriers or LNG shipping businesses. Historically, there have been very few purchases of existing vessels and businesses in the LNG shipping industry. Factors that may contribute to a limited number of acquisition opportunities in the LNG industry in the near term include the relatively small number of independent LNG fleet owners and the limited number of LNG carriers not subject to existing long-term charter contracts. In addition, competition from other companies could reduce our acquisition opportunities or cause us to pay higher prices.

      Any acquisition of a vessel or business may not be profitable to us at or after the time we acquire it and may not generate cash flow sufficient to justify our investment. In addition, our acquisition growth strategy exposes us to risks that may harm our business, financial condition and operating results, including risks that we may:

•  fail to realize anticipated benefits, such as new customer relationships, cost-savings or cash flow enhancements;

•  be unable to hire, train or retain qualified shore and seafaring personnel to manage and operate our growing business and fleet;

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•  decrease our liquidity by using a significant portion of our available cash or borrowing capacity to finance acquisitions;

•  significantly increase our interest expense or financial leverage if we incur additional debt to finance acquisitions;

•  incur or assume unanticipated liabilities, losses or costs associated with the business or vessels acquired; or

•  incur other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges.

      Unlike newbuildings, existing vessels typically do not carry warranties as to their condition. While we generally inspect existing vessels prior to purchase, such an inspection would normally not provide us with as much knowledge of a vessel’s condition as we would possess if it had been built for us and operated by us during its life. Repairs and maintenance costs for existing vessels are difficult to predict and may be substantially higher than for vessels we have operated since they were built. These costs could decrease our cash flow and reduce our liquidity.

Terrorist attacks, increased hostilities or war could lead to further economic instability, increased costs and disruption of our business.

      Terrorist attacks, such as the attacks that occurred in the United States on September 11, 2001 and the bombings in Spain on March 11, 2004 and in England on July 7, 2005, and the current conflicts in Iraq and Afghanistan and other current and future conflicts, may adversely affect our business, operating results, financial condition, ability to raise capital and future growth. Continuing hostilities in the Middle East may lead to additional armed conflicts or to further acts of terrorism and civil disturbance in the United States, Spain or elsewhere, which may contribute further to economic instability and disruption of LNG and oil production and distribution, which could result in reduced demand for our services.

      In addition, LNG and oil facilities, shipyards, vessels, pipelines and oil and gas fields could be targets of future terrorist attacks. Any such attacks could lead to, among other things, bodily injury or loss of life, vessel or other property damage, increased vessel operational costs, including insurance costs, and the inability to transport LNG, natural gas and oil to or from certain locations. Terrorist attacks, war or other events beyond our control that adversely affect the distribution, production or transportation of LNG or oil to be shipped by us could entitle our customers to terminate our charter contracts, which would harm our cash flow and our business.

      Terrorist attacks, or the perception that LNG facilities and LNG carriers are potential terrorist targets, could materially and adversely affect expansion of LNG infrastructure and the continued supply of LNG to the United States and other countries. Concern that LNG facilities may be targeted for attack by terrorists has contributed to significant community and environmental resistance to the construction of a number of LNG facilities, primarily in North America. If a terrorist incident involving an LNG facility or LNG carrier did occur, in addition to the possible effects identified in the previous paragraph, the incident may adversely affect construction of additional LNG facilities in the United States and other countries or result in the temporary or permanent closing of various LNG facilities currently in operation.

Our substantial operations outside the United States expose us to political, governmental and economic instability, which could harm our operations.

      Because our operations are primarily conducted outside of the United States, they may be affected by economic, political and governmental conditions in the countries where we are engaged in business or where our vessels are registered. Any disruption caused by these factors could harm our business. In particular, we derive a substantial portion of our revenues from shipping LNG and oil from politically unstable regions. Past political conflicts in these regions, particularly in the Arabian Gulf, have included attacks on ships, mining of waterways and other efforts to disrupt shipping in the area. In addition to acts of terrorism, vessels trading in this and other regions have also been subject, in limited instances, to piracy.

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      Future hostilities or other political instability in the Arabian Gulf or other regions where we operate or may operate could have a material adverse effect on the growth of our business, results of operations and financial condition and our ability to make required payments on our debt securities and cash distributions on our common units. In addition, tariffs, trade embargoes and other economic sanctions by Spain, the United States or other countries against countries in the Middle East, Southeast Asia or elsewhere as a result of terrorist attacks, hostilities or otherwise may limit trading activities with those countries, which could also harm our business and ability to make cash distributions.

Marine transportation is inherently risky, and an incident involving significant loss of or environmental contamination by any of our vessels could harm our reputation and business.

      Our vessels and their cargoes are at risk of being damaged or lost because of events such as:

•  marine disasters;

•  bad weather;

•  mechanical failures;

•  grounding, fire, explosions and collisions;

•  piracy;

•  human error; and

•  war and terrorism.

      An accident involving any of our vessels could result in any of the following:

•  death or injury to persons, loss of property or environmental damage;

•  delays in the delivery of cargo;

•  loss of revenues from or termination of charter contracts;

•  governmental fines, penalties or restrictions on conducting business;

•  higher insurance rates; and

•  damage to our reputation and customer relationships generally.

      Any of these results could have a material adverse effect on our business, financial condition and operating results.

Our insurance may be insufficient to cover losses that may occur to our property or result from our operations.

      The operation of LNG carriers and oil tankers is inherently risky. Although we carry hull and machinery (marine and war risks) and protection and indemnity insurance, all risks may not be adequately insured against, and any particular claim may not be paid. In addition, we do not carry insurance on our oil tankers covering the loss of revenues resulting from vessel off-hire time based on its cost compared to our off-hire experience. Commencing January 1, 2006, Teekay Shipping Corporation began providing off-hire insurance for our LNG carriers. Any claims covered by insurance would be subject to deductibles, and since it is possible that a large number of claims may be brought, the aggregate amount of these deductibles could be material. Certain of our insurance coverage is maintained through mutual protection and indemnity associations, and as a member of such associations we may be required to make additional payments over and above budgeted premiums if member claims exceed association reserves.

      We may be unable to procure adequate insurance coverage at commercially reasonable rates in the future. For example, more stringent environmental regulations have led in the past to increased costs for, and in the future may result in the lack of availability of, insurance against risks of environmental damage or pollution. A catastrophic oil spill or marine disaster could result in losses that exceed our insurance

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coverage, which could harm our business, financial condition and operating results. Any uninsured or underinsured loss could harm our business and financial condition. In addition, our insurance may be voidable by the insurers as a result of certain of our actions, such as our ships failing to maintain certification with applicable maritime self-regulatory organizations.

      Changes in the insurance markets attributable to terrorist attacks may also make certain types of insurance more difficult for us to obtain. In addition, the insurance that may be available may be significantly more expensive than our existing coverage.

The marine energy transportation industry is subject to substantial environmental and other regulations, which may significantly limit our operations or increase our expenses.

      Our operations are affected by extensive and changing environmental protection laws and other regulations and international conventions. We have incurred, and expect to continue to incur, substantial expenses in complying with these laws and regulations, including expenses for vessel modifications and changes in operating procedures. Additional laws and regulations may be adopted that could limit our ability to do business or further increase our costs. In addition, failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations.

      The United States Oil Pollution Act of 1990 (or OPA 90), for instance, increased expenses for us and others in our industry. OPA 90 provides for potentially unlimited joint, several and strict liability for owners, operators and demise or bareboat charterers for oil pollution and related damages in U.S. waters, which include the U.S. territorial sea and the 200-nautical mile exclusive economic zone around the United States. OPA 90 applies to discharges of any oil from a vessel, including discharges of oil tanker cargoes and discharges of fuel and lubricants from an oil tanker or LNG carrier. To comply with OPA 90, vessel owners generally incur increased costs in meeting additional maintenance and inspection requirements, in developing contingency arrangements for potential spills and in obtaining required insurance coverage. OPA 90 requires vessel owners and operators of vessels operating in U.S. waters to establish and maintain with the U.S. Coast Guard evidence of insurance or of qualification as a self-insurer or other acceptable evidence of financial responsibility sufficient to meet certain potential liabilities under OPA 90 and the U.S. Comprehensive Environmental Response, Compensation, and Liability Act (or CERCLA), which imposes similar liabilities upon owners, operators and bareboat charterers of vessels from which a discharge of “hazardous substances” (other than oil) occurs. While LNG should not be considered a hazardous substance under CERCLA, additives to fuel oil or lubricants used on LNG carriers might fall within its scope. Under OPA 90 and CERCLA, owners, operators and bareboat charterers are jointly, severally and strictly liable for costs of cleanup and damages resulting from a discharge or threatened discharge within U.S. waters. This means we may be subject to liability even if we are not negligent or at fault.

      Most states in the United States bordering on a navigable waterway have enacted legislation providing for potentially unlimited strict liability without regard to fault for the discharge of pollutants within their waters. An oil spill or other event could result in significant liability, including fines, penalties, criminal liability and costs for natural resource damages. The potential for these releases could increase to the extent we increase our operations in U.S. waters.

      OPA 90 and CERCLA do not preclude claimants from seeking damages for the discharge of oil and hazardous substances under other applicable law, including maritime tort law. Such claims could include attempts to characterize seaborne transportation of LNG as an ultra-hazardous activity, which attempts, if successful, would lead to our being strictly liable for damages resulting from that activity.

      In addition, we believe that the heightened environmental, quality and security concerns of insurance underwriters, regulators and charterers will generally lead to additional regulatory requirements, including enhanced risk assessment and security requirements and greater inspection and safety requirements on all vessels in the LNG carrier and oil tanker markets.

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Exposure to currency exchange rate fluctuations will result in fluctuations in our cash flows and operating results.

      We are paid in Euros under some of our charters, and a majority of our vessel operating expenses and general and administrative expenses currently are denominated in Euros, which is primarily a function of the nationality of our crew and administrative staff. We also make payments under two Euro-denominated term loans. If the amount of our Euro-denominated obligations exceeds our Euro-denominated revenues, we must convert other currencies, primarily the U.S. Dollar, into Euros. An increase in the strength of the Euro relative to the U.S. Dollar would require us to convert more U.S. Dollars to Euros to satisfy those obligations, which would cause us to have less cash available to make required payments on our debt securities and for distribution on our common units. In addition, if we do not have sufficient U.S. Dollars, we may be required to convert Euros into U.S. Dollars for payments under any U.S. Dollar-denominated debt securities or for distributions to unitholders. An increase in the strength of the U.S. Dollar relative to the Euro could cause us to have less cash available for these payments and distributions in this circumstance. We have not entered into currency swaps or forward contracts or similar derivatives to mitigate this risk.

      Because we report our operating results in U.S. Dollars, changes in the value of the U.S. Dollar relative to the Euro also result in fluctuations in our reported revenues and earnings. In addition, under U.S. accounting guidelines, all foreign currency-denominated monetary assets and liabilities such as cash and cash equivalents, accounts receivable, restricted cash, accounts payable, long-term debt and capital lease obligations are revalued and reported based on the prevailing exchange rate at the end of the period. This revaluation historically has caused us to report significant non-monetary foreign currency exchange gains or losses each period. The primary source for these gains and losses is our Euro-denominated term loans. In 2003 and 2004 and the first half of 2006, we reported foreign currency exchange losses of $71.5 million, $60.8 million and $28.2 million, respectively. In 2005, we reported a foreign currency exchange gain of $81.8 million.

Many of our seafaring employees are covered by collective bargaining agreements and the failure to renew those agreements or any future labor agreements may disrupt our operations and adversely affect our cash flows.

      A significant portion of our seafarers, and the seafarers employed by Teekay Shipping Corporation and its other affiliates that crew our vessels, are employed under collective bargaining agreements, which expire at varying times through 2008. The collective bargaining agreement for our Spanish Suezmax tanker crew members (covering five Suezmax tankers) expires at the end of 2008. We may be subject to similar labor agreements in the future. We may be subject to labor disruptions in the future if our relationships deteriorate with our seafarers or the unions that represent them. Our collective bargaining agreements may not prevent labor disruptions, particularly when the agreements are being renegotiated. Any labor disruptions could harm our operations and could have a material adverse effect on our business, results of operations and financial condition and our ability to make required payments on our debt securities and cash distributions on our common units.

Due to our lack of diversification, adverse developments in our LNG or oil marine transportation business could reduce our ability to make required payments on our debt securities and distributions to our unitholders.

      We rely exclusively on the cash flow generated from our LNG carriers and Suezmax oil tankers that operate in the LNG and oil marine transportation business. Due to our lack of diversification, an adverse development in the LNG or oil shipping industry would have a significantly greater impact on our financial condition and results of operations than if we maintained more diverse assets or lines of business.

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Risks Inherent in an Investment in Us

Teekay Shipping Corporation and its affiliates may engage in competition with us.

      Teekay Shipping Corporation and its affiliates may engage in competition with us. Pursuant to the omnibus agreement, Teekay Shipping Corporation and its controlled affiliates (other than us and our subsidiaries) generally have agreed not to own, operate or charter LNG carriers without the consent of our general partner. The omnibus agreement, however, allows Teekay Shipping Corporation or any of such controlled affiliates to:

•  acquire LNG carriers and related time charters as part of a business if a majority of the value of the total assets or business acquired is not attributable to the LNG carriers and time charters, as determined in good faith by the board of directors of Teekay Shipping Corporation; however, if at any time Teekay Shipping Corporation completes such an acquisition, it must offer to sell the LNG carriers and related time charters to us for their fair market value plus any additional tax or other similar costs to Teekay Shipping Corporation that would be required to transfer the LNG carriers and time charters to us separately from the acquired business; or

•  own, operate and charter LNG carriers that relate to a bid or award for a proposed LNG project that Teekay Shipping Corporation or any of its subsidiaries has submitted or hereafter submits or receives; however, at least 180 days prior to the scheduled delivery date of any such LNG carrier, Teekay Shipping Corporation must offer to sell the LNG carrier and related time charter to us, with the vessel valued at its “fully-built-up cost,” which represents the aggregate expenditures incurred (or to be incurred prior to delivery to us) by Teekay Shipping Corporation to acquire or construct and bring such LNG carrier to the condition and location necessary for our intended use.

      If we decline the offer to purchase the LNG carriers and time charters described above, Teekay Shipping Corporation may own and operate the LNG carriers, but may not expand that portion of its business.

      In addition, pursuant to the omnibus agreement, Teekay Shipping Corporation or any of its controlled affiliates (other than us and our subsidiaries) may:

•  acquire, operate or charter LNG carriers if our general partner has previously advised Teekay Shipping Corporation that the board of directors of our general partner has elected, with the approval of its conflicts committee, not to cause us or our subsidiaries to acquire or operate the carriers;

•  operate the three RasGas II LNG newbuilding carriers and related time charters if we fail to perform our obligation to purchase such vessels under our agreement with Teekay Shipping Corporation;

•  acquire up to a 9.9% equity ownership, voting or profit participation interest in any publicly traded company that owns or operate LNG carriers; and

•  provide ship management services relating to LNG carriers.

      If there is a change of control of Teekay Shipping Corporation, the non-competition provisions of the omnibus agreement may terminate, which termination could have a material adverse effect on our business, results of operations and financial condition and our ability to make required payments on our debt securities and cash distributions on our common units.

Our general partner and its other affiliates have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interests to those of our securityholders.

      Teekay Shipping Corporation, which owns and controls our general partner, indirectly owns the 2% general partner interest and currently owns a 67.8% limited partner interest in us. Conflicts of interest may arise between Teekay Shipping Corporation and its affiliates, including our general partner, on the one hand, and us and our securityholders, on the other hand. As a result of these conflicts, our general partner

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may favor its own interests and the interests of its affiliates over the interests of our securityholders. These conflicts include, among others, the following situations:

•  neither our partnership agreement nor any other agreement requires our general partner or Teekay Shipping Corporation to pursue a business strategy that favors us or utilizes our assets, and Teekay Shipping Corporation’s officers and directors have a fiduciary duty to make decisions in the best interests of the stockholders of Teekay Shipping Corporation, which may be contrary to our interests;

•  the executive officers and three of the directors of our general partner also currently serve as executive officers or directors of Teekay Shipping Corporation and another director of our general partner is employed by an affiliate of Teekay Shipping Corporation;

•  our general partner is allowed to take into account the interests of parties other than us, such as Teekay Shipping Corporation, in resolving conflicts of interest, which has the effect of limiting its fiduciary duty to our unitholders;

•  our general partner has limited its liability and reduced its fiduciary duties under the laws of the Marshall Islands, while also restricting the remedies available to our unitholders, and as a result of purchasing common units, unitholders are treated as having agreed to the modified standard of fiduciary duties and to certain actions that may be taken by our general partner, all as set forth in the partnership agreement;

•  our general partner determines the amount and timing of asset purchases and sales, capital expenditures, borrowings, issuances of additional partnership securities and reserves, each of which can affect the amount of cash that is available for required payments on our debt securities and distribution to our unitholders;

•  in some instances, our general partner may cause us to borrow funds in order to permit the payment of cash distributions, even if the purpose or effect of the borrowing is to make a distribution on our subordinated units or to make incentive distributions or to accelerate the expiration of the subordination period;

•  our general partner determines which costs incurred by it and its affiliates are reimbursable by us;

•  our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered to us on terms that are fair and reasonable or entering into additional contractual arrangements with any of these entities on our behalf;

•  our general partner controls the enforcement of obligations owed to us by it and its affiliates; and

•  our general partner decides whether to retain separate counsel, accountants or others to perform services for us.

Our partnership agreement limits our general partner’s fiduciary duties to our unitholders and restricts the remedies available to unitholders for actions taken by our general partner.

      Our partnership agreement contains provisions that reduce the standards to which our general partner would otherwise be held by Marshall Islands law. For example, our partnership agreement:

•  permits our general partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our general partner. Where our partnership agreement permits, our general partner may consider only the interests and factors that it desires, and in such cases it has no duty or obligation to give any consideration to any interest of, or factors affecting us, our affiliates or any limited partner;

•  provides that our general partner is entitled to make other decisions in “good faith” if it reasonably believes that the decision is in our best interests;

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•  generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the conflicts committee of the board of directors of our general partner and not involving a vote of unitholders must be on terms no less favorable to us than those generally being provided to or available from unrelated third parties or be “fair and reasonable” to us and that, in determining whether a transaction or resolution is “fair and reasonable,” our general partner may consider the totality of the relationships between the parties involved, including other transactions that may be particularly advantageous or beneficial to us; and

•  provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or assignees for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that the general partner or those other persons acted in bad faith or engaged in fraud, willful misconduct or gross negligence.

      In order to become a limited partner of our partnership, a common unitholder is required to agree to be bound by the provisions in the partnership agreement, including the provisions discussed above.

Fees and cost reimbursements, which our general partner determines for services provided to us and certain of our subsidiaries, are substantial and reduce our cash available to make required payments on our debt securities and for distribution to our common unitholders.

      Prior to making any distribution on the common units, we pay fees for services provided to us and certain of our subsidiaries by certain subsidiaries of Teekay Shipping Corporation, and we reimburse our general partner for all expenses it incurs on our behalf. These fees are negotiated on our behalf by our general partner, and our general partner also determines the amounts it is reimbursed. These fees and expenses include all costs incurred in providing certain advisory, ship management, technical and administrative services to us and certain of our subsidiaries. In addition, our general partner and its affiliates may provide us with other services for which the general partner or its affiliates may charge us fees, and we may pay Teekay Shipping Corporation “incentive fees” pursuant to the omnibus agreement with it to reward and motivate Teekay Shipping Corporation for pursuing LNG projects that we may elect to undertake. The payment of fees to Teekay Shipping Corporation and its subsidiaries and reimbursement of expenses to our general partner could adversely affect our ability to make required payments on our debt securities and to pay cash distributions to our common unitholders.

Even if unitholders are dissatisfied, they cannot remove our general partner without its consent.

      Unlike the holders of common stock in a corporation, unitholders have only limited voting rights on matters affecting our business and, therefore, limited ability to influence management’s decisions regarding our business. Unitholders did not elect our general partner or its board of directors and will have no right to elect our general partner or its board of directors on an annual or other continuing basis. The board of directors of our general partner is chosen by Teekay Shipping Corporation. Furthermore, if the unitholders are dissatisfied with the performance of our general partner, they will have little ability to remove our general partner. As a result of these limitations, the price at which the common units will trade could be diminished because of the absence or reduction of a takeover premium in the trading price.

      The vote of the holders of at least 66-²/3% of all outstanding units voting together as a single class is required to remove the general partner. Teekay Shipping Corporation currently owns 67.8% of our outstanding units. Also, if the general partner is removed without cause during the subordination period and units held by the general partner and Teekay Shipping Corporation are not voted in favor of that removal, all remaining subordinated units will automatically convert into common units and any existing arrearages on the common units will be extinguished. A removal of the general partner under these circumstances would adversely affect the common units by prematurely eliminating their distribution and liquidation preference over the subordinated units, which would otherwise have continued until we had met certain distribution and performance tests. Cause is narrowly defined to mean that a court of competent jurisdiction has entered a final, non-appealable judgment finding the general partner liable for actual fraud

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or willful or wanton misconduct in its capacity as our general partner. Cause does not include most cases of charges of poor management of the business, so the removal of the general partner because of the unitholders’ dissatisfaction with the general partner’s performance in managing our partnership will most likely result in the termination of the subordination period.

      Furthermore, unitholders’ voting rights are further restricted by the partnership agreement provision providing that any units held by a person that owns 20% or more of any class of units then outstanding, other than the general partner, its affiliates, their transferees, and persons who acquired such units with the prior approval of the board of directors of the general partner, cannot vote on any matter. Our partnership agreement also contains provisions limiting the ability of unitholders to call meetings or to acquire information about our operations, as well as other provisions limiting the unitholders’ ability to influence the manner or direction of management.

The control of our general partner may be transferred to a third party without unitholder consent.

      Our general partner may transfer its general partner interest to a third party in a merger or in a sale of all or substantially all of its assets without the consent of the unitholders. In addition, our partnership agreement does not restrict the ability of the members of our general partner from transferring their respective membership interests in our general partner to a third party. In the event of any such transfer, the new members of our general partner would be in a position to replace the board of directors and officers of our general partner with their own choices and to control the decisions taken by the board of directors and officers.

Our financing agreements contain operating and financial restrictions which may restrict our business and financing activities.

      The operating and financial restrictions and covenants in our financing arrangements and any future financing agreements could adversely affect our ability to finance future operations or capital needs or to engage, expand or pursue our business activities. For example, the arrangements may restrict our ability to:

•  incur or guarantee indebtedness;

•  change ownership or structure, including mergers, consolidations, liquidations and dissolutions;

•  make dividends or distributions;

•  make capital expenditures in excess of specified levels;

•  make certain negative pledges and grant certain liens;

•  sell, transfer, assign or convey assets;

•  make certain loans and investments; and

•  enter into a new line of business.

      In addition, some of our financing arrangements require our subsidiaries to maintain restricted cash deposits and maintain minimal levels of tangible net worth. Our ability to comply with the covenants and restrictions contained in our debt instruments may be affected by events beyond our control, including prevailing economic, financial and industry conditions. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. If we are in breach of any of the restrictions, covenants, ratios or tests in our financing agreements, a significant portion of our obligations may become immediately due and payable, and our lenders’ commitment to make further loans to us may terminate. We might not have, or be able to obtain, sufficient funds to make these accelerated payments. In addition, our obligations under an existing revolving credit facility are secured by certain of our assets, and if we are unable to repay our debt under the credit facility, the lenders could seek to foreclose on those assets.

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Restrictions in our debt agreements may prevent us from paying distributions.

      Our payment of principal and interest on our debt and capital lease obligations will reduce cash available for distribution on our units. In addition, a number of our financing agreements prohibit the payment of distributions upon the occurrence of the following events, among others:

•  failure to pay any principal, interest, fees, expenses or other amounts when due;

•  default under any vessel mortgage;

•  failure to notify the lenders of any material oil spill or discharge of hazardous material, or of any action or claim related thereto;

•  breach or lapse of any insurance with respect to the vessels;

•  breach of certain financial covenants;

•  failure to observe any other agreement, security instrument, obligation or covenant beyond specified cure periods in certain cases;

•  default under other indebtedness of our operating company, our general partner or any of our subsidiaries;

•  bankruptcy or insolvency events involving us, our general partner or any of our subsidiaries;

•  failure of any representation or warranty to be materially correct;

•  a change of control, as defined in the applicable agreement; and

•  a material adverse effect, as defined in the applicable agreement, occurs relating to us or our business.

      We anticipate that any subsequent refinancing of our current debt or any new debt will have similar restrictions.

We can borrow money to pay distributions, which would reduce the amount of credit available to operate our business.

      Our partnership agreement allows us to make working capital borrowings to pay distributions. Accordingly, we can make distributions on all our units even though cash generated by our operations may not be sufficient to pay such distributions. We are required to reduce all working capital borrowings for this purpose under our revolving credit agreement to zero for a period of at least 15 consecutive days once each 12-month period. Any working capital borrowings by us to make distributions will reduce the amount of working capital borrowings we can make for operating our business.

Unitholders may have liability to repay distributions.

      Under some circumstances, unitholders may have to repay amounts wrongfully distributed to them. Under the Marshall Islands Limited Partnership Act (or Marshall Islands Act), we may not make a distribution to our unitholders if the distribution would cause our liabilities to exceed the fair value of our assets. Marshall Islands law provides that for a period of three years from the date of the impermissible distribution limited partners who received the distribution and who knew at the time of the distribution that it violated Marshall Islands law will be liable to the limited partnership for the distribution amount. Assignees of partnership interests who become limited partners are liable for the obligations of the assignor to make contributions to the partnership that are known to the assignee at the time it became a limited partner and for unknown obligations if the liabilities could be determined from the partnership agreement. Liabilities to partners on account of their partnership interest and liabilities that are non-recourse to the partnership are not counted for purposes of determining whether a distribution is permitted.

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We have been organized as a limited partnership under the laws of the Republic of The Marshall Islands, which does not have a well-developed body of partnership law.

      Our partnership affairs are governed by our partnership agreement and by the Marshall Islands Act. The provisions of the Marshall Islands Act resemble provisions of the limited partnership laws of a number of states in the United States, most notably Delaware. The Marshall Islands Act also provides that it is to be interpreted according to the non-statutory law of the State of Delaware. There have been, however, few, if any, court cases in the Marshall Islands interpreting the Marshall Islands Act, in contrast to Delaware, which has a fairly well-developed body of case law interpreting its limited partnership statute. Accordingly, we cannot predict whether Marshall Islands courts would reach the same conclusions as the courts in Delaware. For example, the rights of our unitholders and the fiduciary responsibilities of our general partner under Marshall Islands law are not as clearly established as under judicial precedent in existence in Delaware. As a result, unitholders may have more difficulty in protecting their interests in the face of actions by our general partner and its officers and directors than would unitholders of a limited partnership formed in the United States.

Because we are organized under the laws of the Marshall Islands, it may be difficult to serve us with legal process or enforce judgments against us, our directors or our management.

      We are organized under the laws of the Marshall Islands, and all of our assets are located outside of the United States. Our business is operated primarily from our offices in the Bahamas and Spain. In addition, our general partner is a Marshall Islands limited liability company and all but four of its directors and officers are non-residents of the United States, and all or a substantial portion of the assets of these non-residents are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States if you believe that your rights have been infringed under securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Marshall Islands and of other jurisdictions may prevent or restrict you from enforcing a judgment against our assets or the assets of our general partner or its directors and officers.

Risks Relating to the Common Units

Common unitholders may experience immediate and substantial dilution of their interest.

      In the past, purchasers of our common units have experienced immediate and substantial dilution of their ownership interest in us. This dilution results primarily because the assets contributed by our general partner and its affiliates are recorded at their historical cost, and not their fair value, in accordance with GAAP. Depending on whether the offering price for any common units exceeds the pro forma net tangible book value per common unit, you could incur immediate and substantial dilution.

We may issue additional common units without the approval of the common unitholders, which would dilute their ownership interests.

      Our general partner, without the approval of our unitholders, may cause us to issue an unlimited number of additional units or other equity securities of equal or senior rank. The issuance by us of additional common units or other equity securities will have the following effects:

•  our unitholders’ proportionate ownership interest in us will decrease;

•  the amount of cash available for distribution on each unit may decrease;

•  because a lower percentage of total outstanding units will be subordinated units, the risk that a shortfall in the payment of the minimum quarterly distribution will be borne by our common unitholders will increase;

•  the relative voting strength of each previously outstanding unit may be diminished;

•  the market price of the common units may decline; and

•  the ratio of taxable income to distributions may increase.

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In establishing cash reserves, our general partner may reduce the amount of cash available for distribution to the common unitholders.

      Our partnership agreement requires our general partner to deduct from operating surplus cash reserves that it determines are necessary to fund our future operating expenditures. These reserves affect the amount of cash available for distribution to our common unitholders. Our general partner may establish reserves for distributions on the subordinated units, but only if those reserves will not prevent us from distributing the full minimum quarterly distribution, plus any arrearages, on the common units for the following four quarters. The partnership agreement requires our general partner each quarter to deduct from operating surplus estimated maintenance capital expenditures, as opposed to actual expenditures, which could reduce the amount of available cash for distribution to the common unitholders.

Our general partner has a call right that may require common unitholders to sell their common units at an undesirable time or price.

      If at any time our general partner and its affiliates own more than 80% of the common units, our general partner will have the right, but not the obligation (which it may assign to any of its affiliates or to us), to acquire all, but not less than all, of the common units held by unaffiliated persons at a price not less than their then-current market price. As a result, common unitholders may be required to sell their common units at an undesirable time or price and may not receive any return on their investment. Common unitholders may also incur a tax liability upon a sale of their units.

      Teekay Shipping Corporation currently owns 43.2% of our common units. At the end of the subordination period (assuming no additional issuances of common units and conversion of our subordinated units into common units), Teekay Shipping Corporation will own 67.1% of the common units. Teekay Shipping Corporation will also acquire additional common units if it elects to receive common units in satisfaction of obligations owed to it by us, such as in connection with the sale to us of its 70% interest in Teekay Nakilat Corporation, which through its subsidiaries will lease under capital leases the three RasGas II LNG newbuilding carriers. Accordingly, after subordinated units are converted to common units our general partner and its affiliates may own a sufficient percentage of our common units to enable our general partner to exercise its call right.

Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units.

      Our partnership agreement restricts unitholders’ voting rights by providing that any units held by a person that owns 20% or more of any class of units then outstanding, other than our general partner, its affiliates, their transferees and persons who acquired such units with the prior approval of the board of directors of our general partner, cannot vote on any matter. The partnership agreement also contains provisions limiting the ability of unitholders to call meetings or to acquire information about our operations, as well as other provisions limiting the unitholders’ ability to influence the manner or direction of management.

Common unitholders may not have limited liability if a court finds that unitholder action constitutes control of our business.

      As a limited partner in a partnership organized under the laws of the Marshall Islands, common unitholders could be held liable for our obligations to the same extent as a general partner if they participate in the “control” of our business. Our general partner generally has unlimited liability for the obligations of the partnership, such as its debts and environmental liabilities, except for those contractual obligations of the partnership that are expressly made without recourse to our general partner. In addition, the Marshall Islands Act provides that, under some circumstances, a unitholder may be liable to us for the amount of a distribution for a period of three years from the date of the distribution. In addition, the limitations on the liability of holders of limited partner interests for the obligations of a limited partnership have not been clearly established in some jurisdictions in which we do business.

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Risks Relating to the Debt Securities

We may not be able to generate sufficient cash flow to meet our debt service obligations.

      Our ability to make payments on and to refinance our indebtedness and to fund planned expenditures will depend on our ability to generate cash. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

      We may not be able to generate sufficient cash flow from operations or borrow amounts under our revolving credit facilities sufficient to fund our liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity, which we may be unable to do on commercially reasonable terms, if at all.

We are a holding company. We conduct our operations through our subsidiaries, who own our operating assets, and depend on cash flow from our subsidiaries to service our debt obligations.

      We are a holding company. We conduct our operations through our subsidiaries. As a result, our cash flow and ability to service our debt depends on the earnings of our subsidiaries and their distribution of earnings, loans or other payments to us. Any payment of dividends, distributions, loans or other payments from our subsidiaries to us could be subject to statutory or contractual restrictions. If we are unable to obtain funds from our subsidiaries we may not be able to pay interest or principal on our debt securities when due or to obtain the necessary funds from other sources.

Our substantial debt levels may limit our flexibility in obtaining additional financing and in pursuing other business opportunities.

      As of June 30, 2006, our consolidated debt, capital lease obligations and debt related to newbuilding vessels to be acquired totaled $1.4 billion. In addition, we have the capacity to borrow significant additional amounts under our credit facilities. These facilities may be used by us for general partnership purposes. If we are awarded contracts for new LNG projects, our consolidated debt and capital lease obligations will increase, perhaps significantly. We will continue to have the ability to incur additional debt, subject to limitations in our credit facilities. Our level of debt could have important consequences to us, including the following:

•  our ability to satisfy our obligations under our debt securities or other indebtedness may be impaired, and our failure to comply with the requirements of the other indebtedness could result in an event of default under our debt securities or such other indebtedness;

•  our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms;

•  we will need a substantial portion of our cash flow to make principal and interest payments on our debt, reducing the funds that would otherwise be available for operations, future business opportunities and distributions to unitholders;

•  our debt level will make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our business or the economy generally; and

•  our debt level may limit our flexibility in responding to changing business and economic conditions.

Our ability to service our debt will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, many of which are beyond our control. If our operating results are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing distributions, reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt, or seeking additional equity capital or bankruptcy protection. We may be unable to effect any of these remedies on satisfactory terms, or at all.

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In the event of our bankruptcy or liquidation, holders of our debt securities will be paid from any assets remaining after payments to any holders of secured debt and debt of our non-guarantor subsidiaries.

      We anticipate that any debt securities we may offer pursuant to this prospectus will be our general unsecured obligations, and that any guarantees of our debt securities will be the general unsecured obligations of the applicable Subsidiary Guarantors, and effectively subordinated to any secured debt that we or they may have, to the extent of the value of the assets securing that debt. In the event any of our subsidiaries do not guarantee our debt securities, those debt securities will be effectively subordinated to the liabilities of any of those non-guarantor subsidiaries.

      If we are declared bankrupt or insolvent, or are liquidated, the holders of our secured debt will be entitled to be paid from our assets before any payment may be made with respect to our unsecured debt securities. If any of these events occurs, we may not have sufficient assets to pay amounts due on our secured debt and our debt securities.

The subsidiary guarantees could be deemed to be fraudulent conveyances under certain circumstances, and a court may try to subordinate or void the subsidiary guarantees.

      Our debt securities may be guaranteed by certain of our subsidiaries. Under U.S. federal bankruptcy laws and comparable provisions of state fraudulent transfer laws, a guarantee by a subsidiary could be voided, or claims in respect of a guarantee could be subordinated to all other debts of that guarantor if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by its guarantee received less than reasonably equivalent fair value or fair consideration for the incurrence of such guarantee, and

•  was insolvent or rendered insolvent by reason of such incurrence;

•  was engaged in a business or transaction for which the guarantor’s remaining assets constituted unreasonably small capital; or

•  intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature.

      In addition, any payment by that subsidiary guarantor pursuant to its guarantee could be voided and required to be returned to the guarantor, or to a fund for the benefit of the creditors of the guarantor. The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if:

•  the sum of its liabilities, including contingent liabilities, were greater than the fair saleable value of all of its assets;

•  the present fair saleable value of its assets were less than the amount that would be required to pay its liabilities, including contingent liabilities, on its existing debts, as they become absolute or mature; or

•  it could not pay its debts as they become due.

Tax Risks

      In addition to the following risk factors, you should read “Material U.S. Federal Income Tax Consequences” for a more complete discussion of expected material U.S. federal income tax consequences of owning and disposing of our securities.

You may be required to pay U.S. taxes on your share of our income even if you do not receive any cash distributions from us.

      Assuming that you are a U.S. citizen, resident or other U.S. taxpayer, you will be required to pay U.S. federal income taxes and, in some cases, U.S. state and local income taxes on your share of our

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taxable income, whether or not you receive cash distributions from us. You may not receive cash distributions from us equal to your share of our taxable income or even equal to the actual tax liability that results from your share of our taxable income.

Because distributions may reduce a common unitholder’s tax basis in our common units, common unitholders may realize greater gain on the disposition of their units than they otherwise may expect, and common unitholders may have a tax gain even if the price they receive is less than their original cost.

      If common unitholders sell their common units, they will recognize gain or loss for U.S. federal income tax purposes that is equal to the difference between the amount realized and their tax basis in those common units. Prior distributions in excess of the total net taxable income allocated decrease a common unitholder’s tax basis and will, in effect, become taxable income if common units are sold at a price greater than their tax basis, even if the price received is less than the original cost. Assuming we are not treated as a corporation for U.S. federal income tax purposes, a substantial portion of the amount realized on a sale of units, whether or not representing gain, may be ordinary income.

The after-tax benefit of an investment in the common units may be reduced if we cease to be treated as a partnership for U.S. federal income tax purposes.

      The anticipated after-tax benefit of an investment in the common units may be reduced if we cease to be treated as a partnership for U.S. federal income tax purposes.

      If we cease to be treated as a partnership for U.S. federal income tax purposes, we would be treated as becoming a corporation for such purposes, and common unitholders could suffer material adverse tax or economic consequences, including the following:

•  The ratio of taxable income to distributions with respect to common units would increase because items would not be allocated to account for any differences between the fair market value and the basis of our assets at the time of the offering.

•  Common unitholders may recognize income or gain on any change in our status from a partnership to a corporation that occurs while they hold units.

•  We would not be permitted to adjust the tax basis of a secondary market purchaser in our assets under Section 743(b) of the U.S. Internal Revenue Code of 1986. As a result, a person who purchases common units from a common unitholder in the market may realize materially more taxable income each year with respect to the units if we are treated as a corporation than if we are treated as a partnership for U.S. federal income tax purposes. This could reduce the value of the common unitholder’s common units.

•  Common unitholders would not be entitled to claim any credit against their U.S. federal income tax liability for non-U.S. income tax liabilities incurred by us if we are treated as a corporation for U.S. federal income tax purposes.

•  If we fail to qualify for an exemption from U.S. tax on the U.S. source portion of our income attributable to transportation that begins or ends (but not both) in the United States, we will be subject to U.S. tax on such income on a gross basis (that is, without any allowance for deductions) at a rate of 4%. The imposition of this tax would have a negative effect on our business and would result in decreased cash available for distribution to common unitholders.

•  We also may be considered a passive foreign investment company (or PFIC) for U.S. federal income tax purposes.

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U.S. tax-exempt entities and non-U.S. persons face unique U.S. tax issues from owning common units that may result in adverse U.S. tax consequences to them.

      Investments in common units by U.S. tax-exempt entities, including individual retirement accounts (known as IRAs), other retirements plans and non-U.S. persons raise issues unique to them. Assuming we are classified as a partnership for U.S. federal income tax purposes, virtually all of our income allocated to organizations exempt from U.S. federal income tax will be unrelated business taxable income and generally will be subject to U.S. federal income tax. In addition, non-U.S. persons may be subject to a 4% U.S. federal income tax on the U.S. source portion of our gross income attributable to transportation that begins or ends in the United States, or distributions to them may be reduced on account of withholding of U.S. federal income tax by us in the event we are treated as having a fixed place of business in the United States or otherwise earn U.S. effectively connected income, unless an exemption applies and they file U.S. federal income tax returns to claim such exemption.

The sale or exchange of 50% or more of our capital or profits interests in any 12-month period will result in the termination of our partnership for U.S. federal income tax purposes.

      We will be considered to have been terminated for U.S. federal income tax purposes if there is a sale or exchange of 50% or more of the total interests in our capital or profits within any 12-month period. Our termination would, among other things, result in the closing of our taxable year for all unitholders and could result in a deferral of depreciation deductions allowable in computing our taxable income. Please read “Material U.S. Federal Income Tax Consequences — Disposition of Common Units — Constructive Termination.”

Common unitholders may be subject to income tax in one or more non-U.S.  countries, including Canada, as a result of owning our common units if, under the laws of any such country, we are considered to be carrying on business there. Such laws may require common unitholders to file a tax return with, and pay taxes to, those countries. Any foreign taxes imposed on us or any of our subsidiaries will reduce our cash available for distribution to common unitholders.

      We intend that our affairs and the business of each of our subsidiaries is conducted and operated in a manner that minimizes foreign income taxes imposed upon us and our subsidiaries or which may be imposed upon you as a result of owning our common units. However, there is a risk that common unitholders will be subject to tax in one or more countries, including Canada, as a result of owning our common units if, under the laws of any such country, we are considered to be carrying on business there. If common unitholders are subject to tax in any such country, common unitholders may be required to file a tax return with, and pay taxes to, that country based on their allocable share of our income. We may be required to reduce distributions to common unitholders on account of any withholding obligations imposed upon us by that country in respect of such allocation to common unitholders. The United States may not allow a tax credit for any foreign income taxes that common unitholders directly or indirectly incur. Any foreign taxes imposed on us or any of our subsidiaries will reduce our cash available for common unitholders.

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USE OF PROCEEDS

      Unless we specify otherwise in any prospectus supplement, we will use the net proceeds from our sale of securities covered by this prospectus for general partnership purposes, which may include, among other things:

•  paying or refinancing all or a portion of our indebtedness outstanding at the time; and

•  funding working capital, capital expenditures or acquisitions.

      The actual application of proceeds from the sale of any particular offering of securities covered by this prospectus will be described in the applicable prospectus supplement relating to the offering.

RATIO OF EARNINGS TO FIXED CHARGES

      The following table presents our consolidated ratio of earnings to fixed charges for each of the periods indicated:

									Years Ended December 31,
									2004					2005				Six Months
																		Ended
	Years Ended
	December 31,								January 1 to		May 1 to			January 1 to		May 10 to
									April 30,		December 31,			May 9,		December 31,		June 30,
	2001		2002			2003			2004		2004			2005		2005		2006
Ratio of earnings to fixed charges(1)		1.28		(3.87	)		(0.44	)		1.54		(0.62	)		1.74		2.12		0.60
Deficiency of earnings to fixed charges (in millions of U.S. Dollars)(2)		—		117.6			70.4			—		86.0			—		—		16.2

(1)	The information in this table is for our predecessor, Teekay Luxembourg S.a.r.l. and its subsidiaries, which include Teekay Shipping Spain, S.L., for periods subsequent to April 30, 2004 and prior to May 10, 2005, the date of our initial public offering. For periods prior to April 30, 2004, the information presented is for Teekay Shipping Spain, S.L.
(2)	Earnings were insufficient to cover fixed charges for the years ended December 31, 2002 and 2003, the period of May 1 to December 31, 2004 and the six months ended June 30, 2006 by the amounts indicated in the table.

      For purposes of calculating the ratio of earnings to fixed charges:

• “earnings” is the amount resulting from adding the following items:

• pre-tax income (loss) from continuing operations before adjustment for minority interests in consolidated subsidiaries;

• fixed charges; and

• amortization of capitalized interest; and

         subtracting the following items:

• capitalized interest; and

• the minority interest in pre-tax income of subsidiaries that have not incurred fixed charges.

• “fixed charges” represents interest expensed, capitalized interest, write-off of capitalized loan costs and amortization of capitalized expenses related to indebtedness.

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PRICE RANGE OF COMMON UNITS AND DISTRIBUTIONS

      As of September 1, 2006, there were 20,238,072 common units outstanding, held by approximately 20 holders of record. Our common units were first offered on the New York Stock Exchange on May 5, 2005, at an initial price of $22.00 per unit. Our common units are traded on the New York Stock Exchange under the symbol “TGP.”

      The following table sets forth, for the periods indicated, the high and low sales prices for our common units, as reported on the New York Stock Exchange, and quarterly cash distributions declared per common unit. The last reported sale price of common units on the New York Stock Exchange on September 28, 2006 was $29.95 per common unit.

		Price Range				Cash
						Distributions
		High		Low		per Unit(1)
2006
	Year Ending December 31, 2006 (through September 28)	$	31.98	$	28.65	$	0.925
2005(2)
	Year Ended December 31, 2005	$	34.70	$	24.30	$	1.0607
2006
	Quarter Ending September 30 (through September 28)	$	31.47	$	29.35
	Quarter Ended June 30		31.98		29.13	$	0.4625
	Quarter Ended March 31		31.69		28.65		0.4625
2005
	Quarter Ended December 31	$	32.25	$	27.40	$	0.4125
	Quarter Ended September 30		34.70		28.12		0.4125
	Quarter Ended June 30(2)		28.45		24.30		0.2357	(3)
2006
	Month Ending September 30 (through September 28)	$	30.40	$	29.35
	Month Ended August 31		30.40		29.35
	Month Ended July 31		31.47		30.28
	Month Ended June 30		31.13		30.07
	Month Ended May 31		31.00		29.13
	Month Ended April 30		31.98		30.45

(1)	Represents cash distributions attributable to the quarter and paid within 45 days after the quarter.
(2)	Period beginning May 5, 2005.
(3)	The distribution reflects the 52-day period from May 10, 2005 to June 30, 2005.

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DESCRIPTION OF THE COMMON UNITS

      Our common units and our subordinated units represent limited partner interests in us. The holders of units are entitled to participate in partnership distributions and exercise the rights and privileges available to limited partners under our partnership agreement. For a description of the relative rights and privileges of holders of common units, holders of subordinated units and our general partner in and to partnership distributions, together with a description of the circumstances under which subordinated units convert into common units, please read “Cash Distributions.”

Number of Units

      We currently have 20,238,072 common units outstanding, of which 11,503,500 are held by the public and 8,734,572 are held by Teekay Shipping Corporation, which owns our general partner. We also have 14,734,572 subordinated units outstanding, for which there is no established public trading market, all of which are held by Teekay Shipping Corporation. The common units and the subordinated units represent an aggregate 98% limited partner interest and the general partner interest represents a 2% general partner interest in us.

Issuance of Additional Securities

      Our partnership agreement authorizes us to issue an unlimited number of additional partnership securities and rights to buy partnership securities for the consideration and on the terms and conditions determined by our general partner without the approval of our unitholders.

      We may fund acquisitions through the issuance of additional common units or other equity securities. Holders of any additional common units we issue will be entitled to share equally with the then-existing holders of common units in our distributions of available cash. In addition, the issuance of additional common units or other equity securities interests may dilute the value of the interests of the then-existing holders of common units in our net assets.

      In accordance with Marshall Islands law and the provisions of our partnership agreement, we may also issue additional partnership securities interests that, as determined by the general partner, have special voting or other rights to which the common units are not entitled.

      Upon issuance of additional partnership securities, our general partner will be required to make additional capital contributions to the extent necessary to maintain its 2% general partner interest in us. In addition, our general partner and its affiliates have the right, which it may from time to time assign in whole or in part to any of its affiliates, to purchase common units, subordinated units or other equity securities whenever, and on the same terms that, we issue those securities to persons other than our general partner and its affiliates, to the extent necessary to maintain its and its affiliates’ percentage interest, including its interest represented by common units and subordinated units, that existed immediately prior to each issuance. Other holders of common units do not have similar preemptive rights to acquire additional common units or other partnership securities.

Meetings; Voting

      Unlike the holders of common stock in a corporation, the holders of our units have only limited voting rights on matters affecting our business. They have no right to elect our general partner (who manages our operations and activities) or the directors of our general partner on an annual or other continuing basis. On those matters that are submitted to a vote of unitholders, each record holder of a unit may vote according to the holder’s percentage interest in us, although additional limited partner interests having special voting rights could be issued. However, if at any time any person or group, other than our general partner and its affiliates (or a direct or subsequently approved transferee of our general partner or its affiliates or a transferee approved by the board of directors of our general partner) acquires, in the aggregate, beneficial ownership of 20% or more of any class of units then outstanding, that person or group will lose voting rights on all of its units and the units may not be voted on any matter and will not be

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considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes, determining the presence of a quorum, or for other similar purposes.

      Holders of our subordinated units sometimes vote as a single class together with the holders of our common units and sometimes vote as a class separate from the holders of common units. Holders of subordinated units, like holders of common units, have very limited voting rights. During the subordination period, common units (excluding common units held by our general partner and its affiliates) and subordinated units each vote separately as a class generally on the following matters:

•  a merger of our partnership;

•  a sale or exchange of all or substantially all of our assets;

•  the election of a successor general partner in connection with certain withdrawals of our general partner;

•  dissolution or reconstitution of our partnership;

•  some amendments to our partnership agreement; and

•  some amendments to the operating agreement of our operating company or action taken by us as a member of the operating company if such amendment or action would materially and adversely affect our limited partners.

      Neither the subordinated units nor any common units held by our general partners or any of its affiliates are entitled to vote on approval of the withdrawal of our general partner or the transfer by our general partner of its general partner interest or incentive distribution rights under some circumstances. Removal of our general partner requires:

•  a 66-²/3% vote of all outstanding units, voting as a single class; and

•  the election of a successor general partner by the holders of a majority of the outstanding common units and subordinated units, voting as separate classes.

      Except as described above regarding a person or group owning 20% or more of any class of units then outstanding, unitholders or assignees who are record holders of units on the record date will be entitled to notice of, and to vote at, any meetings of our limited partners and to act upon matters for which approvals may be solicited. Common units that are owned by an assignee who is a record holder, but who has not yet been admitted as a limited partner, will be voted by the general partner at the written direction of the record holder. Absent direction of this kind, the common units will not be voted, except that, in the case of common units held by our general partner on behalf of unpermitted citizen assignees, our general partner will distribute the votes on those common units in the same ratios as the votes of limited partners with respect to other units are cast.

      Any action that is required or permitted to be taken by the unitholders may be taken either at a meeting of the unitholders or without a meeting if consents in writing describing the action so taken are signed by holders of the number of units necessary to authorize or take that action at a meeting. Meetings of the unitholders may be called by our general partner or by unitholders owning at least 20% of the outstanding units of the class for which a meeting is proposed. Unitholders may vote either in person or by proxy at meetings. The holders of a majority of the outstanding units of the class or classes for which a meeting has been called, represented in person or by proxy, will constitute a quorum unless any action by the unitholders requires approval by holders of a greater percentage of the units, in which case the quorum will be the greater percentage.

      Common units held in nominee or street name account will be voted by the broker or other nominee in accordance with the instruction of the beneficial owner unless the arrangement between the beneficial owner and his nominee provides otherwise.

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Call Right

      If at any time our general partner and its affiliates hold more than 80% of the then-issued and outstanding partnership securities of any class, our general partner will have the right, which it may assign in whole or in part to any of its affiliates or to us, to acquire all, but not less than all, of the remaining partnership securities of the class held by unaffiliated persons as of a record date to be selected by our general partner, on at least 10 but not more than 60 days’ notice. The purchase price in this event is the greater of: (1) the highest cash price paid by either the general partner or any of its affiliates for any partnership securities of the class purchased within the 90 days preceding the date on which our general partner first mails notice of its election to purchase those partnership securities; and (2) the current market price as of the date three days before the date the notice is mailed.

      As a result of our general partner’s right to purchase outstanding partnership securities, a holder of partnership securities may have the holder’s partnership securities purchased at an undesirable time or price. The tax consequences to a unitholder of the exercise of this call right are the same as a sale by that unitholder of common units in the market. Please read “Material U.S. Federal Income Tax Consequences — Disposition of Common Units.”

Exchange Listing

      Our common units are listed on the New York Stock Exchange, where they trade under the symbol “TGP.”

Transfer Agent and Registrar

      The Bank of New York serves as registrar and transfer agent for our common units. We pay all fees charged by the transfer agent for transfers of common units, except the following, which must be paid by unitholders:

•  surety bond premiums to replace lost or stolen certificates, taxes and other governmental charges;

•  special charges for services requested by a holder of a common unit; and

•  other similar fees or charges.

      There is no charge to unitholders for disbursements of our cash distributions. We will indemnify the transfer agent, its agents and each of their stockholders, directors, officers and employees against all claims and losses that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence or intentional misconduct of the indemnified person or entity.

Transfer of Common Units

      Transfers of a common unit will not be recorded by the transfer agent or recognized by us unless the transferee executes and delivers a transfer application. By executing and delivering a transfer application, the transferee of common units:

•  becomes the record holder of the common units and is an assignee until admitted into our partnership as a substituted limited partner;

•  automatically requests admission as a substituted limited partner in our partnership;

•  agrees to be bound by the terms and conditions of, and executes, our partnership agreement;

•  represents that the transferee has the capacity, power and authority to enter into our partnership agreement;

•  grants powers of attorney to officers of our general partner and any liquidator of us as specified in our partnership agreement; and

•  gives the consents and approvals contained in our partnership agreement.

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      An assignee will become a substituted limited partner of our partnership for the transferred common units automatically upon the recording of the transfer on our books and records. Our general partner will cause any unrecorded transfers for which a completed and duly executed transfer application has been received to be recorded on our books and records no less frequently than quarterly.

      A transferee’s broker, agent or nominee may complete, execute and deliver a transfer application. We are entitled to treat the nominee holder of a common unit as the absolute owner. In that case, the beneficial holder’s rights are limited solely to those that it has against the nominee holder as a result of any agreement between the beneficial owner and the nominee holder.

      Common units are securities and are transferable according to the laws governing transfer of securities. In addition to other rights acquired upon transfer, the transferor gives the transferee the right to request admission as a substituted limited partner in our partnership for the transferred common units. A purchaser or transferee of common units who does not execute and deliver a transfer application obtains only:

•  the right to assign the common unit to a purchaser or other transferee; and

•  the right to transfer the right to seek admission as a substituted limited partner in our partnership for the transferred common units.

      Thus, a purchaser or transferee of common units who does not execute and deliver a transfer application:

•  will not receive cash distributions or U.S. federal income tax allocations, unless the common units are held in a nominee or “street name” account and the nominee or broker has executed and delivered a transfer application; and

•  may not receive some U.S. federal income tax information or reports furnished to record holders of common units.

      The transferor of common units has a duty to provide the transferee with all information that may be necessary to transfer the common units. The transferor does not have a duty to ensure the execution of the transfer application by the transferee and has no liability or responsibility if the transferee neglects or chooses not to execute and forward the transfer application to the transfer agent.

      Until a common unit has been transferred on our books, we and the transfer agent may treat the record holder of the unit as the absolute owner for all purposes, except as otherwise required by law or stock exchange regulations.

Other Matters

      Merger, Sale, or Other Disposition of Assets. A merger or consolidation of us requires the consent of our general partner, in addition to the unitholder vote described above under “— Meetings; Voting.” However, our general partner will have no duty or obligation to consent to any merger or consolidation and may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interests of us or the limited partners. In addition, although our partnership agreement generally requires the unitholder vote described above “— Meetings; Voting” for the sale, exchange or other disposition of all or substantially all of our assets in a single transaction or a series of related transactions, our general partner may mortgage, pledge, hypothecate or grant a security interest in all or substantially all of our assets without that approval. Our general partner may also sell all or substantially all of our assets under a foreclosure or other realization upon those encumbrances without that approval. The unitholders are not entitled to dissenters’ rights of appraisal under our partnership agreement or applicable law in the event of a conversion, merger or consolidation, a sale of all or substantially all of our assets, or any other transaction or event.

      Registration Rights. Under our partnership agreement, we have agreed to register for resale under the U.S. Securities Act of 1933 and applicable state securities laws any common units, subordinated units

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or other partnership securities proposed to be sold by our general partner or any of its affiliates or their assignees if an exemption from the registration requirements is not otherwise available or advisable. These registration rights continue for two years following any withdrawal or removal of Teekay GP L.L.C. as our general partner. We are obligated to pay all expenses incidental to the registration, excluding underwriting discounts and commissions.

Summary of Our Partnership Agreement

      A copy of our partnership agreement is filed as an exhibit to the registration statement of which this prospectus is a part. A summary of the important provisions of our partnership agreement and the rights and privileges of our unitholders is included in our registration statement on Form 8-A/ A as filed with the SEC on September 29, 2006, including any subsequent amendments or reports filed for the purpose of updating such description. Please read “Where You Can Find More Information.”

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CASH DISTRIBUTIONS

Distributions of Available Cash

General

      Our partnership agreement provides that within approximately 45 days after the end of each quarter we will distribute all of our available cash to unitholders of record on the applicable record date.

Definition of Available Cash

      Available cash generally means, for each fiscal quarter, all cash on hand at the end of the quarter (including our proportionate share of cash on hand of certain subsidiaries we do not wholly own):

•  less the amount of cash reserves (including our proportionate share of cash reserves of certain subsidiaries we do not wholly own) established by our general partner to:

•  provide for the proper conduct of our business (including reserves for future capital expenditures and for our anticipated credit needs);

•  comply with applicable law, any of our debt instruments, or other agreements; or

•  provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters;

•  plus all cash on hand (including our proportionate share of cash on hand of certain subsidiaries we do not wholly own) on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter. Working capital borrowings are generally borrowings that are made under our credit agreement and in all cases are used solely for working capital purposes or to pay distributions to partners.

Minimum Quarterly Distribution

      Common unitholders are entitled under our partnership agreement to receive a quarterly distribution of $0.4125 per unit, or $1.65 per year, prior to any distribution on our subordinated units to the extent we have sufficient cash from our operations after establishment of cash reserves and payment of fees and expenses, including payments to our general partner. Our general partner has the authority to determine the amount of our available cash for any quarter. This determination, as well as all determinations made by the general partner, must be made in good faith. Our general partner’s board of directors declared an increase in our quarterly distribution to $0.4625 per unit, or $1.85 per year, commencing with the first quarter of 2006. There is no guarantee that we will pay the quarterly distribution in this amount or the minimum quarterly distribution on the common units in any quarter, and we will be prohibited from making any distributions to unitholders if it would cause an event of default, or an event of default is existing, under our credit facilities.

Operating Surplus and Capital Surplus

General

      All cash distributed to unitholders is characterized as either “operating surplus” or “capital surplus.” We treat distributions of available cash from operating surplus differently than distributions of available cash from capital surplus.

Definition of Operating Surplus

      Operating surplus for any period generally means:

•  our cash balance (including our proportionate share of cash balances of certain subsidiaries we do not wholly own) on the closing date of our initial public offering, other than cash reserved to terminate interest rate swap agreements; plus

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•  $10 million (as described below); plus

•  all of our cash receipts (including our proportionate share of cash receipts of certain subsidiaries we do not wholly own) after the closing of our initial public offering, excluding cash from (1) borrowings, other than working capital borrowings, (2) sales of equity and debt securities, (3) sales or other dispositions of assets outside the ordinary course of business, (4) termination of interest rate swap agreements, (5) capital contributions or (6) corporate reorganizations or restructurings; plus

•  working capital borrowings (including our proportionate share of working capital borrowings by certain subsidiaries we do not wholly own) made after the end of a quarter but before the date of determination of operating surplus for the quarter; plus

•  interest paid on debt incurred (including periodic net payments under related interest rate swap agreements) and cash distributions paid on equity securities issued, in each case, to finance all or any portion of the construction, replacement or improvement of a capital asset such as vessels during the period from such financing until the earlier to occur of the date the capital asset is put into service or the date that it is abandoned or disposed of; plus

•  interest paid on debt incurred (including periodic net payments under related interest rate swap agreements) and cash distributions paid on equity securities issued, in each case, to pay the construction period interest on debt incurred, or to pay construction period distributions on equity issued, to finance the construction projects described in the immediately preceding bullet; less

•  all of our cash operating expenditures (including our proportionate share of cash operating expenditures of certain subsidiaries we do not wholly own) after the closing of our initial public offering and the repayment of working capital borrowings, but not (1) the repayment of other borrowings, (2) actual maintenance capital expenditures or expansion capital expenditures, (3) transaction expenses (including taxes) related to interim capital transactions or (4) distributions; less

•  estimated maintenance capital expenditures and the amount of cash reserves (including our proportionate share of cash reserves of certain subsidiaries we do not wholly own) established by our general partner to provide funds for future operating expenditures.

      As described above, operating surplus does not only reflect actual cash on hand that is available for distribution to our unitholders. For example, it also includes a provision that enables us, if we choose, to distribute as operating surplus up to $10 million of cash we may receive from non-operating sources, such as asset sales, issuances of securities and long-term borrowings, that would otherwise be distributed as capital surplus. In addition, the effect of including, as described above, certain cash distributions on equity securities or interest payments on debt in operating surplus is to increase operating surplus by the amount of any such cash distributions or interest payments. As a result, we may also distribute as operating surplus up to the amount of any such cash distributions or interest payments of cash we receive from non-operating sources.

Capital Expenditures

      For purposes of determining operating surplus, maintenance capital expenditures are those capital expenditures required to maintain over the long term the operating capacity of or the revenue generated by our capital assets, and expansion capital expenditures are those capital expenditures that increase the operating capacity of or the revenue generated by our capital assets. To the extent, however, that capital expenditures associated with acquiring a new vessel increase the revenues or the operating capacity of our fleet, those capital expenditures are classified as expansion capital expenditures.

      Examples of maintenance capital expenditures include capital expenditures associated with dry-docking a vessel or acquiring a new vessel to the extent such expenditures are incurred to maintain the operating capacity of or the revenue generated by our fleet. Maintenance capital expenditures also include

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interest (and related fees) on debt incurred and distributions on equity issued to finance the construction of a replacement vessel and paid during the construction period, which we define as the period beginning on the date that we enter into a binding construction contract and ending on the earlier of the date that the replacement vessel commences commercial service or the date that the replacement vessel is abandoned or disposed of. Debt incurred to pay or equity issued to fund construction period interest payments, and distributions on such equity, also are considered maintenance capital expenditures.

      Because our maintenance capital expenditures can be very large and vary significantly in timing, the amount of our actual maintenance capital expenditures may differ substantially from period to period, which could cause similar fluctuations in the amounts of operating surplus, adjusted operating surplus, and available cash for distribution to our unitholders if we subtracted actual maintenance capital expenditures from operating surplus each quarter. Accordingly, to eliminate the effect on operating surplus of these fluctuations, our partnership agreement requires that an amount equal to an estimate of the average quarterly maintenance capital expenditures necessary to maintain the operating capacity of or the revenue generated by our capital assets over the long term be subtracted from operating surplus each quarter, as opposed to the actual amounts spent. The amount of estimated maintenance capital expenditures deducted from operating surplus is subject to review and change by the board of directors of our general partner at least once a year, provided that any change must be approved by our conflicts committee. The estimate is made at least annually and whenever an event occurs that is likely to result in a material adjustment to the amount of our maintenance capital expenditures, such as a major acquisition or the introduction of new governmental regulations that affects our fleet. For purposes of calculating operating surplus, any adjustment to this estimate is prospective only.

      The use of estimated maintenance capital expenditures in calculating operating surplus has the following effects:

•  it reduces the risk that actual maintenance capital expenditures in any one quarter will be large enough to make operating surplus less than the minimum quarterly distribution to be paid on all the units for that quarter and subsequent quarters;

•  it reduces the need for us to borrow under our working capital facility to pay distributions;

•  it is more difficult for us to raise our distribution on our units above the minimum quarterly distribution and pay incentive distributions to our general partner; and

•  it reduces the likelihood that a large maintenance capital expenditure in a period will prevent the general partner’s affiliates from being able to convert some or all of their subordinated units into common units since the effect of an estimate is to spread the expected expense over several periods, mitigating the effect of the actual payment of the expenditure on any single period.

Definition of Capital Surplus

      Capital surplus generally is generated only by:

•  borrowings other than working capital borrowings;

•  sales of debt and equity securities; and

•  sales or other dispositions of assets for cash, other than inventory, accounts receivable and other current assets sold in the ordinary course of business or non-current assets sold as part of normal retirements or replacements of assets.

Characterization of Cash Distributions

      We treat all available cash distributed as coming from operating surplus until the sum of all available cash distributed since we began operations equals the operating surplus as of the most recent date of determination of available cash. We treat any amount distributed in excess of operating surplus, regardless

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of its source, as capital surplus. We do not anticipate that we will make any distributions from capital surplus.

Subordination Period

General

      During the subordination period, which we define below, the common units will have the right to receive distributions of available cash from operating surplus in an amount equal to the minimum quarterly distribution of $0.4125 per quarter, plus any arrearages in the payment of the minimum quarterly distribution on the common units from prior quarters, before any distributions of available cash from operating surplus may be made on the subordinated units. The purpose of the subordinated units is to increase the likelihood that during the subordination period there will be available cash to be distributed on the common units.

Definition of Subordination Period

      The subordination period generally will extend until the first day of any quarter, beginning after March 31, 2010, that each of the following tests are met:

•  distributions of available cash from operating surplus on each of the outstanding common units and subordinated units equaled or exceeded the minimum quarterly distribution for each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date;

•  the “adjusted operating surplus” (as defined below) generated during each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum of the minimum quarterly distributions on all of the outstanding common units and subordinated units during those periods on a fully diluted basis and the related distribution on the 2% general partner interest during those periods; and

•  there are no arrearages in payment of the minimum quarterly distribution on the common units.

      If the unitholders remove our general partner without cause, the subordination period may end before March 31, 2010.

Early Conversion of Subordinated Units

      Before the end of the subordination period, 50% of the subordinated units, or up to 7,367,286 subordinated units, may convert into common units on a one-for-one basis immediately after the distribution of available cash to the partners in respect of any quarter ending on or after:

•  March 31, 2008 with respect to 25% of the subordinated units outstanding immediately after our initial public offering; and

•  March 31, 2009 with respect to a further 25% of the subordinated units outstanding immediately after our initial public offering.

      The early conversions will occur if at the end of the applicable quarter each of the following occurs:

•  distributions of available cash from operating surplus on each of the outstanding common units and subordinated units equaled or exceeded the minimum quarterly distribution for each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date;

•  the adjusted operating surplus generated during each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum of the minimum quarterly distributions on all of the outstanding common units and subordinated units during those periods on a fully diluted basis and the related distribution on the 2% general partner interest during those periods; and

•  there are no arrearages in payment of the minimum quarterly distribution on the common units.

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      However, the second early conversion of the subordinated units may not occur until at least one year following the first early conversion of the subordinated units.

      For purposes of determining whether sufficient adjusted operating surplus has been generated under these conversion tests, the conflicts committee of our general partner’s board of directors may adjust adjusted operating surplus upwards or downwards if it determines in good faith that the estimated amount of maintenance capital expenditures used in the determination of operating surplus was materially incorrect, based on circumstances prevailing at the time of original determination of the estimate.

Definition of Adjusted Operating Surplus

      Adjusted operating surplus for any period generally means:

•  operating surplus generated with respect to that period; less

•  any net increase in working capital borrowings with respect to that period; less

•  any net reduction in cash reserves for operating expenditures with respect to that period not relating to an operating expenditure made with respect to that period; plus

•  any net decrease in working capital borrowings with respect to that period; plus

•  any net increase in cash reserves for operating expenditures with respect to that period required by any debt instrument for the repayment of principal, interest or premium.

      Adjusted operating surplus is intended to reflect the cash generated from operations during a particular period and therefore excludes net increases in working capital borrowings and net drawdowns of reserves of cash generated in prior periods.

Effect of Expiration of the Subordination Period

      Upon expiration of the subordination period, each outstanding subordinated unit will convert into one common unit and will then participate pro rata with the other common units in distributions of available cash. In addition, if the unitholders remove our general partner other than for cause and units held by our general partner and its affiliates are not voted in favor of such removal:

•  the subordination period will end and each subordinated unit will immediately convert into one common unit;

•  any existing arrearages in payment of the minimum quarterly distribution on the common units will be extinguished; and

•  our general partner will have the right to convert its general partner interest and, if any, its incentive distribution rights into common units or to receive cash in exchange for those interests.

Distributions of Available Cash From Operating Surplus During the Subordination Period

      We make distributions of available cash from operating surplus for any quarter during the subordination period in the following manner:

•  first, 98% to the common unitholders, pro rata, and 2% to our general partner, until we distribute for each outstanding common unit an amount equal to the minimum quarterly distribution for that quarter;

•  second, 98% to the common unitholders, pro rata, and 2% to our general partner, until we distribute for each outstanding common unit an amount equal to any arrearages in payment of the minimum quarterly distribution on the common units for any prior quarters during the subordination period;

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•  third, 98% to the subordinated unitholders, pro rata, and 2% to our general partner, until we distribute for each subordinated unit an amount equal to the minimum quarterly distribution for that quarter; and

•  thereafter, in the manner described in “Incentive Distribution Rights” below.

Distributions of Available Cash From Operating Surplus After the Subordination Period

      We will make distributions of available cash from operating surplus for any quarter after the subordination period in the following manner:

•  first, 98% to all unitholders, pro rata, and 2% to our general partner, until we distribute for each outstanding unit an amount equal to the minimum quarterly distribution for that quarter; and

•  thereafter, in the manner described in “Incentive Distribution Rights” below.

Incentive Distribution Rights

      Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved. Our general partner currently holds the incentive distribution rights, but may transfer these rights separately from its general partner interest, subject to restrictions in the partnership agreement.

      If for any quarter:

•  we have distributed available cash from operating surplus to the common and subordinated unitholders in an amount equal to the minimum quarterly distribution; and

•  we have distributed available cash from operating surplus on outstanding common units in an amount necessary to eliminate any cumulative arrearages in payment of the minimum quarterly distribution;

then, we will distribute any additional available cash from operating surplus for that quarter among the unitholders and our general partner in the following manner:

•  first, 98% to all unitholders, pro rata, and 2% to our general partner, until each unitholder receives a total of $0.4625 per unit for that quarter (the “first target distribution”);

•  second, 85% to all unitholders, pro rata, and 15% to our general partner, until each unitholder receives a total of $0.5375 per unit for that quarter (the “second target distribution”);

•  third, 75% to all unitholders, pro rata, and 25% to our general partner, until each unitholder receives a total of $0.6500 per unit for that quarter (the “third target distribution”); and

•  thereafter, 50% to all unitholders, pro rata, and 50% to our general partner.

      In each case, the amount of the target distribution set forth above is exclusive of any distributions to common unitholders to eliminate any cumulative arrearages in payment of the minimum quarterly distribution. The percentage interests set forth above for our general partner include its 2% general partner interest and assume the general partner has not transferred the incentive distribution rights.

Percentage Allocations of Available Cash From Operating Surplus

      The following table illustrates the percentage allocations of the additional available cash from operating surplus among the unitholders and our general partner up to the various target distribution levels. The amounts set forth under “Marginal Percentage Interest in Distributions” are the percentage interests of the unitholders and our general partner in any available cash from operating surplus we distribute up to and including the corresponding amount in the column “Total Quarterly Distribution Target Amount,” until available cash from operating surplus we distribute reaches the next target distribution level, if any.

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The percentage interests shown for the unitholders and our general partner for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests shown for our general partner include its 2% general partner interest and assume the general partner has not transferred the incentive distribution rights.

		Marginal Percentage Interest in
		Distributions
	Total Quarterly Distribution Target
	Amount	Unitholders			General Partner
Minimum Quarterly Distribution	$0.4125		98	%		2	%
First Target Distribution	up to $0.4625		98			2
Second Target Distribution	above $0.4625 up to $0.5375		85			15
Third Target Distribution	above $0.5375 up to $0.6500		75			25
Thereafter	above $0.6500		50			50

Distributions From Capital Surplus

How Distributions From Capital Surplus Will Be Made

      We will make distributions of available cash from capital surplus, if any, in the following manner:

•  first, 98% to all unitholders, pro rata, and 2% to our general partner, until we distribute for each common unit that was issued in this offering, an amount of available cash from capital surplus equal to the initial public offering price;

•  second, 98% to the common unitholders, pro rata, and 2% to our general partner, until we distribute for each common unit, an amount of available cash from capital surplus equal to any unpaid arrearages in payment of the minimum quarterly distribution on the common units; and

•  thereafter, we will make all distributions of available cash from capital surplus as if they were from operating surplus.

Effect of a Distribution From Capital Surplus

      The partnership agreement treats a distribution of capital surplus as the repayment of the initial unit price from our initial public offering on May 10, 2005, which is a return of capital. That initial public offering price less any distributions of capital surplus per unit is referred to as the “unrecovered initial unit price.” Each time a distribution of capital surplus is made, the minimum quarterly distribution and the target distribution levels will be reduced in the same proportion as the corresponding reduction in the unrecovered initial unit price. Because distributions of capital surplus will reduce the minimum quarterly distribution, after any of these distributions are made, it may be easier for our general partner to receive incentive distributions and for the subordinated units to convert into common units. However, any distribution of capital surplus before the unrecovered initial unit price is reduced to zero cannot be applied to the payment of the minimum quarterly distribution or any arrearages.

      Once we distribute capital surplus on a unit issued in our initial public offering in an amount equal to the initial public offering price for our initial public offering, we will reduce the minimum quarterly distribution and the target distribution levels to zero. We will then make all future distributions from operating surplus, with 50% being paid to the holders of units and 50% to our general partner. The percentage interests shown for our general partner include its 2% general partner interest and assume the general partner has not transferred the incentive distribution rights.

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Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels

      In addition to adjusting the minimum quarterly distribution and target distribution levels to reflect a distribution of capital surplus, if we combine our units into fewer units or subdivide our units into a greater number of units, we will proportionately adjust:

•  the minimum quarterly distribution;

•  the target distribution levels;

•  the unrecovered initial unit price; and

•  the number of common units issuable during the subordination period without a unitholder vote.

      For example, if a two-for-one split of the common units should occur, the minimum quarterly distribution, the target distribution levels and the unrecovered initial unit price would each be reduced to 50% of its initial level and the number of common units issuable during the subordination period without a unitholder vote would double. We will not make any adjustment by reason of the issuance of additional units for cash or property.

      In addition, if legislation is enacted or if existing law is modified or interpreted by a governmental taxing authority so that we become taxable as a corporation or otherwise subject to taxation as an entity for U.S. federal, state, local or non-U.S. income tax purposes, we will reduce the minimum quarterly distribution and the target distribution levels for each quarter by multiplying each distribution level by a fraction, the numerator of which is available cash for that quarter and the denominator of which is the sum of available cash for that quarter plus the general partner’s estimate of our aggregate liability for the quarter for such income taxes payable by reason of such legislation or interpretation. To the extent that the actual tax liability differs from the estimated tax liability for any quarter, the difference will be accounted for in subsequent quarters.

Distributions of Cash Upon Liquidation

General

      If we dissolve in accordance with the partnership agreement, we will sell or otherwise dispose of our assets in a process called liquidation. We will first apply the proceeds of liquidation to the payment of our creditors. We will distribute any remaining proceeds to the unitholders and our general partner, in accordance with their capital account balances, as adjusted to reflect any gain or loss upon the sale or other disposition of our assets in liquidation.

      The allocations of gain and loss upon liquidation are intended, to the extent possible, to entitle the holders of outstanding common units to a preference over the holders of outstanding subordinated units upon our liquidation, to the extent required to permit common unitholders to receive their unrecovered initial unit price plus the minimum quarterly distribution for the quarter during which liquidation occurs plus any unpaid arrearages in payment of the minimum quarterly distribution on the common units. However, there may not be sufficient gain upon our liquidation to enable the holders of common units to fully recover all of these amounts, even though there may be cash available for distribution to the holders of subordinated units. Any further net gain recognized upon liquidation will be allocated in a manner that takes into account the incentive distribution rights of our general partner.

Manner of Adjustments for Gain

      The manner of the adjustment for gain is set forth in the partnership agreement. If our liquidation occurs before the end of the subordination period, we will allocate any gain to the partners in the following manner:

•  first, to our general partner and the holders of units who have negative balances in their capital accounts to the extent of and in proportion to those negative balances;

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•  second, 98% to the common unitholders, pro rata, and 2% to our general partner, until the capital account for each common unit is equal to the sum of:

      (1) the unrecovered initial unit price;

      (2) the amount of the minimum quarterly distribution for the quarter during which our liquidation occurs; and

      (3) any unpaid arrearages in payment of the minimum quarterly distribution;

•  third, 98% to the subordinated unitholders, pro rata, and 2% to our general partner until the capital account for each subordinated unit is equal to the sum of:

      (1) the unrecovered initial unit price; and

      (2) the amount of the minimum quarterly distribution for the quarter during which our liquidation occurs;

•  fourth, 98% to all unitholders, pro rata, and 2% to our general partner, until we allocate under this paragraph an amount per unit equal to:

      (1) the sum of the excess of the first target distribution per unit over the minimum quarterly distribution per unit for each quarter of our existence; less

      (2) the cumulative amount per unit of any distributions of available cash from operating surplus in excess of the minimum quarterly distribution per unit that we distributed 98% to the unitholders, pro rata, and 2% to our general partner, for each quarter of our existence;

•  fifth, 85% to all unitholders, pro rata, and 15% to our general partner, until we allocate under this paragraph an amount per unit equal to:

      (1) the sum of the excess of the second target distribution per unit over the first target distribution per unit for each quarter of our existence; less

      (2) the cumulative amount per unit of any distributions of available cash from operating surplus in excess of the first target distribution per unit that we distributed 85% to the unitholders, pro rata, and 15% to our general partner for each quarter of our existence;

•  sixth, 75% to all unitholders, pro rata, and 25% to our general partner, until we allocate under this paragraph an amount per unit equal to:

      (1) the sum of the excess of the third target distribution per unit over the second target distribution per unit for each quarter of our existence; less

      (2) the cumulative amount per unit of any distributions of available cash from operating surplus in excess of the second target distribution per unit that we distributed 75% to the unitholders, pro rata, and 25% to our general partner for each quarter of our existence; and

•  thereafter, 50% to all unitholders, pro rata, and 50% to our general partner.

The percentage interests set forth above for our general partner include its 2% general partner interest and assume the general partner has not transferred the incentive distribution rights.

      If the liquidation occurs after the end of the subordination period, the distinction between common units and subordinated units will disappear, so that clause (3) of the second bullet point above and all of the third bullet point above will no longer be applicable.

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Manner of Adjustments for Losses

      If our liquidation occurs before the end of the subordination period, we will generally allocate any loss to our general partner and the unitholders in the following manner:

•  first, 98% to holders of subordinated units in proportion to the positive balances in their capital accounts and 2% to our general partner, until the capital accounts of the subordinated unitholders have been reduced to zero;

•  second, 98% to the holders of common units in proportion to the positive balances in their capital accounts and 2% to our general partner, until the capital accounts of the common unitholders have been reduced to zero; and

•  thereafter, 100% to our general partner.

      If the liquidation occurs after the end of the subordination period, the distinction between common units and subordinated units will disappear, so that the first bullet point above will no longer be applicable.

Adjustments to Capital Accounts

      We will make adjustments to capital accounts upon the issuance of additional units. In doing so, we will allocate any unrealized and, for tax purposes, unrecognized gain or loss resulting from the adjustments to the existing unitholders and our general partner in the same manner as we allocate gain or loss upon liquidation. In the event that we make positive adjustments to the capital accounts upon the issuance of additional units, we will allocate any later negative adjustments to the capital accounts resulting from the issuance of additional units or upon our liquidation in a manner which results, to the extent possible, in our general partner’s and unitholders’ capital account balances equaling the amount which they would have been if no earlier positive adjustments to the capital accounts had been made.

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DESCRIPTION OF DEBT SECURITIES

General

      The debt securities we may offer and sell pursuant to this prospectus will be:

•  our direct general obligations;

•  either senior debt securities or subordinated debt securities; and

•  issued under an indenture between us and the Trustee thereunder.

      Teekay LNG Partners L.P. may issue debt securities in one or more series, and Teekay LNG Finance Corp. may be the co-issuer of one or more series of debt securities. Teekay LNG Finance Corp. was incorporated under the laws of the Republic of the Marshall Islands in August 2006 and is wholly owned by Teekay LNG Partners L.P. Its activities will be limited to co-issuing debt securities and engaging in other related activities. When used in this section “Description of Debt Securities,” the terms “we,” “us,” “our” and “issuers” refer jointly to Teekay LNG Partners L.P. and Teekay LNG Finance Corp., and the terms “Teekay LNG Partners L.P.” and “Teekay LNG Finance Corp.” refer strictly to Teekay LNG Partners L.P. and Teekay LNG Finance Corp., respectively.

      If we offer senior debt securities, we will issue them under a senior indenture. If we issue subordinated debt securities, we will issue them under a subordinated indenture. A form of each indenture is filed as an exhibit to the registration statement of which this prospectus is a part. Please read “Where You Can Find More Information” for information on how to obtain copies of the indentures. We have not restated either indenture in its entirety in this description. You should read the relevant indenture because it, and not this description, controls the rights of holders of the debt securities. Capitalized terms used in this summary have the meanings specified in the respective indentures.

Specific Terms of Each Series of Debt Securities to be Described in the Prospectus Supplement

      A prospectus supplement and a supplemental indenture or authorizing resolutions of our general partner’s board of directors relating to any series of debt securities that we may offer will include specific terms relating to the offering. These terms will include some or all of the following:

•  whether Teekay LNG Finance Corp. will be a co-issuer of the debt securities;

•  the Subsidiary Guarantors, if any, of the debt securities;

•  whether the debt securities are senior or subordinated debt securities;

•  the title of the debt securities;

•  the total principal amount of the debt securities;

•  the assets, if any, that are pledged as security for the payment of the debt securities;

•  whether we will issue the debt securities in individual certificates to each holder in registered form, or in the form of temporary or permanent global securities held by a depository on behalf of the holders;

•  the prices at which we will issue the debt securities;

•  the portion of the principal amount of the debt securities that will be payable if the maturity of the debt securities is accelerated;

•  the currency or currency unit in which the debt securities will be payable, if not U.S. Dollars;

•  the dates on which the principal of the debt securities will be payable;

•  the interest rate that the debt securities will bear and the interest payment dates for the debt securities;

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•  whether the debt securities are convertible into or exchangeable for other securities, and the conversion or exchange rate and other related terms, conditions and features;

•  any optional redemption provisions;

•  any sinking fund or other provisions that would obligate us to repurchase or otherwise redeem the debt securities;

•  any changes or additions to events of default or covenants described in this prospectus; and

•  any other terms of the debt securities.

      This description of debt securities will be deemed modified, amended or supplemented by any description of any series of debt securities set forth in a prospectus supplement related to that series.

      For purposes of this prospectus, any reference to the payment of principal of, or any premium or interest on, debt securities will include additional amounts if required by the terms of the debt securities.

      We may issue debt securities with terms different from those of debt securities that may already have been issued. Without the consent of the holders thereof, we may reopen a previous issue of a series of debt securities and issue additional debt securities of that series unless the reopening was restricted when that series was created.

      We may offer and sell debt securities, including original issue discount debt securities, at a substantial discount below their principal amount. The prospectus supplement will describe special U.S. federal income tax and other considerations applicable to those securities. In addition, the prospectus supplement may describe certain special U.S. federal income tax or other considerations applicable to any debt securities that are denominated in a currency other than U.S. Dollars.

Subsidiary Guarantees

      If specified in the prospectus supplement for a series of debt securities, the subsidiaries of Teekay LNG Partners L.P. specified in the prospectus supplement will unconditionally guarantee, on a joint and several basis, the full and prompt payment of principal of, premium, if any, and interest on the debt securities of that series when and as the same become due and payable, whether at maturity, upon redemption or repurchase, by declaration of acceleration or otherwise. The prospectus supplement will describe any limitation on the maximum amount of any particular guarantee.

      The guarantees will be general obligations of the Subsidiary Guarantors. Guarantees of subordinated debt securities of Teekay LNG Partners L.P. will be subordinated to the Senior Indebtedness of the Subsidiary Guarantors on the same basis as the subordinated debt securities are subordinated to the Senior Indebtedness of Teekay LNG Partners L.P. Please read “— Provisions Relating Only to the Subordinated Debt Securities” below.

Releases

      The guarantee of any Subsidiary Guarantor may be released under certain circumstances. If we exercise our legal or covenant defeasance option with respect to debt securities of a particular series as described below in “— Defeasance,” each Subsidiary Guarantor will be released with respect to that series. In addition, if no default has occurred and is continuing under the applicable indenture, and to the extent not otherwise prohibited by the indenture, a Subsidiary Guarantor will be unconditionally released and discharged from its guarantee:

•  automatically upon any sale, exchange or transfer, whether by way of merger or otherwise, to any person that is not our affiliate, of all of our direct or indirect limited partnership or other equity interests in the Subsidiary Guarantor;

•  automatically upon the merger of the Subsidiary Guarantor into us or any other Subsidiary Guarantor or the liquidation and dissolution of the Subsidiary Guarantor; or

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•  following delivery of a written notice by us to the Trustee, upon the release or discharge of all guarantees by the Subsidiary Guarantor of any debt of ours for borrowed money or for a guarantee thereof (other than any series of debt securities under the indenture), except a discharge or release as a result of payment under such guarantees.

Consolidation, Merger or Asset Sale

      Each indenture will, in general, allow us or any Subsidiary Guarantor to consolidate or merge with or into another entity. It will also allow us and each Subsidiary Guarantor to sell, lease, transfer or otherwise dispose of all or substantially all of our or its assets to another entity. If this happens, the remaining or acquiring entity must assume all of our or the Subsidiary Guarantor’s responsibilities and liabilities under the indenture, including the payment of all amounts due on the debt securities and performance of our or the Subsidiary Guarantor’s covenants in the indenture.

      However, each indenture will impose certain requirements relating to any such consolidation or merger with or into another entity, or any sale, lease, transfer or other disposition of all or substantially all of our assets, including:

•  the remaining or acquiring entity must be organized under the laws of the Republic of the Marshall Islands, the United States (or any state thereof) or other specified jurisdictions; provided that Teekay LNG Finance Corp. may not merge or consolidate with or into another entity other than a corporation satisfying such organizational requirement for so long as Teekay LNG Partners L.P. is not a corporation;

•  the remaining or acquiring entity must assume our or such Subsidiary Guarantor’s obligations under the indenture; and

•  immediately after giving effect to the transaction, no Default or Event of Default (as defined below under “— Events of Default and Remedies”) may exist.

      The remaining or acquiring entity will be substituted for us or the Subsidiary Guarantor in the indenture with the same effect as if it had been an original party to the indenture, and we or the Subsidiary Guarantor will be relieved from any further obligations under the indenture.

No Protection in the Event of a Change of Control

      Unless otherwise set forth in the prospectus supplement, the debt securities will not contain any provisions that protect the holders of the debt securities in the event of a change of control of us or in the event of a highly leveraged transaction, whether or not such transaction results in a change of control of us.

Modification of Indentures

      We may supplement or amend an indenture if the holders of a majority in aggregate principal amount of the outstanding debt securities of each series issued under the indenture and affected by the supplement or amendment consent to it. In addition, the holders of a majority in aggregate principal amount of the outstanding debt securities of any series may waive past defaults under the indenture and compliance by us with our covenants with respect to the debt securities of that series only. Those holders may not, however, waive any default in any payment on any debt security of that series or compliance with a provision that cannot be supplemented or amended without the consent of each affected holder. Without the consent of each outstanding debt security affected, no modification of the indenture or waiver may:

•  reduce the principal amount of debt securities whose holders must consent to an amendment, supplement or waiver;

•  reduce the principal or change the fixed maturity of any debt security;

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•  reduce or waive any premium payable upon redemption of any debt security or alter or waive any other redemption provisions (except as may be permitted in the case of a particular series of debt securities);

•  reduce the rate, or change the time for payment, of interest on any debt security;

•  waive a Default or an Event of Default in the payment of principal of or premium, if any, or interest on the debt securities (except a rescission of acceleration of the debt securities by the holders of at least a majority in aggregate principal amount of the debt securities and a waiver of the payment default that resulted from such acceleration);

•  except as otherwise permitted under the indenture, release any security that may have been granted with respect to the debt securities;

•  make any debt security payable in a currency other than that stated in the debt securities;

•  in the case of any subordinated debt security, make any change in the subordination provisions that adversely affects the rights of any holder under those provisions;

•  make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of holders of debt securities to receive payments of principal of or premium, if any, or interest on the debt securities;

•  waive a redemption payment with respect to any debt security (except as may be permitted in the case of a particular series of debt securities);

•  except as otherwise permitted in the indenture, release any Subsidiary Guarantor from its obligations under its guarantee or the indenture or change any guarantee in any manner that would adversely affect the rights of holders; or

•  make any change in the preceding amendment, supplement and waiver provisions (except to increase any percentage set forth therein).

      We may supplement or amend an indenture without the consent of any holders of the debt securities in certain circumstances, including:

•  to establish the form or terms of any series of debt securities;

•  to cure any ambiguity, defect or inconsistency;

•  to provide for uncertificated notes in addition to or in place of certified notes;

•  to provide for the assumption of our or a Subsidiary Guarantor’s obligations to holders of debt securities in the case of a merger or consolidation or a disposition of all or substantially all of our or a Subsidiary Guarantor’s assets;

•  in the case of any subordinated debt security, to make any change in the subordination provisions that limits or terminates the benefits applicable to any holder of Senior Indebtedness;

•  to add or release Subsidiary Guarantors pursuant to the terms of the indenture;

•  to make any changes that would provide any additional rights or benefits to the holders of debt securities or that do not, taken as a whole, adversely affect the rights under the indenture of any holder of such debt securities;

•  to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act of 1939;

•  to evidence or provide for the acceptance of appointment under the indenture of a successor Trustee or separate Trustee;

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•  to add any additional Events of Default; or

•  to secure the debt securities or any guarantees.

Events of Default and Remedies

Events of Default

      “Event of Default,” when used in an indenture, will mean any of the following with respect to the debt securities of any series:

•  failure to pay when due the principal of or any premium on any debt security of that series;

•  failure to pay, within 30 days of the due date, interest on any debt security of that series;

•  failure to pay when due any sinking fund payment with respect to any debt securities of that series;

•  failure on the part of us, or any Subsidiary Guarantor that is a “significant subsidiary” of us under SEC regulations, to comply with the covenant described above under “Consolidation, Merger or Asset Sale”;

•  failure by us or any Subsidiary Guarantor that is a significant subsidiary to perform any other covenant in the indenture that continues for 60 days after written notice is given to us;

•  certain events of bankruptcy, insolvency or reorganization of us or any Subsidiary Guarantor that is a significant subsidiary of us; or

•  with respect to any Subsidiary Guarantor that is a significant subsidiary of us:

•  its guarantee ceases to be in full force and effect, except as otherwise provided in the indenture;

•  its guarantee is declared null and void in a judicial proceeding; or

•  the Subsidiary Guarantor denies or disaffirms its obligations under the indenture or its guarantee; or

•  any other Event of Default provided under the terms of the debt securities of that series.

      An Event of Default for a particular series of debt securities will not necessarily constitute an Event of Default for any other series of debt securities issued under an indenture. The Trustee may withhold notice to the holders of debt securities of any default (except in the payment of principal, premium, if any, or interest or in the making of any sinking fund payment with respect to the debt securities of such series) if it considers such withholding of notice to be in the interests of the holders.

Exercise of Remedies

      If an Event of Default for any series of debt securities occurs and is continuing, the Trustee or the holders of at least 25% in aggregate principal amount of the debt securities of the series may declare the entire principal of, and accrued interest on, all the debt securities of that series to be due and payable immediately. If an Event of Default occurs because of certain events in bankruptcy, insolvency or reorganization, the principal amount of, and accrued interest on, all the debt securities of that series will be automatically accelerated, without any action by the Trustee or any holder. A declaration of acceleration of maturity and its consequences may be rescinded by the holders of a majority in the aggregate principal amount of the debt securities of the affected series if:

•  the rescission would not conflict with any judgment or decree already rendered; and

•  all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration.

      The Trustee will be under no obligation, except as otherwise provided in the indenture, to exercise any of the rights or powers under the indenture at the request or direction of any of the holders unless such

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holders have offered to the Trustee reasonable indemnity or security against any costs, liability or expense. No holder may pursue any remedy with respect to the indenture or the debt securities of any series, except to enforce the right to receive payment of principal, premium, if any, and interest when due on its debt securities, unless:

•  such holder has previously given the Trustee notice that an Event of Default with respect to that series has occurred and is continuing;

•  holders of at least 25% in principal amount of the outstanding debt securities of that series have requested that the Trustee pursue the remedy;

•  such holders have offered the Trustee reasonable indemnity or security against any cost, liability or expense;

•  the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of indemnity or security; and

•  the holders of a majority in principal amount of the outstanding debt securities of that series have not given the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request within such 60-day period.

      The holders of a majority in principal amount of the outstanding debt securities of a series have the right, subject to certain restrictions, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any right or power conferred on the Trustee with respect to that series of debt securities. The Trustee, however, may refuse to follow any direction that:

•  conflicts with law;

•  the Trustee determines is unduly prejudicial to the rights of any other holder; or

•  would involve the Trustee in personal liability.

Notice of an Event of Default

      Within 30 days after the occurrence of any Default (meaning an event that is, or after the notice or passage of time or both would be, an Event of Default) or Event of Default, we are required to give an officers’ certificate to the Trustee specifying the Default or Event of Default and what action we are taking or propose to take to cure it. In addition, we are required to deliver to the Trustee, within 120 days after the end of each fiscal year, an officers’ certificate indicating whether any Default or Event of Default has occurred during the previous year.

      If a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each holder a notice of the Default within 90 days after the Default occurs. Except in the case of a Default in the payment of principal, premium, if any, or interest on any debt securities, the Trustee may withhold such notice, but only if and so long as the board of directors, the executive committee or a committee of directors or responsible officers of the Trustee in good faith determines that withholding such notice is in the interests of the holders.

Defeasance

      At any time we may terminate, with respect to debt securities of a particular series, all our obligations under such series of debt securities and the indenture, which we call a “legal defeasance.” If we decide to make a legal defeasance, however, it will not terminate certain specified obligations, including, among others, our obligations relating to the defeasance trust, to maintain a registrar for the debt securities and to register the transfer and exchange of debt securities.

      If we exercise our legal defeasance option, any guarantee will terminate with respect to that series of debt securities.

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      At any time we may also effect a “covenant defeasance,” which means we have elected to terminate our obligations under certain provisions and restrictive covenants applicable to a series of debt securities, including any covenant that may be added specifically for such series and is described in a prospectus supplement.

      We may exercise our legal defeasance option notwithstanding our prior exercise of our covenant defeasance option. If we exercise our legal defeasance option, payment of the affected series of debt securities may not be accelerated because of an Event of Default with respect to that series. If we exercise our covenant defeasance option, payment of the defeased series of debt securities may not be accelerated because of an Event of Default specified in the fourth, fifth, sixth (with respect only to a Subsidiary Guarantor, if any) or seventh bullet points under “— Events of Default and Remedies — Events of Default” above or an Event of Default that is added specifically for such series and described in a prospectus supplement.

      To exercise either defeasance option, we must:

•  irrevocably deposit with the Trustee as trust funds cash in U.S. Dollars, certain U.S. government obligations or a combination thereof, for the payment of principal, premium, if any, and interest on the series of debt securities to redemption or stated maturity, as applicable;

•  comply with certain other conditions, including that no Default has occurred and is continuing after the deposit in trust, and any additional provisions set forth in the prospectus supplement; and

•  deliver to the Trustee an opinion of counsel to the effect that holders of the series of debt securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such defeasance and will be subject to U.S. federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred. In the case of legal defeasance only, such opinion of counsel must be based on a ruling of the U.S. Internal Revenue Service or a change in applicable U.S. federal income tax law.

      In addition, we may discharge all obligations of the issuers and Subsidiary Guarantors under the indenture with respect to the debt securities of a particular series, other than our obligation to register the transfer of and exchange debt securities of that series, provided that we:

(a)  either:

(1)

deliver all outstanding debt securities of that series to the Trustee for cancellation; or

(2)

all debt securities of that series not so delivered for cancellation have either become due and payable or will become due and payable at their stated maturity within one year or are to be called for redemption within one year, and, in any case, we have irrevocably deposited with the Trustee in trust an amount of cash, certain U.S. government obligations or a combination thereof, in an amount sufficient to pay the entire indebtedness of the debt securities of that series, including for principal, premium, if any, an accrued interest to the date of such deposit (in the case of debt securities that have become due and payable) or to the stated maturity or applicable redemption date, as applicable (in the case of debt securities that have not become due and payable);

(b)	have paid or ceased to be paid all other sums payable under the indenture; and
(c)	have delivered an officers’ certificate and an opinion of counsel to the Trustee stating that all conditions precedent to such satisfaction and discharge have been satisfied.

No Limit on Amount of Debt Securities

      The indenture will not limit the amount of debt securities that we may issue, unless we indicate otherwise in a prospectus supplement. The indenture will allow us to issue debt securities of any series up to the aggregate principal amount that we authorize.

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Registration of Notes

      We will issue debt securities of a series only in registered form, without coupons, unless otherwise indicated in the prospectus supplement.

Minimum Denominations

      Unless the prospectus supplement states otherwise, the debt securities will be issued only in principal amounts of $1,000 each or integral multiples of $1,000.

No Personal Liability

      None of the past, present or future partners, incorporators, managers, members, directors, officers, employees, unitholders or stockholders of us, the general partner of Teekay LNG Partners L.P. or any Subsidiary Guarantor will have any liability for the obligations of us or any Subsidiary Guarantors under the indenture or the debt securities or for any claim based on such obligations or their creation. Each holder of debt securities by accepting a debt security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the debt securities. The waiver may not be effective under U.S. federal securities laws, however, and it is the view of the SEC that such a waiver is against public policy.

Payment and Transfer

      The Trustee will initially act as paying agent and registrar under each indenture. We may change the paying agent or registrar without prior notice to the holders of debt securities, and we or any of our subsidiaries may act as paying agent or registrar.

      If a holder of debt securities has given wire transfer instructions to us, we will make all payments on the debt securities in accordance with those instructions. All other payments on the debt securities will be made at the corporate trust office of the Trustee located in New York City, unless we elect to make interest payments by check mailed to the holders at their addresses set forth in the debt security register.

      The Trustee and any paying agent will repay to us upon request any funds held by them for payments on the debt securities that remain unclaimed for two years after the date upon which that payment has become due. After payment to us, holders entitled to the money must look to us for payment as general creditors.

Exchange, Registration and Transfer

      Debt securities of any series will be exchangeable for other debt securities of the same series, the same total principal amount and the same terms but in different authorized denominations in accordance with the indenture. Holders may present debt securities for exchange or registration of transfer at the office of the registrar. The registrar will effect the transfer or exchange when it is satisfied with the documents of title and identity of the person making the request. We will not charge a service charge for any registration of transfer or exchange of the debt securities. We may, however, require the payment of any tax or other governmental charge payable for that registration.

      We will not be required:

•  to issue, register the transfer of, or exchange debt securities of a series either during a period beginning 15 business days prior to the selection of debt securities of that series for redemption or repurchase and ending on the close of business on the day of mailing of the relevant notice of redemption or repurchase, or between a record date and the next succeeding interest payment date; or

•  to register the transfer of or exchange any debt security called for redemption or repurchase, except the unredeemed portion of any debt security we are redeeming or repurchasing in part.

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Provisions Relating Only to the Senior Debt Securities

      The senior debt securities will rank equally in right of payment with all of our other senior and unsubordinated debt. The senior debt securities will be effectively subordinated, however, to all of our secured debt to the extent of the value of the collateral for that debt. We will disclose the amount of our secured debt in the prospectus supplement.

Provisions Relating Only to the Subordinated Debt Securities

Subordinated Debt Securities Subordinated to Senior Indebtedness

      The subordinated debt securities will rank junior in right of payment to all of the Senior Indebtedness of us and any Subsidiary Guarantors. “Senior Indebtedness” will be defined in a supplemental indenture for any issuance of a series of subordinated debt securities, and the definition will be set forth in the prospectus supplement.

Payment Blockages

      The subordinated indenture will provide that, until the Senior Indebtedness is paid in full, no payment of principal, interest and any premium on the subordinated debt securities may be made in the event:

•  we or our assets (or, if applicable, any Subsidiary Guarantor or its assets) are involved in any voluntary or involuntary liquidation or bankruptcy;

•  we fail (or, if applicable, any Subsidiary Guarantor fails) to pay the principal, interest, any premium or any other amounts on any Senior Indebtedness within any applicable grace period or if the maturity of such Senior Indebtedness is accelerated following any other default, subject to certain limited exceptions set forth in the subordinated indenture; or

•  any other default on any Senior Indebtedness occurs that permits immediate acceleration of its maturity, in which case a payment blockage on the subordinated debt securities will be imposed for a maximum of 179 days at any one time.

      As a result of the subordination provisions described above, in the event of our insolvency, the holders of Senior Indebtedness, as well as certain of our general creditors, may recover more, ratably, than the holders of the subordinated debt securities.

No Limitation on Amount of Senior Debt

      The subordinated indenture will not limit the amount of Senior Indebtedness that Teekay LNG Partners L.P. may incur, unless otherwise indicated in the prospectus supplement.

Book Entry, Delivery and Form

      The debt securities of a particular series may be issued in whole or in part in the form of one or more global certificates that will be registered in the name of The Depository Trust Company, New York, New York (or DTC) or its nominee. This means that we will not issue certificates to each holder. Instead, one or more global debt securities will be issued to DTC, who will keep a computerized record of its participants (for example, your broker) whose clients have purchased the debt securities. The participant will then keep a record of its clients who purchased the debt securities. Unless it is exchanged in whole or in part for a certificated debt security, a global debt security may not be transferred, except that DTC, its nominees and their successors may transfer a global debt security as a whole to one another.

      Beneficial interests in global debt securities will be shown on, and transfers of global debt securities will only be made through, records maintained by DTC and its participants.

      DTC has made available the following information: DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the United States Federal Reserve System, a “clearing corporation”

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within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered under the provisions of Section 17A of the U.S. Securities Exchange Act of 1934. DTC is owned by a number of its participants and by the New York Stock Exchange, Inc. and the National Association of Securities Dealers, Inc.

      DTC holds securities that its participants (or Direct Participants) deposit with DTC. DTC also records the settlement among Direct Participants of securities transactions, such as transfers and pledges, in deposited securities through computerized records for Direct Participants’ accounts. This eliminates the need to exchange certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations.

      DTC’s book-entry system is also used by other organizations such as securities brokers and dealers, banks and trust companies that work through a Direct Participant. The rules that apply to DTC and its participants are on file with the SEC.

      We will wire all payments on the global debt securities to DTC or its nominee. We and the Trustee will treat DTC or its nominee as the owner of the global debt securities for all purposes. Accordingly, we, the Trustee and any paying agent will have no direct responsibility or liability to pay amounts due on the global debt securities to owners of beneficial interests in the global debt securities.

      It is DTC’s current practice, upon receipt of any payment on global debt securities, to credit Direct Participants’ accounts on the payment date according to their respective holdings of beneficial interests in the global debt securities as shown on DTC’s records. In addition, it is DTC’s current practice to assign any consenting or voting rights to Direct Participants whose accounts are credited with debt securities on a record date, by using an omnibus proxy. Payments by participants to owners of beneficial interests in the global debt securities, and voting by participants, will be governed by the customary practices between the participants and owners of beneficial interests, as is the case with debt securities held for the account of customers registered in “street name.” However, payments will be the responsibility of the participants and not of DTC, the Trustee or us.

      Debt securities represented by a global debt security will be exchangeable for certificated debt securities with the same terms in authorized denominations only if:

•  DTC notifies us that it is unwilling or unable to continue as depositary or if DTC ceases to be a clearing agency registered under applicable law and in either event a successor depositary is not appointed by us within 90 days; or

•  we determine not to require all of the debt securities of a series to be represented by a global debt security.

Governing Law

      Each indenture and all of the debt securities will be governed by the laws of the State of New York.

The Trustee

      We will enter into the indentures with a trustee that is qualified to act under the U.S. Trust Indenture Act of 1939 and with any other trustees chosen by us and appointed in a supplemental indenture for a particular series of debt securities. We use the term “Trustee” to refer to the trustee appointed with respect to any such series of debt securities. Unless we otherwise specify in the applicable prospectus supplement, the initial trustee for each series of debt securities will be The Bank of New York. We may maintain banking and other commercial relationships with the Trustee and its affiliates in the ordinary course of business, and the Trustee may own our debt securities. If at any time two or more trustees are acting under an indenture, each with respect to only certain series, the term “debt securities” means the series of debt securities for which each respective trustee is acting. If there is more than one trustee under the indenture, the powers and trust obligations of each trustee will apply only to the debt securities for

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which it is trustee. If two or more trustees are acting under the indenture, then the debt securities for which each trustee is acting would be treated as if issued under separate indentures.

Resignation or Removal of Trustee

      If the Trustee has or acquires a conflicting interest within the meaning of the Trust Indenture Act of 1939, the Trustee shall either eliminate its conflicting interest or resign to the extent and in the manner provided in, and subject to the provisions of, the Trust Indenture Act and the applicable indenture. Any resignation due to a conflicting interest or otherwise will require the appointment of a successor Trustee under the applicable indenture in accordance with the terms and conditions of such indenture.

      The Trustee may resign or be removed by us with respect to one or more series of debt securities and a successor Trustee may be appointed to act with respect to any such series. The holders of a majority in aggregate principal amount of the debt securities outstanding of any series may remove the Trustee with respect to the debt securities of such series.

Annual Trustee Report to Holders of Debt Securities

      The Trustee is required to submit an annual report to the holders of the debt securities regarding, among other things, the Trustee’s eligibility to serve as such, the priority of the Trustee’s claims regarding certain advances made by it, and any action taken by the Trustee materially affecting the debt securities.

Certificates and Opinions to be Furnished to Trustee

      Each indenture will provide that, in addition to other certificates or opinions that may be specifically required by other provisions of the indenture, every application by us for action by the Trustee will be accompanied by a certificate of certain of our officers and an opinion of counsel (which may be our counsel) stating that, in the opinion of the signers, all conditions precedent to such action have been complied with by us.

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

      This section is a discussion of the material U.S. federal income tax considerations that may be relevant to prospective common unitholders who are individual citizens or residents of the United States and, unless otherwise noted in the following discussion, is the opinion of Perkins Coie LLP, counsel to the general partner and us, insofar as it relates to matters of U.S. federal income tax law and legal conclusions with respect to those matters. This section is based upon provisions of the U.S. Internal Revenue Code of 1986 (or the Internal Revenue Code) as in effect on the date of this prospectus, existing final, temporary and proposed regulations thereunder (or Treasury Regulations) and current administrative rulings and court decisions, all of which are subject to change. Changes in these authorities may cause the tax consequences to vary substantially from the consequences described below. Unless the context otherwise requires, references in this section to “we”, “our” or “us” are references to Teekay LNG Partners L.P. and its direct or indirect wholly owned subsidiaries that have properly elected to be disregarded as entities separate from Teekay LNG Partners L.P. for U.S. federal tax purposes.

      The following discussion does not comment on all U.S. federal income tax matters affecting us or the unitholders. Moreover, the discussion focuses on unitholders who are individual citizens or residents of the United States and hold their units as capital assets and has only limited application to corporations, estates, trusts, non-U.S. persons or other unitholders subject to specialized tax treatment, such as tax-exempt entities (including IRAs), regulated investment companies (mutual funds) and real estate investment trusts (or REITs). Accordingly, we urge each prospective unitholder to consult, and depend on, his own tax advisor in analyzing the U.S. federal, state, local and non-U.S. tax consequences particular to him of the ownership or disposition of common units.

      All statements as to matters of law and legal conclusions, but not as to factual matters, contained in this section, unless otherwise noted, are the opinion of Perkins Coie LLP and are based on the accuracy of the representations made by us to Perkins Coie LLP for purposes of their opinion.

      Except as described below under “— Classification as a Partnership,” no ruling has been or will be requested from the IRS regarding any matter affecting us or prospective unitholders. Instead, we will rely on opinions of Perkins Coie LLP. Unlike a ruling, an opinion of counsel represents only that counsel’s best legal judgment and does not bind the IRS or the courts. Accordingly, the opinions of Perkins Coie LLP may not be sustained by a court if contested by the IRS. Any contest of this nature with the IRS may materially and adversely impact the market for the common units and the prices at which common units trade. In addition, the costs of any contest with the IRS, principally legal, accounting and related fees, will result in a reduction in cash available for distribution to our unitholders and our general partner and thus will be borne indirectly by our unitholders and our general partner. Furthermore, our tax treatment, or the tax treatment of an investment in us, may be significantly modified by future legislative or administrative changes or court decisions. Any modifications may or may not be retroactively applied.

      For the reasons described below, Perkins Coie LLP has not rendered an opinion with respect to the following specific U.S. federal income tax issues: (1) the treatment of a unitholder whose common units are loaned to a short seller to cover a short sale of common units (please read “— Consequences of Unit Ownership — Treatment of Short Sales”); (2) whether our method for depreciating Section 743 adjustments is sustainable in certain cases (please read “— Consequences of Unit Ownership — Section 754 Election”); and (3) whether our monthly convention for allocating taxable income and losses is permitted by existing Treasury Regulations (please read “— Disposition of Common Units — Allocations Between Transferors and Transferees”). Perkins Coie LLP has not rendered an opinion on any state, local or non-U.S. tax matters.

Classification as a Partnership

      For purposes of U.S. federal income taxation, a partnership is not a taxable entity, and although it may be subject to withholding taxes on behalf of its partners under certain circumstances, a partnership itself incurs no U.S. federal income tax liability. Instead, each partner of a partnership is required to take into account his share of items of income, gain, loss, deduction and credit of the partnership in computing

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his U.S. federal income tax liability, regardless of whether cash distributions are made to him by the partnership. Distributions by a partnership to a partner generally are not taxable unless the amount of cash distributed exceeds the partner’s adjusted tax basis in his partnership interest.

      Section 7704 of the Internal Revenue Code provides that publicly traded partnerships, as a general rule, will be treated as corporations for U.S. federal income tax purposes. However, an exception, referred to as the “Qualifying Income Exception,” exists with respect to publicly traded partnerships whose “qualifying income” represents 90% or more of their gross income for every taxable year. Qualifying income includes income and gains derived from the transportation and storage of crude oil, natural gas and products thereof, including liquefied natural gas. Other types of qualifying income include interest (other than from a financial business), dividends, gains from the sale of real property and gains from the sale or other disposition of capital assets held for the production of qualifying income, including stock. We have received a ruling from the IRS that we requested in connection with our initial public offering that the income we derive from transporting LNG and crude oil pursuant to time charters existing at the time of our initial public offering is qualifying income within the meaning of Section 7704. A ruling from the IRS, while generally binding on the IRS, may under certain circumstances be revoked or modified by the IRS retroactively. As to income that is not covered by the IRS ruling, we will rely upon the opinion of Perkins Coie LLP whether the income is qualifying income.

      We estimate that less than 5% of our current income is not qualifying income; however, this estimate could change from time to time. A number of factors could cause the percentage of our income that is qualifying income to vary. For example, we have not received an IRS ruling or an opinion of counsel that any income or gain we recognize from foreign currency transactions or from interest rate swaps is qualifying income. Under some circumstances, such as a significant increase in interest rates, the percentage of such income or gain in relation to our total gross income could be substantial. However, we do not expect income or gains from foreign currency transactions or interest rate swaps to constitute a significant percentage of our current or future gross income for U.S. federal income tax purposes.

      Perkins Coie LLP is of the opinion that, based upon the Internal Revenue Code, Treasury Regulations thereunder, published revenue rulings and court decisions, the IRS ruling and representations described below, we will be classified as a partnership for U.S. federal income tax purposes.

      In rendering its opinion, Perkins Coie LLP has relied on factual representations made by us and the general partner. The representations made by us and our general partner upon which Perkins Coie LLP has relied are:

•  We have not elected and will not elect to be treated as a corporation, and each of our direct or indirect wholly-owned subsidiaries has properly elected to be disregarded as an entity separate from us, for U.S. federal income tax purposes; and

•  For each taxable year, at least 90% of our gross income will be either (a) income to which the IRS ruling described above applies or (b) of a type that Perkins Coie LLP has opined or will opine is “qualifying income” within the meaning of Section 7704(d) of the Internal Revenue Code.

      The discussion that follows is based on the assumption that we will be treated as a partnership for U.S. federal income tax purposes. Please read “— Possible Classification as a Corporation” below for a discussion of the consequences of our failing to be treated as a partnership for such purposes.

Status as a Partner

      The treatment of unitholders described in this section applies only to unitholders treated as partners in us for U.S. federal income tax purposes. Unitholders who have been properly admitted as limited partners of Teekay LNG Partners L.P. will be treated as partners in us for U.S. federal income tax purposes. Also:

•  assignees of common units who have executed and delivered transfer applications, and are awaiting admission as limited partners; and

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•  unitholders whose common units are held in street name or by a nominee and who have the right to direct the nominee in the exercise of all substantive rights attendant to the ownership of their common units will be treated as partners in us for U.S. federal income tax purposes.

      Because no direct authority addresses the status of assignees of common units who are entitled to execute and deliver transfer applications and thereby become entitled to direct the exercise of attendant rights, but who fail to execute and deliver transfer applications, Perkins Coie LLP’s opinion does not extend to these persons. Furthermore, a purchaser or other transferee of common units who does not execute and deliver a transfer application may not receive some U.S. federal income tax information or reports furnished to record holders of common units, unless the common units are held in a nominee or street name account and the nominee or broker has executed and delivered a transfer application for those common units.

      Under certain circumstances, a beneficial owner of common units whose units have been loaned to another may lose his status as a partner with respect to those units for U.S. federal income tax purposes. Please read “— Consequences of Unit Ownership — Treatment of Short Sales” below.

      In general, a person who is not a partner in a partnership for U.S. federal income tax purposes is not required or permitted to report any share of the partnership’s income, gain, deductions or losses for such purposes, and any cash distributions received by such a person from the partnership therefore may be fully taxable as ordinary income. Unitholders not described here are urged to consult their own tax advisors with respect to their status as partners in us for U.S. federal income tax purposes.

Consequences of Unit Ownership

      Flow-through of Taxable Income. Each unitholder is required to include in computing his taxable income his allocable share of our income, gains, losses and deductions for our taxable year ending with or within his taxable year, without regard to whether we make corresponding cash distributions to him. Our taxable year ends on December 31. Consequently, we may allocate income to a unitholder as of December 31 of a given year, and the unitholder will be required to report this income on his tax return for his tax year that ends on or includes such date, even if he has not received a cash distribution from us as of that date.

      Treatment of Distributions. Distributions by us to a unitholder generally will not be taxable to the unitholder for U.S. federal income tax purposes to the extent of his tax basis in his common units immediately before the distribution. Our cash distributions in excess of a unitholder’s tax basis generally will be considered to be gain from the sale or exchange of the common units, taxable in accordance with the rules described under “— Disposition of Common Units” below. Any reduction in a unitholder’s share of our liabilities for which no partner, including the general partner, bears the economic risk of loss, known as “nonrecourse liabilities,” will be treated as a distribution of cash to that unitholder. To the extent our distributions cause a unitholder’s “at risk” amount to be less than zero at the end of any taxable year, he must recapture any losses deducted in previous years. Please read “— Limitations on Deductibility of Losses.”

      A decrease in a unitholder’s percentage interest in us because of our issuance of additional common units will decrease his share of our nonrecourse liabilities, and thus will result in a corresponding deemed distribution of cash. A non-pro rata distribution of money or property may result in ordinary income to a unitholder, regardless of his tax basis in his common units, if the distribution reduces the unitholder’s share of our “unrealized receivables,” including depreciation recapture, and/or substantially appreciated “inventory items,” both as defined in the Internal Revenue Code (or, collectively, Section 751 Assets). To that extent, he will be treated as having been distributed his proportionate share of the Section 751 Assets and having exchanged those assets with us in return for the non-pro rata portion of the actual distribution made to him. This latter deemed exchange will generally result in the unitholder’s realization of ordinary income, which will equal the excess of (1) the non-pro rata portion of that distribution over (2) the unitholder’s tax basis for the share of Section 751 Assets deemed relinquished in the exchange.

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      Basis of Common Units. A unitholder’s initial U.S. federal income tax basis for his common units will be the amount he paid for the common units plus his share of our nonrecourse liabilities. That basis will be increased by his share of our income and by any increases in his share of our nonrecourse liabilities. That basis will be decreased, but not below zero, by distributions from us, by the unitholder’s share of our losses, by any decreases in his share of our nonrecourse liabilities and by his share of our expenditures that are not deductible in computing taxable income and are not required to be capitalized. A unitholder will have no share of our debt that is recourse to the general partner, but will have a share, generally based on his share of profits, of our nonrecourse liabilities. Please read “— Disposition of Common Units — Recognition of Gain or Loss.”

      Limitations on Deductibility of Losses. The deduction by a unitholder of his share of our losses will be limited to the tax basis in his units and, in the case of an individual unitholder or a corporate unitholder, if more than 50% of the value of the corporate unitholder’s stock is owned directly or indirectly by five or fewer individuals or some tax-exempt organizations, to the amount for which the unitholder is considered to be “at risk” with respect to our activities, if that is less than his tax basis. A unitholder must recapture losses deducted in previous years to the extent that distributions cause his at risk amount to be less than zero at the end of any taxable year. Losses disallowed to a unitholder or recaptured as a result of these limitations will carry forward and will be allowable to the extent that his tax basis or at risk amount, whichever is the limiting factor, is subsequently increased. Upon the taxable disposition of a unit, any gain recognized by a unitholder can be offset by losses that were previously suspended by the at risk limitation but may not be offset by losses suspended by the basis limitation. Any excess suspended loss above that gain is no longer utilizable. In general, a unitholder will be at risk to the extent of the tax basis of his units, excluding any portion of that basis attributable to his share of our nonrecourse liabilities, reduced by any amount of money he borrows to acquire or hold his units, if the lender of those borrowed funds owns an interest in us, is related to the unitholder or can look only to the units for repayment.

      The passive loss limitations generally provide that individuals, estates, trusts and some closely-held corporations and personal service corporations can deduct losses from a passive activity only to the extent of the taxpayer’s income from the same passive activity. Passive activities generally are corporate or partnership activities in which the taxpayer does not materially participate. The passive loss limitations are applied separately with respect to each publicly traded partnership. Consequently, any passive losses we generate only will be available to offset our passive income generated in the future and will not be available to offset income from other passive activities or investments, including our investments or investments in other publicly traded partnerships, or salary or active business income. Passive losses that are not deductible because they exceed a unitholder’s share of income we generate may be deducted in full when he disposes of his entire investment in us in a fully taxable transaction with an unrelated party. The passive activity loss rules are applied after other applicable limitations on deductions, including the at risk rules and the basis limitation.

      Dual consolidated loss restrictions also may apply to limit the deductibility by a corporate unitholder of losses we incur. Corporate unitholders are urged to consult their own tax advisors regarding the applicability and effect to them of dual consolidated loss restrictions.

      Limitations on Interest Deductions. The deductibility of a non-corporate taxpayer’s “investment interest expense” generally is limited to the amount of that taxpayer’s “net investment income.” Investment interest expense includes:

•  interest on indebtedness properly allocable to property held for investment;

•  our interest expense attributed to portfolio income; and

•  the portion of interest expense incurred to purchase or carry an interest in a passive activity to the extent attributable to portfolio income.

      The computation of a unitholder’s investment interest expense will take into account interest on any margin account borrowing or other loan incurred to purchase or carry a unit. Net investment income includes gross income from property held for investment and amounts treated as portfolio income under

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the passive loss rules, less deductible expenses, other than interest, directly connected with the production of investment income, but generally does not include gains attributable to the disposition of property held for investment. The IRS has indicated that net passive income earned by a publicly traded partnership will be treated as investment income to its unitholders. In addition, the unitholder’s share of our portfolio income will be treated as investment income.

      Entity-Level Collections. If we are required or elect under applicable law to pay any U.S. federal, state or local or foreign income or withholding taxes on behalf of any present or former unitholder or the general partner, we are authorized to pay those taxes from our funds. That payment, if made, will be treated as a distribution of cash to the partner on whose behalf the payment was made. If the payment is made on behalf of a person whose identity cannot be determined, we are authorized to treat the payment as a distribution to all current unitholders. We are authorized to amend the partnership agreement in the manner necessary to maintain uniformity of intrinsic tax characteristics of units and to adjust later distributions, so that after giving effect to these distributions, the priority and characterization of distributions otherwise applicable under the partnership agreement are maintained as nearly as is practicable. Payments by us as described above could give rise to an overpayment of tax on behalf of an individual partner, in which event the partner would be required to file a claim in order to obtain a credit or refund of tax paid.

      Allocation of Income, Gain, Loss, Deduction and Credit. In general, if we have a net profit, our items of income, gain, loss, deduction and credit will be allocated among the general partner and the unitholders in accordance with their percentage interests in us. At any time that distributions are made to the common units in excess of distributions to the subordinated units, or incentive distributions are made to the general partner, gross income will be allocated to the recipients to the extent of these distributions. If we have a net loss for the entire year, that loss generally will be allocated first to the general partner and the unitholders in accordance with their percentage interests in us to the extent of their positive capital accounts and, second, to the general partner.

      Specified items of our income, gain, loss and deduction will be allocated to account for any difference between the tax basis and fair market value of any property held by the partnership immediately prior to an offering of common units, referred to in this discussion as “Adjusted Property.” The effect of these allocations to a unitholder purchasing common units in an offering will be essentially the same as if the tax basis of our assets were equal to their fair market value at the time of the offering. In addition, items of recapture income will be allocated to the extent possible to the partner who was allocated the deduction giving rise to the treatment of that gain as recapture income in order to minimize the recognition of ordinary income by some unitholders. Finally, although we do not expect that our operations will result in the creation of negative capital accounts, if negative capital accounts nevertheless result, items of our income and gain will be allocated in an amount and manner to eliminate the negative balance as quickly as possible.

      An allocation of items of our income, gain, loss, deduction or credit, other than an allocation required by the Internal Revenue Code to eliminate the difference between a partner’s “book” capital account, which is credited with the fair market value of Adjusted Property, and “tax” capital account, which is credited with the tax basis of Adjusted Property, referred to in this discussion as the “Book-Tax Disparity,” will generally be given effect for U.S. federal income tax purposes in determining a partner’s share of an item of income, gain, loss, deduction or credit only if the allocation has substantial economic effect. In any other case, a partner’s share of an item will be determined on the basis of his interest in us, which will be determined by taking into account all the facts and circumstances, including:

•  his relative contributions to us;

•  the interests of all the partners in profits and losses;

•  the interest of all the partners in cash flow; and

•  the rights of all the partners to distributions of capital upon liquidation.

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      Perkins Coie LLP is of the opinion that, with the exception of the issues described in “— Consequences of Unit Ownership — Section 754 Election” and “— Disposition of Common Units — Allocations Between Transferors and Transferees,” allocations under our partnership agreement will be given effect for U.S. federal income tax purposes in determining a partner’s share of an item of income, gain, loss, deduction or credit.

      Treatment of Short Sales. A unitholder whose units are loaned to a “short seller” who sells such units may be considered to have disposed of those units. If so, he would no longer be a partner with respect to those units until the termination of the loan and may recognize gain or loss from the disposition. As a result:

•  any of our income, gain, loss, deduction or credit with respect to the units may not be reportable by the unitholder who loaned them; and

•  any cash distributions received by such unitholder with respect to those units may be fully taxable as ordinary income.

      Perkins Coie LLP has not rendered an opinion regarding the treatment of a unitholder whose common units are loaned to a short seller. Therefore, unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller are urged to ensure that any applicable brokerage account agreements prohibit their brokers from borrowing their units. The IRS has announced that it is actively studying issues relating to the tax treatment of short sales of partnership interests. Please also read “— Disposition of Common Units — Recognition of Gain or Loss.”

      Alternative Minimum Tax. Each unitholder will be required to take into account his distributive share of any items of our income, gain, loss, deduction or credit for purposes of the alternative minimum tax. The current minimum tax rate for noncorporate taxpayers is 26% on the first $175,000 of alternative minimum taxable income in excess of the exemption amount and 28% on any additional alternative minimum taxable income. Prospective unitholders are urged to consult with their tax advisors as to the impact of an investment in units on their liability for the alternative minimum tax.

      Tax Rates. The highest statutory rate of U.S. federal income tax for individuals currently is 35%, and the highest statutory rate of U.S. federal income tax imposed on net capital gains of an individual currently is 15% if the asset disposed of was held for more than one year at the time of disposition.

      Section 754 Election. We intend to make an election under Section 754 of the Internal Revenue Code to adjust a common unit purchaser’s U.S. federal income tax basis in our assets (or inside basis) to reflect the purchaser’s purchase price (or a Section 743(b) adjustment). The Section 743(b) adjustment belongs to the purchaser and not to other unitholders and does not apply to unitholders who acquire their common units directly from us. For purposes of this discussion, a unitholder’s inside basis in our assets will be considered to have two components: (1) his share of our tax basis in our assets (or common basis) and (2) his Section 743(b) adjustment to that basis.

      In general, a purchaser’s common basis is depreciated or amortized according to the existing method utilized by us. A positive Section 743(b) adjustment to that basis generally is depreciated or amortized in the same manner as property of the same type that has been newly placed in service by us. A negative Section 743(b) adjustment to that basis generally is recovered over the remaining useful life of the partnership’s recovery property.

      A Section 743(b) adjustment is advantageous if the purchaser’s tax basis in his units is higher than the units’ share of the aggregate tax basis of our assets immediately prior to the transfer. In that case, as a result of the adjustment, the purchaser would have, among other items, a greater amount of depreciation and amortization deductions and his share of any gain or loss on a sale of our assets would be less. Conversely, a Section 743(b) adjustment is disadvantageous if the purchaser’s tax basis in his units is lower than those units’ share of the aggregate tax basis of our assets immediately prior to the purchase. Thus, the fair market value of the units may be affected either favorably or unfavorably by the Section 743(b) adjustment. A basis adjustment is required regardless of whether a Section 754 election is

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made in the case of a transfer on an interest in us if we have a substantial built-in loss immediately after the transfer, or if we distribute property and have a substantial basis reduction. Generally, a built-in loss or a basis reduction is substantial if it exceeds $250,000.

      The calculations involved in the Section 743(b) adjustment are complex and will be made on the basis of assumptions as to the value of our assets and in accordance with the Internal Revenue Code and applicable Treasury Regulations. We cannot assure you that the determinations we make will not be successfully challenged by the IRS and that the deductions resulting from them will not be reduced or disallowed altogether. Should the IRS require a different basis adjustment to be made, and should, in our judgment, the expense of compliance exceed the benefit of the election, we may seek consent from the IRS to revoke our Section 754 election. If such consent is given, a subsequent purchaser of units may be allocated more income than he would have been allocated had the election not been revoked.

Tax Treatment of Operations

      Accounting Method and Taxable Year. We use the year ending December 31 as our taxable year and the accrual method of accounting for U.S. federal income tax purposes. Each unitholder will be required to include in income his share of our income, gain, loss, deduction and credit for our taxable year ending within or with his taxable year. In addition, a unitholder who disposes of all of his units must include his share of our income, gain, loss, deduction and credit through the date of disposition in income for his taxable year that includes the date of disposition, with the result that a unitholder who has a taxable year ending on a date other than December 31 and who disposes of all of his units following the close of our taxable year but before the close of his taxable year must include his share of more than one year of our income, gain, loss, deduction and credit in income for the year of the disposition. Please read “— Disposition of Common Units — Allocations Between Transferors and Transferees.”

      Asset Tax Basis, Depreciation and Amortization. The tax basis of our assets will be used for purposes of computing depreciation and cost recovery deductions and, ultimately, gain or loss on the disposition of these assets. The U.S. federal income tax burden associated with any difference between the fair market value of our assets and their tax basis immediately prior to this offering will be borne by the general partner and the existing limited partners. Please read “— Consequences of Unit Ownership — Allocation of Income, Gain, Loss and Deduction.”

      To the extent allowable, we may elect to use the depreciation and cost recovery methods that will result in the largest deductions being taken in the early years after assets are placed in service. Property we subsequently acquire or construct may be depreciated using any method permitted by the Internal Revenue Code.

      If we dispose of depreciable property by sale, foreclosure or otherwise, all or a portion of any gain, determined by reference to the amount of depreciation previously deducted and the nature of the property, may be subject to the recapture rules and taxed as ordinary income rather than capital gain. Similarly, a unitholder who has taken cost recovery or depreciation deductions with respect to property we own will likely be required to recapture some or all of those deductions as ordinary income upon a sale of his interest in us. Please read “— Consequences of Unit Ownership — Allocation of Income, Gain, Loss, Deduction and Credit” and “— Disposition of Common Units — Recognition of Gain or Loss.”

      The costs incurred by us in selling our units (or syndication expenses) must be capitalized and cannot be deducted currently, ratably or upon our termination. There are uncertainties regarding the classification of costs as syndication expenses. The underwriting discounts and commissions we incur will be treated as syndication expenses.

      Valuation and Tax Basis of Our Properties. The U.S. federal income tax consequences of the ownership and disposition of units will depend in part on our estimates of the relative fair market values, and the initial tax bases, of our assets. Although we may from time to time consult with professional appraisers regarding valuation matters, we will make many of the relative fair market value estimates ourselves. These estimates and determinations of basis are subject to challenge and will not be binding on

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the IRS or the courts. If the estimates of fair market value or basis are later found to be incorrect, the character and amount of items of income, gain, loss, deductions or credits previously reported by unitholders might change, and unitholders might be required to adjust their tax liability for prior years and incur interest and penalties with respect to those adjustments.

Disposition of Common Units

      Recognition of Gain or Loss. In general, gain or loss will be recognized on a sale of units equal to the difference between the amount realized and the unitholder’s tax basis in the units sold. A unitholder’s amount realized will be measured by the sum of the cash, the fair market value of other property received by him and his share of our nonrecourse liabilities. Because the amount realized includes a unitholder’s share of our nonrecourse liabilities, the gain recognized on the sale of units could result in a tax liability in excess of any cash or property received from the sale.

      Prior distributions from us in excess of cumulative net taxable income for a common unit that decreased a unitholder’s tax basis in that common unit will, in effect, become taxable income if the common unit is sold at a price greater than the unitholder’s tax basis in that common unit, even if the price received is less than his original cost. Except as noted below, gain or loss recognized by a unitholder on the sale or exchange of a unit generally will be taxable as capital gain or loss. Capital gain recognized by an individual on the sale of units held more than one year generally will be taxed at a maximum rate of 15% under current law.

      A portion of a unitholder’s amount realized may be allocable to “unrealized receivables” or to “inventory items” we own. The term “unrealized receivables” includes potential recapture items, including depreciation and amortization recapture. A unitholder will recognize ordinary income or loss to the extent of the difference between the portion of the unitholder’s amount realized allocable to unrealized receivables or inventory items and the unitholder’s share of our basis in such receivables or inventory items. Ordinary income attributable to unrealized receivables, inventory items and depreciation or amortization recapture may exceed net taxable gain realized upon the sale of a unit and may be recognized even if a net taxable loss is realized on the sale of a unit. Thus, a unitholder may recognize both ordinary income and a capital loss upon a sale of units. Net capital losses generally may only be used to offset capital gains. An exception permits individuals to offset up to $3,000 of net capital losses against ordinary income in any given year.

      The IRS has ruled that a partner who acquires interests in a partnership in separate transactions must combine those interests and maintain a single adjusted tax basis for all those interests. Upon a sale or other disposition of less than all of those interests, a portion of that tax basis must be allocated to the interests sold using an “equitable apportionment” method. Treasury Regulations under Section 1223 of the Internal Revenue Code allow a selling unitholder who can identify common units transferred with an ascertainable holding period to elect to use the actual holding period of the common units transferred. Thus, according to the ruling, a common unitholder will be unable to select high or low basis common units to sell as would be the case with corporate stock, but, according to the regulations, may designate specific common units sold for purposes of determining the holding period of units transferred. A unitholder electing to use the actual holding period of common units transferred must consistently use that identification method for all subsequent sales or exchanges of common units. A unitholder considering the purchase of additional units or a sale of common units purchased in separate transactions is urged to consult his tax advisor as to the possible consequences of this ruling and application of the regulations.

      Specific provisions of the Internal Revenue Code affect the taxation of some financial products and securities, including partnership interests, by treating a taxpayer as having sold an “appreciated” partnership interest, one in which gain would be recognized if it were sold, assigned or terminated at its fair market value, if the taxpayer or related persons enter(s) into:

•  a short sale;

•  an offsetting notional principal contract; or

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•  a futures or forward contract with respect to the partnership interest or substantially identical property.

      Moreover, if a taxpayer has previously entered into a short sale, an offsetting notional principal contract or a futures or forward contract with respect to the partnership interest, the taxpayer will be treated as having sold that position if the taxpayer or a related person then acquires the partnership interest or substantially identical property. The Secretary of the Treasury is also authorized to issue regulations that treat a taxpayer that enters into transactions or positions that have substantially the same effect as the preceding transactions as having constructively sold the financial position.

      Allocations Between Transferors and Transferees. In general, our taxable income or loss will be determined annually, will be prorated on a monthly basis and will be subsequently apportioned among the unitholders in proportion to the number of units owned by each of them as of the opening of the applicable exchange on the first business day of the month. However, gain or loss realized on a sale or other disposition of our assets other than in the ordinary course of business will be allocated among the unitholders on the first business day of the month in which that gain or loss is recognized. As a result of the foregoing, a unitholder transferring units may be allocated income, gain, loss, deduction and credit realized after the date of transfer.

      The use of this method for allocating income and deductions among unitholders may not be permitted under existing Treasury Regulations. Accordingly, Perkins Coie LLP is unable to opine on its validity. If this method were disallowed or applied only to transfers of less than all of the unitholder’s interest, our taxable income or losses may be reallocated among the unitholders. We are authorized to revise our method of allocation to conform to a method permitted under any future Treasury Regulations or administrative guidance.

      A unitholder who owns units at any time during a calendar quarter and who disposes of them prior to the record date set for a cash distribution for that quarter will be allocated items of our income, gain, loss and deductions attributable to months within that quarter in which the units were held but will not be entitled to receive that cash distribution.

      Transfer Notification Requirements. A unitholder who sells any of his units, other than through a broker, generally is required to notify us in writing of that sale within 30 days after the sale (or, if earlier, January 15 of the year following the sale). A unitholder who acquires units generally is required to notify us in writing of that acquisition within 30 days after the purchase, unless a broker or nominee will satisfy such requirement. We are required to notify the IRS of any such transfers of units and to furnish specified information to the transferor and transferee. Failure to notify us of a transfer of units may lead to the imposition of substantial penalties.

      Constructive Termination. We will be considered to have been terminated for U.S. federal income tax purposes if there is a sale or exchange of 50% or more of the total interests in our capital and profits within a 12-month period. A constructive termination results in the closing of our taxable year for all unitholders. In the case of a unitholder reporting on a taxable year other than a fiscal year ending December 31, the closing of our taxable year may result in more than 12 months of our taxable income or loss being includable in his taxable income for the year of termination. We would be required to make new tax elections after a termination, including a new election under Section 754 of the Internal Revenue Code, and a termination would result in a deferral of our deductions for depreciation. A termination could also result in penalties if we were unable to determine that the termination had occurred. Moreover, a termination might either accelerate the application of, or subject us to, tax legislation applicable to a newly formed partnership.

Foreign Tax Credit Considerations

      Subject to detailed limitations set forth in the Internal Revenue Code, a unitholder may elect to claim a credit against his liability for U.S. federal income tax for his share of foreign income taxes (and certain foreign taxes imposed in lieu of a tax based upon income) paid by us. Income allocated to unitholders

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likely will constitute foreign source income falling in the general foreign tax credit category for purposes of the U.S. foreign tax credit limitation. The rules relating to the determination of the foreign tax credit are complex and prospective unitholders are urged to consult their own tax advisors to determine whether or to what extent they would be entitled to such credit. Unitholders who do not elect to claim foreign tax credits may instead claim a deduction for their shares of foreign taxes paid by us.

Tax-Exempt Organizations and Non-U.S. Investors

      Investments in units by employee benefit plans, other tax-exempt organizations and non-U.S. persons, including nonresident aliens of the United States, non-U.S. corporations and non-U.S. trusts and estates (collectively, non-U.S. unitholders) raise issues unique to those investors and, as described below, may result in substantially adverse tax consequences to them.

      Employee benefit plans and most other organizations exempt from U.S. federal income tax, including individual retirement accounts and other retirement plans, are subject to U.S. federal income tax on unrelated business taxable income. Virtually all of our income allocated to a unitholder that is a tax-exempt organization will be unrelated business taxable income to them subject to U.S. federal income tax.

      A non-U.S. unitholder may be subject to a 4% U.S. federal income tax on his share of the U.S. source portion of our gross income attributable to transportation that begins or ends (but not both) in the United States, unless either (a) an exemption applies and he files a U.S. federal income tax return to claim that exemption or (b) that income is effectively connected with the conduct of a trade or business in the United States (or U.S. effectively connected income). For this purpose, transportation income includes income from the use, hiring or leasing of a vessel to transport cargo, or the performance of services directly related to the use of any vessel to transport cargo. The U.S. source portion of our transportation income is deemed to be 50% of the income attributable to voyages that begin or end in the United States. Generally, no amount of the income from voyages that begin and end outside the United States is treated as U.S. source, and consequently none of our transportation income attributable to such voyages is subject to U.S. federal income tax. Although the entire amount of transportation income from voyages that begin and end in the United States would be fully taxable in the United States, we currently do not expect to have any transportation income from voyages that begin and end in the United States; however, there is no assurance that such voyages will not occur.

      A non-U.S. unitholder may be entitled to an exemption from the 4% U.S. federal income tax or a refund of tax withheld on U.S. effectively connected income that constitutes transportation income if any of the following applies: (1) such non-U.S. unitholder qualifies for an exemption from this tax under an income tax treaty between the United States and the country where such non-U.S. unitholder is resident; (2) in the case of an individual non-U.S. unitholder, he qualifies for the exemption from tax under Section 872(b)(1) of the Internal Revenue Code as a resident of a country that grants an equivalent exemption from tax to residents of the United States; or (3) in the case of a corporate non-U.S. unitholder, it qualifies for the exemption from tax under Section 883 of the Internal Revenue Code (or the Section 883 Exemption) (for the rules relating to qualification for the Section 883 Exemption, please read below under “— Possible Classification as a Corporation — The Section 883 Exemption”).

      We may be required to withhold U.S. federal income tax, computed at the highest statutory rate, from cash distributions to non-U.S. unitholders with respect to their shares of our income that is U.S. effectively connected income. Our transportation income generally should not be treated as U.S. effectively connected income unless we have a fixed place of business in the United States involved in the earning of that transportation income and certain other requirements are satisfied. While we do not expect to have a fixed place of business in the United States, there can be no guarantee that this will not change. Under a ruling of the IRS, a portion of any gain recognized on the sale or other disposition of a unit by a non-U.S. unitholder may be treated as U.S. effectively connected income to the extent we have a fixed place of business in the United States and a sale of our assets would have given rise to U.S. effectively connected income. A non-U.S. unitholder would be required to file a U.S. federal income

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tax return to report his U.S. effectively connected income (including his share of any such income earned by us) and to pay U.S. federal income tax, or claim a credit or refund for tax withheld on such income. Further, unless an exemption applies, a non-U.S. corporation investing in units may be subject to a branch profits tax, at a 30% rate or lower rate prescribed by a treaty, with respect to its U.S. effectively connected income.

      Non-U.S. unitholders must apply for and obtain a U.S. taxpayer identification number in order to file U.S. federal income tax returns and must provide that identification number to us for purposes of any U.S. federal income tax information returns we may be required to file. Non-U.S. unitholders are encouraged to consult with their own tax advisors regarding the U.S. federal, state and local tax consequences of an investment in units and any filing requirements related thereto.

Functional Currency

      We are required to determine the functional currency of any of our operations that constitute a separate qualified business unit (or QBU) for U.S. federal income tax purposes and report the affairs of any QBU in this functional currency to our unitholders. Any transactions conducted by us other than in the U.S. dollar or by a QBU other than in its functional currency may give rise to foreign currency exchange gain or loss. Further, if a QBU is required to maintain a functional currency other than the U.S. dollar, a unitholder may be required to recognize foreign currency translation gain or loss upon a distribution of money or property from a QBU or upon the sale of common units, and items or income, gain, loss or deduction allocated to the unitholder in such functional currency must be translated into the unitholder’s functional currency.

      For purposes of the foreign currency rules, a QBU includes a separate trade or business owned by a partnership in the event separate books and records are maintained for that separate trade or business. The functional currency of a QBU is determined based upon the economic environment in which the QBU operates. Thus, a QBU whose revenues and expenses are primarily determined in a currency other than the U.S. dollar will have a non-U.S. dollar functional currency. We believe our primary operations constitute a QBU whose functional currency is the U.S. dollar, but certain of our operations constitute separate QBUs whose functional currencies are other than the U.S. dollar.

      Under recently proposed regulations (or the Section 987 Proposed Regulations), the amount of foreign currency translation gain or loss recognized upon a distribution of money or property from a QBU or upon the sale of common units will reflect the appreciation or depreciation in the functional currency value of certain assets and liabilities of the QBU between the time the unitholder purchased his common units and the time we receive distributions from such QBU or the unitholder sells his common units. Foreign currency translation gain or loss will be treated as ordinary income or loss. A unitholder must adjust the U.S. federal income tax basis in his common units to reflect such income or loss prior to determining any other U.S. federal income tax consequences of such distribution or sale. Please read “— Consequences of Unit Ownership — Basis of Common Units.” A unitholder who owns less than a five percent interest in our capital or profits generally may elect not to have these rules apply by attaching a statement to his tax return for the first taxable year the unitholder intends the election to be effective. Further, for purposes of computing his taxable income and U.S. federal income tax basis in his common units, a unitholder will be required to translate into his own functional currency items of income, gain, loss or deduction of such QBU and his share of such QBU’s liabilities. We intend to provide such information based on generally applicable U.S. exchange rates as is necessary for unitholders to comply with the requirements of the Section 987 Proposed Regulations as part of the U.S. federal income tax information we will furnish unitholders each year. Please read “— Administrative Matters — Information Returns and Audit Procedures.” However, a unitholder may be entitled to make an election to apply an alternative exchange rate with respect to the foreign currency translation of certain items. Unitholders who desire to make such an election should consult their own tax advisors.

      Based upon our current projections of the capital invested in and profits of the non-U.S. dollar QBUs, we believe that unitholders will be required to recognize only a nominal amount of foreign currency

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translation gain or loss each year and upon their sale of units. Nonetheless, the rules for determining the amount of translation gain or loss are not entirely clear at present as the Section 987 Proposed Regulations currently are not effective. Please consult your own tax advisor for specific advice regarding the application of the rules for recognizing foreign currency translation gain or loss under your own circumstances.

      In addition to a unitholder’s recognition of foreign currency translation gain or loss, the U.S. dollar QBU will engage in certain transactions denominated in the Euro, which will give rise to a certain amount of foreign currency exchange gain or loss each year. This foreign currency exchange gain or loss will be treated as ordinary income or loss.

Administrative Matters

      Information Returns and Audit Procedures. We intend to furnish to each unitholder, within 90 days after the close of each calendar year, specific U.S. federal income tax information, including a document in the form of IRS Form 1065, Schedule K-1, which sets forth his share of our income, gain, loss, deductions and credits as computed for U.S. federal income tax purposes for our preceding taxable year. In preparing this information, which will not be reviewed by counsel, we will take various accounting and reporting positions, some of which have been mentioned earlier, to determine his share of such income, gain, loss, deduction and credit. We cannot assure you that those positions will yield a result that conforms to the requirements of the Internal Revenue Code, Treasury Regulations or administrative interpretations of the IRS. Neither we nor Perkins Coie LLP can assure prospective unitholders that the IRS will not successfully contend that those positions are impermissible. Any challenge by the IRS could negatively affect the value of the units.

      We will be obligated to file U.S. federal income tax information returns with the IRS for any year in which we earn any U.S. source income or U.S. effectively connected income. In the event we were obligated to file a U.S. federal income tax information return but failed to do so, unitholders would not be entitled to claim any deductions, losses or credits for U.S. federal income tax purposes relating to us. Consequently, we may file U.S. federal income tax information returns for any given year. The IRS may audit any such information returns that we file. Adjustments resulting from an IRS audit of our return may require each unitholder to adjust a prior year’s tax liability, and may result in an audit of his return. Any audit of a unitholder’s return could result in adjustments not related to our returns as well as those related to our returns. Any IRS audit relating to our items of income, gain, loss, deduction or credit for years in which we are not required to file and do not file a U.S. federal income tax information return would be conducted at the partner-level, and each unitholder may be subject to separate audit proceedings relating to such items.

      For years in which we file or are required to file U.S. federal income tax information returns, we will be treated as a separate entity for purposes of any U.S. federal income tax audits, as well as for purposes of judicial review of administrative adjustments by the IRS and tax settlement proceedings. For such years, the tax treatment of partnership items of income, gain, loss, deduction and credit will be determined in a partnership proceeding rather than in separate proceedings with the partners. The Internal Revenue Code requires that one partner be designated as the “Tax Matters Partner” for these purposes. The partnership agreement names Teekay GP L.L.C. as our Tax Matters Partner.

      The Tax Matters Partner will make some U.S. federal tax elections on our behalf and on behalf of unitholders. In addition, the Tax Matters Partner can extend the statute of limitations for assessment of tax deficiencies against unitholders for items reported in the information returns we file. The Tax Matters Partner may bind a unitholder with less than a 1% profits interest in us to a settlement with the IRS with respect to these items unless that unitholder elects, by filing a statement with the IRS, not to give that authority to the Tax Matters Partner. The Tax Matters Partner may seek judicial review, by which all the unitholders are bound, of a final partnership administrative adjustment and, if the Tax Matters Partner fails to seek judicial review, judicial review may be sought by any unitholder having at least a 1% interest in profits or by any group of unitholders having in the aggregate at least a 5% interest in profits. However,

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only one action for judicial review will go forward, and each unitholder with an interest in the outcome may participate.

      A unitholder must file a statement with the IRS identifying the treatment of any item on his U.S. federal income tax return that is not consistent with the treatment of the item on an information return that we file. Intentional or negligent disregard of this consistency requirement may subject a unitholder to substantial penalties.

      Special Reporting Requirements for Owners of Non-U.S. Partnerships. A U.S. person who either contributes more than $100,000 to us (when added to the value of any other property contributed to us by such person or a related person during the previous 12 months), or following a contribution owns, directly, indirectly or by attribution from certain related persons, at least a 10% interest in us, is required to file IRS Form 8865 with his U.S. federal income tax return for the year of the contribution to report the contribution and provide certain details about himself and certain related persons, us and any persons that own a 10% or greater direct interest in us. We will provide each unitholder with the necessary information about us and those persons who own a 10% or greater direct interest in us along with the Schedule K-1 information described previously.

      In addition to the foregoing, a U.S. person who directly owns at least a 10% interest in us may be required to make additional disclosures on IRS Form 8865 in the event such person acquires, disposes or has his interest in us substantially increased or reduced. Further, a U.S. person who directly, indirectly or by attribution from certain related persons, owns at least a 10% interest in us may be required to make additional disclosures on IRS Form 8865 in the event such person, when considered together with any other U.S. persons who own at least a 10% interest in us, owns a greater than 50% interest in us. For these purposes, an “interest” in us generally is defined to include an interest in our capital or profits or an interest in our deductions or losses.

      Significant penalties may apply for failing to satisfy IRS Form 8865 filing requirements and thus unitholders are advised to contact their tax advisors to determine the application of these filing requirements under their own circumstances.

      Accuracy-related Penalties. An additional tax equal to 20% of the amount of any portion of an underpayment of U.S. federal income tax attributable to one or more specified causes, including negligence or disregard of rules or regulations and substantial understatements of income tax, is imposed by the Internal Revenue Code. No penalty will be imposed, however, for any portion of an underpayment if it is shown that there was a reasonable cause for that portion and that the taxpayer acted in good faith regarding that portion.

      A substantial understatement of income tax in any taxable year exists if the amount of the understatement exceeds the greater of 10% of the tax required to be shown on the return for the taxable year or $5,000. The amount of any understatement subject to penalty generally is reduced if any portion is attributable to a position adopted on the return:

      (1) for which there is, or was, “substantial authority”; or

      (2) as to which there is a reasonable basis and the pertinent facts of that position are disclosed on the return.

      More stringent rules, including additional penalties and extended statutes of limitations, may apply as a result of our participation in “listed transactions” or “reportable transactions with a significant tax avoidance purpose.” While we do not anticipate participating in such transactions, if any item of income, gain, loss, deduction or credit included in the distributive shares of unitholders for a given year might result in an “understatement” of income relating to such a transaction, we will disclose the pertinent facts on a U.S. federal income tax information return for such year. In such event, we also will make a reasonable effort to furnish sufficient information for unitholders to make adequate disclosure on their returns and to take other actions as may be appropriate to permit unitholders to avoid liability for penalties.

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Possible Classification as a Corporation

      If we fail to meet the Qualifying Income Exception described previously with respect to our classification as a partnership for U.S. federal income tax purposes, other than a failure that is determined by the IRS to be inadvertent and that is cured within a reasonable time after discovery, we will be treated as a non-U.S. corporation for U.S. federal income tax purposes. If previously treated as a partnership, our change in status would be deemed to have been effected by our transfer of all of our assets, subject to liabilities, to a newly formed non-U.S. corporation, in return for stock in that corporation, and then our distribution of that stock to our unitholders and other owners in liquidation of their interests in us. Unitholders that are U.S. persons would be required to file IRS Form 926 to report these deemed transfers and any other transfers they made to us while we were treated as a corporation and may be required to recognize income or gain for U.S. federal income tax purposes to the extent of certain prior deductions or losses and other items. Substantial penalties may apply for failure to satisfy these reporting requirements, unless the person otherwise required to report shows such failure was due to reasonable cause and not willful neglect.

      If we were treated as a corporation in any taxable year, either as a result of a failure to meet the Qualifying Income Exception or otherwise, our items of income, gain, loss, deduction and credit would not pass through to unitholders. Instead, we would be subject to U.S. federal income tax based on the rules applicable to foreign corporations, not partnerships, and such items would be treated as our own. Any distribution made to a unitholder would be treated as taxable dividend income to the extent of our current or accumulated earnings and profits, a nontaxable return of capital to the extent of the unitholder’s tax basis in his common units, and taxable capital gain thereafter. Section 743(b) adjustments to the basis of our assets would no longer be available to purchasers in the marketplace. Please read “— Consequences of Unit Ownership — Section 754 Election.”

Taxation of Operating Income

      In the event we were treated as a corporation, our operating income may be subject to U.S. federal income taxation under one of two alternative tax regimes (the 4% gross basis tax or the net basis tax, as described below).

The 4% Gross Basis Tax

      We may be subject to a 4% U.S. federal income tax on the U.S. source portion of our gross income (without benefit of deductions) attributable to transportation that begins or ends (but not both) in the United States, unless the Section 883 Exemption applies (as more fully described below under “— The Section 883 Exemption”) and we file a U.S. federal income tax return to claim that exemption. For this purpose, gross income attributable to transportation (or transportation income) includes income from the use, hiring or leasing of a vessel to transport cargo, or the performance of services directly related to the use of any vessel to transport cargo, and thus includes time charter or bareboat charter income. The U.S. source portion of our transportation income is deemed to be 50% of the income attributable to voyages that begin or end (but not both) in the United States. Generally, no amount of the income from voyages that begin and end outside the United States is treated as U.S. source, and consequently none of the transportation income attributable to such voyages is subject to U.S. federal income tax. Although the entire amount of transportation income from voyages that begin and end in the United States would be fully taxable in the United States, we currently do not expect to have any transportation income from voyages that begin and end in the United States; however, there is no assurance that such voyages will not occur.

Net Income Tax and Branch Tax Regime

      We currently do not expect to have a fixed place of business in the United States. Nonetheless, if this were to change or we otherwise were treated as having such a fixed place of business involved in earning U.S. source transportation income, such transportation income may be treated as U.S. effectively

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connected income. Any income that we earn that is treated as U.S. effectively connected income would be subject to U.S. federal corporate income tax (the highest statutory rate is currently 35%), unless the Section 883 Exemption (as discussed below) applied. The 4% U.S. federal income tax described above is inapplicable to U.S. effectively connected income.

      Unless the Section 883 Exemption applied, a 30% branch profits tax imposed under Section 884 of the Internal Revenue Code also would apply to our earnings that result from U.S. effectively connected income, and a branch interest tax could be imposed on certain interest paid or deemed paid by us. Furthermore, on the sale of a vessel that has produced U.S. effectively connected income, we could be subject to the net basis corporate income tax and to the 30% branch profits tax with respect to our gain not in excess of certain prior deductions for depreciation that reduced U.S. effectively connected income. Otherwise, we would not be subject to U.S. federal income tax with respect to gain realized on sale of a vessel because it is expected that any sale of a vessel will be structured so that it is considered to occur outside of the United States and so that it is not attributable to an office or other fixed place of business in the United States.

The Section 883 Exemption

      In general, if a non-U.S. corporation satisfies the requirements of Section 883 of the Internal Revenue Code and the regulations thereunder (or the Final Section 883 Regulations), it will not be subject to the 4% gross basis tax or the net basis tax described above on its U.S. source transportation income attributable to voyages that begin or end (but not both) in the United States (or U.S. Source International Shipping Income).

      A non-U.S. corporation will qualify for the Section 883 Exemption if, among other things, it is organized in a jurisdiction outside the United States that grants an equivalent exemption from tax to corporations organized in the United States (or an Equivalent Exemption), it meets one of three tests described below: (1) the more than 50% ownership test (or the Ownership Test); (2) the “Publicly Traded Test”; or (3) the controlled foreign corporation test (or the CFC Test) — and certain substantiation, reporting and other requirements are met.

      In order to satisfy the Ownership Test, a non-U.S. corporation must be able to substantiate that more than 50% of the value of its stock is owned, directly or indirectly applying attribution rules, by “qualified shareholders” for at least half of the number of days in the non-U.S. corporation’s taxable year, and the non-U.S. corporation must comply with certain substantiation and reporting requirements. For this purpose, qualified shareholders are individuals who are residents (as defined for U.S. federal income tax purposes) of countries that grant an Equivalent Exemption, non-U.S. corporations that meet the Publicly Traded Test of the Final Section 883 Regulations and are organized in countries that grant an Equivalent Exemption, or certain foreign governments, non profit organizations and certain beneficiaries of foreign pension funds. Unitholders who are citizens or residents of the United States or are domestic corporations are not qualified shareholders.

      In addition, a corporation claiming the Section 883 Exemption based on the Ownership Test must obtain statements from the holders relied upon to satisfy the Ownership Test, signed under penalty of perjury, including the owner’s name, permanent address and country where the individual is fully liable to tax, if any, a description of the owner’s ownership interest in the non-U.S. corporation, including information regarding ownership in any intermediate entities, and certain other information. In addition, we would be required to file a U.S. federal income tax return and list on our U.S. federal income tax return the name and address of each unitholder holding 5% or more of the value of our units who is relied upon to meet the Ownership Test.

      The Publicly Traded Test requires that one or more classes of equity representing more than 50% of the voting power and value in a non-U.S. corporation be “primarily and regularly traded” on an established securities market either in the U.S. or in a foreign country that grants an Equivalent Exemption. For this purpose, if one or more 5% shareholders (i.e., a shareholder holding, actually or constructively, at least 5% of the vote and value of a class of equity) own in the aggregate 50% or more of the vote and value of a

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class of equity, such class of equity will not be treated as primarily and regularly traded on an established securities market.

      The CFC Test requires that the non-U.S. corporation be treated as a controlled foreign corporation for U.S. federal income tax purposes and a qualified U.S. person ownership test is met (for the definition of “controlled foreign corporation” please read the discussion below under “— Consequences of Possible Controlled Foreign Corporation Classification”).

      We are organized under the laws of the Republic of The Marshall Islands. The U.S. Treasury Department has recognized the Republic of The Marshall Islands as a jurisdiction that grants an Equivalent Exemption. Consequently, in the event we were treated as a corporation for U.S. federal income tax purposes, our U.S. Source International Shipping Income (including for this purpose, any such income earned by our subsidiaries that have properly elected to be treated as partnerships or disregarded as entities separate from us for U.S. federal income tax purposes), would be exempt from U.S. federal income taxation provided we meet the Ownership Test or we satisfy either the CFC Test or the Publicly Traded Test. We do not believe that we will meet the CFC Test, as we do not expect to be a CFC (please read below under “— Consequences of Possible Controlled Foreign Corporation Classification”), and while not completely clear, we may not meet the Publicly Traded Test due to Teekay Shipping Corporation’s substantial indirect ownership of us. Nonetheless, as of the date of this prospectus, we believe that we should satisfy the Ownership Test based upon the ownership immediately after the offering of more than 50% of the value of us by Teekay Shipping Corporation.

      Based on information provided by Teekay Shipping Corporation, Teekay Shipping Corporation is organized in the Republic of The Marshall Islands and meets the Publicly Traded Test under current law and under the Final Section 883 Regulations. As long as Teekay Shipping Corporation owns more than 50% of the value of us and satisfies the Publicly Traded Test, we will satisfy the Ownership Test and will qualify for the Section 883 Exemption, provided that Teekay Shipping Corporation provides properly completed ownership statements to us as required under the Final Section 883 Regulations and we satisfy certain substantiation and documentation requirements. As of the date hereof, Teekay Shipping Corporation would be willing to provide us with such ownership statements as long as it is a qualifying shareholder. There is no assurance that Teekay Shipping Corporation will continue to satisfy the requirements for being a qualified shareholder of us (i.e., it will meet the Publicly Traded Test) or that it alone will own more than 50% of the value of our units. At some time in the future, it may become necessary for us to look to our other non-U.S. unitholders to determine whether more than 50% of our units, by value, are owned by non-U.S. unitholders who are qualifying shareholders and certain non-U.S. unitholders may be asked to provide ownership statements, signed under penalty of perjury, with respect to their investment in our units in order for us to qualify for the Section 883 Exemption. If we cannot obtain these statements from unitholders holding, in the aggregate, more than 50% of the value of our units, under the Final Section 883 Regulations, we may not be eligible to claim the Section 883 Exemption, and, therefore, we would be required to pay a 4% tax on the gross amount of our U.S. Source International Shipping Income, thereby reducing the amount of cash available for distribution to unitholders.

      The determination of whether we will satisfy the Ownership Test at any given time depends upon a multitude of factors, including Teekay Shipping Corporation’s ownership of us, whether Teekay Shipping Corporation’s stock is publicly traded, the concentration of ownership of Teekay Shipping Corporation’s own stock and the satisfaction of various substantiation and documentation requirements. There can be no assurance that we will satisfy these requirements at any given time and thus that our U.S. Source International Shipping Income would be exempt from U.S. federal income taxation by reason of Section 883 in any of our taxable years if we were treated as a corporation.

Consequences of Possible PFIC Classification

      A non-United States entity treated as a corporation for U.S. federal income tax purposes will be a PFIC in any taxable year in which, after taking into account the income and assets of the corporation and

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certain subsidiaries pursuant to a “look through” rule, either (1) at least 75% of its gross income is “passive” income (or the income test) or (2) at least 50% of the average value of its assets is attributable to assets that produce passive income or are held for the production of passive income (or the assets test).

      Based upon our current assets and operations, we do not believe that we would be considered to be a PFIC even if we were treated as a corporation. However, legal uncertainties are involved and, in addition, there is no assurance that the nature of our assets, income and operations will remain the same in the future. We are not relying on an opinion of counsel on this issue. There is a meaningful risk that the IRS would consider us to be a PFIC, and no assurance can be given that we would not become a PFIC in the future, in the event we were treated as a corporation for U.S. federal income tax purposes.

      If we were classified as a PFIC, for any year during which a unitholder owns units, he generally will be subject to special rules (regardless of whether we continue thereafter to be a PFIC) with respect to (1) any “excess distribution” (generally, any distribution received by a unitholder in a taxable year that is greater than 125% of the average annual distributions received by the unitholder in the three preceding taxable years or, if shorter, the unitholder’s holding period for the units) and (2) any gain realized upon the sale or other disposition of units. Under these rules:

•  the excess distribution or gain will be allocated ratably over the unitholder’s holding period;

•  the amount allocated to the current taxable year and any year prior to the first year in which we were a PFIC will be taxed as ordinary income in the current year;

•  the amount allocated to each of the other taxable years in the unitholder’s holding period will be subject to U.S. federal income tax at the highest rate in effect for the applicable class of taxpayer for that year; and

•  an interest charge for the deemed deferral benefit will be imposed with respect to the resulting tax attributable to each of these other taxable years.

      Certain elections, such as a qualified electing fund (or QEF) election or mark to market election, may be available to a unitholder if we were classified as a PFIC. If we determine that we are or will be a PFIC, we will provide unitholders with information concerning the potential availability of such elections.

      Under current law, dividends received by individual citizens or residents of the United States from domestic corporations and qualified foreign corporations generally are treated as net capital gains and subject to U.S. federal income tax at reduced rates (generally 15%). However, if we were classified as a PFIC for our taxable year in which we pay a dividend, we would not be considered a qualified foreign corporation, and individuals receiving such dividends would not be eligible for the reduced rate of U.S. federal income tax.

Consequences of Possible Controlled Foreign Corporation Classification

      If more than 50% of either the total combined voting power of our outstanding units entitled to vote or the total value of all of our outstanding units were owned, actually or constructively, by citizens or residents of the United States, U.S. partnerships or corporations, or U.S. estates or trusts (as defined for U.S. federal income tax purposes), each of which owned, actually or constructively, 10% or more of the total combined voting power of our outstanding units entitled to vote (each, a U.S. Shareholder), we could be treated as a controlled foreign corporation (or CFC) at any such time as we are properly classified as a corporation for U.S. federal income tax purposes. U.S. Shareholders of a CFC are treated as receiving current distributions of their shares of certain income of the CFC (not including, under current law, certain undistributed earnings attributable to shipping income) without regard to any actual distributions and are subject to other burdensome U.S. federal income tax and administrative requirements but generally are not also subject to the requirements generally applicable to owners of a PFIC. Although we do not believe we will be a CFC following the Offering, U.S. persons purchasing a substantial interest in us should consider the potential implications of being treated as a U.S. Shareholder in the event we were a CFC in the future.

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Tax Consequences of Ownership of Debt Securities

      A description of the material federal income tax consequences of the acquisition, ownership and disposition of debt securities will be set forth in the prospectus supplement relating to the offering of any debt securities.

NON-UNITED STATES TAX CONSEQUENCES

Marshall Islands Tax Consequences

      The following discussion is based upon the opinion of Watson, Farley & Williams (New York) LLP, our counsel as to matters of the laws of the Republic of The Marshall Islands, regarding the material Marshall Islands tax consequences of our activities to holders of our common units who do not reside in, maintain offices in or engage in business in the Marshall Islands.

      Because we and our subsidiaries do not, and we do not expect that we and our subsidiaries will, conduct business or operations in the Marshall Islands, and because all documentation related to this offering will be executed outside of the Marshall Islands, under current Marshall Islands law holders of our common units will not be subject to Marshall Islands taxation or withholding on distributions, including upon a return of capital, we make to our unitholders. In addition, our unitholders will not be subject to Marshall Islands stamp, capital gains or other taxes on the purchase, ownership or disposition of common units, and they will not be required by the Republic of The Marshall Islands to file a tax return relating to the common units.

      It is the responsibility of each unitholder to investigate the legal and tax consequences, under the laws of pertinent jurisdictions, including the Marshall Islands, of his investment in us. Accordingly, each prospective unitholder is urged to consult, and depend upon, his tax counsel or other advisor with regard to those matters. Further, it is the responsibility of each unitholder to file all state, local and non-U.S., as well as U.S. federal tax returns, that may be required of him.

Canadian Federal Income Tax Consequences

      The following discussion is a summary of the material Canadian federal income tax consequences under the Income Tax Act (Canada) (or the Canada Tax Act), as of the date of this prospectus, that we believe are relevant to holders of our common units who are, at all relevant times, for the purposes of the Canada Tax Act and the Canada-United States Tax Convention 1980 (or the Canada-U.S. Treaty) resident in the United States and who deal at arm’s length with us and Teekay Shipping Corporation (or U.S. Resident Holders).

      Under the Canada Tax Act, no taxes on income (including taxable capital gains) are payable by U.S. Resident Holders in respect of the acquisition, holding, disposition or redemption of the common units, provided that we do not carry on business in Canada and such U.S. Resident Holders do not, for the purposes of the Canada-U.S. Treaty, otherwise have a permanent establishment or fixed base in Canada to which such common units pertain and, in addition, do not use or hold and are not deemed or considered to use or hold such common units in the course of carrying on a business in Canada and, in the case of any U.S. Resident Holders that carry on an insurance business in Canada and elsewhere, such U.S. Resident Holders establish that the common units are not effectively connected with their insurance business carried on in Canada.

      In this connection, we believe that our activities and affairs can be conducted in a manner that we will not be carrying on business in Canada and that U.S. Resident Holders should not be considered to be carrying on business in Canada for purposes of the Canada Tax Act solely by reason of the acquisition, holding, disposition or redemption of their common units. We intend that this is and continues to be the case, notwithstanding that certain services will be provided to Teekay LNG Partners L.P., indirectly through arrangements with Teekay Shipping Limited (a subsidiary of Teekay Shipping Corporation that is resident and based in the Bahamas), by Canadian service providers, as discussed below.

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      Under the Canada Tax Act, a resident of Canada (which may include a foreign corporation the central management and control of which is in Canada) is subject to Canadian tax on its world-wide income, subject to any relief that may be provided by any relevant tax treaty. A non-resident corporation or individual that carries on a business in Canada directly or through a partnership is, subject to any relevant tax treaty, subject to tax in Canada on income attributable to its business (or that of the partnership’s, as the case may be) carried on in Canada. The Canada Tax Act contains special rules that provide assurance to qualifying international shipping corporations that they will not be considered resident in Canada even if they are, in whole or in part, managed from Canada. Further, the Canada Tax Act and many of the tax treaties to which Canada is a party also contain special exemptions for profits derived from international shipping operations.

      We have entered into an agreement with Teekay Shipping Limited for the provision of administrative services, and certain of our operating subsidiaries have entered into agreements with:

•  Teekay Shipping Limited for the provision of advisory, technical, ship management and administrative services; and

•  Teekay LNG Projects Ltd., a Canadian subsidiary of Teekay Shipping Corporation, for the provision of strategic advisory and consulting services.

      Certain of the services that Teekay Shipping Limited provides to us and our operating subsidiaries under the services agreements are and will be obtained by Teekay Shipping Limited through subcontracts with a Canadian subsidiary of Teekay Shipping Corporation. The special rules in the Canada Tax Act and various relevant tax treaties relating to qualifying international shipping corporations and income from international shipping operations may provide relief to our operating subsidiaries to the extent that the services provided to them by Canadian entities would otherwise result in such operating subsidiaries being considered to be resident in Canada or to be taxable in Canada on income from such operations by virtue of carrying on business in Canada. However, such rules would not apply to us, as a holding limited partnership, or to our general partner or unitholders. While we do not believe it to be the case, if the arrangements we have entered into result in our being considered to carry on business in Canada for purposes of the Canada Tax Act, our unitholders would be considered to be carrying on business in Canada and would be required to file Canadian tax returns and, subject to any relief provided in any relevant treaty (including, in the case of U.S. Resident Holders, the Canada-U.S. treaty), would be subject to taxation in Canada on any income that is considered to be attributable to the business carried on by us in Canada.

      We believe that we can conduct our activities and affairs in a manner so that our unitholders should not be considered to be carrying on business in Canada solely as a consequence of the acquisition, holding, disposition or redemption of our common units. Consequently, we believe our unitholders should not be subject to tax filing or other tax obligations in Canada under the Canada Tax Act. However, although we do not intend to do so, there can be no assurance that the manner in which we carry on our activities will not change from time to time as circumstances dictate or warrant in a manner that may cause our unitholders to be carrying on business in Canada for purposes of the Canada Tax Act. Further, the relevant Canadian federal income tax law may change by legislation or judicial interpretation and the Canadian taxing authorities may take a different view than we have of the current law.

      It is the responsibility of each unitholder to investigate the legal and tax consequences, under the laws of pertinent jurisdictions, including Canada, of an investment in us. Accordingly, each prospective unitholder is urged to consult, and depend upon, the unitholder’s tax counsel or other advisor with regard to those matters. Further, it is the responsibility of each unitholder to file all state, local and non-U.S., as well as U.S. federal tax returns, that may be required of the unitholder.

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PLAN OF DISTRIBUTION

      We may sell the securities offered by this prospectus and applicable prospectus supplements:

•  through underwriters or dealers;

•  through agents;

•  directly to purchasers; or

•  through a combination of any such methods of sale.

      If underwriters are used to sell securities, we will enter into an underwriting agreement or similar agreement with them at the time of the sale to them. In that connection, underwriters may receive compensation from us in the form of underwriting discounts or commissions and may also receive commissions from purchasers of the securities for whom they may act as agent. Any such underwriter, dealer or agent may be deemed to be an underwriter within the meaning of the U.S. Securities Act of 1933.

      The applicable prospectus supplement relating to the securities will set forth, among other things:

•  the offering terms, including the name or names of any underwriters, dealers or agents;

•  the purchase price of the securities and the proceeds to us from such sale;

•  any underwriting discounts, concessions, commissions and other items constituting compensation to underwriters, dealers or agents;

•  any initial public offering price;

•  any discounts or concessions allowed or reallowed or paid by underwriters or dealers to other dealers;

•  in the case of debt securities, the interest rate, maturity and any redemption provisions;

•  in the case of debt securities that are convertible into or exchangeable for other securities, the conversion or exchange rate and other terms, conditions and features; and

•  any securities exchanges on which the securities may be listed.

      If underwriters or dealers are used in the sale, the securities will be acquired by the underwriters or dealers for their own account and may be resold from time to time in one or more transactions in accordance with the rules of the New York Stock Exchange:

•  at a fixed price or prices that may be changed;

•  at market prices prevailing at the time of sale;

•  at prices related to such prevailing market prices; or

•  at negotiated prices.

      The securities may be offered to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more of such firms. Unless otherwise set forth in an applicable prospectus supplement, the obligations of underwriters or dealers to purchase the securities will be subject to certain conditions precedent and the underwriters or dealers will be obligated to purchase all the securities if any are purchased. Any public offering price and any discounts or concessions allowed or reallowed or paid by underwriters or dealers to other dealers may be changed from time to time.

      Securities may be sold directly by us or through agents designated by us from time to time. Any agent involved in the offer or sale of the securities in respect of which this prospectus and a prospectus supplement is delivered will be named, and any commissions payable by us to such agent will be set forth, in the prospectus supplement. Unless otherwise indicated in the prospectus supplement, any such agent will be acting on a best efforts basis for the period of its appointment.

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      If so indicated in the prospectus supplement, we will authorize underwriters, dealers or agents to solicit offers from certain specified institutions to purchase securities from us at the public offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such contracts will be subject to any conditions set forth in the prospectus supplement and the prospectus supplement will set forth the commissions payable for solicitation of such contracts. The underwriters and other persons soliciting such contracts will have no responsibility for the validity or performance of any such contracts.

      Underwriters, dealers and agents may be entitled under agreements entered into with us to be indemnified by us against certain civil liabilities, including liabilities under the U.S. Securities Act of 1933, or to contribution by us to payments which they may be required to make. The terms and conditions of such indemnification will be described in an applicable prospectus supplement.

      Underwriters, dealers and agents may be customers of, engage in transactions with, or perform services for us or our affiliates in the ordinary course of business.

      Any underwriters to whom securities are sold by us for public offering and sale may make a market in such securities, but such underwriters will not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given as to the liquidity of the trading market for any securities.

      Certain persons participating in any offering of securities may engage in transactions that stabilize, maintain or otherwise affect the price of the securities offered. In connection with any such offering, the underwriters or agents, as the case may be, may purchase and sell securities in the open market. These transactions may include over-allotment and stabilizing transactions and purchases to cover syndicate short positions created in connection with the offering. Stabilizing transactions consist of certain bids or purchases for the purpose of preventing or retarding a decline in the market price of the securities and syndicate short positions involve the sale by the underwriters or agents, as the case may be, of a greater number of securities than they are required to purchase from us in the offering. The underwriters may also impose a penalty bid, whereby selling concessions allowed to syndicate members or other broker-dealers for the securities sold for their account may be reclaimed by the syndicate if such securities are repurchased by the syndicate in stabilizing or covering transactions. These activities may stabilize, maintain or otherwise affect the market price of the securities, which may be higher than the price that might otherwise prevail in the open market, and if commenced, may be discontinued at any time. These transactions may be effected on the New York Stock Exchange, in the over-the-counter market or otherwise. These activities will be described in more detail in the applicable prospectus supplement.

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SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES

      Teekay LNG Partners L.P. is organized under the laws of the Marshall Islands as a limited partnership. Our general partner is organized under the laws of the Marshall Islands as a limited liability company. The Marshall Islands has a less developed body of securities laws as compared to the United States and provides protections for investors to a significantly lesser extent. Teekay LNG Finance Corp. and some of the Subsidiary Guarantors are also incorporated or organized under the laws of the Marshall Islands. Other Subsidiary Guarantors are organized under the laws of Spain and Luxembourg.

      Most of the directors and officers of our general partner and those of our subsidiaries are residents of countries other than the United States. Substantially all of our and our subsidiaries’ assets and a substantial portion of the assets of the directors and officers of our general partner are located outside the United States. As a result, it may be difficult or impossible for United States investors to effect service of process within the United States upon us, our general partner, our subsidiaries or the directors and officers of our general partner or to realize against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. However, we, Teekay LNG Finance Corp. and the Subsidiary Guarantors have expressly submitted to the jurisdiction of the U.S. federal and New York state courts sitting in the City of New York for the purpose of any suit, action or proceeding arising under the securities laws of the United States or any state in the United States, and we have appointed Watson, Farley & Williams (New York) LLP to accept service of process on our behalf in any such action.

      Watson, Farley & Williams (New York) LLP, our counsel as to Marshall Islands law, Noble & Schneidecker, our counsel as to Luxembourg law and Uría, Menéndez y CIA., Abogados, S.C., our counsel as to Spanish law, have advised us that there is uncertainty as to whether the courts of the Marshall Islands, Luxembourg and Spain, respectively, would (1) recognize or enforce against us, our general partner, Teekay LNG Finance Corp., the Subsidiary Guarantors or the directors, officers, managers or partners of such entities judgments of courts of the United States based on civil liability provisions of applicable U.S. federal and state securities laws or (2) impose liabilities against us, such other entities or the directors, officers, managers or partners of such entities in original actions brought in the Marshall Islands, Luxembourg or Spain based on these respective laws.

LEGAL

      Unless otherwise stated in the applicable prospectus supplement, (a) the validity of the securities and certain other legal matters with respect to the laws of The Republic of the Marshall Islands will be passed upon for us by our counsel as to Marshall Islands law, Watson, Farley & Williams (New York) LLP, (b) the validity of the debt securities under New York law and certain other legal matters will be passed upon for us by Perkins Coie LLP, which may rely on the opinions of Watson, Farley & Williams (New York) LLP for all matters of Marshall Islands law, (c) the validity of the guarantee of Teekay Luxembourg S.a.r.l. under Luxembourg law will be passed upon for us by Noble & Schneidecker and (d) the validity of guarantees of certain other Subsidiary Guarantors under the laws of Spain will be passed upon for us by Uría, Menéndez y CIA., Abogados, S.C. Any underwriter will be advised about other issues relating to any offering by its own legal counsel.

EXPERTS

      The financial statements incorporated in this prospectus by reference to Teekay LNG Partners’ Annual Report on Form 20-F for the year ended December 31, 2005 have been so incorporated in reliance on the report of Ernst & Young LLP, an independent registered public accounting firm, given on the authority of such firm as experts in auditing and accounting. You may contact Ernst & Young LLP at 700 West Georgia Street, Vancouver, British Columbia, V7Y 1C7, Canada.

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EXPENSES

      The following table sets forth costs and expenses, other than any underwriting discounts and commissions, we expect to incur in connection with the issuance and distribution of the securities covered by this prospectus. All amounts are estimated except the SEC registration fee.

U.S. Securities and Exchange Commission registration fee		$	42,800
NASD filing fee			*
Rating agency fees			*
Legal fees and expenses			*
Accounting fees and expenses			*
Printing costs			*
Transfer agent fees			*
Trustee fees			*
	Total	$

*  To be provided in a prospectus supplement or in a Report on Form 6-K subsequently incorporated by reference into this prospectus.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 8. Indemnification of Directors and Officers

Teekay LNG Partners L.P.

      Under the partnership agreement, in most circumstances, Teekay LNG Partners L.P. will indemnify the following persons, to the fullest extent permitted by law, from and against all losses, claims, damages or similar events:

      (1) its general partner;

      (2) any departing general partner;

      (3) any person who is or was an affiliate of the general partner or any departing general partner;

      (4) any person who is or was an officer, director, member or partner of any entity described in (1), (2) or (3) above;

      (5) any person who is or was serving as a director, officer, member, partner, fiduciary or trustee of another person at the request of the general partner or any departing general partner; or

      (6) any person designated by the general partner.

      Any indemnification under these provisions will only be out of the assets of Teekay LNG Partners. Unless it otherwise agrees, the general partner will not be personally liable for, or have any obligation to contribute or lend funds or assets to Teekay LNG Partners to enable it to effectuate, indemnification. Teekay LNG Partners may purchase insurance against liabilities asserted against and expenses incurred by persons for its activities, regardless of whether Teekay LNG Partners would have the power to indemnify the person against liabilities under the partnership agreement.

      Teekay LNG Partners is authorized to purchase (or to reimburse its general partners for the costs of) insurance against liabilities asserted against and expenses incurred by its general partner, its affiliates and such other persons as the general partner may determine and described in the paragraph above, whether or not it would have the power to indemnify such person against such liabilities under the provisions described in the paragraphs above. The general partner has purchased insurance covering its officers and directors against liabilities asserted and expenses incurred in connection with their activities as officers and directors of the general partner or any of its direct or indirect subsidiaries.

Teekay LNG Finance Corp.

      Teekay LNG Finance Corp. is a Marshall Islands corporation. The Marshall Islands Business Corporations Act (or MIBCA) provides that a Marshall Islands corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees, judgments, fines and amounts paid in settlement) actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of no contest, or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe his conduct was unlawful.

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      A Marshall Islands corporation also has the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by him or in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.

      To the extent that a director or officer of a Marshall Islands corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in the preceding paragraphs, or in the defense of a claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid in advance of the final disposition of such action, suit or proceeding as authorized by the board of directors in the specific case upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized in the MIBCA.

      In addition, a Marshall Islands corporation has the power to purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director or officer against any liability asserted against him and incurred by him in such capacity whether or not the corporation would have the power to indemnify him against such liability under the provisions of the MIBCA.

      The MIBCA further provides that indemnification and advancement of expenses provided by, or granted pursuant to, the provisions of the MIBCA shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.

      Teekay LNG Finance Corp.’s bylaws provide that any person who is made party to a proceeding by virtue of being an officer or director of Teekay LNG Finance or, being or having been such a director or officer or an employee of Teekay LNG Finance, serving at the request of Teekay LNG Finance as a director, officer, employee or agent of another corporation or other enterprise, shall be indemnified and held harmless to the fullest extent permitted by the MIBCA against any and all expense, liability, loss (including attorneys’ fees), judgments, fines or penalties and amounts paid in settlement actually incurred or suffered by such person in connection with the proceeding.

      Any underwriting agreement entered into in connection with the sale of the securities offered pursuant to this registration statement may provide for indemnification of officers, directors, members or managers of the registrants and any general partner, including liabilities under the U.S. Securities Act of 1933.

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ITEM 9.     Exhibits and Financial Statement Schedules

      (a) Exhibits

Exhibit
Number				Description
	1	.1	—	Form of Underwriting Agreement*
	4	.1	—	First Amended and Restated Agreement of Limited Partnership of Teekay LNG Partners L.P. dated as of May 10, 2005, as amended by Amendment No. 1 dated as of May 31, 2006 (incorporated by reference to Exhibit 3.2 to the Report on Form 6-K of Teekay LNG Partners L.P. filed with the Securities and Exchange Commission on August 17, 2006)
	4	.2	—	Form of Senior Indenture
	4	.3	—	Form of Subordinated Indenture
	5	.1	—	Opinion of Watson, Farley & Williams (New York) LLP, relating to the legality of the securities being registered by Teekay LNG Partners L.P. and Teekay LNG Finance Corp. and of the guarantees of Teekay LNG Operating L.L.C., African Spirit L.L.C., Asian Spirit L.L.C. and European Spirit L.L.C.
	5	.2	—	Opinion of Perkins Coie LLP, relating to the validity of debt securities being registered
	5	.3	—	Opinion of Noble & Scheidecker relating to the validity of the guarantee of Luxembourg S.a.r.l.
	5	.4	—	Opinion of Uría, Menéndez y CIA., Abogados, S.C. relating to the validity of the guarantees of Teekay Spain, S.L., Teekay II Iberia S.L., Teekay Shipping Spain, S.L., Naviera Teekay Gas, S.L., Naviera Teekay Gas II, S.L., Naviera Teekay Gas III, S.L. and Naviera Teekay Gas IV, S.L.
	8	.1	—	Opinion of Perkins Coie LLP, relating to tax matters
	8	.2	—	Opinion of Watson, Farley & Williams (New York) LLP, relating to tax matters
	12	.1	—	Ratios of earnings to fixed charges
	15	.1	—	Letter regarding Unaudited Interim Financial Information
	23	.1	—	Consent of Ernst & Young LLP
	23	.2	—	Consent of Watson, Farley & Williams (New York) LLP (contained in Exhibit 5.1)
	23	.3	—	Consent of Perkins Coie LLP (contained in Exhibit 5.2)
	23	.4	—	Consent of Noble & Scheidecker (contained in Exhibit 5.3)
	23	.5	—	Consent of Uría, Menéndez y CIA., Abogados, S.C. (contained in Exhibit 5.4)
	24	.1	—	Powers of Attorney (contained on pages II-8 through II-12)
	25	.1	—	Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 under the Senior Indenture
	25	.2	—	Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 under the Subordinated Indenture

*  To be filed by amendment or as an exhibit to a Report on Form 6-K of the Registrant that is incorporated by reference into this registration statement.

      (b) Financial Statement Schedules.

      All supplemental schedules are omitted because of the absence of conditions under which they are required or because the information is shown in the financial statements or notes thereto.

      (c) Reports, Opinions, and Appraisals

      The following reports, opinions, and appraisals are included herein: None.

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ITEM 10.     Undertakings

      Each of the undersigned Registrants hereby undertakes:

      1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

      a. To include any prospectus required by section 10(a)(3) of the Securities Act;

      b. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

      c. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

Provided, however, that paragraphs 1(a), 1(b) and 1(c) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.

      2. That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

      3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

      4. To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Securities Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph 4 and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Securities Act or § 210.3-19 of this chapter if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3.

      5. That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

      a. Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

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      b. Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

      6. That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

      a. Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

      b. Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

      c. The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

      d. Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

      Each undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-5

      Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

      The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act of 1939 in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act.

II-6

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, each of the undersigned registrants certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Nassau, Commonwealth of The Bahamas, on September 28, 2006.

TEEKAY LNG PARTNERS L.P.

By: Teekay GP L.L.C., its General Partner

By:  /s/ Bruce C. Bell

Name: Bruce C. Bell

Title: Secretary

TEEKAY LNG OPERATING L.L.C.

By: Teekay LNG Partners L.P., its sole member

By: Teekay GP L.L.C., its General Partner

By:  /s/ Bruce C. Bell

Name: Bruce C. Bell

Title: Secretary

AFRICAN SPIRIT L.L.C.

By: Teekay LNG Operating L.L.C., its sole member

By: Teekay LNG Partners L.P., its sole member

By: Teekay GP L.L.C., its General Partner

By:  /s/ Bruce C. Bell

Name: Bruce C. Bell

Title: Secretary

ASIAN SPIRIT L.L.C.

By: Teekay LNG Operating L.L.C., its sole member

By: Teekay LNG Partners L.P., its sole member

By: Teekay GP L.L.C., its General Partner

By:  /s/ Bruce C. Bell

Name: Bruce C. Bell

Title: Secretary

EUROPEAN SPIRIT L.L.C.

By: Teekay LNG Operating L.L.C., its sole member

By: Teekay LNG Partners L.P., its sole member

By: Teekay GP L.L.C., its General Partner

By:  /s/ Bruce C. Bell

Name: Bruce C. Bell

Title: Secretary

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POWER OF ATTORNEY

      Each person whose signature appears below appoints Bjorn Moller, Peter Evensen and Bruce C. Bell, and each of them, any of whom may act without the joinder of the other, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any Registration Statement (including any amendment thereto) for this offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or would do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his or her substitute and substitutes, may lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on September 28, 2006.

Signature	Title
/s/ Peter Evensen Peter Evensen	Chief Executive Officer and Chief Financial Officer (Principal Executive, Financial and Accounting Officer), Director of Teekay GP L.L.C. and Authorized Representative in the United States
/s/ C. Sean Day C. Sean Day	Director of Teekay GP L.L.C.
/s/ Bjorn Moller Bjorn Moller	Director of Teekay GP L.L.C.
/s/ Robert E. Boyd Robert E. Boyd	Director of Teekay GP L.L.C.
/s/ Ida Jane Hinkley Ida Jane Hinkley	Director of Teekay GP L.L.C.
/s/ Ihab J.M. Massoud Ihab J.M. Massoud	Director of Teekay GP L.L.C.
/s/ George Watson George Watson	Director of Teekay GP L.L.C.

II-8

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, the undersigned registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Nassau, Commonwealth of the Bahamas, on September 28, 2006.

TEEKAY LNG FINANCE CORP.

By:  /s/ Bruce C. Bell

Name: Bruce C. Bell

Title:   Secretary

POWER OF ATTORNEY

      Each person whose signature appears below appoints Bjorn Moller, Peter Evensen and Bruce C. Bell, and each of them, any of whom may act without the joinder of the other, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any Registration Statement (including any amendment thereto) for this offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or would do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his or her substitute and substitutes, may lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on September 28, 2006.

Signature	Title
/s/ Peter Evensen Peter Evensen	President and Treasurer (Principal Executive, Financial and Accounting Officer), Director and Authorized Representative in the United States
/s/ Bruce C. Bell Bruce C. Bell	Director

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SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, the undersigned registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Luxembourg, on September 28, 2006.

TEEKAY LUXEMBOURG S.A.R.L.

By:  /s/ Arthur J. Bensler

Name: Arthur J. Bensler

Title: Authorized Signatory

POWER OF ATTORNEY

      Each person whose signature appears below appoints Bjorn Moller, Peter Evensen and Bruce C. Bell, and each of them, any of whom may act without the joinder of the other, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any Registration Statement (including any amendment thereto) for this offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or would do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his or her substitute and substitutes, may lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on September 28, 2006.

Signature		Title
Teekay Shipping Corporation
By:	/s/ Arthur J. Bensler Name: Arthur J. Bensler Title:   Executive Vice President and General Counsel	Manager (Principal Executive, Financial and Accounting Officer)
/s/ Bruno Bagnouls Bruno Bagnouls		Manager (Principal Executive, Financial and Accounting Officer)
/s/ Dominique Robyns Dominique Robyns		Manager (Principal Executive, Financial and Accounting Officer)
/s/ Peter Evensen Peter Evensen		Authorized Representative in the United States

II-10

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, each of the undersigned registrants certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Vancouver, British Columbia, on September 28, 2006.

TEEKAY SPAIN, S.L.

By:  /s/ Peter Evensen

Name: Peter Evensen

Title: Authorized Signatory

TEEKAY II IBERIA S.L.

By:  /s/ Peter Evensen

Name: Peter Evensen

Title: Authorized Signatory

TEEKAY SHIPPING SPAIN, S.L.

By:  /s/ Peter Evensen

Name: Peter Evensen

Title: Authorized Signatory

NAVIERA TEEKAY GAS, S.L.

By:  /s/ Peter Evensen

Name: Peter Evensen

Title: Authorized Signatory

NAVIERA TEEKAY GAS II, S.L.

By:  /s/ Peter Evensen

Name: Peter Evensen

Title: Authorized Signatory

II-11

NAVIERA TEEKAY GAS III, S.L.

By:  /s/ Peter Evensen

Name: Peter Evensen

Title: Authorized Signatory

NAVIERA TEEKAY GAS IV, S.L.

By:  /s/ Peter Evensen

Name: Peter Evensen

Title: Authorized Signatory

POWER OF ATTORNEY

      Each person whose signature appears below appoints Bjorn Moller, Peter Evensen and Bruce C. Bell, and each of them, any of whom may act without the joinder of the other, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any Registration Statement (including any amendment thereto) for this offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or would do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his or her substitute and substitutes, may lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on September 28, 2006.

Signature	Title
/s/ Peter Evensen Peter Evensen	Chairman (Principal Executive, Financial and Accounting Officer), Director and Authorized Representative in the United States
/s/ Arthur J. Bensler Arthur J. Bensler	Director
/s/ Andrés Luna Abella Andrés Luna Abella	Director

II-12

INDEX TO EXHIBITS

Exhibit
Number				Description
	1	.1	—	Form of Underwriting Agreement*
	4	.1	—	First Amended and Restated Agreement of Limited Partnership of Teekay LNG Partners L.P. dated as of May 10, 2005, as amended by Amendment No. 1 dated as of May 31, 2006 (incorporated by reference to Exhibit 3.2 to the Report on Form 6-K of Teekay LNG Partners L.P. filed with the Securities and Exchange Commission on August 17, 2006)
	4	.2	—	Form of Senior Indenture
	4	.3	—	Form of Subordinated Indenture
	5	.1	—	Opinion of Watson, Farley & Williams (New York) LLP, relating to the legality of the securities being registered by Teekay LNG Partners L.P. and Teekay LNG Finance Corp. and of the guarantees of Teekay LNG Operating L.L.C., African Spirit L.L.C., Asian Spirit L.L.C. and European Spirit L.L.C.
	5	.2	—	Opinion of Perkins Coie LLP, relating to the validity of debt securities being registered
	5	.3	—	Opinion of Noble & Scheidecker relating to the validity of the guarantee of Luxembourg S.a.r.l.
	5	.4	—	Opinion of Uría, Menéndez y CIA., Abogados, S.C. relating to the validity of the guarantees of Teekay Spain, S.L., Teekay II Iberia S.L., Teekay Shipping Spain, S.L., Naviera Teekay Gas, S.L., Naviera Teekay Gas II, S.L., Naviera Teekay Gas III, S.L. and Naviera Teekay Gas IV, S.L.
	8	.1	—	Opinion of Perkins Coie LLP, relating to tax matters
	8	.2	—	Opinion of Watson, Farley & Williams (New York) LLP, relating to tax matters
	12	.1	—	Ratios of earnings to fixed charges
	15	.1	—	Letter regarding Unaudited Interim Financial Information
	23	.1	—	Consent of Ernst & Young LLP
	23	.2	—	Consent of Watson, Farley & Williams (New York) LLP (contained in Exhibit 5.1)
	23	.3	—	Consent of Perkins Coie LLP (contained in Exhibit 5.2)
	23	.4	—	Consent of Noble & Scheidecker (contained in Exhibit 5.3)
	23	.5	—	Consent of Uría, Menéndez y CIA., Abogados, S.C. (contained in Exhibit 5.4)
	24	.1	—	Powers of Attorney (contained on pages II-8 through II-12)
	25	.1	—	Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 under the Senior Indenture
	25	.2	—	Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 under the Subordinated Indenture

*  To be filed by amendment or as an exhibit to a Report on Form 6-K of the Registrant that is incorporated by reference into this registration statement.

EX-4.2

                                                                     EXHIBIT 4.2

                  FORM OF INDENTURE FOR SENIOR DEBT SECURITIES

                            TEEKAY LNG PARTNERS, L.P.

                                       AND

                            TEEKAY LNG FINANCE CORP.,
                                   AS ISSUERS,

                                       AND

                          TEEKAY LNG OPERATING L.L.C.,
                             AFRICAN SPIRIT L.L.C.,
                              ASIAN SPIRIT L.L.C.,
                             EUROPEAN SPIRIT L.L.C.,
                           TEEKAY LUXEMBOURG S.A.R.L.,
                               TEEKAY SPAIN, S.L.,
                             TEEKAY II IBERIA S.L.,
                          TEEKAY SHIPPING SPAIN, S.L.,
                            NAVIERA TEEKAY GAS, S.L.,
                          NAVIERA TEEKAY GAS II, S.L.,
                          NAVIERA TEEKAY GAS III, S.L.

                                       AND
                           NAVIERA TEEKAY GAS IV, S.L.

                       AS POTENTIAL SUBSIDIARY GUARANTORS,

                                       AND

                              THE BANK OF NEW YORK,

                                   AS TRUSTEE

                                   ----------

                                SENIOR INDENTURE

                            DATED AS OF _______, 20__

                                 DEBT SECURITIES
                                   (UNLIMITED)



                                TABLE OF CONTENTS

                                                                          
ARTICLE I. Definitions....................................................     2

   SECTION 1.01.    Certain Terms Defined.................................     2

   SECTION 1.02.    Other Definitions.....................................    11

   SECTION 1.03.    Incorporation by Reference of Trust Indenture Act.....    12

   SECTION 1.04.    Rules of Construction.................................    12

ARTICLE II. Debt Securities...............................................    12

   SECTION 2.01.    Forms Generally.......................................    12

   SECTION 2.02.    Form of Trustee's Certificate of Authentication.......    13

   SECTION 2.03.    Principal Amount; Issuable in Series..................    13

   SECTION 2.04.    Execution of Debt Securities..........................    16

   SECTION 2.05.    Authentication and Delivery of Debt Securities........    17

   SECTION 2.06.    Denomination of Debt Securities.......................    19

   SECTION 2.07.    General Provisions for Registration of Transfer and
                    Exchange..............................................    19

   SECTION 2.08.    Temporary Debt Securities.............................    20

   SECTION 2.09.    Mutilated, Destroyed, Lost or Stolen Debt Securities..    21

   SECTION 2.10.    Cancellation of Surrendered Debt Securities...........    22

   SECTION 2.11.    Provisions of the Indenture and Debt Securities for
                    the Sole Benefit of the Parties and the Holders.......    22

   SECTION 2.12.    Payment of Interest; Rights Preserved.................    23

   SECTION 2.13.    Securities Denominated in Foreign Currencies..........    23




                                       -i-



                                                                          
   SECTION 2.14.    Wire Transfers........................................    24

   SECTION 2.15.    Securities Issuable in the Form of a Global
                    Security..............................................    24

   SECTION 2.16.    Medium Term Securities................................    27

   SECTION 2.17.    Defaulted Interest....................................    27

   SECTION 2.18.    Judgments.............................................    28

   SECTION 2.19.    CUSIP Numbers.........................................    29

ARTICLE III. Redemption of Debt Securities................................    29

   SECTION 3.01.    Applicability of Article..............................    29

   SECTION 3.02.    Notice of Redemption; Selection of Debt Securities....    29

   SECTION 3.03.    Payment of Debt Securities Called for Redemption......    31

   SECTION 3.04.    Mandatory and Optional Sinking Funds..................    32

   SECTION 3.05.    Redemption of Debt Securities for Sinking Fund........    33

ARTICLE IV. Particular Covenants..........................................    35

   SECTION 4.01.    Payment of Principal of, and Premium, if any, and
                    Interest on, Debt Securities..........................    35

   SECTION 4.02.    Maintenance of Offices or Agencies for Registration of
                    Transfer, Exchange and Payment of Debt Securities.....    35

   SECTION 4.03.    Appointment to Fill a Vacancy in the Office
                    of Trustee............................................    36

   SECTION 4.04.    Duties of Paying Agents, etc..........................    36

   SECTION 4.05.    Statement by Officers as to Default...................    37

   SECTION 4.06.    Corporate, Partnership or Limited Liability
                    Company Existence.....................................    38

   SECTION 4.07.    Calculation of Original Issue Discount................    38




                                      -ii-



                                                                          
   SECTION 4.08.    Stay, Extension and Usury Laws........................    38

ARTICLE V. Holders' Lists and Reports by the Issuers and the Trustee......    39

   SECTION 5.01.    Issuers to Furnish Trustee Information as to Names and
                    Addresses of Holders; Preservation of Information.....    39

   SECTION 5.02.    Communications to Holders; Meetings of Holders........    39

   SECTION 5.03.    Reports by Issuers....................................    40

   SECTION 5.04.    Reports by Trustee....................................    41

   SECTION 5.05.    Record Dates for Action by Holders....................    41

ARTICLE VI. Remedies of the Trustee And Holders in Event of Default.......    42

   SECTION 6.01.    Events of Default.....................................    42

   SECTION 6.02.    Collection of Indebtedness by Trustee, etc............    44

   SECTION 6.03.    Application of Moneys Collected by Trustee............    45

   SECTION 6.04.    Limitation on Suits by Holders........................    46

   SECTION 6.05.    Remedies Cumulative; Delay or Omission in Exercise of
                    Rights Not a Waiver of Default........................    47

   SECTION 6.06.    Rights of Holders of Majority in Principal Amount of
                    Debt Securities to Direct Trustee and to
                    Waive Default.........................................    48

   SECTION 6.07.    Trustee to Give Notice of Defaults Known to It, but
                    May Withhold Such Notice in Certain Circumstances.....    48

   SECTION 6.08.    Requirement of an Undertaking to Pay Costs in Certain
                    Suits Under the Indenture or Against the Trustee......    49

ARTICLE VII. Concerning the Trustee.......................................    49

   SECTION 7.01.    Certain Duties and Responsibilities...................    49

   SECTION 7.02.    Certain Rights of Trustee.............................    51




                                      -iii-



                                                                          
   SECTION 7.03.    Trustee Not Liable for Recitals in Indenture or in
                    Debt Securities.......................................    52

   SECTION 7.04.    Trustee, Paying Agent or Registrar May Own Debt
                    Securities............................................    53

   SECTION 7.05.    Moneys Received by Trustee to Be Held in Trust........    53

   SECTION 7.06.    Compensation and Reimbursement........................    53

   SECTION 7.07.    Right of Trustee to Rely on an Officers' Certificate
                    Where No Other Evidence Specifically Prescribed.......    54

   SECTION 7.08.    Separate Trustee; Replacement of Trustee..............    54

   SECTION 7.09.    Successor Trustee by Merger...........................    56

   SECTION 7.10.    Eligibility; Disqualification.........................    56

   SECTION 7.11.    Preferential Collection of Claims Against Issuers.....    57

   SECTION 7.12.    Compliance with Tax Laws..............................    57

ARTICLE VIII. Concerning the Holders......................................    57

   SECTION 8.01.    Evidence of Action by Holders.........................    57

   SECTION 8.02.    Proof of Execution of Instruments and of Holding of
                    Debt Securities.......................................    57

   SECTION 8.03.    Who May Be Deemed Owner of Debt Securities............    58

   SECTION 8.04.    Instruments Executed by Holders Bind Future Holders...    58

ARTICLE IX. Amendment, Supplement and Waiver..............................    59

   SECTION 9.01.    Without Consent of Holders of Debt Securities.........    59

   SECTION 9.02.    With Consent of Holders of Debt Securities............    61

   SECTION 9.03.    Effect of Supplemental Indentures.....................    62




                                      -iv-



                                                                          
   SECTION 9.04.    Debt Securities May Bear Notation of Changes by
                    Supplemental Indentures...............................    63

ARTICLE X. Consolidation, Merger, Sale or Conveyance......................    63

   SECTION 10.01.   Consolidations and Mergers of the Issuers.............    63

   SECTION 10.02.   Rights and Duties of Successor Company................    64

ARTICLE XI. Discharge of Indenture........................................    64

   SECTION 11.01.   Termination of the Issuers' and the Subsidiary
                    Guarantors' Obligations...............................    64

   SECTION 11.02.   Application of Trust Money............................    69

   SECTION 11.03.   Repayment to Issuers or Subsidiary Guarantors.........    69

   SECTION 11.04.   Indemnity for U.S. Government Obligations.............    69

   SECTION 11.05.   Reinstatement.........................................    70

ARTICLE XII. Guarantee....................................................    70

   SECTION 12.01.   Unconditional Guarantee...............................    70

   SECTION 12.02.   Execution and Delivery of Guarantee...................    72

   SECTION 12.03.   Limitation on Liability of the Subsidiary
                    Guarantors............................................    73

   SECTION 12.04.   Release of Subsidiary Guarantors from Guarantee.......    73

   SECTION 12.05.   Contribution..........................................    74

ARTICLE XIII. Miscellaneous Provisions....................................    74

   SECTION 13.01.   Successors and Assigns of Issuers Bound by
                    Indenture.............................................    74

   SECTION 13.02.   Acts of Board, Committee or Officer of Successor
                    Company Valid.........................................    75

   SECTION 13.03.   Required Notices or Demands...........................    75




                                       -v-



                                                                          
   SECTION 13.04.   Indenture and Debt Securities to Be Construed in
                    Accordance with the Laws of the State of New York.....    76

   SECTION 13.05.   Officers' Certificate and Opinion of Counsel to Be
                    Furnished Upon Application or Demand by the Issuers...    76

   SECTION 13.06.   Payments Due on Legal Holidays........................    77

   SECTION 13.07.   Provisions Required by Trust Indenture Act to
                    Control...............................................    77

   SECTION 13.08.   Computation of Interest on Debt Securities............    78

   SECTION 13.09.   Rules by Trustee, Paying Agent and Registrar..........    78

   SECTION 13.10.   No Recourse Against Others............................    78

   SECTION 13.11.   Severability..........................................    78

   SECTION 13.12.   Effect of Headings....................................    78

   SECTION 13.13.   Indenture May Be Executed in Counterparts.............    78

   SECTION 13.14.   Consent to Service; Jurisdiction......................    78

   SECTION 13.15.   Waiver of Trial by Jury...............................    79




                                      -vi-


     THIS SENIOR INDENTURE, dated as of ______, 20__, is among TEEKAY LNG
PARTNERS, L.P., a Marshall Islands limited partnership (the "Partnership"),
TEEKAY LNG FINANCE CORP., a Marshall Islands corporation ("Finance Corp."),
TEEKAY LNG OPERATING L.L.C., a Marshall Islands limited liability company (the
"Operating Company"), AFRICAN SPIRIT L.L.C., a Marshall Islands limited
liability company ("African Spirit"), ASIAN SPIRIT L.L.C., a Marshall Islands
limited liability company ("Asian Spirit"), EUROPEAN SPIRIT L.L.C., a Marshall
Islands limited liability company ("European Spirit"), TEEKAY LUXEMBOURG
S.A.R.L. ("Luxco"), a Luxembourg company, TEEKAY SPAIN, S.L., a Spanish company
("Teekay Spain"), TEEKAY II IBERIA S.L., a Spanish company ("Iberia"), TEEKAY
SHIPPING SPAIN, S.L., a Spanish company ("Teekay Shipping Spain"), NAVIERA
TEEKAY GAS, S.L., a Spanish company ("Naviera I"), NAVIERA TEEKAY GAS II, S.L.,
a Spanish company ("Naviera II"), NAVIERA TEEKAY GAS III, S.L., a Spanish
company ("Naviera III"), and NAVIERA TEEKAY GAS IV, S.L., a Spanish company
("Naviera IV" and, together with Operating Company, African Spirit, Asian
Spirit, European Spirit, Luxco, Teekay Spain, Iberia, Teekay Shipping Spain,
Naviera I, Naviera II and Naviera III, collectively the "Potential Subsidiary
Guarantors"), and THE BANK OF NEW YORK, a New York banking corporation (the
"Trustee").

                                    RECITALS

     WHEREAS, Teekay GP L.L.C., a Marshall Islands limited liability company
(the "General Partner"), as general partner of the Partnership, Finance Corp.
and the Potential Subsidiary Guarantors have duly authorized the execution and
delivery of this Indenture to provide for the issuance from time to time of the
debentures, notes, bonds or other evidences of indebtedness to be issued in one
or more series in an unlimited aggregate principal amount (herein collectively
called the "Debt Securities"), and related Guarantees, if any, of Debt
Securities, as provided in this Indenture.

     WHEREAS, The Partnership, Finance Corp. and the Potential Subsidiary
Guarantors are members of the same consolidated group of companies. The
Potential Subsidiary Guarantors will derive direct and indirect economic benefit
from the issuance of the Debt Securities. Accordingly, each Potential Subsidiary
Guarantor has duly authorized the execution and delivery of this Indenture in
light of the possibility that such Potential Subsidiary Guarantor will provide
its full, unconditional and joint and several guarantee of a series of Debt
Securities to the extent provided in or pursuant to this Indenture.



     WHEREAS, all things necessary to make this Indenture a valid agreement of
the Issuers, in accordance with its terms, have been done.

                                    AGREEMENT

     NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for good and valuable consideration, the sufficiency of which
is hereby acknowledged, the Issuers and the Trustee hereby agree with each
other, for the equal and proportionate benefit of the respective Holders from
time to time of the Debt Securities or any series thereof, as follows:

                             ARTICLE I. DEFINITIONS

SECTION 1.01. CERTAIN TERMS DEFINED.

     The terms defined in this Section 1.01 (except as herein otherwise
expressly provided or unless the context otherwise requires) for all purposes of
the Indenture and of any Indenture supplemental hereto shall have the respective
meanings specified in this Section 1.01. All other terms used in the Indenture
which are defined in the Trust Indenture Act or which are by reference therein
defined in the Securities Act (except as herein otherwise expressly provided or
unless the context otherwise requires), shall have the meanings assigned to such
terms in the Trust Indenture Act and in the Securities Act as in force as of the
date of original execution of the Indenture.

     "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. The Trustee may request and may conclusively rely upon an Officers'
Certificate to determine whether any Person is an Affiliate of any specified
Person.

     "Agent" means any Registrar or paying agent.

     "Bankruptcy Law" means Title 11, U.S. Code, as amended from time to time,
or any similar foreign, federal or state law for the relief of debtors.

     "Board of Directors" means (a) with respect to the Partnership, the board
of directors of the General Partner, and (b) with respect to Finance Corp., its
board of directors, or, in each case, with respect to any determination or
resolution required or


                                      -2-



permitted to be made hereunder, any duly authorized committee or subcommittee of
such board. All references in the Indenture to "Board of Directors" shall be
deemed to refer to the Board of Directors of the Partnership, unless otherwise
expressly indicated or the context otherwise requires.

     "Board Resolution" means a copy of a resolution certified by the
appropriate person to have been duly adopted by the Board of Directors or any
applicable committee thereof and to be in full force and effect on the date of
such certification.

     "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in the Borough of Manhattan,
the City of New York, New York, or the city in which the Corporate Trust Office
of the Trustee is located, are authorized or obligated by law or executive order
to close.

     "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

     "Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of the Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.

     "Corporate Trust Office of the Trustee" means the principal corporate trust
office of the Trustee, at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of the
Indenture is located at 101 Barclay Street, Fl. 21W, New York, New York 10286,
Phone: 212-815-5915, Fax: 212-815-5803, Attention: Corporate Trust
Administration, and as may be located at such other address as the Trustee may
give notice to the Issuers and the Subsidiary Guarantors.

     "Currency" means Dollars or Foreign Currency.

     "Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.

     "Debt" of any Person at any date means any obligation created or assumed by
such Person for the repayment of borrowed money and any guarantee thereof.

     "Debt Security" or "Debt Securities" has the meaning stated in the first
recital of the Indenture and more particularly means any debt security or debt
securities, as the case may be, of any series authenticated and delivered under
the Indenture.


                                      -3-



     "Default" means any event, act or condition that is, or with the passage of
time or the giving of notice or both would be, an Event of Default.

     "Depositary" means, unless otherwise specified by the Issuers pursuant to
either Section 2.03 or 2.15, with respect to registered Debt Securities of any
series issuable or issued in whole or in part in the form of one or more Global
Securities, The Depository Trust Company, New York, New York, or any successor
thereto registered as a clearing agency under the Exchange Act or other
applicable statute or regulations.

     "Dollar" or "$" means such currency of the United States as at the time of
payment is legal tender for the payment of public and private debts.

     "Dollar Equivalent" means, with respect to any monetary amount in a Foreign
Currency, at any time for the determination thereof, the amount of Dollars
obtained by converting such Foreign Currency involved in such computation into
Dollars at the spot rate for the purchase of Dollars with the applicable Foreign
Currency as quoted by Citibank, N.A. (unless another comparable financial
institution is designated by the Issuers) in New York, New York at approximately
11:00 A.M. (New York time) on the date two Business Days prior to such
determination.

     "Equity Interests" means:

     (1) in the case of a corporation, capital stock;

     (2) in the case of an association or a business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock;

     (3) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited);

     (4) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of assets of,
the issuing Person; and

     (5) all warrants, options or other rights to acquire any of the interests
described in clauses (1) through (4) above (but excluding any debt security that
is convertible into, or exchangeable for, any of the interests described in
clauses (1) through (4) above).

     "Event of Default" has the meaning specified in Section 6.01.


                                      -4-



     "Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended,
or any successor statute.

     "Finance Corp." means Finance Corp., a Marshall Islands corporation, and,
subject to the provisions of Article X, shall also include its successors and
assigns.

     "Floating Rate Security" means a Debt Security that provides for the
payment of interest at a variable rate determined periodically by reference to
an interest rate index specified pursuant to Section 2.03.

     "Foreign Currency" means a currency issued or adopted by the government of
any country other than the United States or a composite currency the value of
which is determined by reference to the values of the currencies of any group of
countries.

     "GAAP" means accounting principles generally accepted in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other Person as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.

     "General Partner" means Teekay GP L.L.C., and its successors and permitted
assigns as general partner of the Partnership.

     "Global Security" means, with respect to any series of Debt Securities
issued hereunder, a Debt Security that is executed by the Issuers and
authenticated and delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction, all in accordance with the Indenture, or the
applicable Board Resolution and set forth in an Officers' Certificate, which
shall be registered in the name of the Depositary or its nominee and which shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, all the Outstanding Debt Securities of such series or any
portion thereof, in either case having the same terms, including, without
limitation, the same original issue date, date or dates on which principal is
due and interest rate or method of determining interest.

     "guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Debt or other obligation of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation of such other Person (whether arising
by virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for purposes of assuring
in any other manner the obligee of such Debt


                                      -5-



or other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided, however, that the term
"guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "guarantee" used as a verb has a
corresponding meaning.

     "Guarantee" has the meaning assigned thereto in Section 12.01.

     "Holder," "Holder of Debt Securities" or other similar terms mean, with
respect to a Registered Security, the Registered Holder.

     "Indenture" means this instrument as originally executed, or, if amended or
supplemented as herein provided, as so amended or supplemented, and shall
include the form and terms of particular series of Debt Securities as
contemplated hereunder, whether or not a supplemental indenture is entered into
with respect thereto; provided, however, that, if at any time more than one
Person is acting as Trustee under this instrument, "Indenture" shall mean, with
respect to any one or more series of Debt Securities for which such Person is
Trustee, this instrument as originally executed or, if amended or supplemented
as herein provided, as so amended or supplemented, and shall include the forms
and terms of the particular series of Debt Securities for which such Person is
Trustee established as contemplated by Section 2.03, exclusive, however, of any
provisions or terms which relate solely to other series of Debt Securities for
which such Person is not Trustee, regardless of when such provisions or terms
were adopted, and exclusive of any provisions or terms adopted by means of one
or more supplemental indentures hereto executed and delivered after such Person
had become such Trustee but to which such Person, as such Trustee, was not a
party.

     "Issuer Order" means a written order signed in the name of the applicable
Issuer or Issuers and any applicable Subsidiary Guarantors by two Officers of
the General Partner and delivered to the Trustee.

     "Issuers" means the Partnership and Finance Corp., and, subject to the
provisions of Article X, shall also include their successors and permitted
assigns.

     "Lien" means, with respect to any asset, any mortgage, lien (statutory or
otherwise), pledge, charge, security interest, hypothecation, assignment for
security, claim, preference, priority or encumbrance of any kind in respect of
such asset, whether or not filed, recorded or otherwise perfected under
applicable law, including any conditional sale or other title retention
agreement or any lease in the nature thereof, any option or other agreement to
grant a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statute) of
any jurisdiction, other than a precautionary financing statement respecting a
lease not intended as a security agreement.


                                      -6-



     "Officer" means the Chairman of the Board, the Chief Executive Officer, any
Vice President, the Chief Financial Officer, Treasurer, Secretary, any Assistant
Treasurer or any Assistant Secretary of a Person.

     "Officers' Certificate" means a certificate signed by two Officers of a
Person. Each such certificate shall include the statements provided for in
Section 13.05, if applicable.

     "Opinion of Counsel" means an opinion in writing signed by legal counsel
for the Issuers or the Subsidiary Guarantors, as applicable (which counsel may
be an employee of the Issuers or the Subsidiary Guarantors or outside counsel
for the Issuers or the Subsidiary Guarantors). Each such opinion shall include
the statements provided for in Section 13.05, if applicable.

     "Original Issue Discount Debt Security" means any Debt Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration or acceleration of the maturity thereof pursuant to
Section 6.01.

     "Outstanding" when used with respect to any series of Debt Securities,
means, as of the date of determination, all Debt Securities of that series
theretofore authenticated and delivered under the Indenture, except:

     (1) Debt Securities of that series theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;

     (2) Debt Securities of that series for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Trustee or any
paying agent (other than the Partnership or Finance Corp.) in trust or set aside
and segregated in trust by the Issuers (if either of the Issuers shall act as
its own paying agent) for the holders of such Debt Securities; provided,
however, that, if such Debt Securities are to be redeemed, notice of such
redemption has been duly given pursuant to the Indenture or provision therefore
satisfactory to the Trustee has been made; and

     (3) Debt Securities of that series which have been paid pursuant to Section
2.09 or in exchange for or in lieu of which other Debt Securities have been
authenticated and delivered pursuant to the Indenture, other than any such Debt
Securities in respect of which there shall have been presented to the Trustee
proof satisfactory to it that such Debt Securities are held by a bona fide
purchaser in whose hands such Debt Securities are valid obligations of the
Issuers; provided, however, that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities of any series have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Debt Securities owned by the Issuers or any other obligor upon the
Debt Securities or any Subsidiary of the


                                      -7-



Issuers or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Debt Securities which a Responsible Officer of the
Trustee actually knows to be so owned shall be so disregarded. Debt Securities
so owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Debt Securities and that the pledgee is not one
of the Issuers or any other obligor upon the Debt Securities or a Subsidiary of
the Issuers or of such other obligor. In determining whether the Holders of the
requisite principal amount of outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
the principal amount of an Original Issue Discount Debt Security that shall be
deemed to be Outstanding for such purposes shall be the amount of the principal
thereof that would be due and payable as of the date of such determination upon
a declaration of acceleration of the maturity thereof pursuant to Section 6.01.
In determining whether the Holders of the requisite principal amount of the
Outstanding Debt Securities of any series have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, the principal
amount of a Debt Security denominated in one or more Foreign Currencies or
currency units that shall be deemed to be Outstanding for such purposes shall be
the Dollar Equivalent, determined in the manner provided as contemplated by
Section 2.03 on the date of original issuance of such Debt Security, of the
principal amount (or, in the case of any Original Issue Discount Security, the
Dollar Equivalent on the date of original issuance of such Security of the
amount determined as provided in the preceding sentence above) of such Debt
Security.

     "Partnership" means Teekay LNG Partners, L.P., a Marshall Islands limited
partnership, and, subject to the provisions of Article X, shall also include its
successors and assigns.

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

     "Place of Payment" means, when used with respect to the Debt Securities of
any series, the place or places where the principal of, and premium, if any, and
interest on, the Debt Securities of that series are payable as specified
pursuant to Section 2.03.

     "Redemption Date" means, when used with respect to any Debt Security to be
redeemed, the date fixed for such redemption by or pursuant to this Indenture.


                                      -8-



     "Registered Holder" means the Person in whose name a Registered Security is
registered in the Debt Security Register (as defined in Section 2.07(a)).

     "Registered Security" means any Debt Security registered as to principal
and interest in the Debt Security Register (as defined in Section 2.07(a)).

     "Registrar" has the meaning set forth in Section 2.07(a).

     "Responsible Officer" means, when used with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee or any other officer of
the Trustee performing functions similar to those performed by the persons who
at the time shall be such officers, and any other officer of the Trustee to whom
corporate trust matters are referred because of his knowledge of and familiarity
with the particular subject.

     "Securities Act" means the U.S. Securities Act of 1933, as amended, or any
successor statute.

     "Significant Subsidiary" means a Subsidiary of the Partnership that is a
"significant subsidiary" of the Partnership, as such term is defined in Rule
1-02(w) of Regulation S-X under the Securities Act as of the date hereof.

     "Stated Maturity" means, at any time, with respect to any installment of
interest or principal on any series of Debt Securities, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such indebtedness or such later date as such
documentation shall provide at that time, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.

     "Subsidiary" means, with respect to any Person:

     (1) any corporation, association or other business entity of which more
than 50% of the Voting Stock is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof); and

     (2) any partnership (whether general or limited) or limited liability
company (a) the sole general partner or the managing general partner or managing
member of which is such Person or a Subsidiary of such Person, or (b) if there
are more than a single general partner or member, either (i) the only general
partners or managers of which are such Person and/or one or more Subsidiaries of
such Person (or any combination thereof) or (ii) such Person owns or controls,
directly or


                                      -9-



indirectly, a majority of the outstanding general partner interests, member
interests or other Voting Stock of such partnership or limited liability
company, respectively.

     "Subsidiary Guarantors" means, with respect to any series of Debt
Securities, the Person or Persons, if any, named in accordance with Section
2.03(7) as the "Subsidiary Guarantors" in or pursuant to a Board Resolution of
the applicable Issuer or Issuers and set forth in an Officers' Certificate of
each applicable Issuer, or established in one or more Indentures supplemental
hereto, prior to the issuance of Debt Securities of such series, until a
successor Person or Persons shall have become such pursuant to the applicable
provisions of the Indenture, and thereafter "Subsidiary Guarantors" with respect
to such series of Debt Securities shall mean such successor Person or Persons,
and any other Subsidiary of the Partnership who may execute the Indenture, or a
supplement thereto, for the purpose of providing a guarantee for such series of
Debt Securities pursuant to the Indenture. If a series of Debt Securities does
not have any Subsidiary Guarantors, all references in the Indenture to
Subsidiary Guarantors shall be ignored with respect to such series of Debt
Securities.

     "Trust Indenture Act" means (except as otherwise expressly provided herein)
the U.S. Trust Indenture Act of 1939, as amended, or any successor statute.

     "Trustee" initially means The Bank of New York and any other Person or
Persons appointed as such from time to time pursuant to Section 7.08, and,
subject to the provisions of Article VII, includes its or their successors and
assigns. If at any time there is more than one such Person, "Trustee" as used
with respect to the Debt Securities of any series shall mean the Trustee with
respect to the Debt Securities of that series.

     "Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.

     "United States" means the United States of America (including the States
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction.

     "U.S. Government Obligations" means securities that are (a) direct
obligations of the United States for the payment of which its full faith and
credit is pledged; (b) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States, which, in either case, under clause (a) or (b) above, are not
callable or redeemable at the option of the issuers thereof; or (c) depository
receipts issued by a bank or trust company as custodian with respect to any such
U.S. Government Obligations or a specific payment of interest on or principal of
any such U.S. Government Obligation held by


                                      -10-



such custodian for the account of the holder of a depository receipt, provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation evidenced by such depository receipt.

     "Voting Stock" of any Person as of any date means the Equity Interests of
such Person pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the board of
directors, managers, general partners or trustees of any Person (regardless of
whether, at the time, Equity Interests of any other class or classes shall have,
or might have, voting power by reason of the occurrence of any contingency) or,
with respect to a partnership (whether general or limited), any general partner
interest in such partnership.

     "Yield to Maturity" means the yield to maturity calculated at the time of
issuance of a series of Debt Securities, or, if applicable, at the most recent
redetermination of interest on such series and calculated in accordance with
accepted financial practice.

SECTION 1.02. OTHER DEFINITIONS.



TERM                                  SECTION IN WHICH DEFINED
- ----                                  ------------------------
                                   
"Debt Security Register............           2.07
"Defaulted Interest"...............           2.17
"Designated Currency"..............           2.18
"Funding Guarantor"................           12.05
"Guarantee"........................           12.01
"Iberia"...........................           Preamble
"Luxco"............................           Preamble
"mandatory sinking fund payment"...           3.04
"Naviera I"........................           Preamble
"Naviera II".......................           Preamble
"Naviera III"......................           Preamble
"Naviera IV".......................           Preamble
"Operating Company"................           Preamble
"optional sinking fund payment"....           3.04
"Potential Subsidiary Guarantors"..           Preamble
"Servicios"........................           Preamble
"Successor Company"................           10.01
"Teekay Shipping Spain"............           Preamble
"Teekay Spain".....................           Preamble



                                      -11-



SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

     The Indenture is subject to the mandatory provisions of the Trust Indenture
Act which are incorporated by reference in and made a part of the Indenture. The
following Trust Indenture Act terms have the following meanings:

     "indenture securities" means the Debt Securities;

     "indenture security holder" means a Holder;

     "indenture to be qualified" means the Indenture;

     "indenture trustee" or "institutional trustee" means the Trustee; and

     "obligors" on the indenture securities means the Issuers, any Subsidiary
Guarantors and any other obligors on the Debt Securities.

     All other Trust Indenture Act terms used in the Indenture that are defined
by the Trust Indenture Act, reference to another statute or defined by rules of
the Commission have the meanings assigned to them by such definitions.

SECTION 1.04. RULES OF CONSTRUCTION.

     Unless the context otherwise requires:

     (1) a term has the meaning assigned to it;

     (2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;

     (3) "or" is not exclusive;

     (4) "including" means including without limitation; and

     (5) words in the singular include the plural and words in the plural
include the singular.

                           ARTICLE II. DEBT SECURITIES

SECTION 2.01. FORMS GENERALLY.

     The Debt Securities of each series shall be in substantially the form
established without the approval of any Holder by or pursuant to a Board
Resolution of the applicable Issuer or Issuers or in one or more Indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as


                                      -12-



are required or permitted by the Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as the applicable Issuer or Issuers may deem appropriate (and, if not contained
in a supplemental Indenture entered into in accordance with Article IX, as are
not prohibited by the provisions of the Indenture) or as may be required or
appropriate to comply with any law or with any rules made pursuant thereto or
with any rules of any securities exchange on which such series of Debt
Securities may be listed, or to conform to general usage, or as may,
consistently herewith, be determined by the officers executing such Debt
Securities as evidenced by their execution of the Debt Securities.

     The definitive Debt Securities of each series shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Debt Securities,
as evidenced by their execution of such Debt Securities.

SECTION 2.02. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

     The Trustee's certificate of authentication on all Debt Securities
authenticated by the Trustee shall be in substantially the following form:

     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

     This is one of the Debt Securities of the series designated therein and
referred to in the within-mentioned Indenture.

THE BANK OF NEW YORK,
as Trustee


By
   ----------------------------------
   Authorized Signatory

Dated:
       -------------------------------

SECTION 2.03. PRINCIPAL AMOUNT; ISSUABLE IN SERIES.

     The aggregate principal amount of Debt Securities which may be issued,
executed, authenticated, delivered and outstanding under the Indenture is
unlimited. The Debt Securities may be issued in one or more series. There shall
be established, without the approval of any Holders, in or pursuant to a Board
Resolution of the applicable Issuer or Issuers and set forth in an Officers'
Certificate of each applicable Issuer, or established in one or more Indentures
supplemental hereto, prior to the issuance of Debt Securities of any series, any
or all of the following:


                                      -13-



     (1) the title of the Debt Securities of the series (which shall distinguish
the Debt Securities of the series from all other Debt Securities);

     (2) any limit upon the aggregate principal amount of the Debt Securities of
the series which may be authenticated and delivered under the Indenture (except
for Debt Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Debt Securities of the series
pursuant to this Article);

     (3) the date or dates on which the principal and premium, if any, of the
Debt Securities of the series are payable;

     (4) the rate or rates (which may be fixed or variable) at which the Debt
Securities of the series shall bear interest, if any, or the method of
determining such rate or rates, the date or dates from which such interest shall
accrue, the interest payment dates on which such interest shall be payable, or
the method by which such date will be determined, and in the case of Registered
Securities, the record dates for the determination of Holders thereof to whom
such interest is payable; and the basis upon which interest will be calculated
if other than that of a 360-day year of twelve 30-day months;

     (5) the Place or Places of Payment, if any, in addition to or instead of
the Corporate Trust Office of the Trustee, where the principal of, and interest
on, Debt Securities of the series shall be payable;

     (6) the price or prices at which, the period or periods within which and
the terms and conditions upon which Debt Securities of the series may be
redeemed, in whole or in part, at the option of the Issuers or otherwise;

     (7) whether Debt Securities of the series are entitled to the benefits of
any Guarantee of any Subsidiary Guarantors pursuant to this Indenture;

     (8) the obligation, if any, of the Issuers to redeem, purchase or repay
Debt Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof, and the price or prices at
which and the period or periods within which and the terms and conditions upon
which Debt Securities of the series shall be redeemed, purchased or repaid, in
whole or in part, pursuant to such obligations;

     (9) the terms, if any, upon which the Debt Securities of the series may be
convertible into or exchanged for Equity Interests, other Debt Securities or
other securities of any kind of the Partnership, Finance Corp. or any other
obligor or issuer and the terms and conditions upon which such conversion or
exchange shall be effected, including the initial conversion or exchange price
or rate, the conversion or


                                      -14-



exchange period and any other provisions in addition to or in lieu of those
described herein;

     (10) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Debt Securities of the series shall be
issuable;

     (11) if the amount of principal of or any premium or interest on Debt
Securities of the series may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts will be determined;

     (12) if the principal amount payable at the Stated Maturity of Debt
Securities of the series will not be determinable as of any one or more dates
prior to such Stated Maturity, the amount which will be deemed to be such
principal amount as of any such date for any purpose, including the principal
amount thereof which will be due and payable upon any maturity other than the
Stated Maturity or which will be deemed to be Outstanding as of any such date
(or, in any such case, the manner in which such deemed principal amount is to be
determined); and the manner of determining the equivalent thereof in the
currency of the United States of America for purposes of the definition of
Dollar Equivalent;

     (13) any changes or additions to Article XI or in any defined term used in
Article XI;

     (14) if other than Dollars, the coin or Currency or Currencies or units of
two or more Currencies in which payment of the principal of and premium, if any,
and interest on Debt Securities of the series shall be payable;

     (15) if other than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section 6.01 or
provable in bankruptcy pursuant to Section 6.02;

     (16) the terms, if any, of the transfer, mortgage, pledge or assignment as
security for the Debt Securities of the series of any properties, assets,
moneys, proceeds, securities or other collateral, including whether certain
provisions of the Trust Indenture Act are applicable and any corresponding
changes to provisions of the Indenture as currently in effect;

     (17) any addition to or change in the Events of Default with respect to the
Debt Securities of the series and any change in the right of the Trustee or the
Holders to declare the principal of and interest on, such Debt Securities due
and payable;


                                      -15-


     (18) if the Debt Securities of the series shall be issued, in whole or in
part, in the form of a Global Security or Securities, the terms and conditions,
if any, upon which such Global Security or Securities may be exchanged, in whole
or in part, for other individual Debt Securities in definitive registered form;
and the Depositary for such Global Security or Securities and the form of any
legend or legends to be borne by any such Global Security or Securities in
addition to or in lieu of the legend referred to in Section 2.15;

     (19) any trustees, authenticating or paying agents, transfer agents or
registrars;

     (20) the applicability of, and any addition to or change in the covenants
and definitions currently set forth in the Indenture or in the terms currently
set forth in Article X;

     (21) the terms, if any, of any guarantee of the payment of principal of,
and premium, if any, and interest on, Debt Securities of the series and any
corresponding changes to the provisions of the Indenture as currently in effect;

     (22) with regard to Debt Securities of the series that do not bear
interest, the dates for certain required reports to the Trustee;

     (23) whether Finance Corp. will be a co-issuer of the Debt Securities of
the series;

     (24) applicable CUSIP Numbers; and

     (25) any other terms of the Debt Securities of the series (which terms
shall not be prohibited by the provisions of the Indenture).

     All Debt Securities of any one series appertaining thereto shall be
substantially identical except as to denomination and except as may otherwise be
provided in or pursuant to such Board Resolutions and as set forth in such
Officers' Certificates or in any such Indenture supplemental hereto.

SECTION 2.04. EXECUTION OF DEBT SECURITIES.

     Two Officers of the General Partner shall sign the Debt Securities on
behalf of the Partnership and, if applicable, Finance Corp. Such signatures may
be the manual or facsimile signatures of the present or any future such
authorized Officers and may be imprinted or otherwise reproduced on the Debt
Securities. The seals of the Issuers, if any, may be in the form of a facsimile
thereof and may be impressed, affixed, imprinted or otherwise reproduced on the
Debt Securities.


                                      -16-



     Only such Debt Securities as shall bear thereon a certificate of
authentication substantially in the form hereinbefore recited, signed manually
by the Trustee, shall be entitled to the benefits of the Indenture or be valid
or obligatory for any purpose. Such certificate by the Trustee upon any Debt
Security executed by the applicable Issuer or Issuers shall be conclusive
evidence that the Debt Security so authenticated has been duly authenticated and
delivered hereunder.

     In case any Officer of the General Partner who shall have signed any of the
Debt Securities shall cease to be such Officer before the Debt Securities so
signed shall have been authenticated and delivered by the Trustee, or disposed
of by the Issuers, such Debt Securities nevertheless may be authenticated and
delivered or disposed of as though the Person who signed such Debt Securities
had not ceased to be such Officer of the General Partner; and any Debt Security
may be signed on behalf of the Issuers by such Persons as, at the actual date of
the execution of such Debt Security, shall be the proper Officers of the General
Partner, although at the date of such Debt Security or of the execution of the
Indenture any such Person was not such Officer.

SECTION 2.05. AUTHENTICATION AND DELIVERY OF DEBT SECURITIES.

     At any time and from time to time after the execution and delivery of the
Indenture, the Issuers may deliver Debt Securities of any series executed by the
Issuers to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver such Debt Securities to or upon an Issuer Order. The
Debt Securities shall be dated the date of their authentication. In
authenticating such Debt Securities and accepting the additional
responsibilities under the Indenture in relation to such Debt Securities, the
Trustee shall be entitled to receive, and (subject to Section 7.01) shall be
fully protected in relying upon:

     (1) a copy of any Board Resolution of each of the Issuers, certified by the
Secretary or Assistant Secretary of each of the Issuers, authorizing the terms
of issuance of any series of Debt Securities;

     (2) an executed supplemental Indenture, if any;

     (3) an Officers' Certificate; and

     (4) an Opinion of Counsel prepared in accordance with Section 12.05
substantially to the effect that:

          (a) the form of such Debt Securities has been established by or
     pursuant to a Board Resolution of the applicable Issuer or Issuers or by a


                                      -17-



     supplemental Indenture as permitted by Section 2.01 in conformity with the
     provisions of the Indenture;

          (b) the terms of such Debt Securities and any related Guarantees have
     been established by or pursuant to a Board Resolution of the applicable
     Issuer or Issuers or by a supplemental Indenture as permitted by Section
     2.03 in conformity with the provisions of the Indenture;

          (c) such Debt Securities and Guarantees, when authenticated and
     delivered by the Trustee and issued by the applicable Issuer or Issuers in
     the manner and subject to any conditions specified in such Opinion of
     Counsel, will constitute valid and legally binding obligations of the
     applicable Issuer or Issuers and Subsidiary Guarantors, as applicable,
     enforceable in accordance with their terms except as (i) the enforceability
     thereof may be limited by bankruptcy, insolvency, fraudulent conveyance or
     similar laws affecting the enforcement of creditors' rights generally and
     (ii) rights of acceleration and the availability of equitable remedies may
     be limited by equitable principles of general applicability.

          (d) the Issuers and any Subsidiary Guarantors have the authority to
     issue such Debt Securities and related Guarantees and have duly taken all
     necessary action with respect to such issuance; and

          (e) such other matters as the Trustee may reasonably request.

     Such Opinion of Counsel need express no opinion as to whether a court in
the United States would render a money judgment in a Currency other than
Dollars.

     The Trustee shall have the right to decline to authenticate and deliver any
Debt Securities under this Section 2.05 if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if the
Trustee, in good faith by its board of directors or trustees, executive
committee or a trust committee of directors, trustees or vice presidents, shall
determine that such action would expose the Trustee to personal liability to
existing Holders.

     The Trustee may appoint an authenticating agent reasonably acceptable to
the Issuers to authenticate Debt Securities of any series. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Debt
Securities whenever the Trustee may do so. Each reference in the Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, paying agent or agent
for service of notices and demands.


                                      -18-



SECTION 2.06. DENOMINATION OF DEBT SECURITIES.

     Unless otherwise provided in the form of Debt Security for any series, the
Debt Securities of each series shall be issuable only as Registered Securities
in such denominations as shall be specified or contemplated by Section 2.03. In
the absence of any such specification with respect to the Debt Securities of any
series, the Debt Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof.

SECTION 2.07. GENERAL PROVISIONS FOR REGISTRATION OF TRANSFER AND EXCHANGE.

     (a) The Issuers shall keep or cause to be kept a register for each series
of Registered Securities issued hereunder (hereinafter collectively referred to
as the "Debt Security Register"), in which, subject to such reasonable
regulations as they may prescribe, the Issuers shall provide for the
registration of Registered Securities and the transfer of Registered Securities
as provided in this Article II. At all reasonable times the Debt Security
Register shall be open for inspection by the Trustee. Subject to Section 2.15,
upon due presentment for registration of transfer of any Registered Security at
any office or agency to be maintained by the Issuers in accordance with the
provisions of Section 4.02, the Issuers shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Registered Security or Registered Securities of authorized denominations for a
like aggregate principal amount.

     Unless and until otherwise determined by a Board Resolution of each of the
Issuers, the register of the Issuers for the purpose of registration, exchange
or registration of transfer of the Registered Securities shall be kept at the
Corporate Trust Office of the Trustee and, for this purpose, the Trustee shall
be designated "Registrar". No prior notice to the Holders of Debt Securities is
required to effect the designation of a substitute Registrar by the Issuers.

     Registered Securities of any series (other than a Global Security) may be
exchanged for a like aggregate principal amount of Registered Securities of the
same series of other authorized denominations. Subject to Section 2.15,
Registered Securities to be exchanged shall be surrendered at the office or
agency to be maintained by the Issuers as provided in Section 4.02, and the
Issuers shall execute and the Trustee shall authenticate and deliver in exchange
therefor the Registered Security or Registered Securities that the Holder making
the exchange shall be entitled to receive.

     (b) All Registered Securities presented or surrendered for registration of
transfer, exchange or payment shall (if so required by the Issuers, the Trustee
or the


                                      -19-



Registrar) be duly endorsed or be accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Issuers, the Subsidiary
Guarantors (if applicable), the Trustee and the Registrar, duly executed by the
Registered Holder or his attorney duly authorized in writing.

     All Debt Securities issued in exchange for or upon transfer of Debt
Securities shall be the legal, valid and binding obligations of the Issuers,
evidencing the same debt, and entitled to the same benefits under the Indenture
as the Debt Securities surrendered for such exchange or transfer.

     No service charge shall be made for any exchange or registration of
transfer of Debt Securities (except as provided by Section 2.09), but the
Issuers may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto, other than those
expressly provided in the Indenture to be made at the Issuers' own expense or
without expense or without charge to the Holders.

     The Issuers shall not be required (a) to issue, register the transfer of or
exchange any Debt Securities of a series either (i) during a period beginning 15
Business Days next preceding any selection for redemption or repurchase of Debt
Securities of such series and ending on the close of business on the day of
mailing the relevant notice of redemption or repurchase or (ii) between a record
date and the next succeeding interest payment date, or (b) to register the
transfer of or exchange any Debt Security called for redemption or repurchase
(except, in the case of Debt Securities to be redeemed or repurchased in part,
the portion not to be redeemed or repurchased).

     Specific procedures for registration of transfer and exchange of any series
of Debt Securities may be set forth in the applicable supplemental Indenture for
such Debt Securities.

SECTION 2.08. TEMPORARY DEBT SECURITIES.

     Pending the preparation of definitive Debt Securities of any series, the
Issuers may execute and the Trustee shall authenticate and deliver temporary
Debt Securities (printed, lithographed, photocopied, typewritten or otherwise
produced) of any authorized denomination, and substantially in the form of the
definitive Debt Securities in lieu of which they are issued, and with such
omissions, insertions and variations as may be appropriate for temporary Debt
Securities, all as may be determined by the Issuers with the concurrence of the
Trustee. Temporary Debt Securities may contain such reference to any provisions
of the Indenture as may be appropriate. Every temporary Debt Security shall be
executed by the Issuers and be


                                      -20-



authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Debt Securities.

     If temporary Debt Securities of any series are issued, the Issuers will
cause definitive Debt Securities of such series to be prepared without
unreasonable delay. After the preparation of definitive Debt Securities of such
series, the temporary Debt Securities of such series shall be exchangeable for
definitive Debt Securities of such series upon surrender of the temporary Debt
Securities of such series at the office or agency of the Issuers at a Place of
Payment for such series, without charge to the Holder thereof, except as
provided in Section 2.07 in connection with a transfer, and upon surrender for
cancellation of any one or more temporary Debt Securities of any series, the
Issuers shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Debt Securities of the same
series of authorized denominations and of like tenor. Until so exchanged,
temporary Debt Securities of any series shall in all respects be entitled to the
same benefits under the Indenture as definitive Debt Securities of such series.

     Upon any exchange of a portion of a temporary Global Security for a
definitive Global Security or for the individual Debt Securities represented
thereby pursuant to Section 2.07 or this Section 2.08, the temporary Global
Security shall be endorsed by the Trustee to reflect the reduction of the
principal amount evidenced thereby, whereupon the principal amount of such
temporary Global Security shall be reduced for all purposes by the amount so
exchanged and endorsed.

SECTION 2.09. MUTILATED, DESTROYED, LOST OR STOLEN DEBT SECURITIES.

     If (i) any mutilated Debt Security is surrendered to the Trustee at the
Corporate Trust Office of the Trustee (in the case of Registered Securities) or
(ii) the Issuers and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Debt Security, and there is delivered to the
Issuers and the Trustee such security or indemnity as may be required by them to
save each of them and any paying agent harmless, and neither the Issuers nor the
Trustee receives written notice that such Debt Security has been acquired by a
bona fide purchaser, then the Issuers shall execute and, upon an Issuer Order,
the Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Debt Security, a new Debt Security of
the same series of like tenor, form, terms and principal amount, bearing a
number not contemporaneously Outstanding. Upon the issuance of any substituted
Debt Security, the Issuers 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 connected therewith. In case any Debt Security which has
matured or is about to mature or which has been called for redemption shall
become mutilated or be destroyed, lost or stolen, the Issuers may, instead of
issuing a


                                      -21-



substituted Debt Security, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated Debt Security) if the
applicant for such payment shall furnish the Issuers and the Trustee with such
security or indemnity as either may require to save it harmless from all risk,
however remote, and, in case of destruction, loss or theft, evidence to the
satisfaction of the Issuers and the Trustee of the destruction, loss or theft of
such Debt Security and of the ownership thereof.

     Every substituted Debt Security of any series issued pursuant to the
provisions of this Section 2.09 by virtue of the fact that any Debt Security is
destroyed, lost or stolen shall constitute an original additional contractual
obligation of the Issuers, whether or not the destroyed, lost or stolen Debt
Security shall be found at any time, and shall be entitled to all the benefits
of the Indenture equally and proportionately with any and all other Debt
Securities of that series duly issued hereunder. All Debt Securities shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Debt Securities, and shall preclude any and all other rights or
remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender, in each case to the
fullest extent permitted by law.

SECTION 2.10. CANCELLATION OF SURRENDERED DEBT SECURITIES.

     All Debt Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to the Issuers or any paying agent or
a Registrar, be delivered to the Trustee for cancellation by it, or if
surrendered to the Trustee, shall be canceled by it, and no Debt Securities
shall be issued in lieu thereof except as expressly permitted by any of the
provisions of the Indenture. All canceled Debt Securities held by the Trustee
shall be disposed of by the Trustee in its customary manner. On request of the
Issuers, the Trustee shall deliver to the Issuers canceled Debt Securities held
by the Trustee. If the Issuers shall acquire any of the Debt Securities,
however, such acquisition shall not operate as a redemption or satisfaction of
the indebtedness represented thereby unless and until the same are delivered or
surrendered to the Trustee for cancellation. The Issuers may not issue new Debt
Securities to replace Debt Securities it has redeemed, paid or delivered to the
Trustee for cancellation.

SECTION 2.11. PROVISIONS OF THE INDENTURE AND DEBT SECURITIES FOR THE SOLE
     BENEFIT OF THE PARTIES AND THE HOLDERS.

     Nothing in the Indenture or in the Debt Securities, expressed or implied,
shall give or be construed to give to any Person, other than the parties hereto,
the Holders


                                      -22-



or any Registrar or paying agent, any legal or equitable right, remedy or claim
under or in respect of the Indenture, or under any covenant, condition or
provision herein contained, all its covenants, conditions and provisions being
for the sole benefit of the parties hereto, the Holders and any Registrar and
paying agents.

SECTION 2.12. PAYMENT OF INTEREST; RIGHTS PRESERVED.

     (a) Interest on any Registered Security that is payable and is punctually
paid or duly provided for on any interest payment date shall be paid to the
Person in whose name such Registered Security is registered at the close of
business on the regular record date for such interest notwithstanding the
cancellation of such Registered Security upon any transfer or exchange
subsequent to the regular record date. Payment of interest on Registered
Securities shall be made at the Corporate Trust Office of the Trustee (except as
otherwise specified pursuant to Section 2.03), or at the option of the Issuers,
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Debt Security Register or, if provided pursuant to Section
2.03 and in accordance with arrangements satisfactory to the Trustee, at the
option of the Registered Holder by wire transfer to an account designated by the
Registered Holder.

     (b) Subject to the foregoing provisions of this Section 2.12 and Section
2.17, each Debt Security of a particular series delivered under the Indenture
upon registration of transfer of or in exchange for or in lieu of any other Debt
Security of the same series shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Debt Security.

SECTION 2.13. SECURITIES DENOMINATED IN FOREIGN CURRENCIES.

     (a) Except as otherwise specified pursuant to Section 2.03 for Registered
Securities of any series, payment of the principal of, and premium, if any, and
interest on, Registered Securities of such series will be made in Dollars.

     (b) For the purposes of calculating the principal amount of Debt Securities
of any series denominated in a Foreign Currency or in units of two or more
Foreign Currencies for any purpose under the Indenture, the principal amount of
such Debt Securities at any time Outstanding shall be deemed to be the Dollar
Equivalent of such principal amount as of the date of any such calculation.

     In the event any Foreign Currency or currencies or units of two or more
Currencies in which any payment with respect to any series of Debt Securities
may be made ceases to be a freely convertible Currency on United States Currency
markets, for any date thereafter on which payment of principal of, or premium,
if any, or interest on, the Debt Securities of a series is due, the Issuers
shall select the Currency


                                      -23-



of payment for use on such date, all as provided in the Debt Securities of such
series. In such event, the Issuers shall, as provided in the Debt Securities of
such series, notify the Trustee of the Currency which they have selected to
constitute the funds necessary to meet the Issuers' obligations or such payment
date and of the amount of such Currency to be paid. Such amount shall be
determined as provided in the Debt Securities of such series. The payment to the
Trustee with respect to such payment date shall be made by the Issuers solely in
the Currency so selected.

SECTION 2.14. WIRE TRANSFERS.

     Notwithstanding any other provision to the contrary in the Indenture, the
Issuers may make any payment of monies required to be deposited with the Trustee
on account of principal of, or premium, if any, or interest on, the Debt
Securities (whether pursuant to optional or mandatory redemption payments,
interest payments or otherwise) by wire transfer of immediately available funds
to an account designated by the Trustee on or before the date such moneys are to
be paid to the Holders of the Debt Securities in accordance with the terms
hereof.

SECTION 2.15. SECURITIES ISSUABLE IN THE FORM OF A GLOBAL SECURITY.

     (a) If the Issuers shall establish pursuant to Sections 2.01 and 2.03 that
the Debt Securities of a particular series are to be issued in whole or in part
in the form of one or more Global Securities, then the Issuers shall execute and
the Trustee or its agent shall, in accordance with Section 2.05, authenticate
and deliver, such Global Security or Securities, which (i) shall represent, and
shall be denominated in an amount equal to the aggregate principal amount of,
the Outstanding Debt Securities of such series to be represented by such Global
Security or Securities, or such portion thereof as the Issuers shall specify in
an Officers' Certificate, (ii) shall be registered in the name of the Depositary
for such Global Security or Securities or its nominee, (iii) shall be delivered
by the Trustee or its agent to the Depositary or pursuant to the Depositary's
instruction and (iv) shall bear a legend substantially to the following effect:
"Unless and until it is exchanged in whole or in part for the individual Debt
Securities represented hereby, this Global Security may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor Depositary or a nominee
of such successor Depositary", or such other legend as may then be required by
the Depositary for such Global Security or Securities.

     (b) Notwithstanding any other provision of this Section 2.15 or of Section
2.07 to the contrary, and subject to the provisions of paragraph (c) below,
unless the terms of a Global Security expressly permit such Global Security to
be


                                      -24-



exchanged in whole or in part for definitive Debt Securities in registered form,
a Global Security may be transferred, in whole but not in part and in the manner
provided in Section 2.07, only by the Depositary to a nominee of the Depositary
for such Global Security, or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary, or by the Depositary or a nominee of the
Depositary to a successor Depositary for such Global Security selected or
approved by the Issuers, or to a nominee of such successor Depositary.

     (c) (i) If at any time the Depositary for a Global Security or Securities
notifies the Issuers that it is unwilling or unable to continue as Depositary
for such Global Security or Securities or if at any time the Depositary for the
Debt Securities for such series shall no longer be eligible or in good standing
under the Exchange Act or other applicable statute, rule or regulation, the
Issuers shall appoint a successor Depositary with respect to such Global
Security or Securities. If a successor Depositary for such Global Security or
Securities is not appointed by the Issuers within 90 days after the Issuers
receive such notice or become aware of such ineligibility, the Issuers shall
execute, and the Trustee or its agent, upon receipt of an Issuer Order for the
authentication and delivery of such individual Debt Securities of such series in
exchange for such Global Security, will authenticate and deliver, individual
Debt Securities of such series of like tenor and terms in definitive form in an
aggregate principal amount equal to the principal amount of the Global Security
in exchange for such Global Security or Securities.

          (ii) The Issuers may at any time and in their sole discretion
determine that the Debt Securities of any series or portion thereof issued or
issuable in the form of one or more Global Securities shall no longer be
represented by such Global Security or Securities. In such event the Issuers
will execute, and the Trustee, upon receipt of an Issuer Order for the
authentication and delivery of individual Debt Securities of such series in
exchange in whole or in part for such Global Security, will authenticate and
deliver individual Debt Securities of such series of like tenor and terms in
definitive form in an aggregate principal amount equal to the principal amount
of such series or portion thereof in exchange for such Global Security or
Securities.

          (iii) If specified by the Issuers pursuant to Sections 2.01 and 2.03
with respect to Debt Securities issued or issuable in the form of a Global
Security, the Depositary for such Global Security may surrender such Global
Security in exchange in whole or in part for individual Debt Securities of such
series of like tenor and terms in definitive form on such terms as are
acceptable to the Issuers, the Trustee and such Depositary. Thereupon the
Issuers shall execute, and the Trustee or its agent upon receipt of an Issuer
Order for the authentication and delivery of definitive Debt Securities of such
series shall authenticate and deliver, without service charge, (1) to


                                      -25-



each Person specified by such Depositary a new Debt Security or Securities of
the same series of like tenor and terms and of any authorized denomination as
requested by such Person in aggregate principal amount equal to and in exchange
for such Person's beneficial interest in the Global Security, and (2) to such
Depositary a new Global Security of like tenor and terms and in an authorized
denomination equal to the difference, if any, between the principal amount of
the surrendered Global Security and the aggregate principal amount of Debt
Securities delivered to Holders thereof, unless such Global Security is endorsed
by the Trustee or other custodian to reflect a reduction of such aggregate
principal amount, in which case no new Global Security need be authenticated and
delivered.

          (iv) In any exchange provided for in any of the preceding three
paragraphs, the Issuers will execute and the Trustee or its agent will
authenticate and deliver individual Debt Securities. Upon the exchange of the
entire principal amount of a Global Security for individual Debt Securities,
such Global Security shall be canceled by the Trustee or its agent. Except as
provided in the preceding paragraph, Registered Securities issued in exchange
for a Global Security pursuant to this Section 2.15 shall be registered in such
names and in such authorized denominations as the Depositary for such Global
Security, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee or the Registrar. The Trustee or the
Registrar shall deliver such Registered Securities to the Persons in whose names
such Registered Securities are so registered.

          (v) Payments in respect of the principal of and interest on any Debt
Securities registered in the name of the Depositary or its nominee will be
payable to the Depositary or such nominee in its capacity as the registered
owner of such Global Security. The Issuers and the Trustee may treat the Person
in whose name the Debt Securities, including the Global Security, are registered
as the owner thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. None of the Issuers, the Trustee, any Registrar,
the paying agent or any agent of the Issuers or the Trustee will have any
responsibility or liability for (1) any aspect of the records relating to or
payments made on account of the beneficial ownership interests of the Global
Security by the Depositary or its nominee or any of the Depositary's direct or
indirect participants, or for maintaining, supervising or reviewing any records
of the Depositary, its nominee or any of the Depositary's direct or indirect
participants relating to the beneficial ownership interests of the Global
Security, (2) the payments to the beneficial owners of the Global Security of
amounts paid to the Depositary or its nominee, or (3) any other matter relating
to the actions and practices of the Depositary, its nominee or any of the
Depositary's direct or indirect participants. None of the Issuers, the Trustee
or any such agent will be liable for any delay by the Depositary, its nominee,
or any of the Depositary's direct or indirect participants in identifying the
beneficial owners of the Debt Securities, and the Issuers


                                      -26-



and the Trustee may conclusively rely on, and will be protected in relying on,
instructions from the Depositary or its nominee for all purposes (including with
respect to the registration and delivery, and the respective principal amounts,
of the Debt Securities to be issued).

SECTION 2.16. MEDIUM TERM SECURITIES.

     Notwithstanding any contrary provision herein, if all Debt Securities of a
series are not to be originally issued at one time, it shall not be necessary
for the Issuers to deliver to the Trustee an Officers' Certificate, a Board
Resolution, a supplemental Indenture, an Opinion of Counsel or a written order
or any other document otherwise required pursuant to Section 2.01, 2.03, 2.05 or
13.05 at or prior to the time of authentication of each Debt Security of such
series if such documents are delivered to the Trustee or its agent at or prior
to the authentication upon original issuance of the first such Debt Security of
such series to be issued; provided, however, that any subsequent request by the
Issuers to the Trustee to authenticate Debt Securities of such series upon
original issuance shall constitute a representation and warranty by the Issuers
that, as of the date of such request, the statements made in the Officers'
Certificate delivered pursuant to Section 2.05 or 13.05 shall be true and
correct as if made on such date and that the Opinion of Counsel delivered at or
prior to such time of authentication of an original issuance of Debt Securities
shall specifically state that it shall relate to all subsequent issuances of
Debt Securities of such series that are identical to the Debt Securities issued
in the first issuance of Debt Securities of such series.

     An Issuer Order delivered by the Issuers to the Trustee in the
circumstances set forth in the preceding paragraph may provide that Debt
Securities which are the subject thereof will be authenticated and delivered by
the Trustee or its agent on original issue from time to time upon the written
order of Persons designated in such written order and that such Persons are
authorized to determine, consistent with the Officers' Certificates,
supplemental Indenture or the applicable Board Resolutions relating to such
written order, such terms and conditions of such Debt Securities as are
specified in such Officers' Certificates, supplemental Indenture or such Board
Resolutions.

SECTION 2.17. DEFAULTED INTEREST.

     Any interest on any Debt Security of a particular series which is payable,
but is not punctually paid or duly provided for, on the dates and in the manner
provided in the Debt Securities of such series and in the Indenture (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
Registered Holder thereof on the relevant record date by virtue of having been
such Registered Holder, and such


                                      -27-



Defaulted Interest may be paid by the Issuers, at their election in each case,
as provided in clause (i) or (ii) below:

     (i) The Issuers may elect to make payment of any Defaulted Interest to the
Persons in whose names the Registered Securities of such series are registered
at the close of business on a special record date for the payment of such
Defaulted Interest, which shall be fixed in the following manner: The Issuers
shall notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each such Registered Security of such series and the date of the
proposed payment, and at the same time the Issuers shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as provided in this clause (i). Thereupon the Trustee
shall fix a special record date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify the
Issuers of such special record date and, in the name and at the expense of the
Issuers, shall cause notice of the proposed payment of such Defaulted Interest
and the special record date therefor to be mailed, first class postage prepaid,
to each Holder thereof at its address as it appears in the Debt Security
Register, not less than 10 days prior to such special record date. Notice of the
proposed payment of such Defaulted Interest and the special record date therefor
having been so mailed, such Defaulted Interest shall be paid to the Persons in
whose names the Registered Securities of such series are registered at the close
of business on such special record date.

     (ii) The Issuers may make payment of any Defaulted Interest on the
Registered Securities of such series in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Registered
Securities of such series may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Issuers to the Trustee of the
proposed payment pursuant to this clause (ii), such manner of payment shall be
deemed practicable by the Trustee.

SECTION 2.18. JUDGMENTS.

     The Issuers may provide pursuant to Section 2.03 for Debt Securities of any
series that (a) the obligation, if any, of the Issuers to pay the principal of,
and premium, if any, and interest on, the Debt Securities of any series in a
Foreign Currency or Dollars (the "Designated Currency") as may be specified
pursuant to Section 2.03 is of the essence and agrees that, to the fullest
extent possible under applicable law, judgments in respect of Debt Securities of
such series shall be given in


                                      -28-



the Designated Currency; (b) the obligation of the Issuers to make payments in
the Designated Currency of the principal of, and premium, if any, and interest
on, such Debt Securities shall, notwithstanding any payment in any other
Currency (whether pursuant to a judgment or otherwise), be discharged only to
the extent of the amount in the Designated Currency that the Holder receiving
such payment may, in accordance with normal banking procedures, purchase with
the sum paid in such other Currency (after any premium and cost exchange) on the
business day in the country of issue of the Designated Currency or in the
international banking community (in the case of a composite currency)
immediately following the day on which such Holder receives such payment; (c) if
the amount in the Designated Currency that may be so purchased for any reason
falls short of the amount originally due, the Issuers shall pay such additional
amounts as may be necessary to compensate for such shortfall; and (d) any
obligation of the Issuers not discharged by such payment shall be due as a
separate and independent obligation and, until discharged as provided herein,
shall continue in full force and effect.

SECTION 2.19. CUSIP NUMBERS.

     The Issuers in issuing the Debt Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided, however, that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Debt Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other identification
numbers printed on the Debt Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers. The Issuers will promptly
notify the Trustee of any change in the "CUSIP" numbers.

                   ARTICLE III. REDEMPTION OF DEBT SECURITIES

SECTION 3.01. APPLICABILITY OF ARTICLE.

     The provisions of this Article shall be applicable to the Debt Securities
of any series which are redeemable before their Stated Maturity except as
otherwise specified as contemplated by Section 2.03 for Debt Securities of such
series.

SECTION 3.02. NOTICE OF REDEMPTION; SELECTION OF DEBT SECURITIES.

     In case the Issuers shall desire to exercise the right to redeem all or, as
the case may be, any part of the Debt Securities of any series in accordance
with their terms, a Board Resolution of each applicable Issuer or a supplemental
Indenture, the Issuers shall fix a date for redemption and shall give notice of
such redemption at least 30 and not more than 60 days prior to the date fixed
for redemption to the Holders of Debt


                                      -29-



Securities of such series so to be redeemed as a whole or in part, in the manner
provided in Section 13.03. The notice may not be conditional. The notice if
given in the manner herein provided shall be conclusively presumed to have been
duly given, whether or not the Holder receives such notice. In any case, failure
to give such notice or any defect in the notice to the Holder of any Debt
Security of a series designated for redemption as a whole or in part shall not
affect the validity of the proceedings for the redemption of any other Debt
Security of such series.

     Each such notice of redemption shall specify the amount of Debt Securities
of any series to be redeemed, the date fixed for redemption, the calculation of
the redemption price at which Debt Securities of such series are to be redeemed
(but not the redemption price itself if it is not then determinable), the Place
or Places of Payment that payment will be made upon presentation and surrender
of such Debt Securities, that any interest accrued to the date fixed for
redemption will be paid as specified in such notice, that the redemption is for
a sinking fund payment (if applicable), that on and after such date any interest
thereon or on the portions thereof to be redeemed will cease to accrue, that in
the case of Original Issue Discount Securities original issue discount accrued
after the date fixed for redemption will cease to accrue, the terms of the Debt
Securities of that series pursuant to which the Debt Securities of that series
are being redeemed and that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Debt Securities of that series. If less than all the Debt Securities of a series
are to be redeemed, the notice of redemption shall specify the CUSIP numbers of
the Debt Securities of that series to be redeemed. In case any Debt Security of
a series is to be redeemed in part only, the notice of redemption shall state
the portion of the principal amount thereof to be redeemed and shall state that
on and after the date fixed for redemption, upon surrender of such Debt
Security, a new Debt Security or Debt Securities of that series will be issued
in principal amount equal to the unredeemed portion thereof.

     At least 60 days before the redemption date, unless the Trustee consents to
a shorter period, the Issuers shall give written notice to the Trustee of the
redemption date, the principal amount of Debt Securities to be redeemed and the
series and terms of the Debt Securities pursuant to which such redemption will
occur. Such notice shall be accompanied by an Officers' Certificate and an
Opinion of Counsel to the effect that such redemption will comply with the
conditions herein. If fewer than all the Debt Securities of a series are to be
redeemed, the record date relating to such redemption shall be selected by the
Issuers and given to the Trustee, which record date shall be not less than 15
days after the date of notice to the Trustee.

     No later than 11:00 A.M., New York City time, on the redemption date for
any Debt Securities, the Issuers shall deposit with the Trustee or with a paying
agent (or,


                                      -30-



if the Partnership or Finance Corp. is acting as its own paying agent, segregate
and hold in trust) an amount of money in the Currency in which such Debt
Securities are denominated (except as provided pursuant to Section 2.03)
sufficient to pay the redemption price of such Debt Securities or any portions
thereof that are to be redeemed on that date.

     If less than all the Debt Securities of like tenor and terms of a series
are to be redeemed (other than pursuant to mandatory sinking fund redemptions),
the Trustee shall select the Debt Securities of that series or portions thereof
(in multiples of $1,000) to be redeemed (i) if such Debt Securities are listed
on an exchange, in compliance with the requirements of the principal national
securities exchange on which such Debt Securities are listed, or (ii) if such
Debt Securities are not listed on an exchange or such exchange has no selection
requirements, on a pro rata basis, by lot or by such other method as in its sole
discretion the Trustee shall deem appropriate and fair. In any case where more
than one Debt Security of such series is registered in the same name, the
Trustee in its discretion may treat the aggregate principal amount so registered
as if it were represented by one Debt Security of such series. The Trustee shall
promptly notify the Issuers in writing of the Debt Securities selected for
redemption and, in the case of any Debt Securities selected for partial
redemption, the principal amount thereof to be redeemed. If any Debt Security
called for redemption shall not be so paid upon surrender thereof on such
redemption date, the principal, premium, if any, and interest shall bear
interest until paid from the redemption date at the rate borne by the Debt
Securities of that series. If less than all the Debt Securities of unlike tenor
and terms of a series are to be redeemed, the particular Debt Securities to be
redeemed shall be selected by the Issuers. Provisions of the Indenture that
apply to Debt Securities called for redemption also apply to portions of Debt
Securities called for redemption.

SECTION 3.03. PAYMENT OF DEBT SECURITIES CALLED FOR REDEMPTION.

     If notice of redemption has been given as provided in Section 3.02, the
Debt Securities or portions of Debt Securities of the series with respect to
which such notice has been given shall become due and payable on the date and at
the Place or Places of Payment stated in such notice at the applicable
redemption price, together with any interest accrued to the date fixed for
redemption, and on and after such date (unless the Issuers shall default in the
payment of such Debt Securities at the applicable redemption price, together
with any interest accrued to such date) any interest on the Debt Securities or
portions of Debt Securities of any series so called for redemption shall cease
to accrue and any original issue discount in the case of Original Issue Discount
Securities shall cease to accrue. On presentation and surrender of such Debt
Securities at the Place or Places of Payment in such notice specified, such Debt
Securities or the specified portions thereof shall be paid and


                                      -31-



redeemed by the Issuers at the applicable redemption price, together with any
interest accrued thereon to the date fixed for redemption.

     Any Debt Security that is to be redeemed only in part shall be surrendered
at the Corporate Trust Office of the Trustee or such other office or agency of
the Issuers as is specified pursuant to Section 2.03 with, if the Issuers, the
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Issuers, the Registrar and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing, and the Issuers shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Debt Security, without service charge, a new
Debt Security or Debt Securities of the same series, of like tenor and form, of
any authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Debt Security so surrendered; provided, however, that if a Global Security
is so surrendered, the Issuers shall execute, and the Trustee shall authenticate
and deliver to the Depositary for such Global Security, without service charge,
a new Global Security in a denomination equal to and in exchange for the
unredeemed portion of the principal of the Global Security so surrendered. In
the case of a Debt Security providing appropriate space for such notation, at
the option of the Holder thereof, the Trustee, in lieu of delivering a new Debt
Security or Debt Securities as aforesaid, may make a notation on such Debt
Security of the payment of the redeemed portion thereof.

SECTION 3.04. MANDATORY AND OPTIONAL SINKING FUNDS.

     The minimum amount of any sinking fund payment provided for by the terms of
Debt Securities of any series, a Board Resolution or a supplemental Indenture is
herein referred to as a "mandatory sinking fund payment," and any payment in
excess of such minimum amount provided for by the terms of Debt Securities of
any series, a Board Resolution or a supplemental Indenture is herein referred to
as an "optional sinking fund payment."

     In lieu of making all or any part of any mandatory sinking fund payment
with respect to any Debt Securities of a series in cash, the Issuers may at
their option (a) deliver to the Trustee Debt Securities of that series
theretofore purchased or otherwise acquired by the Issuers or (b) receive credit
for the principal amount of Debt Securities of that series which have been
redeemed either at the election of the Issuers pursuant to the terms of such
Debt Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Debt Securities, resolution or
supplemental Indenture; provided, however, that such Debt Securities have not
been previously so credited. Such Debt Securities shall be received and credited
for such purpose by the Trustee at the redemption price specified in such


                                      -32-



Debt Securities, the applicable Board Resolution or supplemental Indenture for
redemption through operation of the sinking fund and the amount of such
mandatory sinking fund payment shall be reduced accordingly.

SECTION 3.05. REDEMPTION OF DEBT SECURITIES FOR SINKING FUND.

     Not less than 60 days prior to each sinking fund payment date for any
series of Debt Securities, the Issuers will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, any Board Resolution or
supplemental Indenture, the portion thereof, if any, which is to be satisfied by
payment of cash in the Currency in which the Debt Securities of such series are
denominated (except as provided pursuant to Section 2.03) and the portion
thereof, if any, which is to be satisfied by delivering and crediting Debt
Securities of that series pursuant to Section 3.04 and this Section 3.05 (which
Debt Securities, if not previously redeemed, will accompany such certificate)
and whether the Issuers intend to exercise their right to make any permitted
optional sinking fund payment with respect to such series. Such certificate
shall also state that no Event of Default has occurred and is continuing with
respect to such series. Such certificate shall be irrevocable and upon its
delivery the Issuers shall be obligated to make the cash payment or payments
therein referred to, if any, on or before the next succeeding sinking fund
payment date. Failure of the Issuers to deliver such certificate (or to deliver
the Debt Securities specified in this paragraph) shall not constitute a Default,
but such failure shall require that the sinking fund payment due on the next
succeeding sinking fund payment date for that series shall be paid entirely in
cash and shall be sufficient to redeem the principal amount of such Debt
Securities subject to a mandatory sinking fund payment without the option to
deliver or credit Debt Securities as provided in Section 3.04 and this Section
3.05 and without the right to make any optional sinking fund payment, if any,
with respect to such series.

     Any sinking fund payment or payments (mandatory or optional) made in cash
plus any unused balance of any preceding sinking fund payments made in cash
which shall equal or exceed $100,000 (or a lesser sum if the Issuers shall so
request) with respect to the Debt Securities of any particular series shall be
applied by the Trustee on the sinking fund payment date on which such payment is
made (or, if such payment is made before a sinking fund payment date, on the
sinking fund payment date following the date of such payment) to the redemption
of such Debt Securities at the redemption price specified in such Debt
Securities, the applicable Board Resolution or supplemental Indenture for
operation of the sinking fund together with any accrued interest to the date
fixed for redemption. Any sinking fund moneys not so applied or allocated by the
Trustee to the redemption of Debt Securities shall be added to the next cash
sinking fund payment received by the Trustee for such series


                                      -33-



and, together with such payment, shall be applied in accordance with the
provisions of this Section 3.05. Any and all sinking fund moneys with respect to
the Debt Securities of any particular series held by the Trustee on the last
sinking fund payment date with respect to Debt Securities of such series and not
held for the payment or redemption of particular Debt Securities shall be
applied by the Trustee, together with other moneys, if necessary, to be
deposited sufficient for the purpose, to the payment of the principal of the
Debt Securities of that series at its Stated Maturity.

     The Trustee shall select the Debt Securities to be redeemed upon such
sinking fund payment date in the manner specified in the last paragraph of
Section 3.02 and the Issuers shall cause notice of the redemption thereof to be
given in the manner provided in Section 3.02 except that the notice of
redemption shall also state that the Debt Securities are being redeemed by
operation of the sinking fund. Such notice having been duly given, the
redemption of such Debt Securities shall be made upon the terms and in the
manner stated in Section 3.03.

     At least one Business Day before each sinking fund payment date, the
Issuers shall pay to the Trustee (or, if the Partnership or Finance Corp. is
acting as its own paying agent, the Partnership or Finance Corp. shall segregate
and hold in trust) in cash a sum in the Currency in which the Debt Securities of
such series are denominated (except as provided pursuant to Section 2.03) equal
to any interest accrued to the date fixed for redemption of Debt Securities or
portions thereof to be redeemed on such sinking fund payment date pursuant to
this Section 3.05.

     The Trustee shall not redeem any Debt Securities of a series with sinking
fund moneys or mail any notice of redemption of such Debt Securities by
operation of the sinking fund for such series during the continuance of a
Default in payment of interest on such Debt Securities or of any Event of
Default (other than an Event of Default occurring as a consequence of this
paragraph) with respect to such Debt Securities, except that if the notice of
redemption of any such Debt Securities shall theretofore have been mailed in
accordance with the provisions hereof, the Trustee shall redeem such Debt
Securities if cash sufficient for that purpose shall be deposited with the
Trustee for that purpose in accordance with the terms of this Article III.
Except as aforesaid, any moneys in the sinking fund for such series at the time
when any such Default or Event of Default shall occur and any moneys thereafter
paid into such sinking fund shall, during the continuance of such Default or
Event of Default, be held as security for the payment of such Debt Securities;
provided, however, that in case such Default or Event of Default shall have been
cured or waived as provided herein, such moneys shall thereafter be applied on
the next sinking fund payment date for such Debt Securities on which such moneys
may be applied pursuant to the provisions of this Section 3.05.


                                      -34-


                        ARTICLE IV. PARTICULAR COVENANTS

SECTION 4.01. PAYMENT OF PRINCIPAL OF, AND PREMIUM, IF ANY, AND INTEREST ON,
     DEBT SECURITIES.

     The Issuers, for the benefit of each series of Debt Securities, will duly
and punctually pay or cause to be paid the principal of, and premium, if any,
and interest on, each of the Debt Securities at the place, at the respective
times and in the manner provided herein and in the Debt Securities. Each
installment of interest on the Debt Securities may at the Issuers' option be
paid by mailing checks for such interest payable to the Person entitled thereto
to the address of such Person as it appears on the Debt Security Register
maintained pursuant to Section 2.07(a).

     Principal, premium, if any, and interest in respect of Debt Securities of
any series shall be considered paid on the date due if no later than 11:00 A.M.,
New York City time, on such date the Trustee or any paying agent holds in
accordance with the Indenture money sufficient to pay in the Currency in which
the Debt Securities of such series are denominated (except as provided pursuant
to Section 2.03) all principal, premium, if any, and interest then due.

     The Issuers shall pay interest on overdue principal at the rate specified
therefor in the Debt Securities and they shall pay interest on overdue
installments of interest at the same rate to the extent lawful.

SECTION 4.02. MAINTENANCE OF OFFICES OR AGENCIES FOR REGISTRATION OF TRANSFER,
     EXCHANGE AND PAYMENT OF DEBT SECURITIES.

     The Issuers will maintain in each Place of Payment for any series of Debt
Securities, an office or agency where Debt Securities of such series may be
presented or surrendered for payment, where Debt Securities of such series may
be surrendered for transfer or exchange and where notices and demands to or upon
the Issuers or applicable Subsidiary Guarantors in respect of the Debt
Securities of such series or related Guarantees and the Indenture may be served.
The Issuers will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the Issuers
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Issuers hereby appoint the Trustee as its agent to receive all
presentations, surrenders, notices and demands.

     The Issuers may also from time to time designate different or additional
offices or agencies to be maintained for such purposes (in or outside of such
Place of Payment), and may from time to time rescind any such designation;
provided,


                                      -35-



however, that no such designation or rescission shall in any manner relieve the
Issuers of their obligations described in the preceding paragraph. The Issuers
will give prompt written notice to the Trustee of any such additional
designation or rescission of designation and any change in the location of any
such different or additional office or agency.

SECTION 4.03. APPOINTMENT TO FILL A VACANCY IN THE OFFICE OF TRUSTEE.

     The Issuers, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 7.08, a Trustee, so
that there shall at all times be a Trustee hereunder with respect to each series
of Debt Securities.

SECTION 4.04. DUTIES OF PAYING AGENTS, ETC.

     (a) The Issuers shall cause each paying agent, if any, other than the
Trustee, to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 4.04:

          (i) that it will hold all sums held by it as such agent for the
payment of the principal of, and premium, if any, or interest on, the Debt
Securities of any series (whether such sums have been paid to it by the Issuers
or by any other obligor on the Debt Securities of such series) in trust for the
benefit of the Holders of the Debt Securities of such series;

          (ii) that it will give the Trustee notice of any failure by the
Issuers (or by any other obligor on the Debt Securities of such series) to make
any payment of the principal of and premium, if any, or interest on, the Debt
Securities of such series when the same shall be due and payable; and

          (iii) that it will at any time during the continuance of an Event of
Default, upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held by it as such agent.

     (b) If either of the Issuers or any of their respective Subsidiaries shall
act as its own paying agent, it will, on or before 11:00 A.M., New York City
time, on each due date of the principal of, and premium, if any, or interest on,
the Debt Securities if any, of any series, set aside, segregate and hold in
trust for the benefit of the Holders of the Debt Securities of such series a sum
sufficient to pay such principal, premium, if any, or interest so becoming due.
The Issuers will promptly notify the Trustee of any failure by the Issuers or
its Subsidiaries to take such action or the failure by any other obligor on such
Debt Securities to make any payment of the principal of, and premium, if any, or
interest on, such Debt Securities when the same shall be due and payable.


                                      -36-



     (c) Anything in this Section 4.04 to the contrary notwithstanding, either
of the Issuers may, at any time, for the purpose of obtaining a satisfaction and
discharge of the Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by it or any paying agent, as required by
this Section 4.04, such sums to be held by the Trustee upon the same terms as
those upon which such sums were held by the Issuers or such paying agent.

     (d) Whenever the Issuers shall have one or more paying agents with respect
to any series of Debt Securities, they will, prior to 11:00 A.M., New York City
time, on each due date of the principal of, and premium, if any, or interest on,
any Debt Securities of such series, deposit with any such paying agent a sum
sufficient to pay the principal, premium, if any, or interest so becoming due,
such sum to be held in trust for the benefit of the Persons entitled thereto,
and (unless any such paying agent is the Trustee) the Issuers will promptly
notify the Trustee of their action or failure so to act.

     (e) Anything in this Section 4.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 4.04 is subject to
the provisions of Section 11.03.

     (f) Unless and until otherwise determined by the Issuers in Board
Resolutions or pursuant to a supplemental Indenture, the Trustee will act as
paying agent under the Indenture. The Issuers may designate a substitute paying
agent without prior notice to the Holders of Debt Securities.

SECTION 4.05. STATEMENT BY OFFICERS AS TO DEFAULT.

     The Issuers will deliver to the Trustee, on or before a date not more than
four months after the end of each fiscal year of the Issuers (currently ending
on December 31 of each year) ending after the date hereof, an Officers'
Certificate stating, as to each Officer signing such certificate, one of whom
shall be the principal executive, financial or accounting officer of each
Issuer, that (i) in the course of his performance of his duties as an officer of
the General Partner, he would normally have knowledge of any Default, (ii)
whether or not to the best of his knowledge any Default occurred during such
year and (iii) if to the best of his knowledge either Issuer or any Subsidiary
Guarantor is in Default, specifying all such Defaults and what action such
Issuer or Subsidiary Guarantor, as applicable, is taking or proposes to take
with respect thereto.


                                      -37-



SECTION 4.06. CORPORATE, PARTNERSHIP OR LIMITED LIABILITY COMPANY EXISTENCE.

     Subject to Article X, the Partnership shall do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate,
partnership or limited liability company existence and related rights of the
Partnership, Finance Corp. and the Partnership's other Subsidiaries; provided,
however, that the Partnership shall not be required to preserve any such right
for the corporate, partnership or limited liability company existence of any
such Subsidiary if the management of the General Partner shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Partnership and its Subsidiaries, as a whole, and that the loss thereof
would not reasonably be expected to have a material adverse effect on the
ability of the Issuers or any obligor on the Debt Securities of any series to
perform their obligations hereunder; and provided, further, that the foregoing
shall not prohibit a sale, transfer or conveyance of a Subsidiary of the
Partnership or any of its assets in compliance with the terms of the Indenture.

SECTION 4.07. CALCULATION OF ORIGINAL ISSUE DISCOUNT.

     The Issuers shall file with the Trustee promptly at the end of each
calendar year (a) a written notice specifying the amount of original issue
discount (including daily rates and accrual periods) accrued on Outstanding
Original Issue Discount Debt Securities as of the end of such year and (b) such
other specific information relating to such original issue discount as may then
be relevant under the Code.

SECTION 4.08. STAY, EXTENSION AND USURY LAWS.

     Each of the Issuers covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of the Indenture; and each of the Issuers hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.


                                      -38-



      ARTICLE V. HOLDERS' LISTS AND REPORTS BY THE ISSUERS AND THE TRUSTEE

SECTION 5.01. ISSUERS TO FURNISH TRUSTEE INFORMATION AS TO NAMES AND ADDRESSES
     OF HOLDERS; PRESERVATION OF INFORMATION.

     The Issuers covenant and agree that they will furnish or cause to be
furnished to the Trustee with respect to the Registered Securities of each
series:

     (a) not more than 15 days after each record date with respect to the
payment of interest, if any, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Registered Holders as of such record
date, and

     (b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Issuers of any such request, a list as of a date
not more than 15 days prior to the time such list is furnished; provided,
however, that so long as the Trustee shall be the Registrar, such lists shall
not be required to be furnished.

     The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders (1)
contained in the most recent list furnished to it as provided in this Section
5.01 or (2) received by it in the capacity of paying agent or Registrar (if so
acting) hereunder.

     The Trustee may destroy any list furnished to it as provided in this
Section 5.01 upon receipt of a new list so furnished.

SECTION 5.02. COMMUNICATIONS TO HOLDERS; MEETINGS OF HOLDERS.

     (a) Holders may communicate pursuant to Section 312(b) of the Trust
Indenture Act with other Holders with respect to their rights under the
Indenture or the Debt Securities. The Issuers, the Trustee, the Registrar and
anyone else shall have the protection of Section 312(c) of the Trust Indenture
Act.

     (b) A meeting of the Holders of Debt Securities of any or all series may be
called at any time and from time to time pursuant to this Section 5.02 to make,
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided herein to be made, given or taken by Holders of
Debt Securities of such series.

     (c) The Trustee may at any time call a meeting of Holders of Debt
Securities of any series for any purpose specified herein to be held at such
time and at such place in The Borough of Manhattan, The City of New York or in
any other location, as the Trustee shall determine. Notice of every meeting of
Holders of any series, setting forth the time and the place of such meeting and
in general terms the


                                      -39-



action proposed to be taken at such meeting, shall be given not less than 20 nor
more than 180 days prior to the date fixed for the meeting.

     (d) In case at any time the Issuers, pursuant to Board Resolutions, or the
Holders of at least 25% in aggregate principal amount of the outstanding Debt
Securities of any series, shall have requested the Trustee for any such series
to call a meeting of the Holders of Debt Securities of such series for any
purpose specified herein, by written request setting forth in reasonable detail
the action proposed to be taken at the meeting, and the Trustee shall not have
made the first publication of the notice of such meeting within 30 days after
receipt of such request or shall not thereafter proceed to cause the meeting to
be held as provided herein, then the Issuers or the Holders of such series in
the amount specified above, as the case may be, may determine the time and the
place in The Borough of Manhattan, The City of New York, or in any other
location, for such meeting and may call such meeting for such purposes by giving
notice thereof as provided in paragraph (c) of this Section 5.02.

SECTION 5.03. REPORTS BY ISSUERS.

     (a) Notwithstanding that the Partnership may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Partnership shall file with the Commission and provide to the Trustee
and the Holders of Debt Securities the annual reports and the information,
documents and other reports that are specified in Sections 13 and 15(d) of the
Exchange Act and would otherwise be applicable to the Partnership, and, with
respect to the annual consolidated financial statements only, a report thereon
by the Issuers' independent auditors; provided, however, that the Partnership
shall not be so obligated to file such information, documents and reports with
the Commission if the Commission does not permit such filings. The Issuers shall
comply with the other provisions of Section 314(a) of the Trust Indenture Act.

     (b) The Issuers covenant and agree, and any obligor hereunder shall
covenant and agree, to file with the Trustee and the Commission, in accordance
with the rules and regulations prescribed from time to time by the Commission,
such additional information, documents, and reports with respect to compliance
by the Issuers or such obligor, as the case may be, with the conditions and
covenants provided for in the Indenture as may be required from time to time by
such rules and regulations.

     (c) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute notice of any information contained therein or determinable from
information contained therein, including the Issuers' compliance with any of
their covenants


                                      -40-



hereunder (as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).

SECTION 5.04. REPORTS BY TRUSTEE.

     The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under the Indenture as may be required pursuant to the Trust
Indenture Act at the time and in the manner provided pursuant thereto.

     Reports pursuant to this Section 5.04 shall be transmitted by mail:

     (1) to all Registered Holders, as the names and addresses of such Holders
appear in the Debt Security Register; and

     (2) except in the cases of reports under Section 313(b)(2) of the Trust
Indenture Act, to each holder of a Debt Security of any series whose name and
address appear in the information preserved at the time by the Trustee in
accordance with Section 5.01.

     A copy of each report at the time of its mailing to Holders shall be filed
with the Commission and each stock exchange (if any) on which the Debt
Securities of any series are listed. The Issuers agree to notify promptly the
Trustee whenever the Debt Securities of any series become listed on any stock
exchange and of any delisting thereof.

SECTION 5.05. RECORD DATES FOR ACTION BY HOLDERS.

     If the Issuers shall solicit from the Holders of Debt Securities of any
series any action (including the making of any demand or request, the giving of
any direction, notice, consent or waiver or the taking of any other action), the
Issuers may, at their option, by Board Resolutions, fix in advance a record date
for the determination of Holders of Debt Securities entitled to take such
action, but the Issuers shall have no obligation to do so. Any such record date
shall be fixed at the Issuers' discretion. If such a record date is fixed, such
action may be sought or given before or after the record date, but only the
Holders of Debt Securities of record at the close of business on such record
date shall be deemed to be Holders of Debt Securities for the purpose of
determining whether Holders of the requisite proportion of Debt Securities of
such series Outstanding have authorized or agreed or consented to such action,
and for that purpose the Debt Securities of such series Outstanding shall be
computed as of such record date.


                                      -41-



      ARTICLE VI. REMEDIES OF THE TRUSTEE AND HOLDERS IN EVENT OF DEFAULT

SECTION 6.01. EVENTS OF DEFAULT.

     If any one or more of the following shall have occurred and be continuing
with respect to Debt Securities of any series (each of the following, an "Event
of Default"):

     (a) the Issuers Default for a period of 30 days in the payment when due of
interest on any Debt Securities of that series; or

     (b) the Issuers default in the payment when due of principal of or premium,
if any, on any Debt Securities of that series at maturity, upon redemption or
otherwise; or

     (c) default in the payment of any sinking fund payment with respect to any
Debt Securities of that series as and when the same shall become due and
payable; or

     (d) failure on the part of the Issuers or any Significant Subsidiary that
is a Subsidiary Guarantor with respect to that series to comply with Article X;
or

     (e) failure by the Issuers or any Significant Subsidiary that is a
Subsidiary Guarantor for such series for 60 days after notice to comply to duly
observe or perform any other of the covenants or agreements on the part of the
Issuers or such Subsidiary Guarantors in the Debt Securities of that series in
any Board Resolution authorizing the issuance of that series of Debt Securities,
in the Indenture with respect to such series or in any supplemental Indenture
with respect to such series (other than a covenant a default in the performance
of which is elsewhere in this Section 6.01 specifically dealt with); or

     (f) an Issuer or any Significant Subsidiary that is a Subsidiary Guarantor
of that series of Debt Securities, pursuant to or within the meaning of
Bankruptcy Law, commences a voluntary case, consents to the entry of an order
for relief against it in an involuntary case, consents to the appointment of a
custodian of it or for all or substantially all of its property, makes a general
assignment for the benefit of its creditors, or generally is not paying its
debts as they become due; or

     (g) (i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that is for relief against an Issuer or any Significant
Subsidiary that is a Subsidiary Guarantor of that series of Debt Securities in
an involuntary case, appoints a custodian of an Issuer or any such Significant
Subsidiary, or orders the liquidation of an Issuer or any such Significant
Subsidiary and (ii) such order or decree remains unstayed and in effect for 60
consecutive days;


                                      -42-



     (h) if any series of Debt Securities Outstanding under this Indenture is
entitled to the benefits of a Guarantee by the Subsidiary Guarantors, the
Guarantee of any Significant Subsidiary that is such a Subsidiary Guarantor
ceases to be in full force and effect with respect to Debt Securities of that
series (except as otherwise provided in this Indenture) or is declared null and
void in a judicial proceeding or any such Significant Subsidiary denies or
disaffirms its obligations under this Indenture or such Guarantee; or

     (i) any other Event of Default provided under the terms of the Debt
Securities of that series;

then and in each and every case that an Event of Default (other than an Event of
Default specified in Section 6.01(f) or (g)) with respect to Debt Securities of
that series at the time outstanding occurs and is continuing, either the Trustee
or the Holders of at least 25% in aggregate principal amount of the Debt
Securities of that series, may declare the principal of (or, if the Debt
Securities of that series are Original Issue Discount Debt Securities, such
portion of the principal amount as may be specified in the terms of that series)
and interest on all the Debt Securities of that series to be due and payable
immediately; provided, however, that if an Event of Default specified in Section
6.01(f) or (g) occurs, such amounts relating to the applicable series of Debt
Securities shall automatically become and be immediately due and payable without
any declaration, notice or other act on the part of the Trustee or any Holder.

     The Holders of a majority in aggregate principal amount of the Debt
Securities of a particular series at the time Outstanding by notice to the
Trustee may rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree already rendered and if all existing
Events of Default have been cured or waived except nonpayment of principal or
interest that has become due solely because of acceleration. Upon any such
rescission, the parties hereto shall be restored respectively to their several
positions and rights hereunder, and all rights, remedies and powers of the
parties hereto shall continue as though no such acceleration had been declared.

     In case the Trustee or any Holder shall have proceeded to enforce any right
under the Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee or such Holder, then and in
every such case the parties hereto shall be restored respectively to their
several positions and rights hereunder, and all rights, remedies and powers of
the parties hereto shall continue as though no such proceeding had been taken.


                                      -43-



     The foregoing Events of Default shall constitute Events of Default whatever
the reason for any such Event of Default and whether it is voluntary or
involuntary or is effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body.

     The Issuers shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event which with the giving of notice, the lapse of time or both would
become an Event of Default under clause (c), (d), (e), (f), (g) or (h), its
status and what action the Issuers or the Subsidiary Guarantors, as applicable,
are taking or propose to take with respect thereto.

SECTION 6.02. COLLECTION OF INDEBTEDNESS BY TRUSTEE, ETC.

     If an Event of Default occurs and is continuing, the Trustee, in its own
name and as trustee of an express trust, shall be entitled and empowered to
institute any action or proceedings at law or in equity for the collection of
the sums so due and unpaid of the Debt Securities of the affected series or
enforce the performance of any provision of the Debt Securities of the affected
series or the Indenture, and may prosecute any such action or proceedings to
judgment or final decree, and may enforce any such judgment or final decree
against the Issuers or Subsidiary Guarantors or any other obligor upon the Debt
Securities of such series (and collect in the manner provided by law out of the
property of the Issuers or Subsidiary Guarantors or any other obligor upon the
Debt Securities of such series, wherever situated, the moneys adjudged or
decreed to be payable).

     In case there shall be pending proceedings for the bankruptcy or for the
reorganization of an Issuer or any Subsidiary Guarantor or any other obligor
upon the Debt Securities of any series under Title 11 of the United States
Bankruptcy Code or any other foreign, federal or state bankruptcy, insolvency or
similar law, or in case a receiver, trustee or other similar official shall have
been appointed for its property, or in case of any other similar judicial
proceedings relative to an Issuer or any Subsidiary Guarantor or any other
obligor upon the Debt Securities of any series, its creditors or its property,
the Trustee, irrespective of whether the principal of Debt Securities of any
series shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 6.02, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove a
claim or claims for the whole amount of principal, premium, if any, and interest
(or, if the Debt Securities of such series are Original Issue Discount Debt
Securities, such portion of the principal amount as may be specified in the
terms of such series) owing and unpaid in respect of the Debt Securities of such
series, and to file such other papers or


                                      -44-



documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for reasonable compensation to the Trustee, its
agents, attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Trustee except as a result
of its negligence or bad faith) and of the Holders thereof allowed in any such
judicial proceedings relative to an Issuer, any Subsidiary Guarantor or any
other obligor upon the Debt Securities of such series, its creditors or its
property, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of such Holders and of the Trustee on their behalf, and
any receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of such Holders to make payments to the Trustee, and, in the
event that the Trustee shall consent to the making of payments directly to such
Holders, to pay to the Trustee such amount as shall be sufficient to cover
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
all other reasonable expenses and liabilities incurred, and all advances made,
by the Trustee except as a result of its negligence or bad faith.

     All rights of action and of asserting claims under the Indenture, or under
any of the Debt Securities of any series, may be enforced by the Trustee without
the possession of any such Debt Securities or the production thereof in any
trial or other proceedings relative thereto, and any such action or proceedings
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment (except for any amounts payable to
the Trustee pursuant to Section 7.06) shall be for the ratable benefit of the
Holders of all the Debt Securities in respect of which such action was taken.

     In case of an Event of Default hereunder the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by the Indenture by such
appropriate judicial proceedings as the Trustee shall deem necessary to protect
and enforce any of such rights, either at law or in equity or in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement
contained in the Indenture or in aid of the exercise of any power granted in the
Indenture, or to enforce any other legal or equitable right vested in the
Trustee by the Indenture or by law.

SECTION 6.03. APPLICATION OF MONEYS COLLECTED BY TRUSTEE.

     Any moneys or other property collected by the Trustee pursuant to Section
6.02 with respect to Debt Securities of any series shall be applied in the order
following, at the date or dates fixed by the Trustee for the distribution of
such moneys or other property, upon presentation of the several Debt Securities
of such series in respect of which moneys or other property have been collected,
and the notation thereon of the payment, if only partially paid, and upon
surrender thereof if fully paid:


                                      -45-



     First: To the payment of all money due the Trustee pursuant to Section
7.06;

     Second: In case the principal of the Outstanding Debt Securities in respect
of which such moneys have been collected shall not have become due, to the
payment of interest on the Debt Securities of such series in the order of the
maturity of the installments of such interest, with interest (to the extent that
such interest has been collected by the Trustee) upon the overdue installments
of interest at the rate or Yield to Maturity (in the case of Original Issue
Discount Debt Securities) specified in the Debt Securities of such series, such
payments to be made ratably to the Persons entitled thereto, without
discrimination or preference;

     Third: In case the principal of the Outstanding Debt Securities in respect
of which such moneys have been collected shall have become due, by declaration
or otherwise, to the payment of the whole amount then owing and unpaid upon the
Debt Securities of such series for principal and premium, if any, and interest,
with interest on the overdue principal and premium, if any, and (to the extent
that such interest has been collected by the Trustee) upon overdue installments
of interest at the rate or Yield to Maturity (in the case of Original Issue
Discount Debt Securities) specified in the Debt Securities of such series; and
if such moneys shall be insufficient to pay in full the whole amount so due and
unpaid upon the Debt Securities of such series, then to the payment of such
principal and premium, if any, and interest, without preference or priority of
principal and premium, if any, over interest, or of interest over principal and
premium, if any, or of any installment of interest over any other installment of
interest, or of any Debt Security of such series over any Debt Security of such
series, ratably to the aggregate of such principal and premium, if any, and
interest; and

     Fourth: The remainder, if any, shall be paid to the Issuers, the Subsidiary
Guarantors, their successors or assigns, or as a court of competent jurisdiction
may direct.

     The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.03. At least 15 days before such record date,
the Issuers shall mail to each Holder and the Trustee a notice that states the
record date, the payment date and amount to be paid.

SECTION 6.04. LIMITATION ON SUITS BY HOLDERS.

     No Holder of any Debt Security of any series shall have any right by virtue
or by availing of any provision of the Indenture to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise, upon or under or
with respect to the Indenture, or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless such Holder previously shall have
given to the Trustee written notice of an Event of Default with respect to Debt
Securities of that same series and of


                                      -46-



the continuance thereof and unless the Holders of not less than 25% in aggregate
principal amount of the Outstanding Debt Securities of that series shall have
made written request upon the Trustee to institute such action or proceedings in
respect of such Event of Default in its own name as Trustee hereunder and shall
have offered to the Trustee such reasonable indemnity as it may require against
the costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action or proceedings and no
direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 6.06; it being understood and intended, and being
expressly covenanted by the Holder of every Debt Security with every other
Holder and the Trustee, that no one or more Holders shall have any right in any
manner whatever by virtue or by availing of any provision of the Indenture to
affect, disturb or prejudice the rights of any Holders, or to obtain or seek to
obtain priority over or preference to any other such Holder, or to enforce any
right under the Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all such Holders. For the protection and
enforcement of the provisions of this Section 6.04, each and every Holder and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.

     Notwithstanding any other provision in the Indenture, however, the right of
any Holder of any Debt Security to receive payment of the principal of, and
premium, if any, and (subject to Section 2.12) interest on, such Debt Security
on or after the respective due dates expressed in such Debt Security, and to
institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.

SECTION 6.05. REMEDIES CUMULATIVE; DELAY OR OMISSION IN EXERCISE OF RIGHTS NOT A
     WAIVER OF DEFAULT.

     All powers and remedies given by this Article VI to the Trustee or to the
Holders shall, to the extent permitted by law, be deemed cumulative and not
exclusive of any thereof or of any other powers and remedies available to the
Trustee or the Holders, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in the
Indenture, and no delay or omission of the Trustee or of any Holder to exercise
any right or power accruing upon any Default occurring and continuing as
aforesaid, shall impair any such right or power, or shall be construed to be a
waiver of any such Default or an acquiescence therein; and, subject to the
provisions of Section 6.04, every power and remedy given by this Article VI or
by law to the Trustee or to the Holders may be exercised from time to time, and
as often as shall be deemed expedient, by the Trustee or by the Holders.


                                      -47-



SECTION 6.06. RIGHTS OF HOLDERS OF MAJORITY IN PRINCIPAL AMOUNT OF DEBT
     SECURITIES TO DIRECT TRUSTEE AND TO WAIVE DEFAULT.

     The Holders of a majority in aggregate principal amount of the Debt
Securities of any series at the time Outstanding shall have the right to direct
the time, method, and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Debt Securities of such series; provided, however,
that such direction shall not be otherwise than in accordance with law and the
provisions of the Indenture, and that subject to the provisions of Section 7.01,
the Trustee shall have the right to decline to follow any such direction if the
Trustee, being advised by counsel, shall determine that the action so directed
may not lawfully be taken, or if the Trustee shall by a Responsible Officer or
officers determine that the action so directed would involve it in personal
liability or would be prejudicial to Holders of Debt Securities of such series
not taking part in such direction; and, provided further, that nothing contained
in the Indenture shall impair the right of the Trustee to take any action deemed
proper by the Trustee and which is not inconsistent with such direction by such
Holders. Prior to the acceleration of the maturity of the Debt Securities of any
series, as provided in Section 6.01, the Holders of a majority in aggregate
principal amount of the Debt Securities of that series at the time Outstanding
by notice to the Trustee may on behalf of the Holders of all the Debt Securities
of that series waive any past Default or Event of Default and its consequences
for that series specified in the terms thereof as contemplated by Section 2.03,
except (i) a Default in the payment of the principal of, and premium, if any, or
interest on, any of the Debt Securities and (ii) a Default in respect of a
provision that under Section 9.02 cannot be amended, supplemented or waived
without the consent of each Holder affected thereby. In case of any such waiver,
such Default shall cease to exist, any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of the Indenture, and the
Issuers, the Subsidiary Guarantors, the Trustee and the Holders of the Debt
Securities of that series shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or Event or Default or impair any right consequent thereon.

SECTION 6.07. TRUSTEE TO GIVE NOTICE OF DEFAULTS KNOWN TO IT, BUT MAY WITHHOLD
     SUCH NOTICE IN CERTAIN CIRCUMSTANCES.

     The Trustee shall, within 90 days after the occurrence of a Default known
to it with respect to a series of Debt Securities, give to the Holders thereof,
in the manner provided in Section 12.03, notice of all Defaults with respect to
such series known to the Trustee, unless such Defaults shall have been cured or
waived before the giving of such notice; provided, however, that, except in the
case of Default in the payment of the principal of, or premium, if any, or
interest on, any of the Debt Securities of such


                                      -48-



series or in the making of any sinking fund payment with respect to the Debt
Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as the committee of Responsible Officers of the Trustee in
good faith determines that the withholding of such notice is in the interests of
the Holders thereof.

SECTION 6.08. REQUIREMENT OF AN UNDERTAKING TO PAY COSTS IN CERTAIN SUITS UNDER
     THE INDENTURE OR AGAINST THE TRUSTEE.

     All parties to the Indenture agree, and each Holder of any Debt Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
the Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit in the manner and to the extent
provided in the Trust Indenture Act, and that such court may in its discretion
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; provided,
however, that the provisions of this Section 6.08 shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 25% in principal amount of the
Outstanding Debt Securities of that series or to any suit instituted by any
Holder for the enforcement of the payment of the principal of, or premium, if
any, or interest on, any Debt Security on or after the due date for such payment
expressed in such Debt Security.

                       ARTICLE VII. CONCERNING THE TRUSTEE

SECTION 7.01. CERTAIN DUTIES AND RESPONSIBILITIES.

     The Trustee, prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have occurred, undertakes
to perform such duties and only such duties as are specifically set forth in the
Indenture. In case an Event of Default has occurred (which has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in it
by the Indenture, and use the same degree of care and skill in their exercise,
as a prudent person would exercise or use under the circumstances in the conduct
of his own affairs.

     No provision of the Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act,
or its bad faith or willful misconduct, except that:

     (a) this subsection shall not be construed to limit the effect of the first
paragraph of this Section 7.01;


                                      -49-



     (b) prior to the occurrence of an Event of Default with respect to the Debt
Securities of a series and after the curing or waiving of all Events of Default
with respect to such series which may have occurred:

          (1) the duties and obligations of the Trustee with respect to Debt
     Securities of any series shall be determined solely by the express
     provisions of the Indenture, and the Trustee shall not be liable except for
     the performance of such duties and obligations with respect to such series
     as are specifically set forth in the Indenture, and no implied covenants or
     obligations with respect to such series shall be read into the Indenture
     against the Trustee; and

          (2) in the absence of bad faith on the part of the Trustee, the
     Trustee may conclusively rely, as to the truth of the statements and the
     correctness of the opinions expressed therein, upon any certificates or
     opinions furnished to the Trustee and conforming to the requirements of the
     Indenture; provided, however, that in the case of any such certificates or
     opinions which by any provision hereof are specifically required to be
     furnished to the Trustee, the Trustee shall be under a duty to examine the
     same to determine whether or not they conform to the requirements of the
     Indenture;

     (c) the Trustee shall not be liable for an error of judgment made in good
faith by a Responsible Officer, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and

     (d) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it with respect to Debt Securities of any series in good
faith in accordance with the direction of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Debt Securities of
that series relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under the Indenture with respect to Debt Securities
of such series.

     None of the provisions of the Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any personal financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.

     Whether or not therein expressly so provided, every provision of the
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.


                                      -50-



SECTION 7.02. CERTAIN RIGHTS OF TRUSTEE.

     Except as otherwise provided in Section 7.01:

     (a) the Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note or other paper or document (whether in its original or facsimile
form) believed by it to be genuine and to have been signed or presented by the
proper party or parties;

     (b) any request, direction, order or demand of the Issuers mentioned herein
shall be sufficiently evidenced by an Issuer Order (unless other evidence in
respect thereof is specifically prescribed herein); and any Board Resolution may
be evidenced to the Trustee by a copy thereof certified by the Secretary or an
Assistant Secretary of the General Partner;

     (c) the Trustee may consult with counsel of its own selection, and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by the Trustee hereunder in good faith and in accordance with such
advice or Opinion of Counsel;

     (d) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by the Indenture at the request, order or direction of
any of the Holders of Debt Securities of any series pursuant to the provisions
of the Indenture, unless such Holders shall have offered to the Trustee security
or indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which may be incurred therein or thereby;

     (e) the Trustee shall not be liable for any action taken or omitted by it
in good faith and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by the Indenture;

     (f) prior to the occurrence of an Event of Default and after the curing of
all Events of Default which may have occurred, the Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, approval or other paper or document, unless requested in writing
to do so by the Holders of a majority in aggregate principal amount of the then
Outstanding Debt Securities of a series affected by such matter; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is not, in the opinion of the Trustee, reasonably assured to the
Trustee by the security afforded to it by the terms of the


                                      -51-



Indenture, the Trustee may require indemnity reasonably satisfactory to it
against such costs, expenses or liabilities as a condition to so proceeding; the
Trustee shall be entitled to examine the books, records and premises of the
Issuers during ordinary business hours and for any purpose relevant to the
Indenture, personally or by an agent or attorney at the sole cost of the Issuers
and shall incur no liability or additional liability of any kind by reason of
such inquiry or investigation;

     (g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder;

     (h) if any property other than cash shall at any time be subject to a Lien
in favor of the Holders, the Trustee, if and to the extent authorized by a
receivership or bankruptcy court of competent jurisdiction or by the
supplemental instrument subjecting such property to such Lien, shall be entitled
to make advances for the purpose of preserving such property or of discharging
tax Liens or other prior Liens or encumbrances thereon;

     (i) the Trustee shall not be deemed to have notice of any Default or Event
of Default unless a Responsible Officer of the Trustee has actual knowledge
thereof or unless written notice of any event which is in fact such a Default is
received by the Trustee at the Corporate Trust Office of the Trustee, and such
notice references the Debt Securities and the Indenture; and

     (j) the rights, privileges, protections, immunities and benefits given to
the Trustee, including its right to be indemnified, are extended to, and shall
be enforceable by, the Trustee in each of its capacities hereunder, and to each
agent, custodian and other Person employed by the Trustee to act hereunder.

SECTION 7.03. TRUSTEE NOT LIABLE FOR RECITALS IN INDENTURE OR IN DEBT
     SECURITIES.

     The recitals contained herein and in the Debt Securities (except the
Trustee's certificate of authentication) shall be taken as the statements of the
Issuers, and the Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representations as to the validity or sufficiency of
the Indenture or of the Debt Securities of any series, except that the Trustee
represents that it is duly authorized to execute and deliver the Indenture,
authenticate the Debt Securities and perform its obligations hereunder, and that
the statements made by it or to be made by it in a Statement of Eligibility and
Qualification on Form T-1 supplied to the Issuers are true and accurate. The
Trustee shall not be accountable for the use or application by the Issuers of
any of the Debt Securities or of the proceeds thereof.


                                      -52-



SECTION 7.04. TRUSTEE, PAYING AGENT OR REGISTRAR MAY OWN DEBT SECURITIES.

     The Trustee or any paying agent or Registrar, in its individual or any
other capacity, may become the owner or pledgee of Debt Securities or any
related Guarantees and, subject to the provisions of the Trust Indenture Act
relating to conflicts of interest and preferential claims, may otherwise deal
with the Issuers and any Subsidiary Guarantors, as applicable, with the same
rights it would have if it were not Trustee, paying agent or Registrar;
provided, however, that if the Trustee acquires any such conflicting interest
and an Event of Default or Default has occurred and is continuing, the Trustee
must eliminate such conflict within 90 days, apply to the Commission for
permission to continue as trustee, or resign.

SECTION 7.05. MONEYS RECEIVED BY TRUSTEE TO BE HELD IN TRUST.

     Subject to the provisions of Section 11.03, all moneys received by the
Trustee shall, until used or applied as provided herein, be held in trust for
the purposes for which they were received, but need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any moneys received by it hereunder. So long as no
Event of Default shall have occurred and be continuing, all interest allowed on
any such moneys shall be paid from time to time to the Issuers upon an Issuer
Order.

SECTION 7.06. COMPENSATION AND REIMBURSEMENT.

     The Issuers covenant and agree to pay in Dollars to the Trustee from time
to time, and the Trustee shall be entitled to, reasonable compensation for all
services rendered by it hereunder (which shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust), and,
except as otherwise expressly provided herein, the Issuers will pay or reimburse
in Dollars the Trustee upon its request for all expenses, disbursements and
advances reasonably incurred or made by the Trustee in accordance with any of
the provisions of the Indenture (including the reasonable compensation and the
expenses and disbursements of its agents, attorneys and counsel and of all
Persons not regularly in its employ) except any such expense, disbursement or
advances as may arise from its negligence, bad faith or willful misconduct. The
Issuers also covenant to fully indemnify in Dollars the Trustee and any
predecessor Trustee for, and to hold it harmless against, any and all loss,
liability, claim, damage or expense incurred without negligence, bad faith or
willful misconduct on the part of the Trustee, arising out of or in connection
with the acceptance or administration of this trust or trusts hereunder,
including the costs and expenses of defending itself against any claim of
liability in connection with the exercise or performance of any of its powers or
duties hereunder. The obligations of


                                      -53-



the Issuers under this Section 7.06 to compensate and indemnify the Trustee and
to pay or reimburse the Trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder and shall survive the satisfaction
and discharge of the Indenture. The Issuers and the Holders agree that such
additional indebtedness shall be secured by a Lien prior to that of the Debt
Securities upon all property and funds held or collected by the Trustee, as
such, except funds held in trust for the payment of principal of, and premium,
if any, or interest on, particular Debt Securities.

     When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(f) or (g) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any bankruptcy, insolvency, reorganization or other similar
law.

SECTION 7.07. RIGHT OF TRUSTEE TO RELY ON AN OFFICERS' CERTIFICATE WHERE NO
     OTHER EVIDENCE SPECIFICALLY PRESCRIBED.

     Except as otherwise provided in Section 7.01, whenever in the
administration of the provisions of the Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
suffering or omitting any action hereunder, such matter (unless other evidence
in respect thereof be herein specifically prescribed) may, in the absence of
negligence, bad faith or willful misconduct on the part of the Trustee, be
deemed to be conclusively proved and established by an Officers' Certificate
delivered to the Trustee, and such certificate, in the absence of negligence,
bad faith or willful misconduct on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of the Indenture upon the faith thereof.

SECTION 7.08. SEPARATE TRUSTEE; REPLACEMENT OF TRUSTEE.

     The Issuers may, but need not, appoint a separate Trustee for any one or
more series of Debt Securities. The Trustee may resign with respect to one or
more or all series of Debt Securities at any time by giving notice to the
Issuers. The Holders of a majority in principal amount of the Debt Securities of
a particular series at the time Outstanding may remove the Trustee for such
series and only such series by so notifying the Trustee and may appoint a
successor Trustee. The Issuers shall remove the Trustee if:

     (1)  the Trustee fails to comply with Section 7.10;

     (2)  the Trustee is adjudged bankrupt or insolvent;


                                      -54-


     (3) a receiver or other public officer takes charge of the Trustee or its
property; or

     (4) the Trustee otherwise becomes incapable of acting.

     If the Trustee resigns, is removed by the Issuers or by the Holders of a
majority in principal amount of the Debt Securities of a particular series and
such Holders do not reasonably promptly appoint a successor Trustee, or if a
vacancy exists in the office of Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), the Issuers shall
promptly appoint a successor Trustee. No resignation or removal of the Trustee
and no appointment of a successor Trustee shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of this Section 7.08.

     A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuers. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under the Indenture. The
successor Trustee shall mail a notice of its succession to Holders of Debt
Securities of each applicable series. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, subject to
the Lien provided for in Section 7.06.

     If a successor Trustee does not take office within 60 days after the
retiring Trustee gives notice of resignation or is removed, the retiring Trustee
or the Holders of 25% in principal amount of the Debt Securities of any
applicable series may petition any court of competent jurisdiction for the
appointment of a successor Trustee for the Debt Securities of such series.

     If the Trustee fails to comply with Section 7.10, any Holder of Debt
Securities of any applicable series may petition at the expense of the Issuers
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee for the Debt Securities of such series.
Notwithstanding the replacement of the Trustee pursuant to this Section 7.08,
the Issuers' obligations under Section 7.06 shall continue for the benefit of
the retiring Trustee.

     In the case of the appointment hereunder of a separate or successor Trustee
with respect to the Debt Securities of one or more series, the Issuers, any
retiring Trustee and each successor or separate Trustee with respect to the Debt
Securities of any applicable series shall execute and deliver an Indenture
supplemental hereto (1) that shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties
of any retiring Trustee with respect to the Debt Securities of any series as to
which any such retiring Trustee is not retiring shall continue to be vested in
such retiring Trustee and (2) that shall add to or


                                      -55-



change any of the provisions of the Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
trustee, it being understood that nothing herein or in such supplemental
Indenture shall constitute such Trustees as co-trustees of the same trust and
that each such separate, retiring or successor Trustee shall be Trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee.

SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER.

     If the Trustee consolidates or merges with, or converts into, or transfers
all or substantially all of its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation or banking association, without any further act, shall be the
successor Trustee, provided such Person shall be otherwise qualified and
eligible under this Article VII, without the execution or filing of any paper or
any further act on the part of any of the parties hereto. As soon as
practicable, the successor Trustee shall mail a notice of its succession to the
Issuers and the Holders of the Debt Securities then Outstanding.

     In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by the
Indenture any of the Debt Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Debt Securities so
authenticated; and in case at that time any of the Debt Securities shall not
have been authenticated, any successor to the Trustee may authenticate such Debt
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Debt Securities or in the Indenture
provided that the certificate of the Trustee shall have.

SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.

     The Trustee shall at all times satisfy the requirements of Section 310(a)
of the Trust Indenture Act. The Trustee shall have a combined capital and
surplus of at least $50,000,000, as set forth in its most recently published
annual report of condition. No obligor upon the Debt Securities of a particular
series or Person directly or indirectly controlling, controlled by or under
common control with such obligor shall serve as Trustee upon the Debt Securities
of such series. The Trustee shall comply with Section 310(b) of the Trust
Indenture Act; provided, however, that there shall be excluded from the
operation of Section 310(b)(1) of the Trust Indenture Act the Indenture (or any
indenture or indentures under which other securities or certificates of interest
or participation in other securities of the Issuers are outstanding) if the


                                      -56-



requirements for such exclusion set forth in Section 310(b)(1) of the Trust
Indenture Act are met.

SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUERS.

     The Trustee shall comply with Section 311(a) of the Trust Indenture Act,
excluding any creditor relationship listed in Section 311(b) of the Trust
Indenture Act. A Trustee who had resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent indicated therein.

SECTION 7.12. COMPLIANCE WITH TAX LAWS.

     The Trustee hereby agrees to comply with all U.S. federal income tax
information reporting and withholding requirements applicable to it with respect
to payments of principal, premium (if any) and interest on the Debt Securities,
whether acting as Trustee, Registrar, paying agent or otherwise with respect to
the Debt Securities.

                      ARTICLE VIII. CONCERNING THE HOLDERS

SECTION 8.01. EVIDENCE OF ACTION BY HOLDERS.

     Whenever in the Indenture it is provided that the Holders of a specified
percentage in aggregate principal amount of the Debt Securities of any or all
series may take action (including the making of any demand or request, the
giving of any direction, notice, consent or waiver or the taking of any other
action) the fact that at the time of taking any such action the Holders of such
specified percentage have joined therein may be evidenced (a) by any instrument
or any number of instruments of similar tenor executed by Holders in person or
by agent or proxy appointed in writing, (b) by the record of the Holders voting
in favor thereof at any meeting of Holders duly called and held in accordance
with the provisions of Section 5.02 or (c) by a combination of such instrument
or instruments and any such record of such a meeting of Holders.

SECTION 8.02. PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF DEBT
     SECURITIES.

     Subject to the provisions of Sections 7.01, 7.02 and 13.09, proof of the
execution of any instrument by a Holder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee.


                                      -57-



     The ownership of Registered Securities of any series shall be proved by the
Debt Security Register or by a certificate of the Registrar for such series.

     The Trustee may require such additional proof of any matter referred to in
this Section 8.02 as it shall deem necessary.

SECTION 8.03. WHO MAY BE DEEMED OWNER OF DEBT SECURITIES.

     Prior to due presentment for registration of transfer of any Registered
Security, the Issuers, the Trustee, any paying agent and any Registrar may deem
and treat the Person in whose name any Registered Security shall be registered
upon the books of the Issuers as the absolute owner of such Registered Security
(whether or not such Registered Security shall be overdue and notwithstanding
any notation of ownership or other writing thereon) for the purpose of receiving
payment of or on account of the principal of, and premium, if any, and (subject
to Section 2.12) interest on such Registered Security and for all other
purposes, and neither the Issuers nor the Trustee nor any paying agent nor any
Registrar shall be affected by any notice to the contrary; and all such payments
so made to any such Holder for the time being, or upon his order, shall be valid
and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Registered Security.

SECTION 8.04. INSTRUMENTS EXECUTED BY HOLDERS BIND FUTURE HOLDERS.

     At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 8.01, of the taking of any action by the Holders of the
percentage in aggregate principal amount of the Debt Securities of any series
specified in the Indenture in connection with such action and subject to the
following paragraph, any Holder of a Debt Security which is shown by the
evidence to be included in the Debt Securities the Holders of which have
consented to such action may, by filing written notice with the Trustee at the
Corporate Trust Office of the Trustee and upon proof of holding as provided in
Section 8.02, revoke such action so far as concerns such Debt Security. Except
as aforesaid, any such action taken by the Holder of any Debt Security shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of such Debt Security and of any Debt Security issued upon transfer thereof or
in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon such Debt Security or such other Debt
Securities. Any action taken by the Holders of the percentage in aggregate
principal amount of the Debt Securities of any series specified in the Indenture
in connection with such action shall be conclusively binding upon the Issuers,
the Trustee and the Holders of all the Debt Securities of such series.

     The Issuers may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders of Registered Securities entitled to give
their consent or


                                      -58-



take any other action required or permitted to be taken pursuant to the
Indenture. If a record date is fixed, then notwithstanding the immediately
preceding paragraph, those Persons who were Holders of Registered Securities at
such record date (or their duly designated proxies), and only those Persons,
shall be entitled to give such consent or to revoke any consent previously given
or to take any such action, whether or not such Persons continue to be Holders
of Registered Securities after such record date. No such consent shall be valid
or effective for more than 120 days after such record date unless the written
consent of the Holders of the percentage in aggregate principal amount of the
Debt Securities of such series specified in the Indenture shall have been
received within such 120-day period.

                  ARTICLE IX. AMENDMENT, SUPPLEMENT AND WAIVER

SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF DEBT SECURITIES.

     The Issuers, the Subsidiary Guarantors and the Trustee may from time to
time and at any time, without the consent of Holders of any Debt Security, enter
into an Indenture or supplemental Indentures (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of the execution
thereof) for one or more of the following purposes:

     (a) to cure any ambiguity, defect or inconsistency contained herein, in any
supplemental Indenture or in the Debt Securities of any series or any related
Guarantees;

     (b) to provide for uncertificated Debt Securities in addition to or in
place of certificated Debt Securities; provided, however, that the
uncertificated Debt Securities are issued in registered form for purposes of
Section 163(f) of the Code, or in a manner such that the uncertificated Debt
Securities are described in Section 163(f)(2)(B) of the Code;

     (c) to provide for the assumption of an Issuer's obligations to Holders
pursuant to Article X;

     (d) to add guarantors (including Subsidiary Guarantors) or guarantees with
respect to the Debt Securities as parties to the Indenture or to release
guarantors in accordance with the provisions of the Indenture or any
supplemental Indenture;

     (e) to make any changes that would provide any additional rights or
benefits to the Holders of the Debt Securities of one or more series or that do
not, taken as a whole, adversely affect the legal rights hereunder of any such
Holder;


                                      -59-



     (f) to comply with the requirements of the Commission to permit the
qualification of the Indenture or any supplemental Indenture under the Trust
Indenture Act as then in effect; provided, however, that nothing herein
contained shall permit or authorize the inclusion in any supplemental Indenture
of the provisions referred to in Section 316(a)(2) of the Trust Indenture Act;

     (g) to add Subsidiary Guarantors with respect to any or all of the Debt
Securities or to secure any or all of the Debt Securities or any guarantee with
respect to any Debt Securities;

     (h) to evidence or provide for the acceptance of appointment hereunder by a
successor or separate Trustee with respect to the Debt Securities of one or more
series and to add to or change any of the provisions of the Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee;

     (i) to add any additional Events of Default; and

     (j) to establish the form or terms of the Debt Securities as permitted by
Section 2.01 or 2.03.

     The Trustee is hereby authorized to join with the Issuers and guarantors
with respect to any Debt Securities in the execution of any such supplemental
Indenture, to make any further appropriate agreements and stipulations which may
be contained therein and to accept the conveyance, transfer, assignment,
mortgage or pledge of any property thereunder, but the Trustee shall not be
obligated to enter into any such supplemental Indenture which affects the
Trustee's own rights, duties or immunities under the Indenture or otherwise.

     Any supplemental Indenture authorized by the provisions of this Section
9.01 may be executed by the Issuers, any Subsidiary Guarantors with respect to
any Debt Securities of the applicable series and the Trustee without the consent
of the Holders of any of the Debt Securities at the time outstanding,
notwithstanding any of the provisions of Section 9.02.

     After an amendment under this Section 9.01 becomes effective, the Issuers
shall mail to Holders of Debt Securities of each series affected thereby a
notice briefly describing such amendment. The failure to give such notice to all
such Holders, or any defect therein, shall not impair or affect the validity of
an amendment under this Section 9.01.


                                      -60-



SECTION 9.02. WITH CONSENT OF HOLDERS OF DEBT SECURITIES.

     Without notice to any Holder but with the consent (evidenced as provided in
Section 8.01) of the Holders of a majority in aggregate principal amount of the
outstanding Debt Securities of each series affected by such supplemental
Indenture, (a) the Issuers and any Subsidiary Guarantors, when authorized by
Board Resolutions, and the Trustee may from time to time and at any time enter
into an Indenture or supplemental Indentures (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of execution
thereof) for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Indenture or of any supplemental
Indenture or of modifying in any manner the rights of the Holders of the Debt
Securities of such series or any related Guarantees, and (b) subject to Sections
6.04 and 6.08, any existing Default or Events of Default or compliance with any
provision of the Indenture or the Debt Securities of such series may be waived;
provided, however, that no such supplemental Indenture or waiver, without the
consent of the Holders of each Debt Security so affected, shall (i) reduce the
percentage in principal amount of Debt Securities of any series whose Holders
must consent to an amendment, supplement or waiver; (ii) reduce the principal of
or change the Stated Maturity of any Debt Security; (iii) reduce or waive the
premium, if any, payable upon the redemption of any Debt Security or alter or
waive any provisions by which any Debt Security may or shall be redeemed in
accordance with Article III (other than provisions requiring the repurchase of
the Debt Securities of such series if so permitted by the Board Resolutions or
supplemental Indenture establishing the terms of such series); (iv) reduce the
rate of or change the time for payment of interest on any Debt Security; (v)
waive a Default or an Event of Default in the payment of principal of, or
premium, if any, or interest on a Debt Security except for a rescission of an
acceleration of such Debt Securities by the Holders of at least a majority in
aggregate principal amount of such Debt Securities and a waiver of the payment
default that resulted from such acceleration; (vi) except as otherwise permitted
under the Indenture, release any security that may have been granted in respect
of the Debt Securities; (vii) make any Debt Security payable in Currency other
than that stated in the Debt Security; (viii) make any change in the provisions
of the Indenture relating to waivers of past Defaults or the rights of Holders
to receive payments of principal of or premium, if any, or interest on the Debt
Securities; (ix) waive a redemption payment with respect to any Debt Security
(other than a payment required by a covenant requiring the repurchase of the
Debt Securities of such series if so permitted by the Board Resolutions or
supplemental Indenture establishing the terms of such series); (x) make any
change in Section 6.06 or this Section 9.02; or (xi) except as provided in
Section 12.04, release any Subsidiary Guarantor or modify the Guarantee of any
Debt Security in any manner adverse to the Holders.


                                      -61-



     A supplemental Indenture which changes or eliminates any covenant or other
provision of the Indenture which has been expressly included solely for the
benefit of one or more particular series of Debt Securities or which modifies
the rights of the Holders of Debt Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under the
Indenture of the Holders of Debt Securities of any other series.

     Upon the request of the Issuers and, if applicable, the Subsidiary
Guarantors, accompanied by copies of Board Resolutions authorizing the execution
of any such supplemental Indenture, and upon the filing with the Trustee of
evidence of the consent of Holders as aforesaid, the Trustee shall join with the
Issuers and any guarantors with respect to any Debt Securities in the execution
of such supplemental Indenture unless such supplemental Indenture affects the
Trustee's own rights, duties or immunities under the Indenture or otherwise, in
which case the Trustee may in its discretion, but shall not be obligated to,
enter into such supplemental Indenture.

     It shall not be necessary for the consent of the Holders under this Section
9.02 to approve the particular form of any proposed supplemental Indenture, but
it shall be sufficient if such consent shall approve the substance thereof.

     After an amendment or waiver under this Section 9.02 becomes effective, the
Issuers shall mail to Holders of Debt Securities of each series affected thereby
a notice briefly describing such amendment or waiver. The failure to give such
notice to all such Holders, or any defect therein, shall not impair or affect
the validity of an amendment or waiver under this Section 9.02.

SECTION 9.03. EFFECT OF SUPPLEMENTAL INDENTURES.

     Upon the execution of any supplemental Indenture pursuant to the provisions
of this Article IX, the Indenture shall be and be deemed to be modified and
amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under the Indenture of the Trustee,
the Issuers, the Subsidiary Guarantors and the Holders shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental Indenture shall be and be deemed to be part of the terms and
conditions of the Indenture for any and all purposes.

     The Trustee, subject to the provisions of Sections 7.01 and 7.02, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental Indenture complies with the provisions of
this Article IX.


                                      -62-



SECTION 9.04. DEBT SECURITIES MAY BEAR NOTATION OF CHANGES BY SUPPLEMENTAL
     INDENTURES.

     Debt Securities of any series authenticated and delivered after the
execution of any supplemental Indenture pursuant to the provisions of this
Article IX may, and shall if required by the Trustee, bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
Indenture. New Debt Securities of any series so modified as to conform, in the
opinion of the Trustee and the Board of Directors of the Issuers, to any
modification of the Indenture contained in any such supplemental Indenture may
be prepared and executed by the Issuers, authenticated by the Trustee and
delivered in exchange for the Debt Securities of such series then Outstanding.
Failure to make the appropriate notation or to issue a new Debt Security of such
series shall not affect the validity of such amendment.

              ARTICLE X. CONSOLIDATION, MERGER, SALE OR CONVEYANCE

SECTION 10.01. CONSOLIDATIONS AND MERGERS OF THE ISSUERS.

     Neither of the Issuers nor any Subsidiary Guarantor with respect to a
series of Debt Securities may, directly or indirectly (1) consolidate or merge
with or into another Person (whether or not such Issuer or Subsidiary Guarantor
is the survivor) or (2) sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets, in one or more
related transactions, to another Person, unless:

     (1) either (a) such Issuer or Subsidiary Guarantor, as applicable, is the
surviving entity of such transaction; or (b) the Person formed by or surviving
any such consolidation or merger (if other than such Issuer or Subsidiary
Guarantor) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (the "Successor Company") is an entity
organized or existing under the laws of (i) the United States, any state thereof
or the District of Columbia, (ii) the Republic of the Marshall Islands or (iii)
any other country recognized by the United States; provided, however, that
Finance Corp. may not consolidate or merge with or into any entity other than a
corporation satisfying such requirement for so long as the Partnership is not a
corporation;

     (2) the Successor Company assumes all the obligations of such Issuer under
the Debt Securities affected thereby (or, if applicable, of such Subsidiary
Guarantee under the related Guarantee) and the Indenture pursuant to agreements
reasonably satisfactory to the Trustee;

     (3) immediately after such transaction no Default or Event of Default
exists; and


                                      -63-



     (4) such Issuer or Subsidiary Guarantor has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and, if a supplemental Indenture is required,
such supplemental Indenture complies with the Indenture, and all conditions
precedent therein relating to such transaction have been satisfied.

SECTION 10.02. RIGHTS AND DUTIES OF SUCCESSOR COMPANY.

     In case of any consolidation or merger involving the Issuer or a Subsidiary
Guarantor, or a disposition of all or substantially all the assets of an Issuer
or Subsidiary Guarantor in accordance with Section 10.01, the Successor Company
shall succeed to and be substituted for such Issuer or Subsidiary Guarantor, as
applicable, with the same effect as if it had been named herein as the
respective party to the Indenture, and the Issuer or Subsidiary Guarantor shall
be released from any further obligation under the Indenture and the Debt
Securities.

     In case of any such consolidation, merger or disposition, such changes in
phraseology and form (but not in substance) may be made in the Debt Securities
and related Guarantees, if any, appertaining thereto thereafter to be issued as
may be appropriate.

                       ARTICLE XI. DISCHARGE OF INDENTURE

SECTION 11.01. TERMINATION OF THE ISSUERS' AND THE SUBSIDIARY GUARANTORS'
     OBLIGATIONS.

     (a) The Indenture shall cease to be of further effect with respect to all
Outstanding Debt Securities of any series (except that rights of registration of
transfer or exchange of Debt Securities of such series herein expressly provided
for, the Issuers' obligations under Section 7.06, the Trustee's and each paying
agent's obligations under Sections 11.02 and 11.03, and the rights, powers,
protections and privileges accorded to the Trustee under Article VII shall
survive) and the Trustee, on demand and at the expense of the Issuers, shall
execute proper instruments acknowledging satisfaction and discharge of the
Indenture with respect to such series, when:

          (i) either

               (A) all outstanding Debt Securities of such series therefore
authenticated and delivered (other than (1) Debt Securities which have been
destroyed, lost or stolen and which have been replaced or paid as provided in
Section 2.09 and (2) Debt Securities for which payment money has been deposited
in


                                      -64-



trust with the Trustee or any paying agent and thereafter repaid to either
Issuer or discharged from such trust) have been delivered to the Trustee for
cancellation; or

               (B) all outstanding Debt Securities of such series not
theretofore delivered to the Trustee for cancellation

               (1) have become due and payable by reason of the giving of a
          notice of redemption or otherwise,

               (2) shall become due and payable at their Stated Maturity within
          one year, or

               (3) are to be called for redemption within one year under
          arrangements satisfactory to the Trustee for the giving of notice of
          redemption by the Trustee in the name, and at the expense, of the
          Issuers,

and the Issuers, in the case of clause (1), (2) or (3) above, have irrevocably
deposited or caused to be irrevocably deposited with the Trustee as trust funds
in trust for such purpose cash in Dollars or U.S. Government Obligations, or a
combination thereof, in an amount sufficient (in the case of clauses (2) and (3)
and without consideration of any reinvestment of interest and as certified by an
independent public accountant, designated by the Partnership, expressed in a
written certification thereof delivered to the Trustee) to pay and discharge the
entire indebtedness of such Debt Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and accrued and
unpaid interest to the date of such deposit (in the case of Debt Securities
which have become due and payable) or the Stated Maturity or redemption date, as
the case may be (in the case of Debt Securities which have not become due and
payable); or

               (C) the Issuers and the Subsidiary Guarantors have properly
fulfilled such other means of satisfaction and discharge as is specified, as
contemplated by Section 2.03, to be applicable to the Debt Securities of such
series;

          (ii) the Issuers or Subsidiary Guarantors have paid or caused to be
paid all other sums then due and payable hereunder by them under the Indenture;
and

          (iii) the Partnership has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein relating to the satisfaction and discharge of the Indenture
with respect to the Debt Securities of such series have been complied with.


                                      -65-



     (b) Unless this Section 11.01(b) is specified as not being applicable to
Debt Securities of a series as contemplated by Section 2.03, the Partnership
may, at its option, terminate certain of the Issuers' and the Subsidiary
Guarantors' respective obligations under the Indenture ("covenant defeasance")
with respect to the Debt Securities of a series if:

          (1) the Issuers or Subsidiary Guarantors have irrevocably deposited or
caused to be irrevocably deposited with the Trustee as trust funds in trust for
the purpose of making the following payments, specifically pledged as security
for and dedicated solely to the benefit of the Holders of Debt Securities of
such series, (i) money in the Currency in which payment of the Debt Securities
of such series is to be made in an amount, or (ii) U.S. Government Obligations
with respect to such series, maturing as to principal and interest at such times
and in such amounts as will ensure the availability of money in the Currency in
which payment of the Debt Securities of such series is to be made in an amount
or (iii) a combination thereof, that is sufficient, in the opinion (in the case
of clauses (ii) and (iii)) of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay the principal of and premium (if any) and interest on all Debt
Securities of such series on each date that such principal, premium (if any) or
interest is due and payable and (at the Stated Maturity thereof or upon
redemption as provided in Section 11.01(e)) to pay all other sums payable by it
hereunder; provided, however, that the Trustee shall have been irrevocably
instructed to apply such money and/or the proceeds of such U.S. Government
Obligations to the payment of such principal, premium (if any) and interest with
respect to the Debt Securities of such series as the same shall become due;

          (2) the Partnership has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to satisfaction and discharge of the Indenture with respect to the
Debt Securities of such series have been complied with;

          (3) no Default or Event of Default with respect to the Debt Securities
of such series shall have occurred and be continuing on the date of such
deposit;

          (4) the Partnership has delivered to the Trustee an Opinion of Counsel
or a private letter ruling issued by the United States Internal Revenue Service
to the effect that the Holders will not recognize income, gain or loss for
United States federal income tax purposes as a result of the Partnership's
exercise of its option under this Section 11.01(b) and will be subject to United
States Federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such option had not been exercised;


                                      -66-



          (5) the Issuers and the Subsidiary Guarantors have complied with any
additional conditions specified pursuant to Section 2.03 to be applicable to the
discharge of Debt Securities of such series pursuant to this Section 11.01; and

          (6) such deposit and discharge shall not cause the Trustee to have a
conflicting interest as defined in Section 310(b) of the Trust Indenture Act.

     In such event, the Indenture shall cease to be of further effect (except as
set forth in this paragraph), and the Trustee, on demand of the Partnership,
shall execute proper instruments acknowledging satisfaction and discharge under
the Indenture. However, the Issuers' and the Subsidiary Guarantors' respective
obligations in Sections 2.07, 2.09, 4.02, 4.04, 5.01, 7.06, 7.08, 11.04 and
11.05, the Trustee's and any paying agent's obligations in Section 11.03 and the
rights, powers, protections and privileges accorded the Trustee under Article
VII shall survive until all Debt Securities of such series have been paid in
full. Thereafter, only the Issuers' obligations in Section 7.06 and the
Trustee's and any paying agent's obligations in Section 11.03 shall survive with
respect to Debt Securities of such series.

     If the Partnership exercises its covenant defeasance option, payment of the
Debt Securities of the defeased series may not be accelerated because of an
Event of Default specified in Sections 6.01(d), (e), (h) or (i) or, with respect
to the Subsidiary Guarantors only, Sections 6.01(f) or (g) (except to the extent
covenants or agreements referenced in such Sections remain applicable).

     After such irrevocable deposit made pursuant to this Section 11.01(b) and
satisfaction of the other conditions set forth herein, the Trustee upon, request
of the Partnership shall acknowledge in writing the discharge of the Issuers and
the Subsidiary Guarantors' obligations under the Indenture with respect to the
Debt Securities of such series except for those surviving obligations specified
above.

     In order to have money available on a payment date to pay principal of or
premium (if any) or interest on the Debt Securities, the U.S. Government
Obligations shall be payable as to principal or interest on or before such
payment date in such amounts as will provide the necessary money. U.S.
Government Obligations shall not be callable at the issuer's option.

     (c) If the Issuers and the Subsidiary Guarantors have previously complied
or are concurrently complying with Section 11.01(b) (other than any additional
conditions specified pursuant to Section 2.03 that are expressly applicable only
to covenant defeasance) with respect to Debt Securities of a series, then,
unless this Section 11.01(c) is specified as not being applicable to Debt
Securities of such series as contemplated by Section 2.03, the Partnership may
elect that the Issuers' and the


                                      -67-



Subsidiary Guarantors' respective obligations to make payments with respect to
Debt Securities of such series be discharged ("legal defeasance"), if:

          (1) no Default or Event of Default under clauses (f) or (g) of Section
6.01 hereof shall have occurred at any time during the period ending on the 91st
day after the date of deposit contemplated by Section 11.01(b) (it being
understood that this condition shall not be deemed satisfied until the
expiration of such period);

          (2) unless otherwise specified with respect to Debt Securities of such
series as contemplated by Section 2.03, the Partnership has delivered to the
Trustee an Opinion of Counsel to the effect referred to in Section 11.01(b)(4)
with respect to such legal defeasance, which opinion is based on (i) a private
letter ruling issued by the United States Internal Revenue Service addressed to
the Partnership, (ii) a published ruling of the U.S. Internal Revenue Service
pertaining to a comparable form of transaction or (iii) a change in the
applicable U.S. federal income tax law (including regulations) after the date of
the Indenture;

          (3) the Issuers and the Subsidiary Guarantors have complied with any
other conditions specified pursuant to Section 2.03 to be applicable to the
legal defeasance of Debt Securities of such series pursuant to this Section
11.01(c); and

          (4) the Partnership has delivered to the Trustee a written request for
such legal defeasance of the Debt Securities of such series and an Officers'
Certificate and Opinion of Counsel, each stating that all conditions precedent
with respect to such legal defeasance of the Debt Securities of such series have
been complied with.

     In such event, the Issuers and the Subsidiary Guarantors will be discharged
from their respective obligations under the Indenture and the Debt Securities of
such series to pay principal of, premium (if any) and interest on Debt
Securities of such series, the Issuers' and the Subsidiary Guarantors'
obligations under Sections 4.01, 4.02, 4.04 and 12.01 shall terminate with
respect to such Debt Securities, and the entire indebtedness of the Issuers
evidenced by such Debt Securities and of the Subsidiary Guarantors evidenced by
the related Guarantees shall be deemed paid and discharged.

     The Partnership may exercise the legal defeasance option notwithstanding
the prior exercise of the covenant defeasance option. If the Partnership
exercises its legal defeasance option, payment of the Debt Securities of the
defeased series may not be accelerated because of an Event of Default.

     (d) If and to the extent additional or alternative means of satisfaction,
discharge or defeasance of Debt Securities of a series are specified to be
applicable to such series as contemplated by Section 2.03, each of the Issuers
and the Subsidiary


                                      -68-



Guarantors may terminate any or all of its obligations under the Indenture with
respect to Debt Securities of a series and any or all of its obligations under
the Debt Securities of such series if it fulfills such other means of
satisfaction and discharge as may be so specified, as contemplated by Section
2.03, to be applicable to the Debt Securities of such series.

     (e) If Debt Securities of any series subject to subsection (a), (b), (c) or
(d) of this Section 11.01 are to be redeemed prior to their Stated Maturity,
whether pursuant to any optional redemption provisions or in accordance with any
mandatory or optional sinking fund provisions, the terms of the applicable trust
arrangement shall provide for such redemption, and the Issuers shall make such
arrangements as are reasonably satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of the
Issuers.

SECTION 11.02. APPLICATION OF TRUST MONEY.

     The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 11.01. It shall apply the deposited money
and the money from U.S. Government Obligations through any paying agent and in
accordance with the Indenture to the payment of principal of, and premium, if
any, and interest on, the Debt Securities of the defeased series. Prior to the
maturity of such series, the Trustee may, at the written direction of the
Issuers, invest such money in U.S. Government Obligations.

SECTION 11.03. REPAYMENT TO ISSUERS OR SUBSIDIARY GUARANTORS.

     The Trustee and any paying agent shall promptly turn over to the Issuers or
any Subsidiary Guarantor any excess money or securities held by them at any time
upon request of the Partnership.

     Subject to any applicable abandoned property law, the Trustee and any
paying agent shall pay to the Partnership upon request any money held by them
for the payment of any principal, premium or interest on the Debt Securities
that remains unclaimed for two years, and, thereafter, Holders entitled to such
money must look to the Issuers for payment as general creditors unless an
applicable abandoned property law designates another Person, and all liability
of the Trustee and any paying agent with respect to such money shall cease.

SECTION 11.04. INDEMNITY FOR U.S. GOVERNMENT OBLIGATIONS.

     The Issuers shall pay and shall indemnify the Trustee and the Holders
against any tax, fee or other charge imposed on or assessed against deposited
U.S.


                                      -69-



Government Obligations or the principal and interest received on such U.S.
Government Obligations.

SECTION 11.05. REINSTATEMENT.

     If the Trustee or any paying agent is unable to apply any money or U.S.
Government Obligations in accordance with this Article XI by reason of any legal
proceeding or by reason of any order or judgment of any court or government
authority enjoining, restraining or otherwise prohibiting such application, the
obligations of the Issuers and the Subsidiary Guarantors under the Indenture and
the Debt Securities of the defeased series shall be revived and reinstated as
though no deposit had occurred pursuant to this Article XI until such time as
the Trustee or any paying agent is permitted to apply all such money or U.S.
Government Obligations in accordance with this Article XI; provided, however,
that if either Issuer or any Subsidiary Guarantor has made any payment of
principal of, premium (if any) or interest on any Debt Securities because of the
reinstatement of its obligations, such Issuer or Subsidiary Guarantor, as the
case may be, shall be subrogated to the rights of the Holders of such Debt
Securities to receive such payment from the money or U.S. Government Obligations
held by the Trustee or the paying agent.

                             ARTICLE XII. GUARANTEE

SECTION 12.01. UNCONDITIONAL GUARANTEE.

     (a) Notwithstanding any provision of this Article XII to the contrary, the
provisions of this Article XII relating to the Subsidiary Guarantors shall be
applicable only to, and inure solely to the benefit of, the Debt Securities of
any series designated, pursuant to Section 2.03, as entitled to the benefits of
the related Guarantee of each Subsidiary Guarantor with respect to such series.

     (b) For value received, each of the Subsidiary Guarantors hereby fully,
unconditionally and absolutely guarantees (the "Guarantee") to the Holders and
to the Trustee the due and punctual payment of the principal of, and premium, if
any, and interest on the Debt Securities and all other amounts due and payable
under this Indenture and the Debt Securities by the Partnership, when and as
such principal, premium, if any, and interest shall become due and payable,
whether at the stated maturity or by declaration of acceleration, call for
redemption or otherwise, according to the terms of the Debt Securities and this
Indenture, subject to the limitations set forth in Section 12.03.

     (c) Failing payment when due of any amount guaranteed pursuant to the
Guarantee set forth in this Article XII, for whatever reason, each of the
Subsidiary Guarantors will be jointly and severally obligated to pay the same
immediately. The


                                      -70-



Guarantee hereunder is intended to be a general, unsecured obligation of each of
the Subsidiary Guarantors. Each of the Subsidiary Guarantors hereby agrees that
its obligations hereunder shall be full, unconditional and absolute,
irrespective of the validity, regularity or enforceability of the Debt
Securities, the Guarantee (including the Guarantee of any other Subsidiary
Guarantor) or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Debt Securities with respect to any
provisions hereof or thereof, the recovery of any judgment against the Issuers,
any other Subsidiary Guarantor, or any action to enforce the same or any other
circumstances which might otherwise constitute a legal or equitable discharge or
defense of the Subsidiary Guarantors. Each of the Subsidiary Guarantors hereby
agrees that in the event of a default in payment of the principal of, or
premium, if any, or interest on the Debt Securities of the applicable series,
whether at the Stated Maturity or by declaration of acceleration, call for
redemption or otherwise, legal proceedings may be instituted by the Trustee on
behalf of the Holders or, subject to Section 6.04, by the Holders, on the terms
and conditions set forth in this Indenture, directly against such Subsidiary
Guarantor to enforce the Guarantee without first proceeding against the Issuers
or any other Subsidiary Guarantor.

     (d) The obligations of each of the Subsidiary Guarantors under this Article
XII shall be as aforesaid full, unconditional and absolute and shall not,
subject to Section 12.04, be impaired, modified, released or limited by any
occurrence or condition whatsoever, including, without limitation, (A) any
compromise, settlement, release, waiver, renewal, extension, indulgence or
modification of, or any change in, any of the obligations and liabilities of the
Issuers or any of the Subsidiary Guarantors contained in the Debt Securities or
this Indenture, (B) any impairment, modification, release or limitation of the
liability of the Issuers, any of the Subsidiary Guarantors or any of their
estates in bankruptcy, or any remedy for the enforcement thereof, resulting from
the operation of any present or future provision of any applicable Bankruptcy
Law, as amended, or other statute or from the decision of any court, (C) the
assertion or exercise by the Issuers, any of the Subsidiary Guarantors or the
Trustee of any rights or remedies under the Debt Securities or this Indenture or
their delay in or failure to assert or exercise any such rights or remedies, (D)
the assignment or the purported assignment of any property as security for the
Debt Securities, including all or any part of the rights of the Issuers or any
of the Subsidiary Guarantors under this Indenture, (E) the extension of the time
for payment by the Issuers or any of the Subsidiary Guarantors of any payments
or other sums or any part thereof owing or payable under any of the terms and
provisions of the Debt Securities or this Indenture or of the time for
performance by the Issuers or any of the Subsidiary Guarantors of any other
obligations under or arising out of any such terms and provisions or the
extension or the renewal of any thereof, (F) the modification or amendment
(whether material or otherwise) of any duty, agreement or obligation of the
Issuers or any of the Subsidiary Guarantors set forth in this Indenture, (G) the


                                      -71-



voluntary or involuntary liquidation, dissolution, marshaling of assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of, or other
similar proceeding affecting, the Issuers or any of the Subsidiary Guarantors or
any of their respective assets, or the disaffirmance of the Debt Securities, the
Guarantee or this Indenture in any such proceeding, (H) the release or discharge
of the Issuers or any of the Subsidiary Guarantors from the performance or
observance of any agreement, covenant, term or condition contained in any of
such instruments by operation of law, (I) the unenforceability of the Debt
Securities, the Guarantee or this Indenture or (J) any other circumstances
(other than payment in full or discharge of all amounts guaranteed pursuant to
the Guarantee) which might otherwise constitute a legal or equitable discharge
of a surety or guarantor.

     (e) Each of the Subsidiary Guarantors hereby (A) waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
the merger, insolvency or bankruptcy of the Issuers or any of the Subsidiary
Guarantors, and all demands whatsoever, (B) acknowledges that any agreement,
instrument or document evidencing the Guarantee may be transferred and that the
benefit of its obligations hereunder shall extend to each holder of any
agreement, instrument or document evidencing the Guarantee without notice to it
and (C) covenants that the Guarantee will not be discharged except by complete
performance of the Guarantee. Each of the Subsidiary Guarantors further agrees
that if at any time all or any part of any payment theretofore applied by any
Person to the Guarantee is, or must be, rescinded or returned for any reason
whatsoever, including the insolvency, bankruptcy or reorganization of the
Issuers or any of the Subsidiary Guarantors, the Guarantee shall, to the extent
that such payment is or must be rescinded or returned, be deemed to have
continued in existence notwithstanding such application, and the Guarantee shall
continue to be effective or be reinstated, as the case may be, as though such
application had not been made.

     (f) Each of the Subsidiary Guarantors shall be subrogated to all rights of
the Holders and the Trustee against the Issuers in respect of any amounts paid
by such Subsidiary Guarantor pursuant to the provisions of this Indenture;
provided, however, that such Subsidiary Guarantor shall not be entitled to
enforce or to receive any payments arising out of, or based upon, such right of
subrogation until all of the Debt Securities of the applicable series and the
Guarantee shall have been paid in full or discharged.

SECTION 12.02. EXECUTION AND DELIVERY OF GUARANTEE.

     To further evidence the Guarantee set forth in Section 12.01, each
Subsidiary Guarantor hereby agrees that a notation relating to such Guarantee
shall be endorsed


                                      -72-



on each Debt Security entitled to the benefits of the Guarantee authenticated
and delivered by the Trustee and executed by either manual or facsimile
signature of an Officer of the General Partner or such Subsidiary Guarantor.
Each of the Subsidiary Guarantors hereby agrees that the Guarantee set forth in
Section 12.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Debt Security a notation relating to the Guarantee. If any
Officer of any Subsidiary Guarantor whose signature is on the Indenture or a
notation of Guarantee no longer holds that office at the time the Trustee
authenticates such Debt Security or at any time thereafter, the Guarantee of
such Debt Security shall be valid nevertheless. The delivery by the Trustee of
any Debt Security of a series entitled to the benefits of a Guarantee under this
Article XII, after the authentication thereof hereunder, shall constitute due
delivery of the Guarantee set forth in this Indenture on behalf of the
Subsidiary Guarantors.

SECTION 12.03. LIMITATION ON LIABILITY OF THE SUBSIDIARY GUARANTORS.

     Each Subsidiary Guarantor and, by its acceptance hereof, each Holder of a
Debt Security of a series entitled to the benefits of the Guarantee hereby
confirms that it is the intention of all such Persons that the guarantee by such
Subsidiary Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any U.S. federal or state law. To
effectuate the foregoing intention, the Holders of a Debt Security entitled to
the benefits of the Guarantee and the Subsidiary Guarantors hereby irrevocably
agree that the obligations of each Subsidiary Guarantor under its Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor and to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Guarantee, result in the obligations of such Subsidiary Guarantor under the
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
U.S. federal or state law.

SECTION 12.04. RELEASE OF SUBSIDIARY GUARANTORS FROM GUARANTEE.

     (a) Notwithstanding any other provisions of this Indenture, the Guarantee
of any Subsidiary Guarantor may be released upon the terms and subject to the
conditions set forth in this Section 12.04. If no Default shall have occurred
and shall be continuing under this Indenture, any Guarantee incurred by a
Subsidiary Guarantor pursuant to this Article XII shall be unconditionally
released and discharged automatically: (i) upon any sale, exchange or transfer,
whether by way of merger or otherwise, to any Person that is not an Affiliate of
the Issuers, of all of the Issuers' direct or indirect equity interests in such
Subsidiary Guarantor (provided such sale, exchange or transfer is not prohibited
by this Indenture); (ii) upon the merger of such


                                      -73-



Subsidiary Guarantor into the Issuer or any other Subsidiary Guarantor or the
liquidation and dissolution of such Subsidiary Guarantor (in each case to the
extent not prohibited by this Indenture); or (iii) following delivery of a
written notice of such release or discharge by the Issuers to the Trustee, upon
the release or discharge of all guarantees by such Subsidiary Guarantor of any
Debt of the Issuers other than obligations arising under this Indenture and any
Debt Securities issued hereunder, except a discharge or release by or as a
result of payment under such guarantees.

     (b) The Trustee shall deliver an appropriate instrument evidencing any
release of a Subsidiary Guarantor from the Guarantee upon receipt of a written
request of the Issuer accompanied by an Officers' Certificate and an Opinion of
Counsel that the Subsidiary Guarantor is entitled to such release in accordance
with the provisions of this Indenture. Any Subsidiary Guarantor not so released
shall remain liable for the full amount of principal of (and premium, if any)
and interest on the Debt Securities entitled to the benefits of such Guarantee
as provided in this Indenture, subject to the limitations of Section 12.03.

SECTION 12.05. CONTRIBUTION.

     In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors hereby agree, among themselves,
that if any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under its Guarantee, such Funding Guarantor shall be
entitled to a contribution from each other Subsidiary Guarantor (as applicable)
in a pro rata amount based on the net assets of each Subsidiary Guarantor
(including the Funding Guarantor) for all payments, damages and expenses
incurred by the Funding Guarantor in discharging the Issuers' obligations with
respect to the Debt Securities of a series entitled to the benefits of a
Guarantee under this Article XII or any other Subsidiary Guarantor's obligations
with respect to its Guarantee of such series of Debt Securities.

                     ARTICLE XIII. MISCELLANEOUS PROVISIONS

SECTION 13.01. SUCCESSORS AND ASSIGNS OF ISSUERS BOUND BY INDENTURE.

     Except as otherwise provided herein, all the covenants, stipulations,
promises and agreements in the Indenture by or on behalf of the Issuers, the
Potential Subsidiary Guarantors, the Subsidiary Guarantors or the Trustee shall
bind their respective successors and assigns, whether so expressed or not.


                                      -74-


SECTION 13.02. ACTS OF BOARD, COMMITTEE OR OFFICER OF SUCCESSOR COMPANY VALID.

     Any act or proceeding authorized or required by any provision of the
Indenture to be done or performed by any Board of Directors, committee thereof
or officer of the General Partner, Finance Corp. or any Potential Subsidiary
Guarantor or Subsidiary Guarantor, as applicable, shall and may be done and
performed with like force and effect by the like Board of Directors, committee
thereof or officer of any Successor Company.

SECTION 13.03. REQUIRED NOTICES OR DEMANDS.

     Except as otherwise expressly provided in the Indenture, any notice or
demand which by any provision of the Indenture is required or permitted to be
given to or served on the Issuers, the Potential Subsidiary Guarantors, the
Subsidiary Guarantors or the Trustee shall be in writing in the English language
and may be given or served by being delivered in person or mailed by first-class
mail (registered or certified, return receipt requested), by facsimile or by
overnight air courier guaranteeing next Business Day delivery, to the applicable
address below:

     If to either Issuer or any Potential Subsidiary Guarantor or any Subsidiary
Guarantor:

          Teekay LNG Partners L.P.
          Bayside House, Bayside Executive Park
          West Bay Street and Blake Road
          P.O. Box AP-59213
          Nassau, Commonwealth of the Bahamas
          Attn: Secretary
          Telephone: (242) 502-8820
          Facsimile: (242) 502-8840

     If to the Trustee:

          The Bank of New York
          101 Barclay Street, Fl.21W
          New York, New York 10286
          Attn: Corporate Trust Administration
          Telephone: (212) 815-5915
          Facsimile: (212) 815-5803


                                      -75-



     Either Issuer, any Potential Subsidiary Guarantor, any Subsidiary Guarantor
or the Trustee by notice to the others may designate additional or different
addresses for subsequent notices or communications.

     Any notice required or permitted to a Registered Holder by the Issuers, any
Potential Subsidiary Guarantors, any Subsidiary Guarantors or the Trustee
pursuant to the provisions of the Indenture shall be in writing in the English
language and shall be deemed to be properly delivered if mailed by first-class
mail (registered or certified, return receipt requested) or sent by overnight
air courier guaranteeing next Business Day delivery, addressed to such Holder at
the address of such Holder as shown on the Debt Security Register. Any report
pursuant to Section 313 of the Trust Indenture Act shall be transmitted in
compliance with subsection (c) therein.

     Unless otherwise set forth in the Indenture, all notices and communications
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt is acknowledged, if by given by
facsimile; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next Business Day delivery.

     In the event of suspension of regular mail service or by reason of any
other cause it shall be impracticable to give notice by mail, then such
notification as shall be given with the approval of the Trustee shall constitute
sufficient notice for every purpose thereunder.

     Failure to mail or otherwise deliver a notice or communication to a Holder
or any defect in it or any defect in any notice by publication as to a Holder
shall not affect the sufficiency of such notice with respect to other Holders.
If a notice or communication is mailed, sent or published in the manner provided
herein, it is conclusively presumed duly given.

SECTION 13.04. INDENTURE AND DEBT SECURITIES TO BE CONSTRUED IN ACCORDANCE WITH
     THE LAWS OF THE STATE OF NEW YORK.

     The Indenture and each Debt Security shall be deemed to be New York
contracts, and for all purposes shall be construed in accordance with the laws
of such State.

SECTION 13.05. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL TO BE FURNISHED UPON
     APPLICATION OR DEMAND BY THE ISSUERS.

     Upon any application or demand by the Issuers or any Potential Subsidiary
Guarantors or Subsidiary Guarantors to the Trustee to take any action under any
of the


                                      -76-



provisions of the Indenture, the Issuers, Potential Subsidiary Guarantors or
Subsidiary Guarantors, as applicable, shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent provided for in the Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with, except that in the case of any such
application or demand as to which the furnishing of such document is
specifically required by any provision of the Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.

     Each certificate or opinion provided for in the Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in the Indenture shall include (1) a statement that the Person making such
certificate or opinion has read such covenant or condition, (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based, (3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such condition or covenant has been
complied with and (4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.

SECTION 13.06. PAYMENTS DUE ON LEGAL HOLIDAYS.

     In any case where the date of maturity of interest on or principal of and
premium, if any, on the Debt Securities of a series or the date fixed for
redemption or repayment of any Debt Security or the making of any sinking fund
payment shall not be a business day at any Place of Payment for the Debt
Securities of such series, then payment of interest or principal and premium, if
any, or the making of such sinking fund payment need not be made on such date at
such Place of Payment, but may be made on the next succeeding business day at
such Place of Payment with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period after such date. If a record date is not a business day, the record date
shall not be affected.

SECTION 13.07. PROVISIONS REQUIRED BY TRUST INDENTURE ACT TO CONTROL.

     If and to the extent that any provision of the Indenture limits, qualifies
or conflicts with another provision included in the Indenture which is required
to be included in the Indenture by any of Sections 310 to 318, inclusive, of the
Trust Indenture Act, such required provision shall control.


                                      -77-



SECTION 13.08. COMPUTATION OF INTEREST ON DEBT SECURITIES.

     Interest, if any, on the Debt Securities shall be computed on the basis of
a 360-day year of twelve 30-day months, except as may otherwise be provided
pursuant to Section 2.03.

SECTION 13.09. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR.

     The Trustee may make reasonable rules for action by or a meeting of
Holders. The Registrar and any paying agent may make reasonable rules for their
functions.

SECTION 13.10. NO RECOURSE AGAINST OTHERS.

     No past, present or future director, officer, partner, employee,
incorporator, manager, stockholder, unitholder or member of either Issuer, the
General Partner, any Potential Subsidiary Guarantor, any Subsidiary Guarantor or
any other obligor on the Debt Securities of any series, as such, shall have any
liability for any obligations of the Issuers, the Potential Subsidiary
Guarantors, the Subsidiary Guarantors or such other obligors under the Debt
Securities, the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder by accepting a Debt Security
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Debt Securities.

SECTION 13.11. SEVERABILITY.

     In case any provision in the Indenture or the Debt Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 13.12. EFFECT OF HEADINGS.

     The article and section headings herein and in the Table of Contents are
for convenience only and shall not affect the construction hereof.

SECTION 13.13. INDENTURE MAY BE EXECUTED IN COUNTERPARTS.

     The Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.

SECTION 13.14. CONSENT TO SERVICE; JURISDICTION.

     (a) The Issuers, the Potential Subsidiary Guarantors, the Subsidiary
Guarantors and the Trustee agree that any legal suit, action or proceeding
arising out


                                      -78-



of or relating to the Indenture, and the Issuers, the Potential Subsidiary
Guarantors and the Subsidiary Guarantors agree that any legal suit, action or
proceeding arising out of or relating to the Debt Securities, may be instituted
in any federal or state court in the Borough of Manhattan, the City of New York.
Each Issuer, Potential Subsidiary Guarantor and Subsidiary Guarantor and the
Trustee waives any objection which it may now or hereafter have to the laying of
the venue of any such legal suit, action or proceeding, waive any immunity from
jurisdiction or to service of process in respect of any such suit, action or
proceeding, and irrevocably submit to the exclusive jurisdiction of any such
court in any such suit, action or proceeding.

     (b) Each Issuer, Potential Subsidiary Guarantor and Subsidiary Guarantor
hereby designates and appoints Watson, Farley & Williams (New York) LLP as its
authorized agent upon which process may be served in any legal suit, action or
proceeding arising out of or relating to the Indenture or the Debt Securities
which may be instituted in any federal or state court in the Borough of
Manhattan, the City of New York, New York, and agrees that service of process
upon such agent, and written notice of such service to such Issuer, Potential
Subsidiary Guarantor or Subsidiary Guarantor by the Person serving the same,
shall be deemed in every respect effective service of process upon such Issuer,
Potential Subsidiary Guarantor or Subsidiary Guarantor in any such suit, action
or proceeding and further designates its domicile, the domicile of New York, New
York specified above and any domicile it may have in the future as its domicile
to receive any notice hereunder (including service of process). Service of
process, to be effective upon the Trustee, must be served at the Corporate Trust
Office of the Trustee in The City of New York. If for any reason Watson, Farley
& Williams (New York) LLP (or any successor agent for this purpose) shall cease
to act as agent for service of process as provided above, the Issuers, the
Potential Subsidiary Guarantors and the Subsidiary Guarantors will promptly
appoint a successor agent for this purpose reasonably acceptable to the Trustee.
Each Issuer, Potential Subsidiary Guarantor and Subsidiary Guarantor agrees to
take any and all actions as may be necessary to maintain such designation and
appointment of such agent in full force and effect.

SECTION 13.15. WAIVER OF TRIAL BY JURY.

     The Issuers, the Potential Subsidiary Guarantors, the Subsidiary
Guarantors, the Trustee and Holders hereby irrevocably and unconditionally waive
the right to trial by jury in connection with any claim arising out of or
relating to the Debt Securities and under the Indenture.

                [Remainder of this Page Intentionally Left Blank]


                                      -79-



     The Trustee hereby accepts the trusts in the Indenture upon the terms and
conditions herein set forth.

     IN WITNESS WHEREOF, the parties hereto have caused the Indenture to be duly
signed as of the date first written above.

                                        ISSUERS:

                                        TEEKAY LNG PARTNERS, L.P.

                                        By: TEEKAY GP L.L.C.,
                                            its General Partner


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        TEEKAY LNG FINANCE CORP.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        TRUSTEE:

                                        THE BANK OF NEW YORK


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                       S-1



                                        POTENTIAL SUBSIDIARY GUARANTORS:

                                        TEEKAY LNG OPERATING L.L.C.

                                        By: Teekay LNG Partners L.P., its sole
                                            member
                                        By: Teekay GP L.L.C., its General
                                            Partner


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        AFRICAN SPIRIT L.L.C.

                                        By: Teekay LNG Operating L.L.C., it sole
                                            member
                                        By: Teekay LNG Partners L.P., its sole
                                            member
                                        By: Teekay GP L.L.C., its General
                                            Partner


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        ASIAN SPIRIT L.L.C.

                                        By: Teekay LNG Operating L.L.C., it sole
                                            member
                                        By: Teekay LNG Partners L.P., its sole
                                            member
                                        By: Teekay GP L.L.C., its General
                                            Partner


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                       S-2



                                        EUROPEAN SPIRIT L.L.C.

                                        By: Teekay LNG Operating L.L.C., it sole
                                            member
                                        By: Teekay LNG Partners L.P., its sole
                                            member
                                        By: Teekay GP L.L.C., its General
                                            Partner


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        TEEKAY LUXEMBOURG S.A.R.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        TEEKAY SPAIN, S.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        TEEKAY II IBERIA S.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                       S-3



                                        TEEKAY SHIPPING SPAIN, S.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        NAVIERA TEEKAY GAS, S.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        NAVIERA TEEKAY GAS II, S.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        NAVIERA TEEKAY GAS III, S.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        NAVIERA TEEKAY GAS IV, S.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                       S-4

EX-4.3

                                                                     EXHIBIT 4.3

               FORM OF INDENTURE FOR SUBORDINATED DEBT SECURITIES

                            TEEKAY LNG PARTNERS, L.P.

                                       AND

                            TEEKAY LNG FINANCE CORP.,
                                   AS ISSUERS,

                                       AND

                          TEEKAY LNG OPERATING L.L.C.,
                             AFRICAN SPIRIT L.L.C.,
                              ASIAN SPIRIT L.L.C.,
                             EUROPEAN SPIRIT L.L.C.,
                           TEEKAY LUXEMBOURG S.A.R.L.,
                               TEEKAY SPAIN, S.L.,
                             TEEKAY II IBERIA S.L.,
                          TEEKAY SHIPPING SPAIN, S.L.,
                            NAVIERA TEEKAY GAS, S.L.,
                          NAVIERA TEEKAY GAS II, S.L.,
                          NAVIERA TEEKAY GAS III, S.L.

                                       AND
                           NAVIERA TEEKAY GAS IV, S.L.

                       AS POTENTIAL SUBSIDIARY GUARANTORS,

                                       AND

                              THE BANK OF NEW YORK,

                                   AS TRUSTEE

                                   ----------

                             SUBORDINATED INDENTURE

                            DATED AS OF _______, 20__

                                 DEBT SECURITIES
                                   (UNLIMITED)



                                TABLE OF CONTENTS

                                                                          
ARTICLE I.  Definitions...................................................     2

   SECTION 1.01.  Certain Terms Defined...................................     2

   SECTION 1.02.  Other Definitions.......................................    12

   SECTION 1.03.  Incorporation by Reference of Trust Indenture Act.......    12

   SECTION 1.04.  Rules of Construction...................................    13

ARTICLE II.  Debt Securities..............................................    13

   SECTION 2.01.  Forms Generally.........................................    13

   SECTION 2.02.  Form of Trustee's Certificate of Authentication.........    14

   SECTION 2.03.  Principal Amount; Issuable in Series....................    14

   SECTION 2.04.  Execution of Debt Securities............................    17

   SECTION 2.05.  Authentication and Delivery of Debt Securities..........    18

   SECTION 2.06.  Denomination of Debt Securities.........................    19

   SECTION 2.07.  General Provisions for Registration of
                  Transfer and Exchange...................................    19

   SECTION 2.08.  Temporary Debt Securities...............................    21

   SECTION 2.09.  Mutilated, Destroyed, Lost or Stolen Debt Securities....    22

   SECTION 2.10.  Cancellation of Surrendered Debt Securities.............    23

   SECTION 2.11.  Provisions of the Indenture and Debt Securities
                  for the Sole Benefit of the Parties and the Holders.....    23

   SECTION 2.12.  Payment of Interest; Rights Preserved...................    23

   SECTION 2.13.  Securities Denominated in Foreign Currencies............    24




                                       -i-



                                                                          
   SECTION 2.14.  Wire Transfers..........................................    24

   SECTION 2.15.  Securities Issuable in the Form of a Global Security....    25

   SECTION 2.16.  Medium Term Securities..................................    27

   SECTION 2.17.  Defaulted Interest......................................    28

   SECTION 2.18.  Judgments...............................................    29

   SECTION 2.19.  CUSIP Numbers...........................................    30

ARTICLE III.  Redemption of Debt Securities...............................    30

   SECTION 3.01.  Applicability of Article................................    30

   SECTION 3.02.  Notice of Redemption; Selection of Debt Securities......    30

   SECTION 3.03.  Payment of Debt Securities Called for Redemption........    32

   SECTION 3.04.  Mandatory and Optional Sinking Funds....................    33

   SECTION 3.05.  Redemption of Debt Securities for Sinking Fund..........    33

ARTICLE IV.  Particular Covenants.........................................    35

   SECTION 4.01.  Payment of Principal of, and Premium, if any, and
                  Interest on, Debt Securities............................    35

   SECTION 4.02.  Maintenance of Offices or Agencies for Registration of
                  Transfer, Exchange and Payment of Debt Securities.......    36

   SECTION 4.03.  Appointment to Fill a Vacancy in the Office of Trustee..    36

   SECTION 4.04.  Duties of Paying Agents, etc............................    37

   SECTION 4.05.  Statement by Officers as to Default.....................    38

   SECTION 4.06.  Corporate, Partnership or Limited Liability
                  Company Existence.......................................    38

   SECTION 4.07.  Calculation of Original Issue Discount..................    39




                                      -ii-



                                                                          
   SECTION 4.08.  Stay, Extension and Usury Laws..........................    39

ARTICLE V.  Holders' Lists and Reports by the Issuers and the Trustee.....    39

   SECTION 5.01.  Issuers to Furnish Trustee Information as to Names and
                  Addresses of Holders; Preservation of Information.......    39

   SECTION 5.02.  Communications to Holders; Meetings of Holders..........    40

   SECTION 5.03.  Reports by Issuers......................................    41

   SECTION 5.04.  Reports by Trustee......................................    41

   SECTION 5.05.  Record Dates for Action by Holders......................    42

ARTICLE VI.  Remedies of the Trustee And Holders in Event of Default......    42

   SECTION 6.01.  Events of Default.......................................    42

   SECTION 6.02.  Collection of Indebtedness by Trustee, etc..............    44

   SECTION 6.03.  Application of Moneys Collected by Trustee..............    46

   SECTION 6.04.  Limitation on Suits by Holders..........................    47

   SECTION 6.05.  Remedies Cumulative; Delay or Omission in Exercise of
                  Rights Not a Waiver of Default..........................    48

   SECTION 6.06.  Rights of Holders of Majority in Principal Amount of
                  Debt Securities to Direct Trustee and to Waive Default..    48

   SECTION 6.07.  Trustee to Give Notice of Defaults Known to It, but May
                  Withhold Such Notice in Certain Circumstances...........    49

   SECTION 6.08.  Requirement of an Undertaking to Pay Costs in Certain
                  Suits Under the Indenture or Against the Trustee........    49

ARTICLE VII.  Concerning the Trustee......................................    50

   SECTION 7.01.  Certain Duties and Responsibilities.....................    50

   SECTION 7.02.  Certain Rights of Trustee...............................    51




                                      -iii-



                                                                          
   SECTION 7.03.  Trustee Not Liable for Recitals in Indenture or in Debt
                  Securities..............................................    53

   SECTION 7.04.  Trustee, Paying Agent or Registrar May Own
                  Debt Securities.........................................    53

   SECTION 7.05.  Moneys Received by Trustee to Be Held in Trust..........    54

   SECTION 7.06.  Compensation and Reimbursement..........................    54

   SECTION 7.07.  Right of Trustee to Rely on an Officers' Certificate
                  Where No Other Evidence Specifically Prescribed.........    55

   SECTION 7.08.  Separate Trustee; Replacement of Trustee................    55

   SECTION 7.09.  Successor Trustee by Merger.............................    57

   SECTION 7.10.  Eligibility; Disqualification...........................    57

   SECTION 7.11.  Preferential Collection of Claims Against Issuers.......    57

   SECTION 7.12.  Compliance with Tax Laws................................    58

ARTICLE VIII.  Concerning the Holders.....................................    58

   SECTION 8.01.  Evidence of Action by Holders...........................    58

   SECTION 8.02.  Proof of Execution of Instruments and of Holding of Debt
                  Securities..............................................    58

   SECTION 8.03.  Who May Be Deemed Owner of Debt Securities..............    58

   SECTION 8.04.  Instruments Executed by Holders Bind Future Holders.....    59

ARTICLE IX.  Amendment, Supplement and Waiver.............................    60

   SECTION 9.01.  Without Consent of Holders of Debt Securities...........    60

   SECTION 9.02.  With Consent of Holders of Debt Securities..............    61

   SECTION 9.03.  Effect of Supplemental Indentures.......................    63




                                      -iv-



                                                                          
   SECTION 9.04.  Debt Securities May Bear Notation of Changes by
                  Supplemental Indentures.................................    63

ARTICLE X.  Consolidation, Merger, Sale or Conveyance.....................    64

   SECTION 10.01. Consolidations and Mergers of the Issuers...............    64

   SECTION 10.02. Rights and Duties of Successor Company..................    65

ARTICLE XI.  Discharge of Indenture.......................................    65

   SECTION 11.01. Termination of the Issuers' and the Subsidiary
                  Guarantors' Obligations.................................    65

   SECTION 11.02. Application of Trust Money..............................    70

   SECTION 11.03. Repayment to Issuers or Subsidiary Guarantors...........    70

   SECTION 11.04. Indemnity for U.S. Government Obligations...............    70

   SECTION 11.05. Reinstatement...........................................    70

ARTICLE XII.  Guarantee...................................................    71

   SECTION 12.01. Unconditional Guarantee.................................    71

   SECTION 12.02. Execution and Delivery of Guarantee.....................    73

   SECTION 12.03. Limitation on Liability of the Subsidiary Guarantors....    74

   SECTION 12.04. Release of Subsidiary Guarantors from Guarantee.........    74

   SECTION 12.05. Contribution............................................    75

ARTICLE XIII.  Miscellaneous Provisions...................................    75

   SECTION 13.01. Successors and Assigns of Issuers Bound by Indenture....    75

   SECTION 13.02. Acts of Board, Committee or Officer of Successor
                  Company Valid...........................................    75

   SECTION 13.03. Required Notices or Demands.............................    76




                                       -v-



                                                                          
   SECTION 13.04. Indenture and Debt Securities to Be Construed in
                  Accordance with the Laws of the State of New York.......    77

   SECTION 13.05. Officers' Certificate and Opinion of Counsel to Be
                  Furnished Upon Application or Demand by the Issuers.....    77

   SECTION 13.06. Payments Due on Legal Holidays..........................    78

   SECTION 13.07. Provisions Required by Trust Indenture Act to Control...    78

   SECTION 13.08. Computation of Interest on Debt Securities..............    78

   SECTION 13.09. Rules by Trustee, Paying Agent and Registrar............    78

   SECTION 13.10. No Recourse Against Others..............................    79

   SECTION 13.11. Severability............................................    79

   SECTION 13.12. Effect of Headings......................................    79

   SECTION 13.13. Indenture May Be Executed in Counterparts...............    79

   SECTION 13.14. Consent to Service; Jurisdiction........................    79

   SECTION 13.15. Waiver of Trial by Jury.................................    80

ARTICLE XIV.  Subordination of Debt Securities and Guarantees.............    80

   SECTION 14.01. Applicability of Article; Agreement to Subordinate......    80

   SECTION 14.02. Liquidation, Dissolution, Bankruptcy....................    81

   SECTION 14.03. Default on Senior Indebtedness..........................    81

   SECTION 14.04. Acceleration of Payment of Debt Securities..............    83

   SECTION 14.05. When Distribution Must Be Paid Over.....................    83

   SECTION 14.06. Subrogation.............................................    83

   SECTION 14.07. Relative Rights.........................................    83

   SECTION 14.08. Subordination May Not Be Impaired by Issuers or
                  Subsidiary Guarantors...................................    84




                                      -vi-



                                                                          
   SECTION 14.09. Rights of Trustee and Paying Agent......................    84

   SECTION 14.10. Distribution or Notice to Representative................    84

   SECTION 14.11. Article XIV Not to Prevent Defaults or Limit Right to
                  Accelerate..............................................    84

   SECTION 14.12. Trust Moneys Not Subordinated...........................    85

   SECTION 14.13. Trustee Entitled to Rely................................    85

   SECTION 14.14. Trustee to Effectuate Subordination.....................    85

   SECTION 14.15. Trustee Not Fiduciary for Holders of Senior Indebtedness    86

   SECTION 14.16. Reliance by Holders of Senior Indebtedness on
                  Subordination Provisions................................    86




                                      -vii-


     THIS SUBORDINATED INDENTURE, dated as of ______, 20__, is among TEEKAY LNG
PARTNERS, L.P., a Marshall Islands limited partnership (the "Partnership"),
TEEKAY LNG FINANCE CORP., a Marshall Islands corporation ("Finance Corp."),
TEEKAY LNG OPERATING L.L.C., a Marshall Islands limited liability company (the
"Operating Company"), AFRICAN SPIRIT L.L.C., a Marshall Islands limited
liability company ("African Spirit"), ASIAN SPIRIT L.L.C., a Marshall Islands
limited liability company ("Asian Spirit"), EUROPEAN SPIRIT L.L.C., a Marshall
Islands limited liability company ("European Spirit"), TEEKAY LUXEMBOURG
S.A.R.L. ("Luxco"), a Luxembourg company, TEEKAY SPAIN, S.L., a Spanish company
("Teekay Spain"), TEEKAY II IBERIA S.L., a Spanish company ("Iberia"), TEEKAY
SHIPPING SPAIN, S.L., a Spanish company ("Teekay Shipping Spain"), NAVIERA
TEEKAY GAS, S.L., a Spanish company ("Naviera I"), NAVIERA TEEKAY GAS II, S.L.,
a Spanish company ("Naviera II"), NAVIERA TEEKAY GAS III, S.L., a Spanish
company ("Naviera III"), and NAVIERA TEEKAY GAS IV, S.L., a Spanish company
("Naviera IV" and, together with Operating Company, African Spirit, Asian
Spirit, European Spirit, Luxco, Teekay Spain, Iberia, Teekay Shipping Spain,
Naviera I, Naviera II and Naviera III, collectively the "Potential Subsidiary
Guarantors"), and THE BANK OF NEW YORK, a New York banking corporation (the
"Trustee").

                                    RECITALS

     WHEREAS, Teekay GP L.L.C., a Marshall Islands limited liability company
(the "General Partner"), as general partner of the Partnership, Finance Corp.
and the Potential Subsidiary Guarantors have duly authorized the execution and
delivery of this Indenture to provide for the issuance from time to time of the
debentures, notes, bonds or other evidences of indebtedness to be issued in one
or more series in an unlimited aggregate principal amount (herein collectively
called the "Debt Securities"), and related Guarantees, if any, of Debt
Securities, as provided in this Indenture.

     WHEREAS, The Partnership, Finance Corp. and the Potential Subsidiary
Guarantors are members of the same consolidated group of companies. The
Potential Subsidiary Guarantors will derive direct and indirect economic benefit
from the issuance of the Debt Securities. Accordingly, each Potential Subsidiary
Guarantor has duly authorized the execution and delivery of this Indenture in
light of the possibility that such Potential Subsidiary Guarantor will provide
its full, unconditional and joint and several guarantee of a series of Debt
Securities to the extent provided in or pursuant to this Indenture.



     WHEREAS, all things necessary to make this Indenture a valid agreement of
the Issuers, in accordance with its terms, have been done.

                                    AGREEMENT

     NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for good and valuable consideration, the sufficiency of which
is hereby acknowledged, the Issuers and the Trustee hereby agree with each
other, for the equal and proportionate benefit of the respective Holders from
time to time of the Debt Securities or any series thereof, as follows:

                             ARTICLE I. DEFINITIONS

SECTION 1.01. CERTAIN TERMS DEFINED.

     The terms defined in this Section 1.01 (except as herein otherwise
expressly provided or unless the context otherwise requires) for all purposes of
the Indenture and of any Indenture supplemental hereto shall have the respective
meanings specified in this Section 1.01. All other terms used in the Indenture
which are defined in the Trust Indenture Act or which are by reference therein
defined in the Securities Act (except as herein otherwise expressly provided or
unless the context otherwise requires), shall have the meanings assigned to such
terms in the Trust Indenture Act and in the Securities Act as in force as of the
date of original execution of the Indenture.

     "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. The Trustee may request and may conclusively rely upon an Officers'
Certificate to determine whether any Person is an Affiliate of any specified
Person.

     "Agent" means any Registrar or paying agent.

     "Bankruptcy Law" means Title 11, U.S. Code, as amended from time to time,
or any similar foreign, federal or state law for the relief of debtors.

     "Blockage Notice" has the meaning set forth in Section 14.03.


                                      -2-



     "Board of Directors" means (a) with respect to the Partnership, the board
of directors of the General Partner, and (b) with respect to Finance Corp., its
board of directors, or, in each case, with respect to any determination or
resolution required or permitted to be made hereunder, any duly authorized
committee or subcommittee of such board. All references in the Indenture to
"Board of Directors" shall be deemed to refer to the Board of Directors of the
Partnership, unless otherwise expressly indicated or the context otherwise
requires.

     "Board Resolution" means a copy of a resolution certified by the
appropriate person to have been duly adopted by the Board of Directors or any
applicable committee thereof and to be in full force and effect on the date of
such certification.

     "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in the Borough of Manhattan,
the City of New York, New York, or the city in which the Corporate Trust Office
of the Trustee is located, are authorized or obligated by law or executive order
to close.

     "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

     "Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of the Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.

     "Corporate Trust Office of the Trustee" means the principal corporate trust
office of the Trustee, at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of the
Indenture is located at 101 Barclay Street, Fl. 21W, New York, New York 10286,
Phone: 212-815-5915, Fax: 212-815-58003, Attention: Corporate Trust
Administration, and as may be located at such other address as the Trustee may
give notice to the Issuers and the Subsidiary Guarantors.

     "Currency" means Dollars or Foreign Currency.

     "Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.

     "Debt" of any Person at any date means any obligation created or assumed by
such Person for the repayment of borrowed money and any guarantee thereof.


                                      -3-



     "Debt Security" or "Debt Securities" has the meaning stated in the first
recital of the Indenture and more particularly means any debt security or debt
securities, as the case may be, of any series authenticated and delivered under
the Indenture.

     "Default" means any event, act or condition that is, or with the passage of
time or the giving of notice or both would be, an Event of Default.

     "Depositary" means, unless otherwise specified by the Issuers pursuant to
either Section 2.03 or 2.15, with respect to registered Debt Securities of any
series issuable or issued in whole or in part in the form of one or more Global
Securities, The Depository Trust Company, New York, New York, or any successor
thereto registered as a clearing agency under the Exchange Act or other
applicable statute or regulations.

     "Designated Senior Indebtedness" means, as to any series of Debt
Securities, any Senior Indebtedness identified as Designated Senior Indebtedness
in the Board Resolution or supplemental Indenture setting forth the terms of
such series.

     "Dollar" or "$" means such currency of the United States as at the time of
payment is legal tender for the payment of public and private debts.

     "Dollar Equivalent" means, with respect to any monetary amount in a Foreign
Currency, at any time for the determination thereof, the amount of Dollars
obtained by converting such Foreign Currency involved in such computation into
Dollars at the spot rate for the purchase of Dollars with the applicable Foreign
Currency as quoted by Citibank, N.A. (unless another comparable financial
institution is designated by the Issuers) in New York, New York at approximately
11:00 A.M. (New York time) on the date two Business Days prior to such
determination.

     "Equity Interests" means:

     (1) in the case of a corporation, capital stock;

     (2) in the case of an association or a business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock;

     (3) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited);

     (4) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of assets of,
the issuing Person; and


                                      -4-



     (5) all warrants, options or other rights to acquire any of the interests
described in clauses (1) through (4) above (but excluding any debt security that
is convertible into, or exchangeable for, any of the interests described in
clauses (1) through (4) above).

     "Event of Default" has the meaning specified in Section 6.01.

     "Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended,
or any successor statute.

     "Finance Corp." means Finance Corp., a Marshall Islands corporation, and,
subject to the provisions of Article X, shall also include its successors and
assigns.

     "Floating Rate Security" means a Debt Security that provides for the
payment of interest at a variable rate determined periodically by reference to
an interest rate index specified pursuant to Section 2.03.

     "Foreign Currency" means a currency issued or adopted by the government of
any country other than the United States or a composite currency the value of
which is determined by reference to the values of the currencies of any group of
countries.

     "GAAP" means accounting principles generally accepted in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other Person as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.

     "General Partner" means Teekay GP L.L.C., and its successors and permitted
assigns as general partner of the Partnership.

     "Global Security" means, with respect to any series of Debt Securities
issued hereunder, a Debt Security that is executed by the Issuers and
authenticated and delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction, all in accordance with the Indenture, or the
applicable Board Resolution and set forth in an Officers' Certificate, which
shall be registered in the name of the Depositary or its nominee and which shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, all the Outstanding Debt Securities of such series or any
portion thereof, in either case having the same terms, including, without
limitation, the same original issue date, date or dates on which principal is
due and interest rate or method of determining interest.


                                      -5-



     "guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Debt or other obligation of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation of such other Person (whether arising
by virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for purposes of assuring
in any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "guarantee" used as a verb has a corresponding meaning.

     "Guarantee" has the meaning assigned thereto in Section 12.01.

     "Holder," "Holder of Debt Securities" or other similar terms mean, with
respect to a Registered Security, the Registered Holder.

     "Indenture" means this instrument as originally executed, or, if amended or
supplemented as herein provided, as so amended or supplemented, and shall
include the form and terms of particular series of Debt Securities as
contemplated hereunder, whether or not a supplemental indenture is entered into
with respect thereto; provided, however, that, if at any time more than one
Person is acting as Trustee under this instrument, "Indenture" shall mean, with
respect to any one or more series of Debt Securities for which such Person is
Trustee, this instrument as originally executed or, if amended or supplemented
as herein provided, as so amended or supplemented, and shall include the forms
and terms of the particular series of Debt Securities for which such Person is
Trustee established as contemplated by Section 2.03, exclusive, however, of any
provisions or terms which relate solely to other series of Debt Securities for
which such Person is not Trustee, regardless of when such provisions or terms
were adopted, and exclusive of any provisions or terms adopted by means of one
or more supplemental indentures hereto executed and delivered after such Person
had become such Trustee but to which such Person, as such Trustee, was not a
party.

     "Issuer Order" means a written order signed in the name of the applicable
Issuer or Issuers and any applicable Subsidiary Guarantors by two Officers of
the General Partner and delivered to the Trustee.

     "Issuers" means the Partnership and Finance Corp., and, subject to the
provisions of Article X, shall also include their successors and permitted
assigns.

     "Lien" means, with respect to any asset, any mortgage, lien (statutory or
otherwise), pledge, charge, security interest, hypothecation, assignment for
security,


                                      -6-



claim, preference, priority or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement or any lease
in the nature thereof, any option or other agreement to grant a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statute) of any jurisdiction, other
than a precautionary financing statement respecting a lease not intended as a
security agreement.

     "Officer" means the Chairman of the Board, the Chief Executive Officer, any
Vice President, the Chief Financial Officer, Treasurer, Secretary, any Assistant
Treasurer or any Assistant Secretary of a Person.

     "Officers' Certificate" means a certificate signed by two Officers of a
Person. Each such certificate shall include the statements provided for in
Section 13.05, if applicable.

     "Opinion of Counsel" means an opinion in writing signed by legal counsel
for the Issuers or the Subsidiary Guarantors, as applicable (which counsel may
be an employee of the Issuers or the Subsidiary Guarantors or outside counsel
for the Issuers or the Subsidiary Guarantors). Each such opinion shall include
the statements provided for in Section 13.05, if applicable.

     "Original Issue Discount Debt Security" means any Debt Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration or acceleration of the maturity thereof pursuant to
Section 6.01.

     "Outstanding" when used with respect to any series of Debt Securities,
means, as of the date of determination, all Debt Securities of that series
theretofore authenticated and delivered under the Indenture, except:

     (1) Debt Securities of that series theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;

     (2) Debt Securities of that series for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Trustee or any
paying agent (other than the Partnership or Finance Corp.) in trust or set aside
and segregated in trust by the Issuers (if either of the Issuers shall act as
its own paying agent) for the holders of such Debt Securities; provided,
however, that, if such Debt Securities are to be redeemed, notice of such
redemption has been duly given pursuant to the Indenture or provision therefore
satisfactory to the Trustee has been made; and

     (3) Debt Securities of that series which have been paid pursuant to Section
2.09 or in exchange for or in lieu of which other Debt Securities have been


                                      -7-



authenticated and delivered pursuant to the Indenture, other than any such Debt
Securities in respect of which there shall have been presented to the Trustee
proof satisfactory to it that such Debt Securities are held by a bona fide
purchaser in whose hands such Debt Securities are valid obligations of the
Issuers; provided, however, that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities of any series have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Debt Securities owned by the Issuers or any other obligor upon the
Debt Securities or any Subsidiary of the Issuers or of such other obligor shall
be disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Debt Securities which
a Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded. Debt Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Debt Securities and
that the pledgee is not one of the Issuers or any other obligor upon the Debt
Securities or a Subsidiary of the Issuers or of such other obligor. In
determining whether the Holders of the requisite principal amount of outstanding
Debt Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, the principal amount of an Original Issue
Discount Debt Security that shall be deemed to be Outstanding for such purposes
shall be the amount of the principal thereof that would be due and payable as of
the date of such determination upon a declaration of acceleration of the
maturity thereof pursuant to Section 6.01. In determining whether the Holders of
the requisite principal amount of the Outstanding Debt Securities of any series
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, the principal amount of a Debt Security denominated in one or
more Foreign Currencies or currency units that shall be deemed to be Outstanding
for such purposes shall be the Dollar Equivalent, determined in the manner
provided as contemplated by Section 2.03 on the date of original issuance of
such Debt Security, of the principal amount (or, in the case of any Original
Issue Discount Security, the Dollar Equivalent on the date of original issuance
of such Security of the amount determined as provided in the preceding sentence
above) of such Debt Security.

     "Partnership" means Teekay LNG Partners, L.P., a Marshall Islands limited
partnership, and, subject to the provisions of Article X, shall also include its
successors and assigns.

     "Payment Blockage Period" has the meaning set forth in Section 14.03.

     "Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint stock company, trust,
unincorporated


                                      -8-



organization, government or any agency or political subdivision thereof or any
other entity.

     "Place of Payment" means, when used with respect to the Debt Securities of
any series, the place or places where the principal of, and premium, if any, and
interest on, the Debt Securities of that series are payable as specified
pursuant to Section 2.03.

     "Redemption Date" means, when used with respect to any Debt Security to be
redeemed, the date fixed for such redemption by or pursuant to this Indenture.

     "Representative" means the trustee, agent or any representative for an
issue of Senior Indebtedness and, in the absence of any trustee, agent or
representative, it means the holder or holders of such issue.

     "Registered Holder" means the Person in whose name a Registered Security is
registered in the Debt Security Register (as defined in Section 2.07(a)).

     "Registered Security" means any Debt Security registered as to principal
and interest in the Debt Security Register (as defined in Section 2.07(a)).

     "Registrar" has the meaning set forth in Section 2.07(a).

     "Responsible Officer" means, when used with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee or any other officer of
the Trustee performing functions similar to those performed by the persons who
at the time shall be such officers, and any other officer of the Trustee to whom
corporate trust matters are referred because of his knowledge of and familiarity
with the particular subject.

     "Securities Act" means the U.S. Securities Act of 1933, as amended, or any
successor statute.

     "Senior Indebtedness" means, as to any series of Debt Securities, the
indebtedness of the Partnership identified as Senior Indebtedness in the Board
Resolution or supplemental Indenture setting forth the terms of such series and,
with respect to a Guarantee related to such series of Debt Securities, the
indebtedness of the applicable Subsidiary Guarantor identified as Senior
Indebtedness in such Board Resolution or supplemental Indenture.

     "Significant Subsidiary" means a Subsidiary of the Partnership that is a
"significant subsidiary" of the Partnership, as such term is defined in Rule
1-02(w) of Regulation S-X under the Securities Act as of the date hereof.


                                      -9-



     "Stated Maturity" means, at any time, with respect to any installment of
interest or principal on any series of Debt Securities, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such indebtedness or such later date as such
documentation shall provide at that time, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.

     "Subordinated Debt Securities" has the meaning set forth in Section 14.03.

     "Subsidiary" means, with respect to any Person:

     (1) any corporation, association or other business entity of which more
than 50% of the Voting Stock is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof); and

     (2) any partnership (whether general or limited) or limited liability
company (a) the sole general partner or the managing general partner or managing
member of which is such Person or a Subsidiary of such Person, or (b) if there
are more than a single general partner or member, either (i) the only general
partners or managers of which are such Person and/or one or more Subsidiaries of
such Person (or any combination thereof) or (ii) such Person owns or controls,
directly or indirectly, a majority of the outstanding general partner interests,
member interests or other Voting Stock of such partnership or limited liability
company, respectively.

     "Subsidiary Guarantors" means, with respect to any series of Debt
Securities, the Person or Persons, if any, named in accordance with Section
2.03(7) as the "Subsidiary Guarantors" in or pursuant to a Board Resolution of
the applicable Issuer or Issuers and set forth in an Officers' Certificate of
each applicable Issuer, or established in one or more Indentures supplemental
hereto, prior to the issuance of Debt Securities of such series, until a
successor Person or Persons shall have become such pursuant to the applicable
provisions of the Indenture, and thereafter "Subsidiary Guarantors" with respect
to such series of Debt Securities shall mean such successor Person or Persons,
and any other Subsidiary of the Partnership who may execute the Indenture, or a
supplement thereto, for the purpose of providing a guarantee for such series of
Debt Securities pursuant to the Indenture. If a series of Debt Securities does
not have any Subsidiary Guarantors, all references in the Indenture to
Subsidiary Guarantors shall be ignored with respect to such series of Debt
Securities.

     "Trust Indenture Act" means (except as otherwise expressly provided herein)
the U.S. Trust Indenture Act of 1939, as amended, or any successor statute.


                                      -10-



     "Trustee" initially means The Bank of New York and any other Person or
Persons appointed as such from time to time pursuant to Section 7.08, and,
subject to the provisions of Article VII, includes its or their successors and
assigns. If at any time there is more than one such Person, "Trustee" as used
with respect to the Debt Securities of any series shall mean the Trustee with
respect to the Debt Securities of that series.

     "Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.

     "United States" means the United States of America (including the States
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction.

     "U.S. Government Obligations" means securities that are (a) direct
obligations of the United States for the payment of which its full faith and
credit is pledged; (b) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States, which, in either case, under clause (a) or (b) above, are not
callable or redeemable at the option of the issuers thereof; or (c) depository
receipts issued by a bank or trust company as custodian with respect to any such
U.S. Government Obligations or a specific payment of interest on or principal of
any such U.S. Government Obligation held by such custodian for the account of
the holder of a depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation evidenced by such
depository receipt.

     "Voting Stock" of any Person as of any date means the Equity Interests of
such Person pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the board of
directors, managers, general partners or trustees of any Person (regardless of
whether, at the time, Equity Interests of any other class or classes shall have,
or might have, voting power by reason of the occurrence of any contingency) or,
with respect to a partnership (whether general or limited), any general partner
interest in such partnership.

     "Yield to Maturity" means the yield to maturity calculated at the time of
issuance of a series of Debt Securities, or, if applicable, at the most recent
redetermination of interest on such series and calculated in accordance with
accepted financial practice.


                                      -11-



SECTION 1.02. OTHER DEFINITIONS.



TERM                                                    SECTION IN WHICH DEFINED
- ----                                                    ------------------------
                                                     
"Debt Security Register..............................           2.07
"Defaulted Interest".................................           2.17
"Designated Currency"................................           2.18
"Funding Guarantor"..................................           12.05
"Guarantee"..........................................           12.01
"Iberia".............................................           Preamble
"Luxco"..............................................           Preamble
"mandatory sinking fund payment".....................           3.04
"Naviera I"..........................................           Preamble
"Naviera II".........................................           Preamble
"Naviera III"........................................           Preamble
"Naviera IV".........................................           Preamble
"Operating Company"..................................           Preamble
"optional sinking fund payment"......................           3.04
"Potential Subsidiary Guarantors"....................           Preamble
"Servicios"..........................................           Preamble
"Successor Company"..................................           10.01
"Teekay Shipping Spain"..............................           Preamble
"Teekay Spain".......................................           Preamble


SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

     The Indenture is subject to the mandatory provisions of the Trust Indenture
Act which are incorporated by reference in and made a part of the Indenture. The
following Trust Indenture Act terms have the following meanings:

     "indenture securities" means the Debt Securities;

     "indenture security holder" means a Holder;

     "indenture to be qualified" means the Indenture;

     "indenture trustee" or "institutional trustee" means the Trustee; and

     "obligors" on the indenture securities means the Issuers, any Subsidiary
Guarantors and any other obligors on the Debt Securities.


                                      -12-



     All other Trust Indenture Act terms used in the Indenture that are defined
by the Trust Indenture Act, reference to another statute or defined by rules of
the Commission have the meanings assigned to them by such definitions.

SECTION 1.04. RULES OF CONSTRUCTION.

     Unless the context otherwise requires:

     (1) a term has the meaning assigned to it;

     (2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;

     (3) "or" is not exclusive;

     (4) "including" means including without limitation; and

     (5) words in the singular include the plural and words in the plural
include the singular.

                           ARTICLE II. DEBT SECURITIES

SECTION 2.01. FORMS GENERALLY.

     The Debt Securities of each series shall be in substantially the form
established without the approval of any Holder by or pursuant to a Board
Resolution of the applicable Issuer or Issuers or in one or more Indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by the
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as the applicable Issuer or
Issuers may deem appropriate (and, if not contained in a supplemental Indenture
entered into in accordance with Article IX, as are not prohibited by the
provisions of the Indenture) or as may be required or appropriate to comply with
any law or with any rules made pursuant thereto or with any rules of any
securities exchange on which such series of Debt Securities may be listed, or to
conform to general usage, or as may, consistently herewith, be determined by the
officers executing such Debt Securities as evidenced by their execution of the
Debt Securities.

     The definitive Debt Securities of each series shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Debt Securities,
as evidenced by their execution of such Debt Securities.


                                      -13-



SECTION 2.02. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

     The Trustee's certificate of authentication on all Debt Securities
authenticated by the Trustee shall be in substantially the following form:

     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

     This is one of the Debt Securities of the series designated therein and
referred to in the within-mentioned Indenture.

THE BANK OF NEW YORK,
as Trustee


By
   ----------------------------------
   Authorized Signatory

Dated:
       ------------------------------

SECTION 2.03. PRINCIPAL AMOUNT; ISSUABLE IN SERIES.

     The aggregate principal amount of Debt Securities which may be issued,
executed, authenticated, delivered and outstanding under the Indenture is
unlimited. The Debt Securities may be issued in one or more series. There shall
be established, without the approval of any Holders, in or pursuant to a Board
Resolution of the applicable Issuer or Issuers and set forth in an Officers'
Certificate of each applicable Issuer, or established in one or more Indentures
supplemental hereto, prior to the issuance of Debt Securities of any series, any
or all of the following:

     (1) the title of the Debt Securities of the series (which shall distinguish
the Debt Securities of the series from all other Debt Securities);

     (2) any limit upon the aggregate principal amount of the Debt Securities of
the series which may be authenticated and delivered under the Indenture (except
for Debt Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Debt Securities of the series
pursuant to this Article);

     (3) the date or dates on which the principal and premium, if any, of the
Debt Securities of the series are payable;

     (4) the rate or rates (which may be fixed or variable) at which the Debt
Securities of the series shall bear interest, if any, or the method of
determining such rate or rates, the date or dates from which such interest shall
accrue, the interest payment dates on which such interest shall be payable, or
the method by which such date will be determined, and in the case of Registered
Securities, the record dates for


                                      -14-



the determination of Holders thereof to whom such interest is payable; and the
basis upon which interest will be calculated if other than that of a 360-day
year of twelve 30-day months;

     (5) the Place or Places of Payment, if any, in addition to or instead of
the Corporate Trust Office of the Trustee, where the principal of, and interest
on, Debt Securities of the series shall be payable;

     (6) the price or prices at which, the period or periods within which and
the terms and conditions upon which Debt Securities of the series may be
redeemed, in whole or in part, at the option of the Issuers or otherwise;

     (7) whether Debt Securities of the series are entitled to the benefits of
any Guarantee of any Subsidiary Guarantors pursuant to this Indenture;

     (8) the obligation, if any, of the Issuers to redeem, purchase or repay
Debt Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof, and the price or prices at
which and the period or periods within which and the terms and conditions upon
which Debt Securities of the series shall be redeemed, purchased or repaid, in
whole or in part, pursuant to such obligations;

     (9) the terms, if any, upon which the Debt Securities of the series may be
convertible into or exchanged for Equity Interests, other Debt Securities or
other securities of any kind of the Partnership, Finance Corp. or any other
obligor or issuer and the terms and conditions upon which such conversion or
exchange shall be effected, including the initial conversion or exchange price
or rate, the conversion or exchange period and any other provisions in addition
to or in lieu of those described herein;

     (10) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Debt Securities of the series shall be
issuable;

     (11) if the amount of principal of or any premium or interest on Debt
Securities of the series may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts will be determined;

     (12) if the principal amount payable at the Stated Maturity of Debt
Securities of the series will not be determinable as of any one or more dates
prior to such Stated Maturity, the amount which will be deemed to be such
principal amount as of any such date for any purpose, including the principal
amount thereof which will be due and payable upon any maturity other than the
Stated Maturity or which will be deemed to be Outstanding as of any such date
(or, in any such case, the manner in


                                      -15-



which such deemed principal amount is to be determined); and the manner of
determining the equivalent thereof in the currency of the United States of
America for purposes of the definition of Dollar Equivalent;

     (13) any changes or additions to Article XI or XIV or in any defined term
used in either Article XI or XIV;

     (14) if other than Dollars, the coin or Currency or Currencies or units of
two or more Currencies in which payment of the principal of and premium, if any,
and interest on Debt Securities of the series shall be payable;

     (15) if other than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section 6.01 or
provable in bankruptcy pursuant to Section 6.02;

     (16) the terms, if any, of the transfer, mortgage, pledge or assignment as
security for the Debt Securities of the series of any properties, assets,
moneys, proceeds, securities or other collateral, including whether certain
provisions of the Trust Indenture Act are applicable and any corresponding
changes to provisions of the Indenture as currently in effect;

     (17) any addition to or change in the Events of Default with respect to the
Debt Securities of the series and any change in the right of the Trustee or the
Holders to declare the principal of and interest on, such Debt Securities due
and payable;

     (18) if the Debt Securities of the series shall be issued, in whole or in
part, in the form of a Global Security or Securities, the terms and conditions,
if any, upon which such Global Security or Securities may be exchanged, in whole
or in part, for other individual Debt Securities in definitive registered form;
and the Depositary for such Global Security or Securities and the form of any
legend or legends to be borne by any such Global Security or Securities in
addition to or in lieu of the legend referred to in Section 2.15;

     (19) any trustees, authenticating or paying agents, transfer agents or
registrars;

     (20) the applicability of, and any addition to or change in the covenants
and definitions currently set forth in the Indenture or in the terms currently
set forth in Article X;


                                      -16-


     (21) the terms, if any, of any guarantee of the payment of principal of,
and premium, if any, and interest on, Debt Securities of the series and any
corresponding changes to the provisions of the Indenture as currently in effect;

     (22) with regard to Debt Securities of the series that do not bear
interest, the dates for certain required reports to the Trustee;

     (23) whether Finance Corp. will be a co-issuer of the Debt Securities of
the series;

     (24) applicable CUSIP Numbers; and

     (25) any other terms of the Debt Securities of the series (which terms
shall not be prohibited by the provisions of the Indenture).

     All Debt Securities of any one series appertaining thereto shall be
substantially identical except as to denomination and except as may otherwise be
provided in or pursuant to such Board Resolutions and as set forth in such
Officers' Certificates or in any such Indenture supplemental hereto.

SECTION 2.04. EXECUTION OF DEBT SECURITIES.

     Two Officers of the General Partner shall sign the Debt Securities on
behalf of the Partnership and, if applicable, Finance Corp. Such signatures may
be the manual or facsimile signatures of the present or any future such
authorized Officers and may be imprinted or otherwise reproduced on the Debt
Securities. The seals of the Issuers, if any, may be in the form of a facsimile
thereof and may be impressed, affixed, imprinted or otherwise reproduced on the
Debt Securities.

     Only such Debt Securities as shall bear thereon a certificate of
authentication substantially in the form hereinbefore recited, signed manually
by the Trustee, shall be entitled to the benefits of the Indenture or be valid
or obligatory for any purpose. Such certificate by the Trustee upon any Debt
Security executed by the applicable Issuer or Issuers shall be conclusive
evidence that the Debt Security so authenticated has been duly authenticated and
delivered hereunder.

     In case any Officer of the General Partner who shall have signed any of the
Debt Securities shall cease to be such Officer before the Debt Securities so
signed shall have been authenticated and delivered by the Trustee, or disposed
of by the Issuers, such Debt Securities nevertheless may be authenticated and
delivered or disposed of as though the Person who signed such Debt Securities
had not ceased to be such Officer of the General Partner; and any Debt Security
may be signed on behalf of the Issuers by such Persons as, at the actual date of
the execution of such


                                      -17-



Debt Security, shall be the proper Officers of the General Partner, although at
the date of such Debt Security or of the execution of the Indenture any such
Person was not such Officer.

SECTION 2.05. AUTHENTICATION AND DELIVERY OF DEBT SECURITIES.

     At any time and from time to time after the execution and delivery of the
Indenture, the Issuers may deliver Debt Securities of any series executed by the
Issuers to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver such Debt Securities to or upon an Issuer Order. The
Debt Securities shall be dated the date of their authentication. In
authenticating such Debt Securities and accepting the additional
responsibilities under the Indenture in relation to such Debt Securities, the
Trustee shall be entitled to receive, and (subject to Section 7.01) shall be
fully protected in relying upon:

     (1) a copy of any Board Resolution of each of the Issuers, certified by the
Secretary or Assistant Secretary of each of the Issuers, authorizing the terms
of issuance of any series of Debt Securities;

     (2) an executed supplemental Indenture, if any;

     (3) an Officers' Certificate; and

     (4) an Opinion of Counsel prepared in accordance with Section 12.05
substantially to the effect that:

          (a) the form of such Debt Securities has been established by or
     pursuant to a Board Resolution of the applicable Issuer or Issuers or by a
     supplemental Indenture as permitted by Section 2.01 in conformity with the
     provisions of the Indenture;

          (b) the terms of such Debt Securities and any related Guarantees have
     been established by or pursuant to a Board Resolution of the applicable
     Issuer or Issuers or by a supplemental Indenture as permitted by Section
     2.03 in conformity with the provisions of the Indenture;

          (c) such Debt Securities and Guarantees, when authenticated and
     delivered by the Trustee and issued by the applicable Issuer or Issuers in
     the manner and subject to any conditions specified in such Opinion of
     Counsel, will constitute valid and legally binding obligations of the
     applicable Issuer or Issuers and Subsidiary Guarantors, as applicable,
     enforceable in accordance with their terms except as (i) the enforceability
     thereof may be limited by bankruptcy, insolvency, fraudulent conveyance or
     similar laws affecting the


                                      -18-



     enforcement of creditors' rights generally and (ii) rights of acceleration
     and the availability of equitable remedies may be limited by equitable
     principles of general applicability.

          (d) the Issuers and any Subsidiary Guarantors have the authority to
     issue such Debt Securities and related Guarantees and have duly taken all
     necessary action with respect to such issuance; and

          (e) such other matters as the Trustee may reasonably request.

     Such Opinion of Counsel need express no opinion as to whether a court in
the United States would render a money judgment in a Currency other than
Dollars.

     The Trustee shall have the right to decline to authenticate and deliver any
Debt Securities under this Section 2.05 if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if the
Trustee, in good faith by its board of directors or trustees, executive
committee or a trust committee of directors, trustees or vice presidents, shall
determine that such action would expose the Trustee to personal liability to
existing Holders.

     The Trustee may appoint an authenticating agent reasonably acceptable to
the Issuers to authenticate Debt Securities of any series. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Debt
Securities whenever the Trustee may do so. Each reference in the Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, paying agent or agent
for service of notices and demands.

SECTION 2.06. DENOMINATION OF DEBT SECURITIES.

     Unless otherwise provided in the form of Debt Security for any series, the
Debt Securities of each series shall be issuable only as Registered Securities
in such denominations as shall be specified or contemplated by Section 2.03. In
the absence of any such specification with respect to the Debt Securities of any
series, the Debt Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof.

SECTION 2.07. GENERAL PROVISIONS FOR REGISTRATION OF TRANSFER AND EXCHANGE.

     (a) The Issuers shall keep or cause to be kept a register for each series
of Registered Securities issued hereunder (hereinafter collectively referred to
as the "Debt Security Register"), in which, subject to such reasonable
regulations as they may prescribe, the Issuers shall provide for the
registration of Registered Securities


                                      -19-



and the transfer of Registered Securities as provided in this Article II. At all
reasonable times the Debt Security Register shall be open for inspection by the
Trustee. Subject to Section 2.15, upon due presentment for registration of
transfer of any Registered Security at any office or agency to be maintained by
the Issuers in accordance with the provisions of Section 4.02, the Issuers shall
execute and the Trustee shall authenticate and deliver in the name of the
transferee or transferees a new Registered Security or Registered Securities of
authorized denominations for a like aggregate principal amount.

     Unless and until otherwise determined by a Board Resolution of each of the
Issuers, the register of the Issuers for the purpose of registration, exchange
or registration of transfer of the Registered Securities shall be kept at the
Corporate Trust Office of the Trustee and, for this purpose, the Trustee shall
be designated "Registrar". No prior notice to the Holders of Debt Securities is
required to effect the designation of a substitute Registrar by the Issuers.

     Registered Securities of any series (other than a Global Security) may be
exchanged for a like aggregate principal amount of Registered Securities of the
same series of other authorized denominations. Subject to Section 2.15,
Registered Securities to be exchanged shall be surrendered at the office or
agency to be maintained by the Issuers as provided in Section 4.02, and the
Issuers shall execute and the Trustee shall authenticate and deliver in exchange
therefor the Registered Security or Registered Securities that the Holder making
the exchange shall be entitled to receive.

     (b) All Registered Securities presented or surrendered for registration of
transfer, exchange or payment shall (if so required by the Issuers, the Trustee
or the Registrar) be duly endorsed or be accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Issuers, the Subsidiary
Guarantors (if applicable), the Trustee and the Registrar, duly executed by the
Registered Holder or his attorney duly authorized in writing.

     All Debt Securities issued in exchange for or upon transfer of Debt
Securities shall be the legal, valid and binding obligations of the Issuers,
evidencing the same debt, and entitled to the same benefits under the Indenture
as the Debt Securities surrendered for such exchange or transfer.

     No service charge shall be made for any exchange or registration of
transfer of Debt Securities (except as provided by Section 2.09), but the
Issuers may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto, other than those
expressly provided in the Indenture to


                                      -20-



be made at the Issuers' own expense or without expense or without charge to the
Holders.

     The Issuers shall not be required (a) to issue, register the transfer of or
exchange any Debt Securities of a series either (i) during a period beginning 15
Business Days next preceding any selection for redemption or repurchase of Debt
Securities of such series and ending on the close of business on the day of
mailing the relevant notice of redemption or repurchase or (ii) between a record
date and the next succeeding interest payment date, or (b) to register the
transfer of or exchange any Debt Security called for redemption or repurchase
(except, in the case of Debt Securities to be redeemed or repurchased in part,
the portion not to be redeemed or repurchased).

     Specific procedures for registration of transfer and exchange of any series
of Debt Securities may be set forth in the applicable supplemental Indenture for
such Debt Securities.

SECTION 2.08. TEMPORARY DEBT SECURITIES.

     Pending the preparation of definitive Debt Securities of any series, the
Issuers may execute and the Trustee shall authenticate and deliver temporary
Debt Securities (printed, lithographed, photocopied, typewritten or otherwise
produced) of any authorized denomination, and substantially in the form of the
definitive Debt Securities in lieu of which they are issued, and with such
omissions, insertions and variations as may be appropriate for temporary Debt
Securities, all as may be determined by the Issuers with the concurrence of the
Trustee. Temporary Debt Securities may contain such reference to any provisions
of the Indenture as may be appropriate. Every temporary Debt Security shall be
executed by the Issuers and be authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with like effect, as the
definitive Debt Securities.

     If temporary Debt Securities of any series are issued, the Issuers will
cause definitive Debt Securities of such series to be prepared without
unreasonable delay. After the preparation of definitive Debt Securities of such
series, the temporary Debt Securities of such series shall be exchangeable for
definitive Debt Securities of such series upon surrender of the temporary Debt
Securities of such series at the office or agency of the Issuers at a Place of
Payment for such series, without charge to the Holder thereof, except as
provided in Section 2.07 in connection with a transfer, and upon surrender for
cancellation of any one or more temporary Debt Securities of any series, the
Issuers shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Debt Securities of the same
series of authorized denominations and of like tenor. Until so exchanged,
temporary


                                      -21-



Debt Securities of any series shall in all respects be entitled to the same
benefits under the Indenture as definitive Debt Securities of such series.

     Upon any exchange of a portion of a temporary Global Security for a
definitive Global Security or for the individual Debt Securities represented
thereby pursuant to Section 2.07 or this Section 2.08, the temporary Global
Security shall be endorsed by the Trustee to reflect the reduction of the
principal amount evidenced thereby, whereupon the principal amount of such
temporary Global Security shall be reduced for all purposes by the amount so
exchanged and endorsed.

SECTION 2.09. MUTILATED, DESTROYED, LOST OR STOLEN DEBT SECURITIES.

     If (i) any mutilated Debt Security is surrendered to the Trustee at the
Corporate Trust Office of the Trustee (in the case of Registered Securities) or
(ii) the Issuers and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Debt Security, and there is delivered to the
Issuers and the Trustee such security or indemnity as may be required by them to
save each of them and any paying agent harmless, and neither the Issuers nor the
Trustee receives written notice that such Debt Security has been acquired by a
bona fide purchaser, then the Issuers shall execute and, upon an Issuer Order,
the Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Debt Security, a new Debt Security of
the same series of like tenor, form, terms and principal amount, bearing a
number not contemporaneously Outstanding. Upon the issuance of any substituted
Debt Security, the Issuers 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 connected therewith. In case any Debt Security which has
matured or is about to mature or which has been called for redemption shall
become mutilated or be destroyed, lost or stolen, the Issuers may, instead of
issuing a substituted Debt Security, pay or authorize the payment of the same
(without surrender thereof except in the case of a mutilated Debt Security) if
the applicant for such payment shall furnish the Issuers and the Trustee with
such security or indemnity as either may require to save it harmless from all
risk, however remote, and, in case of destruction, loss or theft, evidence to
the satisfaction of the Issuers and the Trustee of the destruction, loss or
theft of such Debt Security and of the ownership thereof.

     Every substituted Debt Security of any series issued pursuant to the
provisions of this Section 2.09 by virtue of the fact that any Debt Security is
destroyed, lost or stolen shall constitute an original additional contractual
obligation of the Issuers, whether or not the destroyed, lost or stolen Debt
Security shall be found at any time, and shall be entitled to all the benefits
of the Indenture equally and proportionately with any and all other Debt
Securities of that series duly issued hereunder. All Debt Securities shall be
held and owned upon the express condition that the foregoing


                                      -22-



provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Debt Securities, and shall preclude any and
all other rights or remedies, notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender, in each case
to the fullest extent permitted by law.

SECTION 2.10. CANCELLATION OF SURRENDERED DEBT SECURITIES.

     All Debt Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to the Issuers or any paying agent or
a Registrar, be delivered to the Trustee for cancellation by it, or if
surrendered to the Trustee, shall be canceled by it, and no Debt Securities
shall be issued in lieu thereof except as expressly permitted by any of the
provisions of the Indenture. All canceled Debt Securities held by the Trustee
shall be disposed of by the Trustee in its customary manner. On request of the
Issuers, the Trustee shall deliver to the Issuers canceled Debt Securities held
by the Trustee. If the Issuers shall acquire any of the Debt Securities,
however, such acquisition shall not operate as a redemption or satisfaction of
the indebtedness represented thereby unless and until the same are delivered or
surrendered to the Trustee for cancellation. The Issuers may not issue new Debt
Securities to replace Debt Securities it has redeemed, paid or delivered to the
Trustee for cancellation.

SECTION 2.11. PROVISIONS OF THE INDENTURE AND DEBT SECURITIES FOR THE SOLE
     BENEFIT OF THE PARTIES AND THE HOLDERS.

     Nothing in the Indenture or in the Debt Securities, expressed or implied,
shall give or be construed to give to any Person, other than the parties hereto,
the Holders or any Registrar or paying agent, any legal or equitable right,
remedy or claim under or in respect of the Indenture, or under any covenant,
condition or provision herein contained, all its covenants, conditions and
provisions being for the sole benefit of the parties hereto, the Holders and any
Registrar and paying agents.

SECTION 2.12. PAYMENT OF INTEREST; RIGHTS PRESERVED.

     (a) Interest on any Registered Security that is payable and is punctually
paid or duly provided for on any interest payment date shall be paid to the
Person in whose name such Registered Security is registered at the close of
business on the regular record date for such interest notwithstanding the
cancellation of such Registered Security upon any transfer or exchange
subsequent to the regular record date. Payment of interest on Registered
Securities shall be made at the Corporate Trust Office of the Trustee (except as
otherwise specified pursuant to Section 2.03), or at the option of the Issuers,
by check mailed to the address of the Person entitled


                                      -23-



thereto as such address shall appear in the Debt Security Register or, if
provided pursuant to Section 2.03 and in accordance with arrangements
satisfactory to the Trustee, at the option of the Registered Holder by wire
transfer to an account designated by the Registered Holder.

     (b) Subject to the foregoing provisions of this Section 2.12 and Section
2.17, each Debt Security of a particular series delivered under the Indenture
upon registration of transfer of or in exchange for or in lieu of any other Debt
Security of the same series shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Debt Security.

SECTION 2.13. SECURITIES DENOMINATED IN FOREIGN CURRENCIES.

     (a) Except as otherwise specified pursuant to Section 2.03 for Registered
Securities of any series, payment of the principal of, and premium, if any, and
interest on, Registered Securities of such series will be made in Dollars.

     (b) For the purposes of calculating the principal amount of Debt Securities
of any series denominated in a Foreign Currency or in units of two or more
Foreign Currencies for any purpose under the Indenture, the principal amount of
such Debt Securities at any time Outstanding shall be deemed to be the Dollar
Equivalent of such principal amount as of the date of any such calculation.

     In the event any Foreign Currency or currencies or units of two or more
Currencies in which any payment with respect to any series of Debt Securities
may be made ceases to be a freely convertible Currency on United States Currency
markets, for any date thereafter on which payment of principal of, or premium,
if any, or interest on, the Debt Securities of a series is due, the Issuers
shall select the Currency of payment for use on such date, all as provided in
the Debt Securities of such series. In such event, the Issuers shall, as
provided in the Debt Securities of such series, notify the Trustee of the
Currency which they have selected to constitute the funds necessary to meet the
Issuers' obligations or such payment date and of the amount of such Currency to
be paid. Such amount shall be determined as provided in the Debt Securities of
such series. The payment to the Trustee with respect to such payment date shall
be made by the Issuers solely in the Currency so selected.

SECTION 2.14. WIRE TRANSFERS.

     Notwithstanding any other provision to the contrary in the Indenture, the
Issuers may make any payment of monies required to be deposited with the Trustee
on account of principal of, or premium, if any, or interest on, the Debt
Securities (whether pursuant to optional or mandatory redemption payments,
interest payments or otherwise) by wire transfer of immediately available funds
to an account


                                      -24-



designated by the Trustee on or before the date such moneys are to be paid to
the Holders of the Debt Securities in accordance with the terms hereof.

SECTION 2.15. SECURITIES ISSUABLE IN THE FORM OF A GLOBAL SECURITY.

     (a) If the Issuers shall establish pursuant to Sections 2.01 and 2.03 that
the Debt Securities of a particular series are to be issued in whole or in part
in the form of one or more Global Securities, then the Issuers shall execute and
the Trustee or its agent shall, in accordance with Section 2.05, authenticate
and deliver, such Global Security or Securities, which (i) shall represent, and
shall be denominated in an amount equal to the aggregate principal amount of,
the Outstanding Debt Securities of such series to be represented by such Global
Security or Securities, or such portion thereof as the Issuers shall specify in
an Officers' Certificate, (ii) shall be registered in the name of the Depositary
for such Global Security or Securities or its nominee, (iii) shall be delivered
by the Trustee or its agent to the Depositary or pursuant to the Depositary's
instruction and (iv) shall bear a legend substantially to the following effect:
"Unless and until it is exchanged in whole or in part for the individual Debt
Securities represented hereby, this Global Security may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor Depositary or a nominee
of such successor Depositary", or such other legend as may then be required by
the Depositary for such Global Security or Securities.

     (b) Notwithstanding any other provision of this Section 2.15 or of Section
2.07 to the contrary, and subject to the provisions of paragraph (c) below,
unless the terms of a Global Security expressly permit such Global Security to
be exchanged in whole or in part for definitive Debt Securities in registered
form, a Global Security may be transferred, in whole but not in part and in the
manner provided in Section 2.07, only by the Depositary to a nominee of the
Depositary for such Global Security, or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary, or by the Depositary or a
nominee of the Depositary to a successor Depositary for such Global Security
selected or approved by the Issuers, or to a nominee of such successor
Depositary.

     (c) (i) If at any time the Depositary for a Global Security or Securities
notifies the Issuers that it is unwilling or unable to continue as Depositary
for such Global Security or Securities or if at any time the Depositary for the
Debt Securities for such series shall no longer be eligible or in good standing
under the Exchange Act or other applicable statute, rule or regulation, the
Issuers shall appoint a successor Depositary with respect to such Global
Security or Securities. If a successor Depositary for such Global Security or
Securities is not appointed by the Issuers


                                      -25-



within 90 days after the Issuers receive such notice or become aware of such
ineligibility, the Issuers shall execute, and the Trustee or its agent, upon
receipt of an Issuer Order for the authentication and delivery of such
individual Debt Securities of such series in exchange for such Global Security,
will authenticate and deliver, individual Debt Securities of such series of like
tenor and terms in definitive form in an aggregate principal amount equal to the
principal amount of the Global Security in exchange for such Global Security or
Securities.

          (ii) The Issuers may at any time and in their sole discretion
determine that the Debt Securities of any series or portion thereof issued or
issuable in the form of one or more Global Securities shall no longer be
represented by such Global Security or Securities. In such event the Issuers
will execute, and the Trustee, upon receipt of an Issuer Order for the
authentication and delivery of individual Debt Securities of such series in
exchange in whole or in part for such Global Security, will authenticate and
deliver individual Debt Securities of such series of like tenor and terms in
definitive form in an aggregate principal amount equal to the principal amount
of such series or portion thereof in exchange for such Global Security or
Securities.

          (iii) If specified by the Issuers pursuant to Sections 2.01 and 2.03
with respect to Debt Securities issued or issuable in the form of a Global
Security, the Depositary for such Global Security may surrender such Global
Security in exchange in whole or in part for individual Debt Securities of such
series of like tenor and terms in definitive form on such terms as are
acceptable to the Issuers, the Trustee and such Depositary. Thereupon the
Issuers shall execute, and the Trustee or its agent upon receipt of an Issuer
Order for the authentication and delivery of definitive Debt Securities of such
series shall authenticate and deliver, without service charge, (1) to each
Person specified by such Depositary a new Debt Security or Securities of the
same series of like tenor and terms and of any authorized denomination as
requested by such Person in aggregate principal amount equal to and in exchange
for such Person's beneficial interest in the Global Security, and (2) to such
Depositary a new Global Security of like tenor and terms and in an authorized
denomination equal to the difference, if any, between the principal amount of
the surrendered Global Security and the aggregate principal amount of Debt
Securities delivered to Holders thereof, unless such Global Security is endorsed
by the Trustee or other custodian to reflect a reduction of such aggregate
principal amount, in which case no new Global Security need be authenticated and
delivered.

          (iv) In any exchange provided for in any of the preceding three
paragraphs, the Issuers will execute and the Trustee or its agent will
authenticate and deliver individual Debt Securities. Upon the exchange of the
entire principal amount of a Global Security for individual Debt Securities,
such Global Security shall be


                                      -26-



canceled by the Trustee or its agent. Except as provided in the preceding
paragraph, Registered Securities issued in exchange for a Global Security
pursuant to this Section 2.15 shall be registered in such names and in such
authorized denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or the Registrar. The Trustee or the Registrar shall
deliver such Registered Securities to the Persons in whose names such Registered
Securities are so registered.

          (v) Payments in respect of the principal of and interest on any Debt
Securities registered in the name of the Depositary or its nominee will be
payable to the Depositary or such nominee in its capacity as the registered
owner of such Global Security. The Issuers and the Trustee may treat the Person
in whose name the Debt Securities, including the Global Security, are registered
as the owner thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. None of the Issuers, the Trustee, any Registrar,
the paying agent or any agent of the Issuers or the Trustee will have any
responsibility or liability for (1) any aspect of the records relating to or
payments made on account of the beneficial ownership interests of the Global
Security by the Depositary or its nominee or any of the Depositary's direct or
indirect participants, or for maintaining, supervising or reviewing any records
of the Depositary, its nominee or any of the Depositary's direct or indirect
participants relating to the beneficial ownership interests of the Global
Security, (2) the payments to the beneficial owners of the Global Security of
amounts paid to the Depositary or its nominee, or (3) any other matter relating
to the actions and practices of the Depositary, its nominee or any of the
Depositary's direct or indirect participants. None of the Issuers, the Trustee
or any such agent will be liable for any delay by the Depositary, its nominee,
or any of the Depositary's direct or indirect participants in identifying the
beneficial owners of the Debt Securities, and the Issuers and the Trustee may
conclusively rely on, and will be protected in relying on, instructions from the
Depositary or its nominee for all purposes (including with respect to the
registration and delivery, and the respective principal amounts, of the Debt
Securities to be issued).

SECTION 2.16. MEDIUM TERM SECURITIES.

     Notwithstanding any contrary provision herein, if all Debt Securities of a
series are not to be originally issued at one time, it shall not be necessary
for the Issuers to deliver to the Trustee an Officers' Certificate, a Board
Resolution, a supplemental Indenture, an Opinion of Counsel or a written order
or any other document otherwise required pursuant to Section 2.01, 2.03, 2.05 or
13.05 at or prior to the time of authentication of each Debt Security of such
series if such documents are delivered to the Trustee or its agent at or prior
to the authentication upon original issuance of the first such Debt Security of
such series to be issued; provided, however, that any


                                      -27-



subsequent request by the Issuers to the Trustee to authenticate Debt Securities
of such series upon original issuance shall constitute a representation and
warranty by the Issuers that, as of the date of such request, the statements
made in the Officers' Certificate delivered pursuant to Section 2.05 or 13.05
shall be true and correct as if made on such date and that the Opinion of
Counsel delivered at or prior to such time of authentication of an original
issuance of Debt Securities shall specifically state that it shall relate to all
subsequent issuances of Debt Securities of such series that are identical to the
Debt Securities issued in the first issuance of Debt Securities of such series.

     An Issuer Order delivered by the Issuers to the Trustee in the
circumstances set forth in the preceding paragraph may provide that Debt
Securities which are the subject thereof will be authenticated and delivered by
the Trustee or its agent on original issue from time to time upon the written
order of Persons designated in such written order and that such Persons are
authorized to determine, consistent with the Officers' Certificates,
supplemental Indenture or the applicable Board Resolutions relating to such
written order, such terms and conditions of such Debt Securities as are
specified in such Officers' Certificates, supplemental Indenture or such Board
Resolutions.

SECTION 2.17. DEFAULTED INTEREST.

     Any interest on any Debt Security of a particular series which is payable,
but is not punctually paid or duly provided for, on the dates and in the manner
provided in the Debt Securities of such series and in the Indenture (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
Registered Holder thereof on the relevant record date by virtue of having been
such Registered Holder, and such Defaulted Interest may be paid by the Issuers,
at their election in each case, as provided in clause (i) or (ii) below:

     (i) The Issuers may elect to make payment of any Defaulted Interest to the
Persons in whose names the Registered Securities of such series are registered
at the close of business on a special record date for the payment of such
Defaulted Interest, which shall be fixed in the following manner: The Issuers
shall notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each such Registered Security of such series and the date of the
proposed payment, and at the same time the Issuers shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as provided in this clause (i). Thereupon the Trustee
shall fix a special record date for the payment of such


                                      -28-



Defaulted Interest which shall be not more than 15 days and not less than 10
days prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Issuers of such special record date and, in the name
and at the expense of the Issuers, shall cause notice of the proposed payment of
such Defaulted Interest and the special record date therefor to be mailed, first
class postage prepaid, to each Holder thereof at its address as it appears in
the Debt Security Register, not less than 10 days prior to such special record
date. Notice of the proposed payment of such Defaulted Interest and the special
record date therefor having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Registered Securities of such series are
registered at the close of business on such special record date.

     (ii) The Issuers may make payment of any Defaulted Interest on the
Registered Securities of such series in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Registered
Securities of such series may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Issuers to the Trustee of the
proposed payment pursuant to this clause (ii), such manner of payment shall be
deemed practicable by the Trustee.

SECTION 2.18. JUDGMENTS.

     The Issuers may provide pursuant to Section 2.03 for Debt Securities of any
series that (a) the obligation, if any, of the Issuers to pay the principal of,
and premium, if any, and interest on, the Debt Securities of any series in a
Foreign Currency or Dollars (the "Designated Currency") as may be specified
pursuant to Section 2.03 is of the essence and agrees that, to the fullest
extent possible under applicable law, judgments in respect of Debt Securities of
such series shall be given in the Designated Currency; (b) the obligation of the
Issuers to make payments in the Designated Currency of the principal of, and
premium, if any, and interest on, such Debt Securities shall, notwithstanding
any payment in any other Currency (whether pursuant to a judgment or otherwise),
be discharged only to the extent of the amount in the Designated Currency that
the Holder receiving such payment may, in accordance with normal banking
procedures, purchase with the sum paid in such other Currency (after any premium
and cost exchange) on the business day in the country of issue of the Designated
Currency or in the international banking community (in the case of a composite
currency) immediately following the day on which such Holder receives such
payment; (c) if the amount in the Designated Currency that may be so purchased
for any reason falls short of the amount originally due, the Issuers shall pay
such additional amounts as may be necessary to compensate for such shortfall;
and (d) any obligation of the Issuers not discharged by such payment shall be
due as a separate and independent obligation and, until discharged as provided
herein, shall continue in full force and effect.


                                      -29-



SECTION 2.19. CUSIP NUMBERS.

     The Issuers in issuing the Debt Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided, however, that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Debt Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other identification
numbers printed on the Debt Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers. The Issuers will promptly
notify the Trustee of any change in the "CUSIP" numbers.

                   ARTICLE III. REDEMPTION OF DEBT SECURITIES

SECTION 3.01. APPLICABILITY OF ARTICLE.

     The provisions of this Article shall be applicable to the Debt Securities
of any series which are redeemable before their Stated Maturity except as
otherwise specified as contemplated by Section 2.03 for Debt Securities of such
series.

SECTION 3.02. NOTICE OF REDEMPTION; SELECTION OF DEBT SECURITIES.

     In case the Issuers shall desire to exercise the right to redeem all or, as
the case may be, any part of the Debt Securities of any series in accordance
with their terms, a Board Resolution of each applicable Issuer or a supplemental
Indenture, the Issuers shall fix a date for redemption and shall give notice of
such redemption at least 30 and not more than 60 days prior to the date fixed
for redemption to the Holders of Debt Securities of such series so to be
redeemed as a whole or in part, in the manner provided in Section 13.03. The
notice may not be conditional. The notice if given in the manner herein provided
shall be conclusively presumed to have been duly given, whether or not the
Holder receives such notice. In any case, failure to give such notice or any
defect in the notice to the Holder of any Debt Security of a series designated
for redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Debt Security of such series.

     Each such notice of redemption shall specify the amount of Debt Securities
of any series to be redeemed, the date fixed for redemption, the calculation of
the redemption price at which Debt Securities of such series are to be redeemed
(but not the redemption price itself if it is not then determinable), the Place
or Places of Payment that payment will be made upon presentation and surrender
of such Debt Securities, that any interest accrued to the date fixed for
redemption will be paid as specified in such notice, that the redemption is for
a sinking fund payment (if applicable), that on and after such date any interest
thereon or on the portions thereof


                                      -30-



to be redeemed will cease to accrue, that in the case of Original Issue Discount
Securities original issue discount accrued after the date fixed for redemption
will cease to accrue, the terms of the Debt Securities of that series pursuant
to which the Debt Securities of that series are being redeemed and that no
representation is made as to the correctness or accuracy of the CUSIP number, if
any, listed in such notice or printed on the Debt Securities of that series. If
less than all the Debt Securities of a series are to be redeemed, the notice of
redemption shall specify the CUSIP numbers of the Debt Securities of that series
to be redeemed. In case any Debt Security of a series is to be redeemed in part
only, the notice of redemption shall state the portion of the principal amount
thereof to be redeemed and shall state that on and after the date fixed for
redemption, upon surrender of such Debt Security, a new Debt Security or Debt
Securities of that series will be issued in principal amount equal to the
unredeemed portion thereof.

     At least 60 days before the redemption date, unless the Trustee consents to
a shorter period, the Issuers shall give written notice to the Trustee of the
redemption date, the principal amount of Debt Securities to be redeemed and the
series and terms of the Debt Securities pursuant to which such redemption will
occur. Such notice shall be accompanied by an Officers' Certificate and an
Opinion of Counsel to the effect that such redemption will comply with the
conditions herein. If fewer than all the Debt Securities of a series are to be
redeemed, the record date relating to such redemption shall be selected by the
Issuers and given to the Trustee, which record date shall be not less than 15
days after the date of notice to the Trustee.

     No later than 11:00 A.M., New York City time, on the redemption date for
any Debt Securities, the Issuers shall deposit with the Trustee or with a paying
agent (or, if the Partnership or Finance Corp. is acting as its own paying
agent, segregate and hold in trust) an amount of money in the Currency in which
such Debt Securities are denominated (except as provided pursuant to Section
2.03) sufficient to pay the redemption price of such Debt Securities or any
portions thereof that are to be redeemed on that date.

     If less than all the Debt Securities of like tenor and terms of a series
are to be redeemed (other than pursuant to mandatory sinking fund redemptions),
the Trustee shall select the Debt Securities of that series or portions thereof
(in multiples of $1,000) to be redeemed (i) if such Debt Securities are listed
on an exchange, in compliance with the requirements of the principal national
securities exchange on which such Debt Securities are listed, or (ii) if such
Debt Securities are not listed on an exchange or such exchange has no selection
requirements, on a pro rata basis, by lot or by such other method as in its sole
discretion the Trustee shall deem appropriate and fair. In any case where more
than one Debt Security of such series is registered in the same name, the
Trustee in its discretion may treat the aggregate principal amount


                                      -31-



so registered as if it were represented by one Debt Security of such series. The
Trustee shall promptly notify the Issuers in writing of the Debt Securities
selected for redemption and, in the case of any Debt Securities selected for
partial redemption, the principal amount thereof to be redeemed. If any Debt
Security called for redemption shall not be so paid upon surrender thereof on
such redemption date, the principal, premium, if any, and interest shall bear
interest until paid from the redemption date at the rate borne by the Debt
Securities of that series. If less than all the Debt Securities of unlike tenor
and terms of a series are to be redeemed, the particular Debt Securities to be
redeemed shall be selected by the Issuers. Provisions of the Indenture that
apply to Debt Securities called for redemption also apply to portions of Debt
Securities called for redemption.

SECTION 3.03. PAYMENT OF DEBT SECURITIES CALLED FOR REDEMPTION.

     If notice of redemption has been given as provided in Section 3.02, the
Debt Securities or portions of Debt Securities of the series with respect to
which such notice has been given shall become due and payable on the date and at
the Place or Places of Payment stated in such notice at the applicable
redemption price, together with any interest accrued to the date fixed for
redemption, and on and after such date (unless the Issuers shall default in the
payment of such Debt Securities at the applicable redemption price, together
with any interest accrued to such date) any interest on the Debt Securities or
portions of Debt Securities of any series so called for redemption shall cease
to accrue and any original issue discount in the case of Original Issue Discount
Securities shall cease to accrue. On presentation and surrender of such Debt
Securities at the Place or Places of Payment in such notice specified, such Debt
Securities or the specified portions thereof shall be paid and redeemed by the
Issuers at the applicable redemption price, together with any interest accrued
thereon to the date fixed for redemption.

     Any Debt Security that is to be redeemed only in part shall be surrendered
at the Corporate Trust Office of the Trustee or such other office or agency of
the Issuers as is specified pursuant to Section 2.03 with, if the Issuers, the
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Issuers, the Registrar and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing, and the Issuers shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Debt Security, without service charge, a new
Debt Security or Debt Securities of the same series, of like tenor and form, of
any authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Debt Security so surrendered; provided, however, that if a Global Security
is so surrendered, the Issuers shall execute, and the Trustee shall authenticate
and deliver to the Depositary for such Global Security, without service charge,
a new


                                      -32-



Global Security in a denomination equal to and in exchange for the
unredeemed portion of the principal of the Global Security so surrendered. In
the case of a Debt Security providing appropriate space for such notation, at
the option of the Holder thereof, the Trustee, in lieu of delivering a new Debt
Security or Debt Securities as aforesaid, may make a notation on such Debt
Security of the payment of the redeemed portion thereof.

SECTION 3.04. MANDATORY AND OPTIONAL SINKING FUNDS.

     The minimum amount of any sinking fund payment provided for by the terms of
Debt Securities of any series, a Board Resolution or a supplemental Indenture is
herein referred to as a "mandatory sinking fund payment," and any payment in
excess of such minimum amount provided for by the terms of Debt Securities of
any series, a Board Resolution or a supplemental Indenture is herein referred to
as an "optional sinking fund payment."

     In lieu of making all or any part of any mandatory sinking fund payment
with respect to any Debt Securities of a series in cash, the Issuers may at
their option (a) deliver to the Trustee Debt Securities of that series
theretofore purchased or otherwise acquired by the Issuers or (b) receive credit
for the principal amount of Debt Securities of that series which have been
redeemed either at the election of the Issuers pursuant to the terms of such
Debt Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Debt Securities, resolution or
supplemental Indenture; provided, however, that such Debt Securities have not
been previously so credited. Such Debt Securities shall be received and credited
for such purpose by the Trustee at the redemption price specified in such Debt
Securities, the applicable Board Resolution or supplemental Indenture for
redemption through operation of the sinking fund and the amount of such
mandatory sinking fund payment shall be reduced accordingly.

SECTION 3.05. REDEMPTION OF DEBT SECURITIES FOR SINKING FUND.

     Not less than 60 days prior to each sinking fund payment date for any
series of Debt Securities, the Issuers will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, any Board Resolution or
supplemental Indenture, the portion thereof, if any, which is to be satisfied by
payment of cash in the Currency in which the Debt Securities of such series are
denominated (except as provided pursuant to Section 2.03) and the portion
thereof, if any, which is to be satisfied by delivering and crediting Debt
Securities of that series pursuant to Section 3.04 and this Section 3.05 (which
Debt Securities, if not previously redeemed, will accompany such certificate)
and whether the Issuers intend to exercise their right to make any


                                      -33-



permitted optional sinking fund payment with respect to such series. Such
certificate shall also state that no Event of Default has occurred and is
continuing with respect to such series. Such certificate shall be irrevocable
and upon its delivery the Issuers shall be obligated to make the cash payment or
payments therein referred to, if any, on or before the next succeeding sinking
fund payment date. Failure of the Issuers to deliver such certificate (or to
deliver the Debt Securities specified in this paragraph) shall not constitute a
Default, but such failure shall require that the sinking fund payment due on the
next succeeding sinking fund payment date for that series shall be paid entirely
in cash and shall be sufficient to redeem the principal amount of such Debt
Securities subject to a mandatory sinking fund payment without the option to
deliver or credit Debt Securities as provided in Section 3.04 and this Section
3.05 and without the right to make any optional sinking fund payment, if any,
with respect to such series.

     Any sinking fund payment or payments (mandatory or optional) made in cash
plus any unused balance of any preceding sinking fund payments made in cash
which shall equal or exceed $100,000 (or a lesser sum if the Issuers shall so
request) with respect to the Debt Securities of any particular series shall be
applied by the Trustee on the sinking fund payment date on which such payment is
made (or, if such payment is made before a sinking fund payment date, on the
sinking fund payment date following the date of such payment) to the redemption
of such Debt Securities at the redemption price specified in such Debt
Securities, the applicable Board Resolution or supplemental Indenture for
operation of the sinking fund together with any accrued interest to the date
fixed for redemption. Any sinking fund moneys not so applied or allocated by the
Trustee to the redemption of Debt Securities shall be added to the next cash
sinking fund payment received by the Trustee for such series and, together with
such payment, shall be applied in accordance with the provisions of this Section
3.05. Any and all sinking fund moneys with respect to the Debt Securities of any
particular series held by the Trustee on the last sinking fund payment date with
respect to Debt Securities of such series and not held for the payment or
redemption of particular Debt Securities shall be applied by the Trustee,
together with other moneys, if necessary, to be deposited sufficient for the
purpose, to the payment of the principal of the Debt Securities of that series
at its Stated Maturity.

     The Trustee shall select the Debt Securities to be redeemed upon such
sinking fund payment date in the manner specified in the last paragraph of
Section 3.02 and the Issuers shall cause notice of the redemption thereof to be
given in the manner provided in Section 3.02 except that the notice of
redemption shall also state that the Debt Securities are being redeemed by
operation of the sinking fund. Such notice having been duly given, the
redemption of such Debt Securities shall be made upon the terms and in the
manner stated in Section 3.03.


                                      -34-


     At least one Business Day before each sinking fund payment date, the
Issuers shall pay to the Trustee (or, if the Partnership or Finance Corp. is
acting as its own paying agent, the Partnership or Finance Corp. shall segregate
and hold in trust) in cash a sum in the Currency in which the Debt Securities of
such series are denominated (except as provided pursuant to Section 2.03) equal
to any interest accrued to the date fixed for redemption of Debt Securities or
portions thereof to be redeemed on such sinking fund payment date pursuant to
this Section 3.05.

     The Trustee shall not redeem any Debt Securities of a series with sinking
fund moneys or mail any notice of redemption of such Debt Securities by
operation of the sinking fund for such series during the continuance of a
Default in payment of interest on such Debt Securities or of any Event of
Default (other than an Event of Default occurring as a consequence of this
paragraph) with respect to such Debt Securities, except that if the notice of
redemption of any such Debt Securities shall theretofore have been mailed in
accordance with the provisions hereof, the Trustee shall redeem such Debt
Securities if cash sufficient for that purpose shall be deposited with the
Trustee for that purpose in accordance with the terms of this Article III.
Except as aforesaid, any moneys in the sinking fund for such series at the time
when any such Default or Event of Default shall occur and any moneys thereafter
paid into such sinking fund shall, during the continuance of such Default or
Event of Default, be held as security for the payment of such Debt Securities;
provided, however, that in case such Default or Event of Default shall have been
cured or waived as provided herein, such moneys shall thereafter be applied on
the next sinking fund payment date for such Debt Securities on which such moneys
may be applied pursuant to the provisions of this Section 3.05.

                        ARTICLE IV. PARTICULAR COVENANTS

SECTION 4.01. PAYMENT OF PRINCIPAL OF, AND PREMIUM, IF ANY, AND INTEREST ON,
     DEBT SECURITIES.

     The Issuers, for the benefit of each series of Debt Securities, will duly
and punctually pay or cause to be paid the principal of, and premium, if any,
and interest on, each of the Debt Securities at the place, at the respective
times and in the manner provided herein and in the Debt Securities. Each
installment of interest on the Debt Securities may at the Issuers' option be
paid by mailing checks for such interest payable to the Person entitled thereto
to the address of such Person as it appears on the Debt Security Register
maintained pursuant to Section 2.07(a).

     Principal, premium, if any, and interest in respect of Debt Securities of
any series shall be considered paid on the date due if no later than 11:00 A.M.,
New York City time, on such date the Trustee or any paying agent holds in
accordance with the


                                      -35-



Indenture money sufficient to pay in the Currency in which the Debt Securities
of such series are denominated (except as provided pursuant to Section 2.03) all
principal, premium, if any, and interest then due.

     The Issuers shall pay interest on overdue principal at the rate specified
therefor in the Debt Securities and they shall pay interest on overdue
installments of interest at the same rate to the extent lawful.

SECTION 4.02. MAINTENANCE OF OFFICES OR AGENCIES FOR REGISTRATION OF TRANSFER,
     EXCHANGE AND PAYMENT OF DEBT SECURITIES.

     The Issuers will maintain in each Place of Payment for any series of Debt
Securities, an office or agency where Debt Securities of such series may be
presented or surrendered for payment, where Debt Securities of such series may
be surrendered for transfer or exchange and where notices and demands to or upon
the Issuers or applicable Subsidiary Guarantors in respect of the Debt
Securities of such series or related Guarantees and the Indenture may be served.
The Issuers will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the Issuers
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Issuers hereby appoint the Trustee as its agent to receive all
presentations, surrenders, notices and demands.

     The Issuers may also from time to time designate different or additional
offices or agencies to be maintained for such purposes (in or outside of such
Place of Payment), and may from time to time rescind any such designation;
provided, however, that no such designation or rescission shall in any manner
relieve the Issuers of their obligations described in the preceding paragraph.
The Issuers will give prompt written notice to the Trustee of any such
additional designation or rescission of designation and any change in the
location of any such different or additional office or agency.

SECTION 4.03. APPOINTMENT TO FILL A VACANCY IN THE OFFICE OF TRUSTEE.

     The Issuers, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 7.08, a Trustee, so
that there shall at all times be a Trustee hereunder with respect to each series
of Debt Securities.


                                      -36-



SECTION 4.04. DUTIES OF PAYING AGENTS, ETC.

     (a) The Issuers shall cause each paying agent, if any, other than the
Trustee, to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 4.04:

          (i) that it will hold all sums held by it as such agent for the
payment of the principal of, and premium, if any, or interest on, the Debt
Securities of any series (whether such sums have been paid to it by the Issuers
or by any other obligor on the Debt Securities of such series) in trust for the
benefit of the Holders of the Debt Securities of such series;

          (ii) that it will give the Trustee notice of any failure by the
Issuers (or by any other obligor on the Debt Securities of such series) to make
any payment of the principal of and premium, if any, or interest on, the Debt
Securities of such series when the same shall be due and payable; and

          (iii) that it will at any time during the continuance of an Event of
Default, upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held by it as such agent.

     (b) If either of the Issuers or any of their respective Subsidiaries shall
act as its own paying agent, it will, on or before 11:00 A.M., New York City
time, on each due date of the principal of, and premium, if any, or interest on,
the Debt Securities if any, of any series, set aside, segregate and hold in
trust for the benefit of the Holders of the Debt Securities of such series a sum
sufficient to pay such principal, premium, if any, or interest so becoming due.
The Issuers will promptly notify the Trustee of any failure by the Issuers or
its Subsidiaries to take such action or the failure by any other obligor on such
Debt Securities to make any payment of the principal of, and premium, if any, or
interest on, such Debt Securities when the same shall be due and payable.

     (c) Anything in this Section 4.04 to the contrary notwithstanding, either
of the Issuers may, at any time, for the purpose of obtaining a satisfaction and
discharge of the Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by it or any paying agent, as required by
this Section 4.04, such sums to be held by the Trustee upon the same terms as
those upon which such sums were held by the Issuers or such paying agent.

     (d) Whenever the Issuers shall have one or more paying agents with respect
to any series of Debt Securities, they will, prior to 11:00 A.M., New York City
time, on each due date of the principal of, and premium, if any, or interest on,
any Debt Securities of such series, deposit with any such paying agent a sum
sufficient to pay


                                      -37-



the principal, premium, if any, or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled thereto, and (unless any such
paying agent is the Trustee) the Issuers will promptly notify the Trustee of
their action or failure so to act.

     (e) Anything in this Section 4.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 4.04 is subject to
the provisions of Section 11.03.

     (f) Unless and until otherwise determined by the Issuers in Board
Resolutions or pursuant to a supplemental Indenture, the Trustee will act as
paying agent under the Indenture. The Issuers may designate a substitute paying
agent without prior notice to the Holders of Debt Securities.

SECTION 4.05. STATEMENT BY OFFICERS AS TO DEFAULT.

     The Issuers will deliver to the Trustee, on or before a date not more than
four months after the end of each fiscal year of the Issuers (currently ending
on December 31 of each year) ending after the date hereof, an Officers'
Certificate stating, as to each Officer signing such certificate, one of whom
shall be the principal executive, financial or accounting officer of each
Issuer, that (i) in the course of his performance of his duties as an officer of
the General Partner, he would normally have knowledge of any Default, (ii)
whether or not to the best of his knowledge any Default occurred during such
year and (iii) if to the best of his knowledge either Issuer or any Subsidiary
Guarantor is in Default, specifying all such Defaults and what action such
Issuer or Subsidiary Guarantor, as applicable, is taking or proposes to take
with respect thereto.

SECTION 4.06. CORPORATE, PARTNERSHIP OR LIMITED LIABILITY COMPANY EXISTENCE.

     Subject to Article X, the Partnership shall do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate,
partnership or limited liability company existence and related rights of the
Partnership, Finance Corp. and the Partnership's other Subsidiaries; provided,
however, that the Partnership shall not be required to preserve any such right
for the corporate, partnership or limited liability company existence of any
such Subsidiary if the management of the General Partner shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Partnership and its Subsidiaries, as a whole, and that the loss thereof
would not reasonably be expected to have a material adverse effect on the
ability of the Issuers or any obligor on the Debt Securities of any series to
perform their obligations hereunder; and provided, further, that the foregoing
shall


                                      -38-



not prohibit a sale, transfer or conveyance of a Subsidiary of the Partnership
or any of its assets in compliance with the terms of the Indenture.

SECTION 4.07. CALCULATION OF ORIGINAL ISSUE DISCOUNT.

     The Issuers shall file with the Trustee promptly at the end of each
calendar year (a) a written notice specifying the amount of original issue
discount (including daily rates and accrual periods) accrued on Outstanding
Original Issue Discount Debt Securities as of the end of such year and (b) such
other specific information relating to such original issue discount as may then
be relevant under the Code.

SECTION 4.08. STAY, EXTENSION AND USURY LAWS.

     Each of the Issuers covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of the Indenture; and each of the Issuers hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.

      ARTICLE V. HOLDERS' LISTS AND REPORTS BY THE ISSUERS AND THE TRUSTEE

SECTION 5.01. ISSUERS TO FURNISH TRUSTEE INFORMATION AS TO NAMES AND ADDRESSES
     OF HOLDERS; PRESERVATION OF INFORMATION.

     The Issuers covenant and agree that they will furnish or cause to be
furnished to the Trustee with respect to the Registered Securities of each
series:

     (a) not more than 15 days after each record date with respect to the
payment of interest, if any, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Registered Holders as of such record
date, and

     (b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Issuers of any such request, a list as of a date
not more than 15 days prior to the time such list is furnished; provided,
however, that so long as the Trustee shall be the Registrar, such lists shall
not be required to be furnished.

     The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders (1)
contained in the most


                                      -39-



recent list furnished to it as provided in this Section 5.01 or (2) received by
it in the capacity of paying agent or Registrar (if so acting) hereunder.

     The Trustee may destroy any list furnished to it as provided in this
Section 5.01 upon receipt of a new list so furnished.

SECTION 5.02. COMMUNICATIONS TO HOLDERS; MEETINGS OF HOLDERS.

     (a) Holders may communicate pursuant to Section 312(b) of the Trust
Indenture Act with other Holders with respect to their rights under the
Indenture or the Debt Securities. The Issuers, the Trustee, the Registrar and
anyone else shall have the protection of Section 312(c) of the Trust Indenture
Act.

     (b) A meeting of the Holders of Debt Securities of any or all series may be
called at any time and from time to time pursuant to this Section 5.02 to make,
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided herein to be made, given or taken by Holders of
Debt Securities of such series.

     (c) The Trustee may at any time call a meeting of Holders of Debt
Securities of any series for any purpose specified herein to be held at such
time and at such place in The Borough of Manhattan, The City of New York or in
any other location, as the Trustee shall determine. Notice of every meeting of
Holders of any series, setting forth the time and the place of such meeting and
in general terms the action proposed to be taken at such meeting, shall be given
not less than 20 nor more than 180 days prior to the date fixed for the meeting.

     (d) In case at any time the Issuers, pursuant to Board Resolutions, or the
Holders of at least 25% in aggregate principal amount of the outstanding Debt
Securities of any series, shall have requested the Trustee for any such series
to call a meeting of the Holders of Debt Securities of such series for any
purpose specified herein, by written request setting forth in reasonable detail
the action proposed to be taken at the meeting, and the Trustee shall not have
made the first publication of the notice of such meeting within 30 days after
receipt of such request or shall not thereafter proceed to cause the meeting to
be held as provided herein, then the Issuers or the Holders of such series in
the amount specified above, as the case may be, may determine the time and the
place in The Borough of Manhattan, The City of New York, or in any other
location, for such meeting and may call such meeting for such purposes by giving
notice thereof as provided in paragraph (c) of this Section 5.02.


                                      -40-



SECTION 5.03. REPORTS BY ISSUERS.

     (a) Notwithstanding that the Partnership may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Partnership shall file with the Commission and provide to the Trustee
and the Holders of Debt Securities the annual reports and the information,
documents and other reports that are specified in Sections 13 and 15(d) of the
Exchange Act and would otherwise be applicable to the Partnership, and, with
respect to the annual consolidated financial statements only, a report thereon
by the Issuers' independent auditors; provided, however, that the Partnership
shall not be so obligated to file such information, documents and reports with
the Commission if the Commission does not permit such filings. The Issuers shall
comply with the other provisions of Section 314(a) of the Trust Indenture Act.

     (b) The Issuers covenant and agree, and any obligor hereunder shall
covenant and agree, to file with the Trustee and the Commission, in accordance
with the rules and regulations prescribed from time to time by the Commission,
such additional information, documents, and reports with respect to compliance
by the Issuers or such obligor, as the case may be, with the conditions and
covenants provided for in the Indenture as may be required from time to time by
such rules and regulations.

     (c) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute notice of any information contained therein or determinable from
information contained therein, including the Issuers' compliance with any of
their covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates).

SECTION 5.04. REPORTS BY TRUSTEE.

     The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under the Indenture as may be required pursuant to the Trust
Indenture Act at the time and in the manner provided pursuant thereto.

     Reports pursuant to this Section 5.04 shall be transmitted by mail:

     (1) to all Registered Holders, as the names and addresses of such Holders
appear in the Debt Security Register; and

     (2) except in the cases of reports under Section 313(b)(2) of the Trust
Indenture Act, to each holder of a Debt Security of any series whose name and


                                      -41-



address appear in the information preserved at the time by the Trustee in
accordance with Section 5.01.

     A copy of each report at the time of its mailing to Holders shall be filed
with the Commission and each stock exchange (if any) on which the Debt
Securities of any series are listed. The Issuers agree to notify promptly the
Trustee whenever the Debt Securities of any series become listed on any stock
exchange and of any delisting thereof.

SECTION 5.05. RECORD DATES FOR ACTION BY HOLDERS.

     If the Issuers shall solicit from the Holders of Debt Securities of any
series any action (including the making of any demand or request, the giving of
any direction, notice, consent or waiver or the taking of any other action), the
Issuers may, at their option, by Board Resolutions, fix in advance a record date
for the determination of Holders of Debt Securities entitled to take such
action, but the Issuers shall have no obligation to do so. Any such record date
shall be fixed at the Issuers' discretion. If such a record date is fixed, such
action may be sought or given before or after the record date, but only the
Holders of Debt Securities of record at the close of business on such record
date shall be deemed to be Holders of Debt Securities for the purpose of
determining whether Holders of the requisite proportion of Debt Securities of
such series Outstanding have authorized or agreed or consented to such action,
and for that purpose the Debt Securities of such series Outstanding shall be
computed as of such record date.

       ARTICLE VI. REMEDIES OF THE TRUSTEE AND HOLDERS IN EVENT OF DEFAULT

SECTION 6.01. EVENTS OF DEFAULT.

     If any one or more of the following shall have occurred and be continuing
with respect to Debt Securities of any series (each of the following, an "Event
of Default"):

     (a) the Issuers Default for a period of 30 days in the payment when due of
interest on any Debt Securities of that series; or

     (b) the Issuers default in the payment when due of principal of or premium,
if any, on any Debt Securities of that series at maturity, upon redemption or
otherwise; or

     (c) default in the payment of any sinking fund payment with respect to any
Debt Securities of that series as and when the same shall become due and
payable; or


                                      -42-



     (d) failure on the part of the Issuers or any Significant Subsidiary that
is a Subsidiary Guarantor with respect to that series to comply with Article X;
or

     (e) failure by the Issuers or any Significant Subsidiary that is a
Subsidiary Guarantor for such series for 60 days after notice to comply to duly
observe or perform any other of the covenants or agreements on the part of the
Issuers or such Subsidiary Guarantors in the Debt Securities of that series in
any Board Resolution authorizing the issuance of that series of Debt Securities,
in the Indenture with respect to such series or in any supplemental Indenture
with respect to such series (other than a covenant a default in the performance
of which is elsewhere in this Section 6.01 specifically dealt with); or

     (f) an Issuer or any Significant Subsidiary that is a Subsidiary Guarantor
of that series of Debt Securities, pursuant to or within the meaning of
Bankruptcy Law, commences a voluntary case, consents to the entry of an order
for relief against it in an involuntary case, consents to the appointment of a
custodian of it or for all or substantially all of its property, makes a general
assignment for the benefit of its creditors, or generally is not paying its
debts as they become due; or

     (g) (i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that is for relief against an Issuer or any Significant
Subsidiary that is a Subsidiary Guarantor of that series of Debt Securities in
an involuntary case, appoints a custodian of an Issuer or any such Significant
Subsidiary, or orders the liquidation of an Issuer or any such Significant
Subsidiary and (ii) such order or decree remains unstayed and in effect for 60
consecutive days;

     (h) if any series of Debt Securities Outstanding under this Indenture is
entitled to the benefits of a Guarantee by the Subsidiary Guarantors, the
Guarantee of any Significant Subsidiary that is such a Subsidiary Guarantor
ceases to be in full force and effect with respect to Debt Securities of that
series (except as otherwise provided in this Indenture) or is declared null and
void in a judicial proceeding or any such Significant Subsidiary denies or
disaffirms its obligations under this Indenture or such Guarantee; or

     (i) any other Event of Default provided under the terms of the Debt
Securities of that series;

then and in each and every case that an Event of Default (other than an Event of
Default specified in Section 6.01(f) or (g)) with respect to Debt Securities of
that series at the time outstanding occurs and is continuing, either the Trustee
or the Holders of at least 25% in aggregate principal amount of the Debt
Securities of that series, may declare the principal of (or, if the Debt
Securities of that series are Original Issue Discount Debt Securities, such
portion of the principal amount as may


                                      -43-



be specified in the terms of that series) and interest on all the Debt
Securities of that series to be due and payable immediately; provided, however,
that if an Event of Default specified in Section 6.01(f) or (g) occurs, such
amounts relating to the applicable series of Debt Securities shall automatically
become and be immediately due and payable without any declaration, notice or
other act on the part of the Trustee or any Holder.

     The Holders of a majority in aggregate principal amount of the Debt
Securities of a particular series at the time Outstanding by notice to the
Trustee may rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree already rendered and if all existing
Events of Default have been cured or waived except nonpayment of principal or
interest that has become due solely because of acceleration. Upon any such
rescission, the parties hereto shall be restored respectively to their several
positions and rights hereunder, and all rights, remedies and powers of the
parties hereto shall continue as though no such acceleration had been declared.

     In case the Trustee or any Holder shall have proceeded to enforce any right
under the Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee or such Holder, then and in
every such case the parties hereto shall be restored respectively to their
several positions and rights hereunder, and all rights, remedies and powers of
the parties hereto shall continue as though no such proceeding had been taken.

     The foregoing Events of Default shall constitute Events of Default whatever
the reason for any such Event of Default and whether it is voluntary or
involuntary or is effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body.

     The Issuers shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event which with the giving of notice, the lapse of time or both would
become an Event of Default under clause (c), (d), (e), (f), (g) or (h), its
status and what action the Issuers or the Subsidiary Guarantors, as applicable,
are taking or propose to take with respect thereto.

SECTION 6.02. COLLECTION OF INDEBTEDNESS BY TRUSTEE, ETC.

     If an Event of Default occurs and is continuing, the Trustee, in its own
name and as trustee of an express trust, shall be entitled and empowered to
institute any action or proceedings at law or in equity for the collection of
the sums so due and unpaid of the Debt Securities of the affected series or
enforce the performance of any


                                      -44-



provision of the Debt Securities of the affected series or the Indenture, and
may prosecute any such action or proceedings to judgment or final decree, and
may enforce any such judgment or final decree against the Issuers or Subsidiary
Guarantors or any other obligor upon the Debt Securities of such series (and
collect in the manner provided by law out of the property of the Issuers or
Subsidiary Guarantors or any other obligor upon the Debt Securities of such
series, wherever situated, the moneys adjudged or decreed to be payable).

     In case there shall be pending proceedings for the bankruptcy or for the
reorganization of an Issuer or any Subsidiary Guarantor or any other obligor
upon the Debt Securities of any series under Title 11 of the United States
Bankruptcy Code or any other foreign, federal or state bankruptcy, insolvency or
similar law, or in case a receiver, trustee or other similar official shall have
been appointed for its property, or in case of any other similar judicial
proceedings relative to an Issuer or any Subsidiary Guarantor or any other
obligor upon the Debt Securities of any series, its creditors or its property,
the Trustee, irrespective of whether the principal of Debt Securities of any
series shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 6.02, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove a
claim or claims for the whole amount of principal, premium, if any, and interest
(or, if the Debt Securities of such series are Original Issue Discount Debt
Securities, such portion of the principal amount as may be specified in the
terms of such series) owing and unpaid in respect of the Debt Securities of such
series, and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred, and all advances
made, by the Trustee except as a result of its negligence or bad faith) and of
the Holders thereof allowed in any such judicial proceedings relative to an
Issuer, any Subsidiary Guarantor or any other obligor upon the Debt Securities
of such series, its creditors or its property, and to collect and receive any
moneys or other property payable or deliverable on any such claims, and to
distribute all amounts received with respect to the claims of such Holders and
of the Trustee on their behalf, and any receiver, assignee or trustee in
bankruptcy or reorganization is hereby authorized by each of such Holders to
make payments to the Trustee, and, in the event that the Trustee shall consent
to the making of payments directly to such Holders, to pay to the Trustee such
amount as shall be sufficient to cover reasonable compensation to the Trustee,
its agents, attorneys and counsel, and all other reasonable expenses and
liabilities incurred, and all advances made, by the Trustee except as a result
of its negligence or bad faith.


                                      -45-



     All rights of action and of asserting claims under the Indenture, or under
any of the Debt Securities of any series, may be enforced by the Trustee without
the possession of any such Debt Securities or the production thereof in any
trial or other proceedings relative thereto, and any such action or proceedings
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment (except for any amounts payable to
the Trustee pursuant to Section 7.06) shall be for the ratable benefit of the
Holders of all the Debt Securities in respect of which such action was taken.

     In case of an Event of Default hereunder the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by the Indenture by such
appropriate judicial proceedings as the Trustee shall deem necessary to protect
and enforce any of such rights, either at law or in equity or in bankruptcy or
otherwise, whether for the specific enforcement of any covenant or agreement
contained in the Indenture or in aid of the exercise of any power granted in the
Indenture, or to enforce any other legal or equitable right vested in the
Trustee by the Indenture or by law.

SECTION 6.03. APPLICATION OF MONEYS COLLECTED BY TRUSTEE.

     Any moneys or other property collected by the Trustee pursuant to Section
6.02 with respect to Debt Securities of any series shall be applied, after
giving effect to the provisions of Article XIV, in the order following, at the
date or dates fixed by the Trustee for the distribution of such moneys or other
property, upon presentation of the several Debt Securities of such series in
respect of which moneys or other property have been collected, and the notation
thereon of the payment, if only partially paid, and upon surrender thereof if
fully paid:

     First: To the payment of all money due the Trustee pursuant to Section
7.06;

     Second: In case the principal of the Outstanding Debt Securities in respect
of which such moneys have been collected shall not have become due, to the
payment of interest on the Debt Securities of such series in the order of the
maturity of the installments of such interest, with interest (to the extent that
such interest has been collected by the Trustee) upon the overdue installments
of interest at the rate or Yield to Maturity (in the case of Original Issue
Discount Debt Securities) specified in the Debt Securities of such series, such
payments to be made ratably to the Persons entitled thereto, without
discrimination or preference;

     Third: In case the principal of the Outstanding Debt Securities in respect
of which such moneys have been collected shall have become due, by declaration
or otherwise, to the payment of the whole amount then owing and unpaid upon the
Debt Securities of such series for principal and premium, if any, and interest,
with interest on the overdue principal and premium, if any, and (to the extent
that such interest has


                                      -46-



been collected by the Trustee) upon overdue installments of interest at the rate
or Yield to Maturity (in the case of Original Issue Discount Debt Securities)
specified in the Debt Securities of such series; and if such moneys shall be
insufficient to pay in full the whole amount so due and unpaid upon the Debt
Securities of such series, then to the payment of such principal and premium, if
any, and interest, without preference or priority of principal and premium, if
any, over interest, or of interest over principal and premium, if any, or of any
installment of interest over any other installment of interest, or of any Debt
Security of such series over any Debt Security of such series, ratably to the
aggregate of such principal and premium, if any, and interest; and

     Fourth: The remainder, if any, shall be paid to the Issuers, the Subsidiary
Guarantors, their successors or assigns, or as a court of competent jurisdiction
may direct.

     The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.03. At least 15 days before such record date,
the Issuers shall mail to each Holder and the Trustee a notice that states the
record date, the payment date and amount to be paid.

SECTION 6.04. LIMITATION ON SUITS BY HOLDERS.

     No Holder of any Debt Security of any series shall have any right by virtue
or by availing of any provision of the Indenture to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise, upon or under or
with respect to the Indenture, or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless such Holder previously shall have
given to the Trustee written notice of an Event of Default with respect to Debt
Securities of that same series and of the continuance thereof and unless the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Debt Securities of that series shall have made written request upon the Trustee
to institute such action or proceedings in respect of such Event of Default in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity shall have
failed to institute any such action or proceedings and no direction inconsistent
with such written request shall have been given to the Trustee pursuant to
Section 6.06; it being understood and intended, and being expressly covenanted
by the Holder of every Debt Security with every other Holder and the Trustee,
that no one or more Holders shall have any right in any manner whatever by
virtue or by availing of any provision of the Indenture to affect, disturb or
prejudice the rights of any Holders, or to obtain or seek to obtain priority
over or preference to any other such Holder, or to enforce any right under the
Indenture, except in the manner herein provided and for the equal, ratable and


                                      -47-



common benefit of all such Holders. For the protection and enforcement of the
provisions of this Section 6.04, each and every Holder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.

     Notwithstanding any other provision in the Indenture (but subject to
Article XIV), however, the right of any Holder of any Debt Security to receive
payment of the principal of, and premium, if any, and (subject to Section 2.12)
interest on, such Debt Security on or after the respective due dates expressed
in such Debt Security, and to institute suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.

SECTION 6.05. REMEDIES CUMULATIVE; DELAY OR OMISSION IN EXERCISE OF RIGHTS NOT A
     WAIVER OF DEFAULT.

     All powers and remedies given by this Article VI to the Trustee or to the
Holders shall, to the extent permitted by law, be deemed cumulative and not
exclusive of any thereof or of any other powers and remedies available to the
Trustee or the Holders, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in the
Indenture, and no delay or omission of the Trustee or of any Holder to exercise
any right or power accruing upon any Default occurring and continuing as
aforesaid, shall impair any such right or power, or shall be construed to be a
waiver of any such Default or an acquiescence therein; and, subject to the
provisions of Section 6.04, every power and remedy given by this Article VI or
by law to the Trustee or to the Holders may be exercised from time to time, and
as often as shall be deemed expedient, by the Trustee or by the Holders.

SECTION 6.06. RIGHTS OF HOLDERS OF MAJORITY IN PRINCIPAL AMOUNT OF DEBT
     SECURITIES TO DIRECT TRUSTEE AND TO WAIVE DEFAULT.

     The Holders of a majority in aggregate principal amount of the Debt
Securities of any series at the time Outstanding shall have the right to direct
the time, method, and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Debt Securities of such series; provided, however,
that such direction shall not be otherwise than in accordance with law and the
provisions of the Indenture, and that subject to the provisions of Section 7.01,
the Trustee shall have the right to decline to follow any such direction if the
Trustee, being advised by counsel, shall determine that the action so directed
may not lawfully be taken, or if the Trustee shall by a Responsible Officer or
officers determine that the action so directed would involve it in personal
liability or would be prejudicial to Holders of Debt Securities of such series
not taking part in


                                      -48-



such direction; and, provided further, that nothing contained in the Indenture
shall impair the right of the Trustee to take any action deemed proper by the
Trustee and which is not inconsistent with such direction by such Holders. Prior
to the acceleration of the maturity of the Debt Securities of any series, as
provided in Section 6.01, the Holders of a majority in aggregate principal
amount of the Debt Securities of that series at the time Outstanding by notice
to the Trustee may on behalf of the Holders of all the Debt Securities of that
series waive any past Default or Event of Default and its consequences for that
series specified in the terms thereof as contemplated by Section 2.03, except
(i) a Default in the payment of the principal of, and premium, if any, or
interest on, any of the Debt Securities and (ii) a Default in respect of a
provision that under Section 9.02 cannot be amended, supplemented or waived
without the consent of each Holder affected thereby. In case of any such waiver,
such Default shall cease to exist, any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of the Indenture, and the
Issuers, the Subsidiary Guarantors, the Trustee and the Holders of the Debt
Securities of that series shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or Event or Default or impair any right consequent thereon.

SECTION 6.07. TRUSTEE TO GIVE NOTICE OF DEFAULTS KNOWN TO IT, BUT MAY WITHHOLD
     SUCH NOTICE IN CERTAIN CIRCUMSTANCES.

     The Trustee shall, within 90 days after the occurrence of a Default known
to it with respect to a series of Debt Securities, give to the Holders thereof,
in the manner provided in Section 12.03, notice of all Defaults with respect to
such series known to the Trustee, unless such Defaults shall have been cured or
waived before the giving of such notice; provided, however, that, except in the
case of Default in the payment of the principal of, or premium, if any, or
interest on, any of the Debt Securities of such series or in the making of any
sinking fund payment with respect to the Debt Securities of such series, the
Trustee shall be protected in withholding such notice if and so long as the
committee of Responsible Officers of the Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders thereof.

SECTION 6.08. REQUIREMENT OF AN UNDERTAKING TO PAY COSTS IN CERTAIN SUITS UNDER
     THE INDENTURE OR AGAINST THE TRUSTEE.

     All parties to the Indenture agree, and each Holder of any Debt Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
the Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs


                                      -49-



of such suit in the manner and to the extent provided in the Trust Indenture
Act, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; provided, however, that the provisions of
this Section 6.08 shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 25% in principal amount of the Outstanding Debt Securities of that
series or to any suit instituted by any Holder for the enforcement of the
payment of the principal of, or premium, if any, or interest on, any Debt
Security on or after the due date for such payment expressed in such Debt
Security.

                       ARTICLE VII. CONCERNING THE TRUSTEE

SECTION 7.01. CERTAIN DUTIES AND RESPONSIBILITIES.

     The Trustee, prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have occurred, undertakes
to perform such duties and only such duties as are specifically set forth in the
Indenture. In case an Event of Default has occurred (which has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in it
by the Indenture, and use the same degree of care and skill in their exercise,
as a prudent person would exercise or use under the circumstances in the conduct
of his own affairs.

     No provision of the Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act,
or its bad faith or willful misconduct, except that:

     (a) this subsection shall not be construed to limit the effect of the first
paragraph of this Section 7.01;

     (b) prior to the occurrence of an Event of Default with respect to the Debt
Securities of a series and after the curing or waiving of all Events of Default
with respect to such series which may have occurred:

          (1) the duties and obligations of the Trustee with respect to Debt
     Securities of any series shall be determined solely by the express
     provisions of the Indenture, and the Trustee shall not be liable except for
     the performance of such duties and obligations with respect to such series
     as are specifically set forth in the Indenture, and no implied covenants or
     obligations with respect to such series shall be read into the Indenture
     against the Trustee; and

          (2) in the absence of bad faith on the part of the Trustee, the
     Trustee may conclusively rely, as to the truth of the statements and the
     correctness of


                                      -50-



     the opinions expressed therein, upon any certificates or opinions furnished
     to the Trustee and conforming to the requirements of the Indenture;
     provided, however, that in the case of any such certificates or opinions
     which by any provision hereof are specifically required to be furnished to
     the Trustee, the Trustee shall be under a duty to examine the same to
     determine whether or not they conform to the requirements of the Indenture;

     (c) the Trustee shall not be liable for an error of judgment made in good
faith by a Responsible Officer, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and

     (d) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it with respect to Debt Securities of any series in good
faith in accordance with the direction of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Debt Securities of
that series relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under the Indenture with respect to Debt Securities
of such series.

     None of the provisions of the Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any personal financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.

     Whether or not therein expressly so provided, every provision of the
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.

SECTION 7.02. CERTAIN RIGHTS OF TRUSTEE.

     Except as otherwise provided in Section 7.01:

     (a) the Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note or other paper or document (whether in its original or facsimile
form) believed by it to be genuine and to have been signed or presented by the
proper party or parties;

     (b) any request, direction, order or demand of the Issuers mentioned herein
shall be sufficiently evidenced by an Issuer Order (unless other evidence in
respect thereof is specifically prescribed herein); and any Board Resolution may
be evidenced


                                      -51-



to the Trustee by a copy thereof certified by the Secretary or an Assistant
Secretary of the General Partner;

     (c) the Trustee may consult with counsel of its own selection, and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by the Trustee hereunder in good faith and in accordance with such
advice or Opinion of Counsel;

     (d) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by the Indenture at the request, order or direction of
any of the Holders of Debt Securities of any series pursuant to the provisions
of the Indenture, unless such Holders shall have offered to the Trustee security
or indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which may be incurred therein or thereby;

     (e) the Trustee shall not be liable for any action taken or omitted by it
in good faith and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by the Indenture;

     (f) prior to the occurrence of an Event of Default and after the curing of
all Events of Default which may have occurred, the Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, approval or other paper or document, unless requested in writing
to do so by the Holders of a majority in aggregate principal amount of the then
Outstanding Debt Securities of a series affected by such matter; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is not, in the opinion of the Trustee, reasonably assured to the
Trustee by the security afforded to it by the terms of the Indenture, the
Trustee may require indemnity reasonably satisfactory to it against such costs,
expenses or liabilities as a condition to so proceeding; the Trustee shall be
entitled to examine the books, records and premises of the Issuers during
ordinary business hours and for any purpose relevant to the Indenture,
personally or by an agent or attorney at the sole cost of the Issuers and shall
incur no liability or additional liability of any kind by reason of such inquiry
or investigation;

     (g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder;


                                      -52-


     (h) if any property other than cash shall at any time be subject to a Lien
in favor of the Holders, the Trustee, if and to the extent authorized by a
receivership or bankruptcy court of competent jurisdiction or by the
supplemental instrument subjecting such property to such Lien, shall be entitled
to make advances for the purpose of preserving such property or of discharging
tax Liens or other prior Liens or encumbrances thereon;

     (i) the Trustee shall not be deemed to have notice of any Default or Event
of Default unless a Responsible Officer of the Trustee has actual knowledge
thereof or unless written notice of any event which is in fact such a Default is
received by the Trustee at the Corporate Trust Office of the Trustee, and such
notice references the Debt Securities and the Indenture; and

     (j) the rights, privileges, protections, immunities and benefits given to
the Trustee, including its right to be indemnified, are extended to, and shall
be enforceable by, the Trustee in each of its capacities hereunder, and to each
agent, custodian and other Person employed by the Trustee to act hereunder.

SECTION 7.03. TRUSTEE NOT LIABLE FOR RECITALS IN INDENTURE OR IN DEBT
     SECURITIES.

     The recitals contained herein and in the Debt Securities (except the
Trustee's certificate of authentication) shall be taken as the statements of the
Issuers, and the Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representations as to the validity or sufficiency of
the Indenture or of the Debt Securities of any series, except that the Trustee
represents that it is duly authorized to execute and deliver the Indenture,
authenticate the Debt Securities and perform its obligations hereunder, and that
the statements made by it or to be made by it in a Statement of Eligibility and
Qualification on Form T-1 supplied to the Issuers are true and accurate. The
Trustee shall not be accountable for the use or application by the Issuers of
any of the Debt Securities or of the proceeds thereof.

SECTION 7.04. TRUSTEE, PAYING AGENT OR REGISTRAR MAY OWN DEBT SECURITIES.

     The Trustee or any paying agent or Registrar, in its individual or any
other capacity, may become the owner or pledgee of Debt Securities or any
related Guarantees and, subject to the provisions of the Trust Indenture Act
relating to conflicts of interest and preferential claims, may otherwise deal
with the Issuers and any Subsidiary Guarantors, as applicable, with the same
rights it would have if it were not Trustee, paying agent or Registrar;
provided, however, that if the Trustee acquires any such conflicting interest
and an Event of Default or Default has occurred and is


                                      -53-



continuing, the Trustee must eliminate such conflict within 90 days, apply to
the Commission for permission to continue as trustee, or resign.

SECTION 7.05. MONEYS RECEIVED BY TRUSTEE TO BE HELD IN TRUST.

     Subject to the provisions of Section 11.03, all moneys received by the
Trustee shall, until used or applied as provided herein, be held in trust for
the purposes for which they were received, but need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any moneys received by it hereunder. So long as no
Event of Default shall have occurred and be continuing, all interest allowed on
any such moneys shall be paid from time to time to the Issuers upon an Issuer
Order.

SECTION 7.06. COMPENSATION AND REIMBURSEMENT.

     The Issuers covenant and agree to pay in Dollars to the Trustee from time
to time, and the Trustee shall be entitled to, reasonable compensation for all
services rendered by it hereunder (which shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust), and,
except as otherwise expressly provided herein, the Issuers will pay or reimburse
in Dollars the Trustee upon its request for all expenses, disbursements and
advances reasonably incurred or made by the Trustee in accordance with any of
the provisions of the Indenture (including the reasonable compensation and the
expenses and disbursements of its agents, attorneys and counsel and of all
Persons not regularly in its employ) except any such expense, disbursement or
advances as may arise from its negligence, bad faith or willful misconduct. The
Issuers also covenant to fully indemnify in Dollars the Trustee and any
predecessor Trustee for, and to hold it harmless against, any and all loss,
liability, claim, damage or expense incurred without negligence, bad faith or
willful misconduct on the part of the Trustee, arising out of or in connection
with the acceptance or administration of this trust or trusts hereunder,
including the costs and expenses of defending itself against any claim of
liability in connection with the exercise or performance of any of its powers or
duties hereunder. The obligations of the Issuers under this Section 7.06 to
compensate and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder and shall survive the satisfaction and discharge of the Indenture. The
Issuers and the Holders agree that such additional indebtedness shall be secured
by a Lien prior to that of the Debt Securities upon all property and funds held
or collected by the Trustee, as such, except funds held in trust for the payment
of principal of, and premium, if any, or interest on, particular Debt
Securities.


                                      -54-



     When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(f) or (g) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any bankruptcy, insolvency, reorganization or other similar
law.

SECTION 7.07. RIGHT OF TRUSTEE TO RELY ON AN OFFICERS' CERTIFICATE WHERE NO
     OTHER EVIDENCE SPECIFICALLY PRESCRIBED.

     Except as otherwise provided in Section 7.01, whenever in the
administration of the provisions of the Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
suffering or omitting any action hereunder, such matter (unless other evidence
in respect thereof be herein specifically prescribed) may, in the absence of
negligence, bad faith or willful misconduct on the part of the Trustee, be
deemed to be conclusively proved and established by an Officers' Certificate
delivered to the Trustee, and such certificate, in the absence of negligence,
bad faith or willful misconduct on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of the Indenture upon the faith thereof.

SECTION 7.08. SEPARATE TRUSTEE; REPLACEMENT OF TRUSTEE.

     The Issuers may, but need not, appoint a separate Trustee for any one or
more series of Debt Securities. The Trustee may resign with respect to one or
more or all series of Debt Securities at any time by giving notice to the
Issuers. The Holders of a majority in principal amount of the Debt Securities of
a particular series at the time Outstanding may remove the Trustee for such
series and only such series by so notifying the Trustee and may appoint a
successor Trustee. The Issuers shall remove the Trustee if:

     (1) the Trustee fails to comply with Section 7.10;

     (2) the Trustee is adjudged bankrupt or insolvent;

     (3) a receiver or other public officer takes charge of the Trustee or its
property; or

     (4) the Trustee otherwise becomes incapable of acting.

     If the Trustee resigns, is removed by the Issuers or by the Holders of a
majority in principal amount of the Debt Securities of a particular series and
such Holders do not reasonably promptly appoint a successor Trustee, or if a
vacancy exists in the office of Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), the Issuers shall
promptly appoint a successor Trustee. No


                                      -55-



resignation or removal of the Trustee and no appointment of a successor Trustee
shall become effective until the acceptance of appointment by the successor
Trustee in accordance with the applicable requirements of this Section 7.08.

     A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuers. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under the Indenture. The
successor Trustee shall mail a notice of its succession to Holders of Debt
Securities of each applicable series. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, subject to
the Lien provided for in Section 7.06.

     If a successor Trustee does not take office within 60 days after the
retiring Trustee gives notice of resignation or is removed, the retiring Trustee
or the Holders of 25% in principal amount of the Debt Securities of any
applicable series may petition any court of competent jurisdiction for the
appointment of a successor Trustee for the Debt Securities of such series.

     If the Trustee fails to comply with Section 7.10, any Holder of Debt
Securities of any applicable series may petition at the expense of the Issuers
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee for the Debt Securities of such series.
Notwithstanding the replacement of the Trustee pursuant to this Section 7.08,
the Issuers' obligations under Section 7.06 shall continue for the benefit of
the retiring Trustee.

     In the case of the appointment hereunder of a separate or successor Trustee
with respect to the Debt Securities of one or more series, the Issuers, any
retiring Trustee and each successor or separate Trustee with respect to the Debt
Securities of any applicable series shall execute and deliver an Indenture
supplemental hereto (1) that shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties
of any retiring Trustee with respect to the Debt Securities of any series as to
which any such retiring Trustee is not retiring shall continue to be vested in
such retiring Trustee and (2) that shall add to or change any of the provisions
of the Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee, it being
understood that nothing herein or in such supplemental Indenture shall
constitute such Trustees as co-trustees of the same trust and that each such
separate, retiring or successor Trustee shall be Trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee.


                                      -56-



SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER.

     If the Trustee consolidates or merges with, or converts into, or transfers
all or substantially all of its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation or banking association, without any further act, shall be the
successor Trustee, provided such Person shall be otherwise qualified and
eligible under this Article VII, without the execution or filing of any paper or
any further act on the part of any of the parties hereto. As soon as
practicable, the successor Trustee shall mail a notice of its succession to the
Issuers and the Holders of the Debt Securities then Outstanding.

     In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by the
Indenture any of the Debt Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Debt Securities so
authenticated; and in case at that time any of the Debt Securities shall not
have been authenticated, any successor to the Trustee may authenticate such Debt
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Debt Securities or in the Indenture
provided that the certificate of the Trustee shall have.

SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.

     The Trustee shall at all times satisfy the requirements of Section 310(a)
of the Trust Indenture Act. The Trustee shall have a combined capital and
surplus of at least $50,000,000, as set forth in its most recently published
annual report of condition. No obligor upon the Debt Securities of a particular
series or Person directly or indirectly controlling, controlled by or under
common control with such obligor shall serve as Trustee upon the Debt Securities
of such series. The Trustee shall comply with Section 310(b) of the Trust
Indenture Act; provided, however, that there shall be excluded from the
operation of Section 310(b)(1) of the Trust Indenture Act the Indenture (or any
indenture or indentures under which other securities or certificates of interest
or participation in other securities of the Issuers are outstanding) if the
requirements for such exclusion set forth in Section 310(b)(1) of the Trust
Indenture Act are met.

SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUERS.

     The Trustee shall comply with Section 311(a) of the Trust Indenture Act,
excluding any creditor relationship listed in Section 311(b) of the Trust
Indenture Act. A Trustee who had resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent indicated therein.


                                      -57-



SECTION 7.12. COMPLIANCE WITH TAX LAWS.

     The Trustee hereby agrees to comply with all U.S. federal income tax
information reporting and withholding requirements applicable to it with respect
to payments of principal, premium (if any) and interest on the Debt Securities,
whether acting as Trustee, Registrar, paying agent or otherwise with respect to
the Debt Securities.

                      ARTICLE VIII. CONCERNING THE HOLDERS

SECTION 8.01. EVIDENCE OF ACTION BY HOLDERS.

     Whenever in the Indenture it is provided that the Holders of a specified
percentage in aggregate principal amount of the Debt Securities of any or all
series may take action (including the making of any demand or request, the
giving of any direction, notice, consent or waiver or the taking of any other
action) the fact that at the time of taking any such action the Holders of such
specified percentage have joined therein may be evidenced (a) by any instrument
or any number of instruments of similar tenor executed by Holders in person or
by agent or proxy appointed in writing, (b) by the record of the Holders voting
in favor thereof at any meeting of Holders duly called and held in accordance
with the provisions of Section 5.02 or (c) by a combination of such instrument
or instruments and any such record of such a meeting of Holders.

SECTION 8.02. PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF DEBT
     SECURITIES.

     Subject to the provisions of Sections 7.01, 7.02 and 13.09, proof of the
execution of any instrument by a Holder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee.

     The ownership of Registered Securities of any series shall be proved by the
Debt Security Register or by a certificate of the Registrar for such series.

     The Trustee may require such additional proof of any matter referred to in
this Section 8.02 as it shall deem necessary.

SECTION 8.03. WHO MAY BE DEEMED OWNER OF DEBT SECURITIES.

     Prior to due presentment for registration of transfer of any Registered
Security, the Issuers, the Trustee, any paying agent and any Registrar may deem
and treat the Person in whose name any Registered Security shall be registered
upon the books of


                                      -58-



the Issuers as the absolute owner of such Registered Security (whether or not
such Registered Security shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of, and premium, if any, and (subject to Section
2.12) interest on such Registered Security and for all other purposes, and
neither the Issuers nor the Trustee nor any paying agent nor any Registrar shall
be affected by any notice to the contrary; and all such payments so made to any
such Holder for the time being, or upon his order, shall be valid and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Registered Security.

SECTION 8.04. INSTRUMENTS EXECUTED BY HOLDERS BIND FUTURE HOLDERS.

     At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 8.01, of the taking of any action by the Holders of the
percentage in aggregate principal amount of the Debt Securities of any series
specified in the Indenture in connection with such action and subject to the
following paragraph, any Holder of a Debt Security which is shown by the
evidence to be included in the Debt Securities the Holders of which have
consented to such action may, by filing written notice with the Trustee at the
Corporate Trust Office of the Trustee and upon proof of holding as provided in
Section 8.02, revoke such action so far as concerns such Debt Security. Except
as aforesaid, any such action taken by the Holder of any Debt Security shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of such Debt Security and of any Debt Security issued upon transfer thereof or
in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon such Debt Security or such other Debt
Securities. Any action taken by the Holders of the percentage in aggregate
principal amount of the Debt Securities of any series specified in the Indenture
in connection with such action shall be conclusively binding upon the Issuers,
the Trustee and the Holders of all the Debt Securities of such series.

     The Issuers may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders of Registered Securities entitled to give
their consent or take any other action required or permitted to be taken
pursuant to the Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders of Registered
Securities at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders of Registered Securities after such record date. No such
consent shall be valid or effective for more than 120 days after such record
date unless the written consent of the Holders of the percentage in aggregate
principal amount of the Debt Securities of such series specified in the
Indenture shall have been received within such 120-day period.


                                      -59-



                  ARTICLE IX. AMENDMENT, SUPPLEMENT AND WAIVER

SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF DEBT SECURITIES.

     The Issuers, the Subsidiary Guarantors and the Trustee may from time to
time and at any time, without the consent of Holders of any Debt Security, enter
into an Indenture or supplemental Indentures (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of the execution
thereof) for one or more of the following purposes:

     (a) to cure any ambiguity, defect or inconsistency contained herein, in any
supplemental Indenture or in the Debt Securities of any series or any related
Guarantees;

     (b) to provide for uncertificated Debt Securities in addition to or in
place of certificated Debt Securities; provided, however, that the
uncertificated Debt Securities are issued in registered form for purposes of
Section 163(f) of the Code, or in a manner such that the uncertificated Debt
Securities are described in Section 163(f)(2)(B) of the Code;

     (c) to provide for the assumption of an Issuer's obligations to Holders
pursuant to Article X;

     (d) to add guarantors (including Subsidiary Guarantors) or guarantees with
respect to the Debt Securities as parties to the Indenture or to release
guarantors in accordance with the provisions of the Indenture or any
supplemental Indenture;

     (e) to make any changes that would provide any additional rights or
benefits to the Holders of the Debt Securities of one or more series or that do
not, taken as a whole, adversely affect the legal rights hereunder of any such
Holder;

     (f) to comply with the requirements of the Commission to permit the
qualification of the Indenture or any supplemental Indenture under the Trust
Indenture Act as then in effect; provided, however, that nothing herein
contained shall permit or authorize the inclusion in any supplemental Indenture
of the provisions referred to in Section 316(a)(2) of the Trust Indenture Act;

     (g) to add Subsidiary Guarantors with respect to any or all of the Debt
Securities or to secure any or all of the Debt Securities or any guarantee with
respect to any Debt Securities;

     (h) to evidence or provide for the acceptance of appointment hereunder by a
successor or separate Trustee with respect to the Debt Securities of one or more
series


                                      -60-



and to add to or change any of the provisions of the Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee;

     (i) to add any additional Events of Default;

     (j) to make any changes in Article XIV that would limit or terminate the
benefits applicable to any holder of Senior Indebtedness (or its
Representatives) under Article XIV; and

     (k) to establish the form or terms of the Debt Securities as permitted by
Section 2.01 or 2.03.

     The Trustee is hereby authorized to join with the Issuers and guarantors
with respect to any Debt Securities in the execution of any such supplemental
Indenture, to make any further appropriate agreements and stipulations which may
be contained therein and to accept the conveyance, transfer, assignment,
mortgage or pledge of any property thereunder, but the Trustee shall not be
obligated to enter into any such supplemental Indenture which affects the
Trustee's own rights, duties or immunities under the Indenture or otherwise.

     Any supplemental Indenture authorized by the provisions of this Section
9.01 may be executed by the Issuers, any Subsidiary Guarantors with respect to
any Debt Securities of the applicable series and the Trustee without the consent
of the Holders of any of the Debt Securities at the time outstanding,
notwithstanding any of the provisions of Section 9.02.

     After an amendment under this Section 9.01 becomes effective, the Issuers
shall mail to Holders of Debt Securities of each series affected thereby a
notice briefly describing such amendment. The failure to give such notice to all
such Holders, or any defect therein, shall not impair or affect the validity of
an amendment under this Section 9.01.

SECTION 9.02. WITH CONSENT OF HOLDERS OF DEBT SECURITIES.

     Without notice to any Holder but with the consent (evidenced as provided in
Section 8.01) of the Holders of a majority in aggregate principal amount of the
outstanding Debt Securities of each series affected by such supplemental
Indenture, (a) the Issuers and any Subsidiary Guarantors, when authorized by
Board Resolutions, and the Trustee may from time to time and at any time enter
into an Indenture or supplemental Indentures (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of execution
thereof) for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the


                                      -61-



Indenture or of any supplemental Indenture or of modifying in any manner the
rights of the Holders of the Debt Securities of such series or any related
Guarantees, and (b) subject to Sections 6.04 and 6.08, any existing Default or
Events of Default or compliance with any provision of the Indenture or the Debt
Securities of such series may be waived; provided, however, that no such
supplemental Indenture or waiver, without the consent of the Holders of each
Debt Security so affected, shall (i) reduce the percentage in principal amount
of Debt Securities of any series whose Holders must consent to an amendment,
supplement or waiver; (ii) reduce the principal of or change the Stated Maturity
of any Debt Security; (iii) reduce or waive the premium, if any, payable upon
the redemption of any Debt Security or alter or waive any provisions by which
any Debt Security may or shall be redeemed in accordance with Article III (other
than provisions requiring the repurchase of the Debt Securities of such series
if so permitted by the Board Resolutions or supplemental Indenture establishing
the terms of such series); (iv) reduce the rate of or change the time for
payment of interest on any Debt Security; (v) waive a Default or an Event of
Default in the payment of principal of, or premium, if any, or interest on a
Debt Security except for a rescission of an acceleration of such Debt Securities
by the Holders of at least a majority in aggregate principal amount of such Debt
Securities and a waiver of the payment default that resulted from such
acceleration; (vi) except as otherwise permitted under the Indenture, release
any security that may have been granted in respect of the Debt Securities; (vii)
make any Debt Security payable in Currency other than that stated in the Debt
Security; (viii) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of Holders to receive payments of
principal of or premium, if any, or interest on the Debt Securities; (ix) waive
a redemption payment with respect to any Debt Security (other than a payment
required by a covenant requiring the repurchase of the Debt Securities of such
series if so permitted by the Board Resolutions or supplemental Indenture
establishing the terms of such series); (x) make any change in Section 6.06 or
this Section 9.02; (xi) make any change in Article XIV that adversely affects
the rights of any Holder under Article XIV; or (xii) except as provided in
Section 12.04, release any Subsidiary Guarantor or modify the Guarantee of any
Debt Security in any manner adverse to the Holders.

     A supplemental Indenture which changes or eliminates any covenant or other
provision of the Indenture which has been expressly included solely for the
benefit of one or more particular series of Debt Securities or which modifies
the rights of the Holders of Debt Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under the
Indenture of the Holders of Debt Securities of any other series.

     Upon the request of the Issuers and, if applicable, the Subsidiary
Guarantors, accompanied by copies of Board Resolutions authorizing the execution
of any such


                                      -62-



supplemental Indenture, and upon the filing with the Trustee of evidence of the
consent of Holders as aforesaid, the Trustee shall join with the Issuers and any
guarantors with respect to any Debt Securities in the execution of such
supplemental Indenture unless such supplemental Indenture affects the Trustee's
own rights, duties or immunities under the Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such supplemental Indenture.

     It shall not be necessary for the consent of the Holders under this Section
9.02 to approve the particular form of any proposed supplemental Indenture, but
it shall be sufficient if such consent shall approve the substance thereof.

     An amendment under this Section 9.02 may not make any change that adversely
affects the rights under Article XIV of any holder of Senior Indebtedness then
Outstanding unless the holders of such Senior Indebtedness (or any group or
Representative thereof authorized to give a consent) consents to such change.

     After an amendment or waiver under this Section 9.02 becomes effective, the
Issuers shall mail to Holders of Debt Securities of each series affected thereby
a notice briefly describing such amendment or waiver. The failure to give such
notice to all such Holders, or any defect therein, shall not impair or affect
the validity of an amendment or waiver under this Section 9.02.

SECTION 9.03. EFFECT OF SUPPLEMENTAL INDENTURES.

     Upon the execution of any supplemental Indenture pursuant to the provisions
of this Article IX, the Indenture shall be and be deemed to be modified and
amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under the Indenture of the Trustee,
the Issuers, the Subsidiary Guarantors and the Holders shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental Indenture shall be and be deemed to be part of the terms and
conditions of the Indenture for any and all purposes.

     The Trustee, subject to the provisions of Sections 7.01 and 7.02, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental Indenture complies with the provisions of
this Article IX.

SECTION 9.04. DEBT SECURITIES MAY BEAR NOTATION OF CHANGES BY SUPPLEMENTAL
     INDENTURES.

     Debt Securities of any series authenticated and delivered after the
execution of any supplemental Indenture pursuant to the provisions of this
Article IX may, and shall if required by the Trustee, bear a notation in form
approved by the Trustee as to

                                      -63-



any matter provided for in such supplemental Indenture. New Debt Securities of
any series so modified as to conform, in the opinion of the Trustee and the
Board of Directors of the Issuers, to any modification of the Indenture
contained in any such supplemental Indenture may be prepared and executed by the
Issuers, authenticated by the Trustee and delivered in exchange for the Debt
Securities of such series then Outstanding. Failure to make the appropriate
notation or to issue a new Debt Security of such series shall not affect the
validity of such amendment.

              ARTICLE X. CONSOLIDATION, MERGER, SALE OR CONVEYANCE

SECTION 10.01. CONSOLIDATIONS AND MERGERS OF THE ISSUERS.

     Neither of the Issuers nor any Subsidiary Guarantor with respect to a
series of Debt Securities may, directly or indirectly (1) consolidate or merge
with or into another Person (whether or not such Issuer or Subsidiary Guarantor
is the survivor) or (2) sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets, in one or more
related transactions, to another Person, unless:

     (1) either (a) such Issuer or Subsidiary Guarantor, as applicable, is the
surviving entity of such transaction; or (b) the Person formed by or surviving
any such consolidation or merger (if other than such Issuer or Subsidiary
Guarantor) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (the "Successor Company") is an entity
organized or existing under the laws of (i) the United States, any state thereof
or the District of Columbia, (ii) the Republic of the Marshall Islands or (iii)
any other country recognized by the United States; provided, however, that
Finance Corp. may not consolidate or merge with or into any entity other than a
corporation satisfying such requirement for so long as the Partnership is not a
corporation;

     (2) the Successor Company assumes all the obligations of such Issuer under
the Debt Securities affected thereby (or, if applicable, of such Subsidiary
Guarantee under the related Guarantee) and the Indenture pursuant to agreements
reasonably satisfactory to the Trustee;

     (3) immediately after such transaction no Default or Event of Default
exists; and

     (4) such Issuer or Subsidiary Guarantor has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and, if a supplemental Indenture is required,
such supplemental Indenture complies with the Indenture, and all conditions
precedent therein relating to such transaction have been satisfied.


                                      -64-



SECTION 10.02. RIGHTS AND DUTIES OF SUCCESSOR COMPANY.

     In case of any consolidation or merger involving the Issuer or a Subsidiary
Guarantor, or a disposition of all or substantially all the assets of an Issuer
or Subsidiary Guarantor in accordance with Section 10.01, the Successor Company
shall succeed to and be substituted for such Issuer or Subsidiary Guarantor, as
applicable, with the same effect as if it had been named herein as the
respective party to the Indenture, and the Issuer or Subsidiary Guarantor shall
be released from any further obligation under the Indenture and the Debt
Securities.

     In case of any such consolidation, merger or disposition, such changes in
phraseology and form (but not in substance) may be made in the Debt Securities
and related Guarantees, if any, appertaining thereto thereafter to be issued as
may be appropriate.

                       ARTICLE XI. DISCHARGE OF INDENTURE

SECTION 11.01. TERMINATION OF THE ISSUERS' AND THE SUBSIDIARY GUARANTORS'
     OBLIGATIONS.

     (a) The Indenture shall cease to be of further effect with respect to all
Outstanding Debt Securities of any series (except that rights of registration of
transfer or exchange of Debt Securities of such series herein expressly provided
for, the Issuers' obligations under Section 7.06, the Trustee's and each paying
agent's obligations under Sections 11.02 and 11.03, and the rights, powers,
protections and privileges accorded to the Trustee under Article VII shall
survive) and the Trustee, on demand and at the expense of the Issuers, shall
execute proper instruments acknowledging satisfaction and discharge of the
Indenture with respect to such series, when:

          (i) either

               (A) all outstanding Debt Securities of such series therefore
authenticated and delivered (other than (1) Debt Securities which have been
destroyed, lost or stolen and which have been replaced or paid as provided in
Section 2.09 and (2) Debt Securities for which payment money has been deposited
in trust with the Trustee or any paying agent and thereafter repaid to either
Issuer or discharged from such trust) have been delivered to the Trustee for
cancellation; or

               (B) all outstanding Debt Securities of such series not
theretofore delivered to the Trustee for cancellation


                                      -65-



               (1) have become due and payable by reason of the giving of a
          notice of redemption or otherwise,

               (2) shall become due and payable at their Stated Maturity within
          one year, or

               (3) are to be called for redemption within one year under
          arrangements satisfactory to the Trustee for the giving of notice of
          redemption by the Trustee in the name, and at the expense, of the
          Issuers,

and the Issuers, in the case of clause (1), (2) or (3) above, have irrevocably
deposited or caused to be irrevocably deposited with the Trustee as trust funds
in trust for such purpose cash in Dollars or U.S. Government Obligations, or a
combination thereof, in an amount sufficient (in the case of clauses (2) and (3)
and without consideration of any reinvestment of interest and as certified by an
independent public accountant, designated by the Partnership, expressed in a
written certification thereof delivered to the Trustee) to pay and discharge the
entire indebtedness of such Debt Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and accrued and
unpaid interest to the date of such deposit (in the case of Debt Securities
which have become due and payable) or the Stated Maturity or redemption date, as
the case may be (in the case of Debt Securities which have not become due and
payable); or

               (C) the Issuers and the Subsidiary Guarantors have properly
fulfilled such other means of satisfaction and discharge as is specified, as
contemplated by Section 2.03, to be applicable to the Debt Securities of such
series;

          (ii) the Issuers or Subsidiary Guarantors have paid or caused to be
paid all other sums then due and payable hereunder by them under the Indenture;
and

          (iii) the Partnership has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein relating to the satisfaction and discharge of the Indenture
with respect to the Debt Securities of such series have been complied with.

     (b) Unless this Section 11.01(b) is specified as not being applicable to
Debt Securities of a series as contemplated by Section 2.03, the Partnership
may, at its option, terminate certain of the Issuers' and the Subsidiary
Guarantors' respective obligations under the Indenture ("covenant defeasance")
with respect to the Debt Securities of a series if:


                                      -66-



          (1) the Issuers or Subsidiary Guarantors have irrevocably deposited or
caused to be irrevocably deposited with the Trustee as trust funds in trust for
the purpose of making the following payments, specifically pledged as security
for and dedicated solely to the benefit of the Holders of Debt Securities of
such series, (i) money in the Currency in which payment of the Debt Securities
of such series is to be made in an amount, or (ii) U.S. Government Obligations
with respect to such series, maturing as to principal and interest at such times
and in such amounts as will ensure the availability of money in the Currency in
which payment of the Debt Securities of such series is to be made in an amount
or (iii) a combination thereof, that is sufficient, in the opinion (in the case
of clauses (ii) and (iii)) of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay the principal of and premium (if any) and interest on all Debt
Securities of such series on each date that such principal, premium (if any) or
interest is due and payable and (at the Stated Maturity thereof or upon
redemption as provided in Section 11.01(e)) to pay all other sums payable by it
hereunder; provided, however, that the Trustee shall have been irrevocably
instructed to apply such money and/or the proceeds of such U.S. Government
Obligations to the payment of such principal, premium (if any) and interest with
respect to the Debt Securities of such series as the same shall become due;

          (2) the Partnership has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to satisfaction and discharge of the Indenture with respect to the
Debt Securities of such series have been complied with;

          (3) no Default or Event of Default with respect to the Debt Securities
of such series shall have occurred and be continuing on the date of such
deposit;

          (4) the Partnership has delivered to the Trustee an Opinion of Counsel
or a private letter ruling issued by the United States Internal Revenue Service
to the effect that the Holders will not recognize income, gain or loss for
United States federal income tax purposes as a result of the Partnership's
exercise of its option under this Section 11.01(b) and will be subject to United
States Federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such option had not been exercised;

          (5) the Issuers and the Subsidiary Guarantors have complied with any
additional conditions specified pursuant to Section 2.03 to be applicable to the
discharge of Debt Securities of such series pursuant to this Section 11.01; and

          (6) such deposit and discharge shall not cause the Trustee to have a
conflicting interest as defined in Section 310(b) of the Trust Indenture Act.


                                      -67-



     In such event, the Indenture shall cease to be of further effect (except as
set forth in this paragraph), and the Trustee, on demand of the Partnership,
shall execute proper instruments acknowledging satisfaction and discharge under
the Indenture. However, the Issuers' and the Subsidiary Guarantors' respective
obligations in Sections 2.07, 2.09, 4.02, 4.04, 5.01, 7.06, 7.08, 11.04 and
11.05, the Trustee's and any paying agent's obligations in Section 11.03 and the
rights, powers, protections and privileges accorded the Trustee under Article
VII shall survive until all Debt Securities of such series have been paid in
full. Thereafter, only the Issuers' obligations in Section 7.06 and the
Trustee's and any paying agent's obligations in Section 11.03 shall survive with
respect to Debt Securities of such series.

     If the Partnership exercises its covenant defeasance option, payment of the
Debt Securities of the defeased series may not be accelerated because of an
Event of Default specified in Sections 6.01(d), (e), (h) or (i) or, with respect
to the Subsidiary Guarantors only, Sections 6.01(f) or (g) (except to the extent
covenants or agreements referenced in such Sections remain applicable).

     After such irrevocable deposit made pursuant to this Section 11.01(b) and
satisfaction of the other conditions set forth herein, the Trustee upon, request
of the Partnership shall acknowledge in writing the discharge of the Issuers and
the Subsidiary Guarantors' obligations under the Indenture with respect to the
Debt Securities of such series except for those surviving obligations specified
above.

     In order to have money available on a payment date to pay principal of or
premium (if any) or interest on the Debt Securities, the U.S. Government
Obligations shall be payable as to principal or interest on or before such
payment date in such amounts as will provide the necessary money. U.S.
Government Obligations shall not be callable at the issuer's option.

     (c) If the Issuers and the Subsidiary Guarantors have previously complied
or are concurrently complying with Section 11.01(b) (other than any additional
conditions specified pursuant to Section 2.03 that are expressly applicable only
to covenant defeasance) with respect to Debt Securities of a series, then,
unless this Section 11.01(c) is specified as not being applicable to Debt
Securities of such series as contemplated by Section 2.03, the Partnership may
elect that the Issuers' and the Subsidiary Guarantors' respective obligations to
make payments with respect to Debt Securities of such series be discharged
("legal defeasance"), if:

          (1) no Default or Event of Default under clauses (f) or (g) of Section
6.01 hereof shall have occurred at any time during the period ending on the 91st
day after the date of deposit contemplated by Section 11.01(b) (it being
understood that this condition shall not be deemed satisfied until the
expiration of such period);


                                      -68-



          (2) unless otherwise specified with respect to Debt Securities of such
series as contemplated by Section 2.03, the Partnership has delivered to the
Trustee an Opinion of Counsel to the effect referred to in Section 11.01(b)(4)
with respect to such legal defeasance, which opinion is based on (i) a private
letter ruling issued by the United States Internal Revenue Service addressed to
the Partnership, (ii) a published ruling of the U.S. Internal Revenue Service
pertaining to a comparable form of transaction or (iii) a change in the
applicable U.S. federal income tax law (including regulations) after the date of
the Indenture;

          (3) the Issuers and the Subsidiary Guarantors have complied with any
other conditions specified pursuant to Section 2.03 to be applicable to the
legal defeasance of Debt Securities of such series pursuant to this Section
11.01(c); and

          (4) the Partnership has delivered to the Trustee a written request for
such legal defeasance of the Debt Securities of such series and an Officers'
Certificate and Opinion of Counsel, each stating that all conditions precedent
with respect to such legal defeasance of the Debt Securities of such series have
been complied with.

     In such event, the Issuers and the Subsidiary Guarantors will be discharged
from their respective obligations under the Indenture and the Debt Securities of
such series to pay principal of, premium (if any) and interest on Debt
Securities of such series, the Issuers' and the Subsidiary Guarantors'
obligations under Sections 4.01, 4.02, 4.04 and 12.01 shall terminate with
respect to such Debt Securities, and the entire indebtedness of the Issuers
evidenced by such Debt Securities and of the Subsidiary Guarantors evidenced by
the related Guarantees shall be deemed paid and discharged.

     The Partnership may exercise the legal defeasance option notwithstanding
the prior exercise of the covenant defeasance option. If the Partnership
exercises its legal defeasance option, payment of the Debt Securities of the
defeased series may not be accelerated because of an Event of Default.

     (d) If and to the extent additional or alternative means of satisfaction,
discharge or defeasance of Debt Securities of a series are specified to be
applicable to such series as contemplated by Section 2.03, each of the Issuers
and the Subsidiary Guarantors may terminate any or all of its obligations under
the Indenture with respect to Debt Securities of a series and any or all of its
obligations under the Debt Securities of such series if it fulfills such other
means of satisfaction and discharge as may be so specified, as contemplated by
Section 2.03, to be applicable to the Debt Securities of such series.

     (e) If Debt Securities of any series subject to subsection (a), (b), (c) or
(d) of this Section 11.01 are to be redeemed prior to their Stated Maturity,
whether


                                      -69-



pursuant to any optional redemption provisions or in accordance with any
mandatory or optional sinking fund provisions, the terms of the applicable trust
arrangement shall provide for such redemption, and the Issuers shall make such
arrangements as are reasonably satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of the
Issuers.

SECTION 11.02. APPLICATION OF TRUST MONEY.

     The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 11.01. It shall apply the deposited money
and the money from U.S. Government Obligations through any paying agent and in
accordance with the Indenture to the payment of principal of, and premium, if
any, and interest on, the Debt Securities of the defeased series. Prior to the
maturity of such series, the Trustee may, at the written direction of the
Issuers, invest such money in U.S. Government Obligations.

SECTION 11.03. REPAYMENT TO ISSUERS OR SUBSIDIARY GUARANTORS.

     The Trustee and any paying agent shall promptly turn over to the Issuers or
any Subsidiary Guarantor any excess money or securities held by them at any time
upon request of the Partnership.

     Subject to any applicable abandoned property law, the Trustee and any
paying agent shall pay to the Partnership upon request any money held by them
for the payment of any principal, premium or interest on the Debt Securities
that remains unclaimed for two years, and, thereafter, Holders entitled to such
money must look to the Issuers for payment as general creditors unless an
applicable abandoned property law designates another Person, and all liability
of the Trustee and any paying agent with respect to such money shall cease.

SECTION 11.04. INDEMNITY FOR U.S. GOVERNMENT OBLIGATIONS.

     The Issuers shall pay and shall indemnify the Trustee and the Holders
against any tax, fee or other charge imposed on or assessed against deposited
U.S. Government Obligations or the principal and interest received on such U.S.
Government Obligations.

SECTION 11.05. REINSTATEMENT.

     If the Trustee or any paying agent is unable to apply any money or U.S.
Government Obligations in accordance with this Article XI by reason of any legal
proceeding or by reason of any order or judgment of any court or government
authority enjoining, restraining or otherwise prohibiting such application, the


                                      -70-



obligations of the Issuers and the Subsidiary Guarantors under the Indenture and
the Debt Securities of the defeased series shall be revived and reinstated as
though no deposit had occurred pursuant to this Article XI until such time as
the Trustee or any paying agent is permitted to apply all such money or U.S.
Government Obligations in accordance with this Article XI; provided, however,
that if either Issuer or any Subsidiary Guarantor has made any payment of
principal of, premium (if any) or interest on any Debt Securities because of the
reinstatement of its obligations, such Issuer or Subsidiary Guarantor, as the
case may be, shall be subrogated to the rights of the Holders of such Debt
Securities to receive such payment from the money or U.S. Government Obligations
held by the Trustee or the paying agent.

                             ARTICLE XII. GUARANTEE

SECTION 12.01. UNCONDITIONAL GUARANTEE.

     (a) Notwithstanding any provision of this Article XII to the contrary, the
provisions of this Article XII relating to the Subsidiary Guarantors shall be
applicable only to, and inure solely to the benefit of, the Debt Securities of
any series designated, pursuant to Section 2.03, as entitled to the benefits of
the related Guarantee of each Subsidiary Guarantor with respect to such series.

     (b) For value received, each of the Subsidiary Guarantors hereby fully,
unconditionally and absolutely guarantees (the "Guarantee") to the Holders and
to the Trustee the due and punctual payment of the principal of, and premium, if
any, and interest on the Debt Securities and all other amounts due and payable
under this Indenture and the Debt Securities by the Partnership, when and as
such principal, premium, if any, and interest shall become due and payable,
whether at the stated maturity or by declaration of acceleration, call for
redemption or otherwise, according to the terms of the Debt Securities and this
Indenture, subject to the limitations set forth in Section 12.03.

     (c) Failing payment when due of any amount guaranteed pursuant to the
Guarantee set forth in this Article XII, for whatever reason, each of the
Subsidiary Guarantors will be jointly and severally obligated to pay the same
immediately, subject to applicable subordination provisions of Article XIV. The
Guarantee hereunder is intended to be a general, unsecured obligation of each of
the Subsidiary Guarantors and will rank subordinate in right of payment with all
Senior Debt of such Subsidiary Guarantor. Each of the Subsidiary Guarantors
hereby agrees that its obligations hereunder shall be full, unconditional and
absolute, irrespective of the validity, regularity or enforceability of the Debt
Securities, the Guarantee (including the Guarantee of any other Subsidiary
Guarantor) or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Debt


                                      -71-



Securities with respect to any provisions hereof or thereof, the recovery of any
judgment against the Issuers, any other Subsidiary Guarantor, or any action to
enforce the same or any other circumstances which might otherwise constitute a
legal or equitable discharge or defense of the Subsidiary Guarantors. Each of
the Subsidiary Guarantors hereby agrees that in the event of a default in
payment of the principal of, or premium, if any, or interest on the Debt
Securities of the applicable series, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise, legal proceedings
may be instituted by the Trustee on behalf of the Holders or, subject to Section
6.04, by the Holders, on the terms and conditions set forth in this Indenture,
directly against such Subsidiary Guarantor to enforce the Guarantee without
first proceeding against the Issuers or any other Subsidiary Guarantor.

     (d) The obligations of each of the Subsidiary Guarantors under this Article
XII shall be as aforesaid full, unconditional and absolute and shall not,
subject to Section 12.04, be impaired, modified, released or limited by any
occurrence or condition whatsoever, including, without limitation, (A) any
compromise, settlement, release, waiver, renewal, extension, indulgence or
modification of, or any change in, any of the obligations and liabilities of the
Issuers or any of the Subsidiary Guarantors contained in the Debt Securities or
this Indenture, (B) any impairment, modification, release or limitation of the
liability of the Issuers, any of the Subsidiary Guarantors or any of their
estates in bankruptcy, or any remedy for the enforcement thereof, resulting from
the operation of any present or future provision of any applicable Bankruptcy
Law, as amended, or other statute or from the decision of any court, (C) the
assertion or exercise by the Issuers, any of the Subsidiary Guarantors or the
Trustee of any rights or remedies under the Debt Securities or this Indenture or
their delay in or failure to assert or exercise any such rights or remedies, (D)
the assignment or the purported assignment of any property as security for the
Debt Securities, including all or any part of the rights of the Issuers or any
of the Subsidiary Guarantors under this Indenture, (E) the extension of the time
for payment by the Issuers or any of the Subsidiary Guarantors of any payments
or other sums or any part thereof owing or payable under any of the terms and
provisions of the Debt Securities or this Indenture or of the time for
performance by the Issuers or any of the Subsidiary Guarantors of any other
obligations under or arising out of any such terms and provisions or the
extension or the renewal of any thereof, (F) the modification or amendment
(whether material or otherwise) of any duty, agreement or obligation of the
Issuers or any of the Subsidiary Guarantors set forth in this Indenture, (G) the
voluntary or involuntary liquidation, dissolution, marshaling of assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of, or other
similar proceeding affecting, the Issuers or any of the Subsidiary Guarantors or
any of their respective assets, or the disaffirmance of the Debt Securities, the
Guarantee or this Indenture in any such proceeding, (H) the release or discharge
of the Issuers or any of


                                      -72-



the Subsidiary Guarantors from the performance or observance of any agreement,
covenant, term or condition contained in any of such instruments by operation of
law, (I) the unenforceability of the Debt Securities, the Guarantee or this
Indenture or (J) any other circumstances (other than payment in full or
discharge of all amounts guaranteed pursuant to the Guarantee) which might
otherwise constitute a legal or equitable discharge of a surety or guarantor.

     (e) Each of the Subsidiary Guarantors hereby (A) waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
the merger, insolvency or bankruptcy of the Issuers or any of the Subsidiary
Guarantors, and all demands whatsoever, (B) acknowledges that any agreement,
instrument or document evidencing the Guarantee may be transferred and that the
benefit of its obligations hereunder shall extend to each holder of any
agreement, instrument or document evidencing the Guarantee without notice to it
and (C) covenants that the Guarantee will not be discharged except by complete
performance of the Guarantee. Each of the Subsidiary Guarantors further agrees
that if at any time all or any part of any payment theretofore applied by any
Person to the Guarantee is, or must be, rescinded or returned for any reason
whatsoever, including the insolvency, bankruptcy or reorganization of the
Issuers or any of the Subsidiary Guarantors, the Guarantee shall, to the extent
that such payment is or must be rescinded or returned, be deemed to have
continued in existence notwithstanding such application, and the Guarantee shall
continue to be effective or be reinstated, as the case may be, as though such
application had not been made.

     (f) Each of the Subsidiary Guarantors shall be subrogated to all rights of
the Holders and the Trustee against the Issuers in respect of any amounts paid
by such Subsidiary Guarantor pursuant to the provisions of this Indenture;
provided, however, that such Subsidiary Guarantor shall not be entitled to
enforce or to receive any payments arising out of, or based upon, such right of
subrogation until all of the Debt Securities of the applicable series and the
Guarantee shall have been paid in full or discharged.

SECTION 12.02. EXECUTION AND DELIVERY OF GUARANTEE.

     To further evidence the Guarantee set forth in Section 12.01, each
Subsidiary Guarantor hereby agrees that a notation relating to such Guarantee
shall be endorsed on each Debt Security entitled to the benefits of the
Guarantee authenticated and delivered by the Trustee and executed by either
manual or facsimile signature of an Officer of the General Partner or such
Subsidiary Guarantor. Each of the Subsidiary Guarantors hereby agrees that the
Guarantee set forth in Section 12.01 shall remain in full force and effect
notwithstanding any failure to endorse on each Debt Security a notation relating
to the Guarantee. If any Officer of any Subsidiary Guarantor whose


                                      -73-



signature is on the Indenture or a notation of Guarantee no longer holds that
office at the time the Trustee authenticates such Debt Security or at any time
thereafter, the Guarantee of such Debt Security shall be valid nevertheless. The
delivery by the Trustee of any Debt Security of a series entitled to the
benefits of a Guarantee under this Article XII, after the authentication thereof
hereunder, shall constitute due delivery of the Guarantee set forth in this
Indenture on behalf of the Subsidiary Guarantors.

SECTION 12.03. LIMITATION ON LIABILITY OF THE SUBSIDIARY GUARANTORS.

     Each Subsidiary Guarantor and, by its acceptance hereof, each Holder of a
Debt Security of a series entitled to the benefits of the Guarantee hereby
confirms that it is the intention of all such Persons that the guarantee by such
Subsidiary Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any U.S. federal or state law. To
effectuate the foregoing intention, the Holders of a Debt Security entitled to
the benefits of the Guarantee and the Subsidiary Guarantors hereby irrevocably
agree that the obligations of each Subsidiary Guarantor under its Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor and to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Guarantee, result in the obligations of such Subsidiary Guarantor under the
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
U.S. federal or state law.

SECTION 12.04. RELEASE OF SUBSIDIARY GUARANTORS FROM GUARANTEE.

     (a) Notwithstanding any other provisions of this Indenture, the Guarantee
of any Subsidiary Guarantor may be released upon the terms and subject to the
conditions set forth in this Section 12.04. If no Default shall have occurred
and shall be continuing under this Indenture, any Guarantee incurred by a
Subsidiary Guarantor pursuant to this Article XII shall be unconditionally
released and discharged automatically: (i) upon any sale, exchange or transfer,
whether by way of merger or otherwise, to any Person that is not an Affiliate of
the Issuers, of all of the Issuers' direct or indirect equity interests in such
Subsidiary Guarantor (provided such sale, exchange or transfer is not prohibited
by this Indenture); (ii) upon the merger of such Subsidiary Guarantor into the
Issuer or any other Subsidiary Guarantor or the liquidation and dissolution of
such Subsidiary Guarantor (in each case to the extent not prohibited by this
Indenture); or (iii) following delivery of a written notice of such release or
discharge by the Issuers to the Trustee, upon the release or discharge of all
guarantees by such Subsidiary Guarantor of any Debt of the Issuers other than


                                      -74-



obligations arising under this Indenture and any Debt Securities issued
hereunder, except a discharge or release by or as a result of payment under such
guarantees.

     (b) The Trustee shall deliver an appropriate instrument evidencing any
release of a Subsidiary Guarantor from the Guarantee upon receipt of a written
request of the Issuer accompanied by an Officers' Certificate and an Opinion of
Counsel that the Subsidiary Guarantor is entitled to such release in accordance
with the provisions of this Indenture. Any Subsidiary Guarantor not so released
shall remain liable for the full amount of principal of (and premium, if any)
and interest on the Debt Securities entitled to the benefits of such Guarantee
as provided in this Indenture, subject to the limitations of Section 12.03.

SECTION 12.05. CONTRIBUTION.

     In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors hereby agree, among themselves,
that if any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under its Guarantee, such Funding Guarantor shall be
entitled to a contribution from each other Subsidiary Guarantor (as applicable)
in a pro rata amount based on the net assets of each Subsidiary Guarantor
(including the Funding Guarantor) for all payments, damages and expenses
incurred by the Funding Guarantor in discharging the Issuers' obligations with
respect to the Debt Securities of a series entitled to the benefits of a
Guarantee under this Article XII or any other Subsidiary Guarantor's obligations
with respect to its Guarantee of such series of Debt Securities.

                     ARTICLE XIII. MISCELLANEOUS PROVISIONS

SECTION 13.01. SUCCESSORS AND ASSIGNS OF ISSUERS BOUND BY INDENTURE.

     Except as otherwise provided herein, all the covenants, stipulations,
promises and agreements in the Indenture by or on behalf of the Issuers, the
Potential Subsidiary Guarantors, the Subsidiary Guarantors or the Trustee shall
bind their respective successors and assigns, whether so expressed or not.

SECTION 13.02. ACTS OF BOARD, COMMITTEE OR OFFICER OF SUCCESSOR COMPANY VALID.

     Any act or proceeding authorized or required by any provision of the
Indenture to be done or performed by any Board of Directors, committee thereof
or officer of the General Partner, Finance Corp. or any Potential Subsidiary
Guarantor or Subsidiary Guarantor, as applicable, shall and may be done and
performed with like force and effect by the like Board of Directors, committee
thereof or officer of any Successor Company.


                                      -75-


SECTION 13.03. REQUIRED NOTICES OR DEMANDS.

     Except as otherwise expressly provided in the Indenture, any notice or
demand which by any provision of the Indenture is required or permitted to be
given to or served on the Issuers, the Potential Subsidiary Guarantors, the
Subsidiary Guarantors or the Trustee shall be in writing in the English language
and may be given or served by being delivered in person or mailed by first-class
mail (registered or certified, return receipt requested), by facsimile or by
overnight air courier guaranteeing next Business Day delivery, to the applicable
address below:

     If to either Issuer or any Potential Subsidiary Guarantor or any Subsidiary
Guarantor:

          Teekay LNG Partners L.P.
          Bayside House, Bayside Executive Park
          West Bay Street and Blake Road
          P.O. Box AP-59213
          Nassau, Commonwealth of the Bahamas
          Attn: Secretary
          Telephone: (242) 502-8820
          Facsimile: (242) 502-8840

     If to the Trustee:

          The Bank of New York
          101 Barclay Street, Fl. 21W
          New York, New York 10286
          Attn: Corporate Trust Administration
          Telephone: (212) 815-5915
          Facsimile: (212) 815-5803

     Either Issuer, any Potential Subsidiary Guarantor, any Subsidiary Guarantor
or the Trustee by notice to the others may designate additional or different
addresses for subsequent notices or communications.

     Any notice required or permitted to a Registered Holder by the Issuers, any
Potential Subsidiary Guarantors, any Subsidiary Guarantors or the Trustee
pursuant to the provisions of the Indenture shall be in writing in the English
language and shall be deemed to be properly delivered if mailed by first-class
mail (registered or certified, return receipt requested) or sent by overnight
air courier guaranteeing next Business Day delivery, addressed to such Holder at
the address of such Holder as shown on the


                                      -76-



Debt Security Register. Any report pursuant to Section 313 of the Trust
Indenture Act shall be transmitted in compliance with subsection (c) therein.

     Unless otherwise set forth in the Indenture, all notices and communications
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt is acknowledged, if by given by
facsimile; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next Business Day delivery.

     In the event of suspension of regular mail service or by reason of any
other cause it shall be impracticable to give notice by mail, then such
notification as shall be given with the approval of the Trustee shall constitute
sufficient notice for every purpose thereunder.

     Failure to mail or otherwise deliver a notice or communication to a Holder
or any defect in it or any defect in any notice by publication as to a Holder
shall not affect the sufficiency of such notice with respect to other Holders.
If a notice or communication is mailed, sent or published in the manner provided
herein, it is conclusively presumed duly given.

SECTION 13.04. INDENTURE AND DEBT SECURITIES TO BE CONSTRUED IN ACCORDANCE WITH
     THE LAWS OF THE State of New York.

     The Indenture and each Debt Security shall be deemed to be New York
contracts, and for all purposes shall be construed in accordance with the laws
of such State.

SECTION 13.05. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL TO BE FURNISHED UPON
     APPLICATION OR DEMAND BY THE ISSUERS.

     Upon any application or demand by the Issuers or any Potential Subsidiary
Guarantors or Subsidiary Guarantors to the Trustee to take any action under any
of the provisions of the Indenture, the Issuers, Potential Subsidiary Guarantors
or Subsidiary Guarantors, as applicable, shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent provided for in the
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with, except that in the case of any such
application or demand as to which the furnishing of such document is
specifically required by any provision of the Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.


                                      -77-



     Each certificate or opinion provided for in the Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in the Indenture shall include (1) a statement that the Person making such
certificate or opinion has read such covenant or condition, (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based, (3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such condition or covenant has been
complied with and (4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.

SECTION 13.06. PAYMENTS DUE ON LEGAL HOLIDAYS.

     In any case where the date of maturity of interest on or principal of and
premium, if any, on the Debt Securities of a series or the date fixed for
redemption or repayment of any Debt Security or the making of any sinking fund
payment shall not be a business day at any Place of Payment for the Debt
Securities of such series, then payment of interest or principal and premium, if
any, or the making of such sinking fund payment need not be made on such date at
such Place of Payment, but may be made on the next succeeding business day at
such Place of Payment with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period after such date. If a record date is not a business day, the record date
shall not be affected.

SECTION 13.07. PROVISIONS REQUIRED BY TRUST INDENTURE ACT TO CONTROL.

     If and to the extent that any provision of the Indenture limits, qualifies
or conflicts with another provision included in the Indenture which is required
to be included in the Indenture by any of Sections 310 to 318, inclusive, of the
Trust Indenture Act, such required provision shall control.

SECTION 13.08. COMPUTATION OF INTEREST ON DEBT SECURITIES.

     Interest, if any, on the Debt Securities shall be computed on the basis of
a 360-day year of twelve 30-day months, except as may otherwise be provided
pursuant to Section 2.03.

SECTION 13.09. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR.

     The Trustee may make reasonable rules for action by or a meeting of
Holders. The Registrar and any paying agent may make reasonable rules for their
functions.


                                      -78-



SECTION 13.10. NO RECOURSE AGAINST OTHERS.

     No past, present or future director, officer, partner, employee,
incorporator, manager, stockholder, unitholder or member of either Issuer, the
General Partner, any Potential Subsidiary Guarantor, any Subsidiary Guarantor or
any other obligor on the Debt Securities of any series, as such, shall have any
liability for any obligations of the Issuers, the Potential Subsidiary
Guarantors, the Subsidiary Guarantors or such other obligors under the Debt
Securities, the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder by accepting a Debt Security
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Debt Securities.

SECTION 13.11. SEVERABILITY.

     In case any provision in the Indenture or the Debt Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 13.12. EFFECT OF HEADINGS.

     The article and section headings herein and in the Table of Contents are
for convenience only and shall not affect the construction hereof.

SECTION 13.13. INDENTURE MAY BE EXECUTED IN COUNTERPARTS.

     The Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.

SECTION 13.14. CONSENT TO SERVICE; JURISDICTION.

     (a) The Issuers, the Potential Subsidiary Guarantors, the Subsidiary
Guarantors and the Trustee agree that any legal suit, action or proceeding
arising out of or relating to the Indenture, and the Issuers, the Potential
Subsidiary Guarantors and the Subsidiary Guarantors agree that any legal suit,
action or proceeding arising out of or relating to the Debt Securities, may be
instituted in any federal or state court in the Borough of Manhattan, the City
of New York. Each Issuer, Potential Subsidiary Guarantor and Subsidiary
Guarantor and the Trustee waives any objection which it may now or hereafter
have to the laying of the venue of any such legal suit, action or proceeding,
waive any immunity from jurisdiction or to service of process in respect of any
such suit, action or proceeding, and irrevocably submit to the exclusive
jurisdiction of any such court in any such suit, action or proceeding.


                                      -79-



     (b) Each Issuer, Potential Subsidiary Guarantor and Subsidiary Guarantor
hereby designates and appoints Watson, Farley & Williams (New York) LLP as its
authorized agent upon which process may be served in any legal suit, action or
proceeding arising out of or relating to the Indenture or the Debt Securities
which may be instituted in any federal or state court in the Borough of
Manhattan, the City of New York, New York, and agrees that service of process
upon such agent, and written notice of such service to such Issuer, Potential
Subsidiary Guarantor or Subsidiary Guarantor by the Person serving the same,
shall be deemed in every respect effective service of process upon such Issuer,
Potential Subsidiary Guarantor or Subsidiary Guarantor in any such suit, action
or proceeding and further designates its domicile, the domicile of New York, New
York specified above and any domicile it may have in the future as its domicile
to receive any notice hereunder (including service of process). Service of
process, to be effective upon the Trustee, must be served at the Corporate Trust
Office of the Trustee in The City of New York. If for any reason Watson, Farley
& Williams (New York) LLP (or any successor agent for this purpose) shall cease
to act as agent for service of process as provided above, the Issuers, the
Potential Subsidiary Guarantors and the Subsidiary Guarantors will promptly
appoint a successor agent for this purpose reasonably acceptable to the Trustee.
Each Issuer, Potential Subsidiary Guarantor and Subsidiary Guarantor agrees to
take any and all actions as may be necessary to maintain such designation and
appointment of such agent in full force and effect.

SECTION 13.15. WAIVER OF TRIAL BY JURY.

     The Issuers, the Potential Subsidiary Guarantors, the Subsidiary
Guarantors, the Trustee and Holders hereby irrevocably and unconditionally waive
the right to trial by jury in connection with any claim arising out of or
relating to the Debt Securities and under the Indenture.

          ARTICLE XIV. SUBORDINATION OF DEBT SECURITIES AND GUARANTEES

SECTION 14.01. APPLICABILITY OF ARTICLE; AGREEMENT TO SUBORDINATE.

     The provisions of this Article XIV shall be applicable to the Debt
Securities of any series (Debt Securities of such series being referred to in
this Article XIV as "Subordinated Debt Securities") under the Indenture and any
related Guarantees of such Subordinated Debt Securities except to the extent
such provisions may be changed or added to pursuant to Section 2.03. Each Holder
by accepting a Subordinated Debt Security agrees that the indebtedness evidenced
by such Subordinated Debt Security and any related Guarantees of such
Subordinated Debt Security is subordinated in right of payment, to the extent
and in the manner provided in this Article XIV (as the same may be changed or
added to pursuant to Section 2.03


                                      -80-



or by any supplemental Indenture), to the prior payment of all Senior
Indebtedness and that the subordination is for the benefit of and enforceable by
the holders of Senior Indebtedness. All provisions of this Article XIV shall be
subject to Section 14.12.

SECTION 14.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY.

     Upon any payment or distribution of the assets of an applicable Issuer or
Subsidiary Guarantor to creditors upon a voluntary or involuntary liquidation or
a dissolution of such Issuer or Subsidiary Guarantor in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to such
Person or its property:

     (1) holders of Senior Indebtedness of the Issuer or Subsidiary Guarantor,
as applicable, shall be entitled to receive payment in full in cash of the
Senior Indebtedness (including interest, if any, accruing on or after the
commencement of a proceeding in bankruptcy, whether or not allowed as a claim
against the Issuer or Subsidiary Guarantor in such bankruptcy proceeding) before
Holders of Subordinated Debt Securities and any related Guarantees shall be
entitled to receive any payment of principal of, or premium, if any, or interest
on, the Subordinated Debt Securities from the Issuer, or any payment in respect
of such related Guarantee from the Subsidiary Guarantor; and

     (2) until the Senior Indebtedness of the Issuer or Subsidiary Guarantor is
paid in full, any distribution to which Holders of Subordinated Debt Securities
and any related Guarantee would be entitled but for this Article XIV shall be
made to holders of Senior Indebtedness of the Issuer or the Subsidiary
Guarantor, as applicable, as their interests may appear, except that such
Holders may receive Equity Interests and any debt securities that are
subordinated to Senior Indebtedness of the Issuer or the Subsidiary Guarantor,
as applicable, to at least the same extent as the Subordinated Debt Securities
of such Issuer or the related Guarantee of such Subsidiary Guarantor.

SECTION 14.03. DEFAULT ON SENIOR INDEBTEDNESS.

     No Issuer or Subsidiary Guarantor, as applicable, may pay the principal of,
or premium, if any, or interest on, the Subordinated Debt Securities or any
related Guarantee or make any deposit into a defeasance trust or pursuant to
Article XI and may not repurchase, redeem or otherwise retire (except, in the
case of Subordinated Debt Securities that provide for a mandatory sinking fund
pursuant to Section 3.04, by the delivery of Subordinated Debt Securities by the
Issuers to the Trustee pursuant to the first paragraph of Section 3.05) any Debt
Securities (collectively, "pay the Subordinated Debt Securities") if (i) any
principal, premium, interest or any other amount payable in respect of Senior
Indebtedness of such Person is not paid within


                                      -81-



any applicable grace period (including at maturity) or (ii) any other default on
Senior Indebtedness of such Person occurs and the maturity of such Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
(x) the default has been cured or waived and any such acceleration has been
rescinded or (y) such Senior Indebtedness has been paid in full in cash;
provided, however, that any Issuer or Subsidiary Guarantor may pay the
Subordinated Debt Securities without regard to the foregoing if such Person and
the Trustee receive written notice approving such payment from the
Representative of each issue of Designated Senior Indebtedness. During the
continuance of any default (other than a default described in clause (i) or (ii)
of the preceding sentence) with respect to any Designated Senior Indebtedness
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, no Issuer or
Subsidiary Guarantor, as applicable, may pay the Subordinated Debt Securities or
any related Guarantee for a period (a "Payment Blockage Period") commencing upon
the receipt by the Issuers and the Trustee of written notice of such default
from the Representative of any Designated Senior Indebtedness specifying an
election to effect a Payment Blockage Period (a "Blockage Notice") and ending
179 days thereafter (or earlier if such Payment Blockage Period is terminated
(i) by written notice to the Trustee and the Issuers from the Person or Persons
who gave such Blockage Notice, (ii) by repayment in full in cash of such
Designated Senior Indebtedness or (iii) because the default giving rise to such
Blockage Notice is no longer continuing). Notwithstanding the provisions
described in the immediately preceding sentence (but subject to the provisions
contained in the first sentence of this Section 14.03), unless the holders of
such Designated Senior Indebtedness or the Representative of such holders shall
have accelerated the maturity of such Designated Senior Indebtedness, the
Issuers and Subsidiary Guarantors may resume payments on the Subordinated Debt
Securities and any related Guarantees after such Payment Blockage Period. Not
more than one Blockage Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to any number of issues of
Designated Senior Indebtedness during such period. For purposes of this Section
14.03, no default or event of default which existed or was continuing on the
date of the commencement of any Payment Blockage Period with respect to the
Designated Senior Indebtedness initiating such Payment Blockage Period shall be,
or be made, the basis of the commencement of a subsequent Payment Blockage
Period by the Representative of such Designated Senior Indebtedness, whether or
not within a period of 360 consecutive days, unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.


                                      -82-



SECTION 14.04. ACCELERATION OF PAYMENT OF DEBT SECURITIES.

     If payment of the Subordinated Debt Securities is accelerated because of an
Event of Default, the Issuers or the Trustee shall promptly notify the holders
of the Designated Senior Indebtedness (or their Representatives) of the
acceleration.

SECTION 14.05. WHEN DISTRIBUTION MUST BE PAID OVER.

     If a distribution is made to Holders of Subordinated Debt Securities or any
related Guarantee that because of this Article XIV should not have been made to
them, the Holders who receive such distribution shall hold it in trust for
holders of Senior Indebtedness and pay it over to them as their interests may
appear.

SECTION 14.06. SUBROGATION.

     After all Senior Indebtedness is paid in full and until the Subordinated
Debt Securities are paid in full, Holders thereof shall be subrogated to the
rights of holders of Senior Indebtedness to receive distributions applicable to
Senior Indebtedness. A distribution made under this Article XIV to holders of
Senior Indebtedness which otherwise would have been made to Holders of
Subordinated Debt Securities is not, as between the Issuers or the Subsidiary
Guarantors, as applicable, and such Holders, a payment by the Issuers or the
Subsidiary Guarantors on Senior Indebtedness.

SECTION 14.07. RELATIVE RIGHTS.

     This Article XIV defines the relative rights of Holders of Subordinated
Debt Securities and holders of Senior Indebtedness. Nothing in the Indenture
shall:

     (1) impair, as between the Issuers or the Subsidiary Guarantors, as
applicable, and Holders of Subordinated Debt Securities, the obligation of the
applicable Issuer or Issuers or Subsidiary Guarantors, which is absolute and
unconditional, to pay principal of, and premium, if any, and interest on, the
Subordinated Debt Securities or amounts owing under the related Guarantees, as
applicable, in accordance with their respective terms; or

     (2) prevent the Trustee or any Holder of Subordinated Debt Securities from
exercising its available remedies upon an Event of Default, subject to the
rights of holders of Senior Indebtedness to receive distributions otherwise
payable to Holders of Subordinated Debt Securities.


                                      -83-



SECTION 14.08. SUBORDINATION MAY NOT BE IMPAIRED BY ISSUERS OR SUBSIDIARY
     GUARANTORS.

     No right of any holder of Senior Indebtedness to enforce the subordination
of the indebtedness evidenced by the Subordinated Debt Securities and any
related Guarantees shall be impaired by any act or failure to act by the
applicable Issuers or Subsidiary Guarantors, as applicable, by their failure to
comply with the Indenture.

SECTION 14.09. RIGHTS OF TRUSTEE AND PAYING AGENT.

     Notwithstanding Section 14.03, the Trustee or any paying agent may continue
to make payments on Subordinated Debt Securities and shall not be charged with
knowledge of the existence of facts that would prohibit the making of any such
payments unless, not less than two Business Days prior to the date of such
payment, a Responsible Officer of the Trustee receives notice satisfactory to it
that payments may not be made under this Article XIV. The Issuers, the
Registrar, any paying agent, a Representative or a holder of Senior Indebtedness
may give the notice; provided, however, that, if an issue of Senior Indebtedness
has a Representative, only the Representative may give the notice.

     The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not the Trustee. The
Registrar and any paying agent may do the same with like rights. The Trustee
shall be entitled to all the rights set forth in this Article XIV with respect
to any Senior Indebtedness which may at any time be held by it, to the same
extent as any other holder of Senior Indebtedness; and nothing in Article VII
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article XIV shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.06.

SECTION 14.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.

     Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness, the distribution may be made and the notice given to their
Representative, if any.

SECTION 14.11. ARTICLE XIV NOT TO PREVENT DEFAULTS OR LIMIT RIGHT TO ACCELERATE.

     The failure to make a payment pursuant to the Debt Securities, whether
directly or pursuant to the related Guarantees, if any, by reason of any
provision in this Article XIV shall not be construed as preventing the
occurrence of a Default or Event of Default. Nothing in this Article XIV shall
have any effect on the right of the Holders or the Trustee to accelerate the
maturity of the Subordinated Debt Securities.


                                      -84-



SECTION 14.12. TRUST MONEYS NOT SUBORDINATED.

     Notwithstanding anything contained herein to the contrary, payments from
money or the proceeds of U.S. Government Obligations held in a defeasance trust
or in trust under Article XI by the Trustee for the payment of principal of, and
premium, if any, and interest on, the Subordinated Debt Securities shall not be
subordinated to the prior payment of any Senior Indebtedness or subject to the
restrictions set forth in this Article XIV, and none of the Holders thereof
shall be obligated to pay over any such amount to the Issuers, any Subsidiary
Guarantors or any holder of Senior Indebtedness or any other creditor of the
Issuers or Subsidiary Guarantors.

SECTION 14.13. TRUSTEE ENTITLED TO RELY.

     Upon any payment or distribution pursuant to this Article XIV, the Trustee
and the Holders shall be entitled to rely (i) upon any order or decree of a
court of competent jurisdiction in which any proceedings of the nature referred
to in Section 14.02 are pending, (ii) upon a certificate of the liquidating
trustee or agent or other Person making such payment or distribution to the
Trustee or to such Holders or (iii) upon the Representatives for the holders of
Senior Indebtedness for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Issuers or the Subsidiary Guarantors,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article XIV. In the
event that the Trustee determines, in good faith, that evidence is required with
respect to the right of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this Article XIV, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and other facts pertinent to the rights of such Person
under this Article XIV, and, if such evidence is not furnished, the Trustee may
defer any payment to such Person pending judicial determination as to the right
of such Person to receive such payment. The provisions of Sections 7.01 and 7.02
shall be applicable to all actions or omissions of actions by the Trustee
pursuant to this Article XIV.

SECTION 14.14. TRUSTEE TO EFFECTUATE SUBORDINATION.

     Each Holder by accepting a Subordinated Debt Security and any related
Guarantee authorizes and directs the Trustee on such Holder's behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination between the Holders of Subordinated Debt Securities and the
holders of


                                      -85-



Senior Indebtedness as provided in this Article XIV and appoints the Trustee as
attorney-in-fact for any and all such purposes.

SECTION 14.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.

     The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall
mistakenly pay over or distribute to Holders of Subordinated Debt Securities or
the Issuers, any Subsidiary Guarantor or any other Person, money or assets to
which any holders of Senior Indebtedness shall be entitled by virtue of this
Article XIV or otherwise.

SECTION 14.16. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON SUBORDINATION
     PROVISIONS.

     Each Holder by accepting a Subordinated Debt Security or any related
Guarantee acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder of
any Senior Indebtedness, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Subordinated Debt Securities, to
acquire and continue to hold, or to continue to hold, such Senior Indebtedness
and such holder of Senior Indebtedness shall be deemed conclusively to have
relied on such subordination provisions in acquiring and continuing to hold, or
in continuing to hold, such Senior Indebtedness.

                [Remainder of this Page Intentionally Left Blank]


                                      -86-



     The Trustee hereby accepts the trusts in the Indenture upon the terms and
conditions herein set forth.

     IN WITNESS WHEREOF, the parties hereto have caused the Indenture to be duly
signed as of the date first written above.

                                        ISSUERS:

                                        TEEKAY LNG PARTNERS, L.P.

                                        By: TEEKAY GP L.L.C.,
                                        its General Partner


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        TEEKAY LNG FINANCE CORP.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        TRUSTEE:

                                        THE BANK OF NEW YORK


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                       S-1



                                        POTENTIAL SUBSIDIARY GUARANTORS:

                                        TEEKAY LNG OPERATING L.L.C.

                                        By: Teekay LNG Partners L.P., its sole
                                            member
                                        By: Teekay GP L.L.C., its General
                                            Partner


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        AFRICAN SPIRIT L.L.C.

                                        By: Teekay LNG Operating L.L.C., it sole
                                            member
                                        By: Teekay LNG Partners L.P., its sole
                                            member
                                        By: Teekay GP L.L.C., its General
                                            Partner


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        ASIAN SPIRIT L.L.C.

                                        By: Teekay LNG Operating L.L.C., it sole
                                            member
                                        By: Teekay LNG Partners L.P., its sole
                                            member
                                        By: Teekay GP L.L.C., its General
                                            Partner


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                       S-2



                                        EUROPEAN SPIRIT L.L.C.

                                        By: Teekay LNG Operating L.L.C., it sole
                                            member
                                        By: Teekay LNG Partners L.P., its sole
                                            member
                                        By: Teekay GP L.L.C., its General
                                            Partner


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        TEEKAY LUXEMBOURG S.A.R.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        TEEKAY SPAIN, S.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        TEEKAY II IBERIA S.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                       S-3



                                        TEEKAY SHIPPING SPAIN, S.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        NAVIERA TEEKAY GAS, S.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        NAVIERA TEEKAY GAS II, S.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        NAVIERA TEEKAY GAS III, S.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        NAVIERA TEEKAY GAS IV, S.L.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                      S-4

EX-5.1

                                                                     EXHIBIT 5.1

                                        WATSON, FARLEY & WILLIAMS (NEW YORK) LLP
Our reference: 02375.50030/19083445 v3                           100 Park Avenue
                                                        New York, New York 10017

                                                              Tel (212) 922 2200

                                                              Fax (212) 922 1512

September 29, 2006

Teekay LNG Partners L.P.
Teekay LNG Finance Corp.
Teekay LNG Operating L.L.C.
African Spirit L.L.C.
Asian Spirit L.L.C.
European Spirit L.L.C.
Bayside House, Bayside Executive Park
West Bay Street and Blake Road
Nassau, Commonwealth of the Bahamas

REGISTRATION STATEMENT ON FORM F-3

Dear Sirs:

We have acted as special counsel as to matters of the law of the Republic of The
Marshall Islands ("MARSHALL ISLANDS LAW") for (i) Teekay LNG Partners L.P. (the
"PARTNERSHIP"), (ii) Teekay LNG Finance Corp. ("TEEKAY LNG FINANCE"), and (iii)
Teekay LNG Operating L.L.C., African Spirit L.L.C., Asian Spirit L.L.C. and
European Spirit L.L.C. (collectively, the "GUARANTORS", and together with the
Partnership and Teekay LNG Finance, the "REGISTRANTS"), in connection with the
preparation and filing with the Securities and Exchange Commission (the
"COMMISSION"), pursuant to the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and the rules and regulations promulgated thereunder
("RULES"), of a registration statement on Form F-3 (such registration statement
and any additional registration statement filed pursuant to Rule 462(b) is
referred to as the "REGISTRATION STATEMENT") for the registration of the sale
from time to time of up to $400,000,000 aggregate offering price (or any such
further aggregate offering price as may be registered pursuant to Rule 462(b))
of:

(a)   Common units (the "UNITS") representing limited partnership interests in
      the Partnership;

(b)   Debt securities of the Partnership, which may be co-issued by Teekay LNG
      Finance in the form of either senior debt securities (the "SENIOR DEBT
      SECURITIES") or subordinated debt securities (the "SUBORDINATED DEBT
      SECURITIES", and together with the Senior Debt Securities, the "DEBT
      Securities"); and

(c)   Guarantees (the "GUARANTEES", and together with the Units and the Debt
      Securities, the "Securities") of the Debt Securities by one or more
      subsidiaries of the Partnership, including the Guarantors.

London o Athens o Paris o New York o Singapore o Bangkok o Rome o Hamburg

Watson, Farley & Williams (New York) LLP is a limited liability partnership
registered in England and Wales with registered number OC312253. It is regulated
by the Law Society of England and Wales and its members are solicitors or
registered foreign lawyers. A list of members of Watson, Farley & Williams (New
York) LLP and their professional qualifications is open to inspection at the
above address. Any reference to a 'partner' in relation to Watson, Farley &
Williams (New York) LLP means a member, partner, consultant or employee of
Watson, Farley & Williams (New York) LLP or an affiliated undertaking.

Watson, Farley & Williams (New York) LLP or an affiliated undertaking has an
office in each of the cities listed above.



Teekay LNG Partners L.P.
Teekay LNG Finance Corp.
Teekay LNG Operating L.L.C.
African Spirit L.L.C.
Asian Spirit L.L.C.
European Spirit L.L.C.
September 29, 2006                                                        Page 2


The Securities will be sold or delivered from time to time as set forth in the
Registration Statement, the prospectus contained therein (the "PROSPECTUS") and
supplements to the Prospectus (the "PROSPECTUS SUPPLEMENTS").

The Senior Debt Securities will be issued in one or more series pursuant to an
indenture (together with any supplemental indentures, the "SENIOR INDENTURE") to
be entered into between the Partnership and a trustee thereunder, in
substantially the form filed as an exhibit to the Registration Statement. The
Subordinated Debt Securities will be issued in one or more series pursuant to a
subordinated indenture (together with any supplemental indentures, the
"SUBORDINATED INDENTURE") to be entered into between the Partnership and a
trustee thereto, in substantially the form filed as an exhibit to the
Registration Statement.

In rendering this opinion, we have examined originals or photocopies of all such
documents, including (i) the Registration Statement and the Prospectus, (ii) the
form of Senior Indenture to be filed as an exhibit to the Registration
Statement, (iii) the form of Subordinated Indenture to be filed as an exhibit to
the Registration Statement, and (iv) certificates of public officials and of
representatives of the Registrants and the Partnership's general partner, Teekay
GP L.L.C. (the "GENERAL PARTNER"), as we have deemed necessary. In such
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, and the conformity with the
original documents of all documents submitted to us as photocopies. We have also
assumed the power, authority and legal right of all parties (other than the
Registrants and the General Partner) to the Registration Statement and any
amendments or supplements thereto (including any necessary post-effective
amendments), the Senior Indenture, the Subordinated Indenture and the Guarantees
(collectively, the "DOCUMENTS") to enter into and perform their respective
obligations thereunder and the due authorization, execution and delivery of the
Documents by such parties. We have further assumed the validity and
enforceability of the Documents under all applicable laws other than Marshall
Islands law. As to any questions of fact material to our opinion, we have, when
relevant facts were not independently established, relied upon the aforesaid
certificates.

We have also assumed that (a) the Registration Statement and any amendments or
supplements thereto (including any necessary post-effective amendments) shall
have become effective under the Securities Act, (b) with respect to the opinion
in Paragraph 2 below, the Registrants and the relevant indenture trustee shall
have complied with the terms and conditions of the Senior Indenture or the
Subordinated Indenture, as applicable, regarding the creation, authentication
and delivery of any supplemental indenture to such indenture, (c) a Prospectus
Supplement shall have been prepared and filed with the Commission describing the
Securities offered thereby, (d) all Securities shall be issued and sold in
compliance with applicable federal, state and foreign securities laws and in the
manner stated in the Registration Statement and the appropriate Prospectus
Supplement, (e) a definitive purchase, underwriting or similar agreement with
respect to any Securities offered will have been duly authorized and validly
executed and delivered by the applicable Registrants and the other parties
thereto, and (f) any Securities issuable upon conversion, exchange or exercise
of any Security



Teekay LNG Partners L.P.
Teekay LNG Finance Corp.
Teekay LNG Operating L.L.C.
African Spirit L.L.C.
Asian Spirit L.L.C.
European Spirit L.L.C.
September 29, 2006                                                        Page 3


being offered will be duly authorized, created and, if appropriate, reserved for
issuance upon such conversion, exchange or exercise.

This opinion is limited to Marshall Islands Law and is as of the date hereof.

Based on the foregoing and having regard to legal considerations which we deem
relevant, we are of the opinion that:

1.    When the terms of the issuance and sale thereof have been duly approved by
      the Partnership and when issued and delivered against payment therefor in
      accordance with the terms of the First Amended and Restated Agreement of
      Limited Partnership dated May 10, 2005, as amended on May 31, 2006, of the
      Partnership, the applicable underwriting agreement (or similar agreement)
      and the Registration Statement and Prospectus, the Units will be duly
      authorized, validly issued, fully paid and non-assessable.

2.    Upon the due execution and delivery of the applicable indenture by the
      parties thereto substantially in the form examined by us, when (a) the
      specific terms of a particular Debt Security have been duly authorized by
      the Partnership and, if applicable, Teekay LNG Finance, and established in
      accordance with the applicable indenture, (b) any related Guarantee by the
      Guarantors has been duly authorized by each such Guarantor, and (c) such
      Debt Security and any such Guarantee have been duly executed,
      authenticated, issued for value and delivered in accordance with the
      applicable indenture, such Debt Security and any such Guarantee will be
      binding obligations of the applicable Registrants.

We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the references to our firm in the Prospectus. In giving this
consent, we do not hereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act or related Rules nor
do we admit that we are experts with respect to any part of the Registration
Statement within the meaning of the term "expert" as used in the Securities Act
or related Rules.

Very truly yours,

/S/ WATSON, FARLEY & WILLIAMS (NEW YORK) LLP

EX-5.2

                                                                     EXHIBIT 5.2

                                PERKINS COIE LLP

         1120 N.W. Couch Street, Tenth Floor, Portland Oregon 97209-4128
                  Telephone 503-727-2000 Facsimile 503-727-2222


                               September 29, 2006

Teekay LNG Partners L.P.
Bayside House, Bayside Executive Park
West Bay Street and Blake Road
P.O. Box AP-59212
Nassau, Commonwealth of the Bahamas

         RE:   REGISTRATION STATEMENT ON FORM F-3

Ladies and Gentlemen:

         We have acted as counsel to Teekay LNG Partners L.P., a Marshall
Islands limited partnership (the "Partnership"), in connection with the
preparation and filing with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated thereunder
("Rules") of a registration statement on Form F-3 (such registration statement
and any additional registration statement filed pursuant to Rule 462(b) is
referred to as the "Registration Statement"), for the registration of the sale
from time to time of up to $400,000,000 aggregate offering price (or any such
further aggregate offering price as may be registered pursuant to Rule 462(b))
of:

         (a)   common units representing limited partnership interests in the
               Partnership (the "Units");

         (b)   debt securities of the Partnership, which may be co-issued by
               Teekay LNG Finance Corp., a Marshall Islands corporation ("Teekay
               LNG Finance"), in the form of either senior debt securities (the
               "Senior Debt Securities") or subordinated debt securities (the
               "Subordinated Debt Securities" and, together with the Senior Debt
               Securities, collectively the "Debt Securities"); and

         (c)   guarantees (the "Guarantees" and, together with the Units and the
               Debt Securities, collectively the "Securities") of the Debt
               Securities by one or more of the following subsidiaries of the
               Partnership (collectively, the "Subsidiary Guarantors" and,
               together with the Partnership and Teekay LNG Finance,
               collectively the "Registrants"): Teekay LNG Operating L.L.C., a
               Marshall Islands limited liability company, African Spirit
               L.L.C., a Marshall Islands limited liability company, Asian
               Spirit L.L.C., a Marshall Islands limited



Teekay LNG Partners L.P.
September 29, 2006

               liability company, European Spirit L.L.C., a Marshall Islands
               limited liability company, Teekay Luxembourg S.a.r.l., a
               Luxembourg company, Teekay Spain, S.L., a Spanish company, Teekay
               II Iberia S.L., a Spanish company, Teekay Shipping Spain, S.L., a
               Spanish company, Naviera Teekay Gas, S.L., a Spanish company,
               Naviera Teekay Gas II, S.L., a Spanish company, Naviera Teekay
               Gas III, S.L., a Spanish company, and Naviera Teekay Gas IV,
               S.L., a Spanish company.

         The Securities will be sold or delivered from time to time as set forth
in the Registration Statement, the prospectus contained therein (the
"Prospectus") and supplements to the Prospectus (the "Prospectus Supplements").

         The Senior Debt Securities will be issued in one or more series
pursuant to an indenture (together with any supplemental indentures, the "Senior
Indenture") to be entered into between the Registrants and a trustee thereunder
(the "Senior Trustee"), in substantially the form filed as an exhibit to the
Registration Statement. The Subordinated Debt Securities will be issued in one
or more series pursuant to a subordinated indenture (together with any
supplemental indentures, the "Subordinated Indenture") to be entered into
between the Registrants and a trustee thereto (the "Subordinated Trustee"), in
substantially the form filed as an exhibit to the Registration Statement.

         In our capacity as counsel to the Partnership we have examined (a) the
Registration Statement, (b) the form of Senior Indenture to be filed as an
exhibit to the Registration Statement, (c) the form of Subordinated Indenture to
be filed as an exhibit to the Registration Statement, and (d) the originals, or
copies identified to our satisfaction, of such corporate records of the
Registrants, certificates of public officials, officers of the Registrants and
the Partnership's general partner, Teekay GP L.L.C., and other persons, and such
other documents, agreements and instruments as we have deemed necessary as a
basis for the opinions hereinafter expressed. In our examination, we have
assumed the authenticity of all documents submitted to us as originals, the
conformity with the originals of all documents submitted to us as copies, and
the truth, accuracy and completeness of the information, representations and
warranties contained in the Registration Statement and such other documents,
agreements and instruments.

         For purposes of the opinions expressed below, we also assume that (a)
the Registration Statement, and any amendments or supplements thereto (including
any necessary post-effective amendments), shall have become effective under the
Securities Act, (b) with respect to the opinions in Paragraphs 2 and 4 below,
the Registrants and the Trustee shall have complied with the terms and
conditions of the Senior Indenture or the Subordinated Indenture, as applicable,
regarding the creation, authentication and delivery of any supplemental
indenture to such Indenture, (c) a Prospectus Supplement shall have been
prepared and filed with the Commission describing the Securities offered
thereby, and (d) all Securities shall be issued and sold in compliance with
applicable federal, state and foreign



Teekay LNG Partners L.P.
September 29, 2006

securities laws and in the manner stated in the Registration Statement and the
appropriate Prospectus Supplement.

         Based on and subject to the foregoing, we are of the opinion that:

         1.    When the Senior Indenture has been duly authorized, executed and
               delivered by the Registrants and qualified under the Trust
               Indenture Act of 1939, as amended (the "Trust Indenture Act"),
               and assuming due authorization, execution and delivery by the
               Senior Trustee, the Senior Indenture will constitute a valid and
               legally binding obligation of the Registrants, enforceable
               against the Registrants in accordance with its terms.

         2.    When (a) the Senior Debt Securities and any related Guarantees
               have been duly authorized, (b) the final terms of the Senior Debt
               Securities and the Guarantees have been duly established and
               approved, and (c) the Senior Debt Securities and any related
               Guarantees have been duly executed by the Partnership and other
               applicable Registrants and authenticated by the Senior Trustee in
               accordance with the Senior Indenture and delivered to and paid
               for by the purchasers thereof as contemplated by the Registration
               Statement, the Senior Debt Securities and any such Guarantees
               will constitute valid and legally binding obligations of the
               applicable Registrants, enforceable against such Registrants in
               accordance with the terms thereof and will be entitled to the
               benefits of the Senior Indenture.

         3.    When the Subordinated Indenture has been duly authorized,
               executed and delivered by the Registrants and qualified under the
               Trust Indenture Act, and assuming due authorization, execution
               and delivery by the Subordinated Trustee, the Subordinated
               Indenture will constitute a valid and legally binding obligation
               of the Registrants, enforceable against the Registrants in
               accordance with its terms.

         4.    When (a) the Subordinated Debt Securities and any related
               Guarantees have been duly authorized, (b) the final terms of the
               Subordinated Debt Securities and the Guarantees have been duly
               established and approved, and (c) the Subordinated Debt
               Securities and any related Guarantees have been duly executed by
               the Partnership and other applicable Registrants and
               authenticated by the Subordinated Trustee in accordance with the
               Subordinated Indenture and delivered to and paid for by the
               purchasers thereof as contemplated by the Registration Statement,
               the Subordinated Debt Securities and any such Guarantees will
               constitute valid and legally binding obligations of the
               applicable Registrants, enforceable against such Registrants in
               accordance with the terms thereof and will be entitled to the
               benefits of the Subordinated Indenture. Teekay LNG Partners L.P.
               September 29, 2006



Teekay LNG Partners L.P.
September 29, 2006


         The opinions expressed above are subject to the following exclusions
and qualifications:

               a.    Our opinions are as of the date hereof and we have no
responsibility to update this opinion for events and circumstances occurring
after the date hereof or as to facts relating to prior events that are
subsequently brought to our attention. We disavow any undertaking to advise you
of any changes in law.

               b.    We express no opinion as to enforceability of any right or
obligation to the extent such right or obligation is subject to and limited by
(i) the effect of bankruptcy, insolvency, reorganization, receivership,
conservatorship, arrangement, moratorium, fraudulent transfer or other laws
affecting or relating to the rights of creditors generally, (ii) rules governing
the availability of specific performance, injunctive relief or other equitable
remedies and general principles of equity, regardless of whether arising prior
to, or after, the date hereof or considered in a proceeding in equity or at law,
or (iii) provisions of law that require that a judgment for money damages
rendered by a court in the United States be expressed only in United States
dollars.

               c.    We are qualified to practice law in the State of New York
and do not express any opinions herein concerning any laws other than the laws
in their current forms of the State of New York and the federal laws of the
United States of America, and we express no opinion with respect to the laws of
any other jurisdiction.

         We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to our firm in the Prospectus made
part of the Registration Statement. In giving this consent, we do not hereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act or related Rules nor do we admit that we are
experts with respect to any part of the Registration Statement within the
meaning of the term "expert" as used in the Securities Act or related Rules.

                                        Very truly yours,

                                        /s/ Perkins Coie LLP

                                        PERKINS COIE LLP

EX-5.3

                                                                     Exhibit 5.3

                       [Letterhead of Noble & Scheidecker]


                                      (1) Teekay LNG Partners L.P.
                                      c/o Bayside House, Bayside Executive Park
                                      West Bay Street and Blake Road
                                      P.O. Box AP-59212
                                      Nassau, Commonwealth of the Bahamas

                                      (2) Teekay Luxembourg S.a.r.l.
                                      7, rue Robert Stumper
                                      Luxembourg
                                      Grand-Duchy of Luxembourg

                                      The "ADRESSEES"

                                      Luxembourg, September 29, 2006




Dear Sirs,

RE:   REGISTRATION STATEMENT ON FORM F-3

I.    INTRODUCTION

We have acted as special counsel as to matters of the law of the Grand-Duchy of
Luxembourg ("LUXEMBOURG") for Teekay Luxembourg S.a.r.l. ("LUXCO") in connection
with the preparation and filing with the U.S. Securities and Exchange Commission
(the "COMMISSION") pursuant to the U.S. Securities Act of 1933, as amended (the
"SECURITIES ACT"), and the rules and regulations promulgated thereunder
("RULES") of a registration statement on Form F-3 (such registration statement
and any additional registration statement filed pursuant to Rule 462(b) is
referred to as the "REGISTRATION STATEMENT"), for the registration of the sale
from time to time of up to $400,000,000 aggregate offering price (or any such
further aggregate offering price as may be registered pursuant to Rule 462(b))
of:

      (a)   common units (the "UNITS") representing limited partnership
            interests in Teekay LNG Partners L.P. (the "PARTNERSHIP");




                       [Letterhead of Noble & Scheidecker]


      (b)   debt securities of the Partnership, which may be (i) co-issued by
            Teekay LNG Finance Corp. and (ii) either senior debt securities
            ("SENIOR DEBT SECURITIES") or subordinated debt securities
            ("SUBORDINATED DEBT SECURITIES" and, together with the Senior Debt
            Securities, collectively the "DEBT SECURITIES"); and

      (c)   guarantees (the "GUARANTEES" and, together with the Units and the
            Debt Securities, collectively the "SECURITIES") of the Debt
            Securities by one or more subsidiaries of the Partnership, including
            Luxco.

We understand that the Securities will be sold or delivered from time to time as
set forth in the Registration Statement, the prospectus contained therein (the
"PROSPECTUS") and supplements to the Prospectus (the "PROSPECTUS SUPPLEMENTS").

We understand that the Senior Debt Securities will be issued in one or more
series pursuant to an indenture (together with any supplemental indentures, the
"SENIOR INDENTURE") to be entered into between the Partnership and a trustee
thereunder, in substantially the form filed as an exhibit to the Registration
Statement. We understand that the Subordinated Debt Securities will be issued in
one or more series pursuant to a subordinated indenture (together with any
supplemental indentures, the "SUBORDINATED Indenture" and together with the
Senior Indenture collectively the "INDENTURES") to be entered into between the
Partnership and a trustee thereto, in substantially the form filed as an exhibit
to the Registration Statement.

II.   SCOPE OF THE LEGAL OPINION

      a)    This legal opinion is strictly confined to the specific matters of
            Luxembourg law and has been prepared without considering the
            implications of any laws of any jurisdictions other than Luxembourg
            and, accordingly, we express no opinion with regard to any systems
            of law other than the laws of Luxembourg (including, without however
            limitation, US laws).

      b)    This legal opinion is strictly limited to the matters stated herein
            and may not be read as extending by implication to any matters not
            specifically referred to. Where an assumption is stated to be made
            in this legal opinion, we have not made an investigation with
            respect to the matters that are the subject of such assumption.

      c)    We have, for the purpose of this legal opinion, solely examined
            provisions of section XII (Guarantee) of the Indentures, with the
            exclusion of any other provisions of the Indentures. In particular,
            without however limitation, we have not examined nor reviewed the
            documents or agreements mentioned or referred to in the Transaction
            Documents (as such term is defined in Schedule 1 hereto).



                                       2

                       [Letterhead of Noble & Scheidecker]


      d)    We do not opine in this legal opinion on the enforceability of any
            of the provisions of the Indentures other than the binding nature of
            the Guarantees on Luxco.

      e)    We have not examined and express therein no opinion on any matter
            relating to any contractual obligation, by which Luxco may be bound
            other than those contained in Section XII of the Indentures.

      f)    The declarations made in this legal opinion are stated and are only
            valid as at the date hereof.

      g)    We shall have no duty to inform the Addressees of any changes in
            Luxembourg law, in the legal status of Luxco or any other
            circumstance, occurring after the date of this legal opinion and
            which affect the matters addressed herein.

      h)    We are not responsible for (a) investigating and verifying the
            accuracy of the statements of fact and the reasonableness of (i) any
            statements of opinion, (ii) intention and (iii) representations and
            warranties contained in the Transaction Documents, (b) verifying
            that no material facts or contractual provisions have been omitted
            therefrom and (c) verifying whether the parties thereto (including
            Luxco) or any of them have complied, or will comply with them and
            with the terms and conditions of any obligations binding upon them.

      i)    In this legal opinion, unless otherwise specified, the terms "law",
            "Laws" "legislation" and "regulation" and all other similar terms
            refer to all laws and regulations that are applicable within the
            territory of Luxembourg.

      j)    We do not give any opinion with respect to, or regarding, the
            compliance of Luxco with Luxembourg tax law.


III.  STATEMENTS OF LEGAL OPINION

On the basis of and subject to the assumptions and qualifications set out below,
we are of the opinion that (a) upon the due execution and delivery of the
applicable Indenture by the parties thereto substantially in the form examined
by us and (b) when (i) the specific terms of a particular Debt Security have
been duly authorized by the Partnership and, if applicable, Teekay LNG Finance
Corp., and established in accordance with the applicable Indenture, (ii) any
related Guarantee by Luxco has been duly authorized thereby and (c) such Debt
Security and any such Guarantee have been duly executed, authenticated, issued
for value and delivered in accordance with the applicable Indenture, such
Guarantee will be a binding obligation of Luxco.


                                       3

                       [Letterhead of Noble & Scheidecker]


IV.   ASSUMPTIONS

In rendering this legal opinion, we have, without verification or other enquiry,
assumed:

      a)    The genuineness of all signatures, the authenticity of all documents
            submitted to us as originals, and the conformity with the original
            documents of all documents submitted to us as photocopies.

      b)    That the Indentures have been duly and validly executed and
            delivered by the respective parties thereto (including Luxco)
            substantially in the form examined by us.

      c)    That none of the Transaction Documents has been amended,
            supplemented, replaced or varied, nor has been revoked as at the
            date hereof.

      d)    That each of the parties to the Indentures (including Luxco) is a
            validly existing entity with the capacity and power and authority to
            enter into, execute, deliver and perform each of the Indentures and
            all obligations thereunder, in compliance with all requisite
            corporate or similar action.

      e)    That all the necessary corporate and other actions have been taken
            in order to allow each of the parties to the Indentures (including
            Luxco) to validly execute and deliver the Indentures and to perform
            its respective obligations thereunder.

      f)    That any consents, approvals, registrations, licenses or other
            actions by or with any governmental authority required to be
            obtained or made by the parties (including Luxco) in any
            jurisdiction (including Luxembourg) in order to execute, deliver or
            perform the Indentures has been or will be obtained or made at the
            appropriate times.

      g)    That the manner of execution of the Indentures is valid and
            effective under their respective governing laws, and under any other
            law which may be applicable according to the place of execution
            (including Luxembourg laws).

      h)    That the obligations created under or pursuant to the Indentures
            constitute legal, valid, binding obligations of each of the parties
            thereto (excluding Luxco with respect to its Guarantee), enforceable
            against the respective parties thereto (excluding Luxco with respect
            to its Guarantee) in accordance with their terms, under all
            applicable laws (including Luxembourg laws), and in particular,
            without however limitation, under their respective governing laws.



                                       4

                       [Letterhead of Noble & Scheidecker]


      i)    That the obligations created under or pursuant to the Indentures
            constitute legal, valid, binding obligations of Luxco, enforceable
            against Luxco in accordance with their terms, under all applicable
            laws (excluding Luxembourg laws), and in particular, without however
            limitation, under their respective governing laws.

      j)    That each of the parties to the Transaction Documents (including
            Luxco) is not or will not be, by reason of the execution of the
            transactions contemplated by the Transaction Documents, in breach of
            any of its obligations under any previous contractual arrangements
            to which it is a party.

      k)    All contractual obligations created under or pursuant to the
            Indentures are executed and will be performed in good faith by the
            parties thereto (including Luxco) and without committing any fraud
            or cheating.

      l)    That no petition has been filed in with a court for the opening of
            winding-up (in the meaning of voluntary or not liquidation and
            dissolution), bankruptcy, suspension of payments or similar
            proceedings against Luxco; that Luxco has not been granted a
            suspension of payments or declared bankrupt or been subject to any
            similar procedure (which includes, without however limitation,
            controlled management ("gestion controlee"), moratorium of payments
            ("sursis de paiement") and composition ("concordat preventif de
            faillite") procedures) and that Luxco is not subject to any
            liquidation proceedings.

      m)    That the Guarantees are of an independent and unconditional nature
            and would therefore qualify as "garanties a premiere demande" under
            Luxembourg laws.

      n)    That the real place of effective management of Luxco is not located
            anywhere else than in Luxembourg.

      o)    That the entry into and the execution by Luxco of the Indentures as
            well as the performance of its obligations thereunder are in the
            best interest of Luxco.

      p)    That the performance and observance of the provisions of the
            governing laws of the Indentures are not contrary to any mandatory
            rules ("lois de police") or to the international public order rules
            ("ordre public international") of Luxembourg.

      q)    That the Registration Statement, and any amendments or supplements
            thereto (including any necessary post-effective amendments), shall
            have become effective under the Securities Act.

      r)    That all parties to the relevant indenture shall have complied with
            the terms and conditions thereof regarding the creation,
            authentication and delivery of any supplemental indenture to such
            indenture.



                                       5

                       [Letterhead of Noble & Scheidecker]


      s)    That a Prospectus Supplement shall have been prepared and filed with
            the Commission describing the Securities offered thereby.

      t)    That all Securities shall be issued and sold in compliance with
            applicable federal, state and foreign securities laws and in the
            manner stated in the Registration Statement and the appropriate
            Prospectus Supplement.

      u)    That a definitive purchase, underwriting or similar agreement with
            respect to any Securities offered will have been duly authorized and
            validly executed and delivered by the parties thereto.

      v)    That any Securities issuable upon conversion, exchange or exercise
            of any Security being offered will be duly authorized, created and,
            if appropriate, reserved for issuance upon such conversion, exchange
            or exercise.

V.    QUALIFICATIONS

This legal opinion is subject to the following qualifications:

      a)    In this legal opinion, some Luxembourg legal concepts are expressed
            in English terms and not in their original French terms. Terms and
            expressions of law and of legal concepts as used in this legal
            opinion have the meaning attributed to them under the laws of
            Luxembourg and this legal opinion should be read and understood
            accordingly. The concepts concerned may not be identical to the
            concepts described by the same English terms as they exist under the
            laws of other jurisdictions. This legal opinion may, therefore, only
            be relied upon under the express condition that any issue of
            interpretation or liability arising hereunder will be interpreted as
            would be by a Luxembourg Court.

      b)    Any enforcement of an obligation against Luxco would be subject to
            any applicable bankruptcy, insolvency and any other similar
            Luxembourg laws relating to or affecting the enforcement or
            protection of creditors rights and remedies.

      c)    Payments made, as well as other transactions (listed in the
            pertinent section of the Luxembourg Code of Commerce) concluded or
            performed, during the so-called suspect period ("periode suspecte")
            which is fixed by the Luxembourg court and dates back (not more
            than) 6 months as from the date on which the Luxembourg court
            formally adjudicates a person bankrupt, and, as for specific
            payments and transactions, during an additional period of ten days
            before the commencement of such period, are subject to cancellation
            by the Luxembourg court.

                                       6

                       [Letterhead of Noble & Scheidecker]


            In particular,

            i)    Article 445 of the Code of Commerce sets out that, during the
                  suspect period and an additional period of ten days preceding
                  the suspect period fixed by the court, specified transactions
                  (e.g., the granting of a security interest for past debts; the
                  payment of debts which have not fallen due, whether payment is
                  made in cash or by way of assignment, sale, set-off or by any
                  other means; the payment of debts which have fallen due by any
                  other means than in cash or by bill of exchange; the sale of
                  assets without consideration or for materially inadequate
                  consideration) must be set aside or declared null and void, as
                  the case may be, if so requested by the insolvency receiver;

            ii)   Article 446 of the Code of Commerce states that payments made
                  for matured debts as well as other transactions concluded for
                  consideration during the suspect period are subject to
                  cancellation by the court upon proceedings instituted by the
                  insolvency receiver if they were concluded with the knowledge
                  by such parties having received such payments or having
                  concluded transactions with the bankrupt, of the bankrupt's
                  cessation of payments; and

            iii)  Regardless of the suspect period, article 448 of the Code of
                  Commerce and article 1167 of the civil code (actio pauliana)
                  give the creditor the right to challenge any fraudulent
                  payments and transactions made prior to the bankruptcy,
                  without limitation of time.

      d)    We do not express any opinion on the enforceability of provisions
            that provide for a postponement of the rights of Luxco that would be
            contained in the Indentures against a duly appointed receiver
            ("curateur") of Luxco.

      e)    We express no opinion as to the availability under Luxembourg law or
            before a Luxembourg court of remedies other than those culminating
            in a judgment for the payment of money. To this extent, the term
            "enforceable", as used hereinabove, means that the obligations are
            of a type which the Luxembourg courts would not oppose to enforce
            (except as otherwise qualified in this opinion), but does not mean
            that those obligations will necessarily be enforced in all
            circumstances in accordance with their terms. In particular (i)
            remedies (such as specific performance or injunctive relief) may not
            be available to persons seeking to enforce provisions of an
            agreement and (ii) enforcement of an obligation may be invalidated
            on the grounds of fraud, lack of consent (mistake, duress,
            misrepresentation), illegal consideration, uncertainty of the
            object, incapacity and force majeure.

                                       7

                       [Letterhead of Noble & Scheidecker]


      f)    In respect of obligations of payment Luxembourg courts have power,
            under article 1244 of the Luxembourg Civil Code, to postpone or
            spread over time the payment of due sums.

      g)    We express no opinion as to whether any provision conferring a right
            of set-off or similar right would be effective against a bankruptcy
            receiver, liquidator or creditor.

      h)    An obligation may be invalidated on the grounds of fraud, lack of
            consent (mistake, duress, misrepresentation), illegal consideration,
            uncertainty of the object, incapacity and force majeure.

      i)    With respect to the provisions providing for a subordination of a
            debt, there is, to our knowledge, no Luxembourg case law or legal
            doctrine on the validity and enforceability (under Luxembourg law)
            thereof. It is our opinion that Luxembourg courts should admit the
            validity and enforceability of such provisions establishing
            contractual arrangements to the extent that they do not grant to a
            particular creditor a better rank in the distribution of the
            debtor's assets by impairing the rights of the other creditors,
            unless said creditors have expressly agreed to their rights being
            impaired. The principle of pari passu treatment of creditors should
            not be construed so as to prohibit one or more creditors to limit,
            or renounce their rights in the sense that they dispose of their own
            rights without altering other creditors' rights.

      j)    The opinion set forth above is valid, subject to the qualification
            that the granting of such Guarantees by Luxco does not constitute an
            abuse of company assets (abus des biens sociaux) pursuant to Article
            171-1 of the Luxembourg Company Law (as amended).

            We are not aware of any Luxembourg precedent appreciating the said
            notion of abuse of company assets, in the context of a company
            belonging to a group of companies.

            The company's interests in the meaning of the aforesaid Article
            171-1 is construed on a case by case basis on which we are unable to
            express an opinion as a matter of law.

            As far as guarantees are concerned, one of the element that would
            presumably be taken into account when determining whether or not the
            granting of a guarantee is in a company's interest is whether or not
            the said guarantee is in line or in adequacy with that companies'
            financial capabilities.

                                       8

                       [Letterhead of Noble & Scheidecker]


            In certain circumstances, Luxembourg courts may declare null and
            void agreements when the violation of the corporate interest is
            combined with particular elements, including a fraudulent collusion
            or an abuse of majority of the shareholders.

      k)    Provided that the relevant trust falls within the scope of The Hague
            Convention of 1 July 1985 on the law applicable to trusts and their
            recognition, Luxembourg courts will recognize trusts in accordance
            with the provisions of that Convention.

      l)    We express no opinion on recognition by Luxembourg courts of any
            judgment rendered by a foreign court (including without limitation
            any judgment rendered by a US court) as well as on enforcement in
            Luxembourg of judgments rendered by foreign courts (including
            without limitations US courts).

      m)    No opinion is expressed on any tax consequences of the execution of
            the Indentures.


VII.  CONSENT

      We consent to the filing of this opinion as an exhibit to the Registration
      Statement and to the references to our firm in the Prospectus. In giving
      this consent, we do not hereby admit that we are in the category of
      persons whose consent is required under Section 7 of the Securities Act or
      related Rules nor do we admit that we are experts with respect to any part
      of the Registration Statement within the meaning of the term "expert" as
      used in the Securities Act or related Rules.

VIII. APPLICABLE LAW AND JURISDICTION

As stated in paragraph II.a), this legal opinion herein is exclusively based
upon, governed by and shall be construed in accordance with the laws of
Luxembourg effective on the date hereof.

Luxembourg courts shall have exclusive jurisdiction to settle any dispute,
proceeding, suit or action that may arise out or be in connection with this
legal opinion. Yours very truly,

/s/ Marie-Beatrice Noble               /s/ Jean-Francois Trapp
- ------------------------               -----------------------
Marie-Beatrice Noble                   Jean-Francois Trapp
Avocat a la Cour                       Avocat a la Cour



                                       9

                       [Letterhead of Noble & Scheidecker]


                                   SCHEDULE 1

                                LIST OF DOCUMENTS

1     the Registration Statement and the Prospectus;

2     The form of Subordinated Indenture to be filed as an exhibit to the
      Registration Statement; and

3     The form of Senior Indenture to be filed as an exhibit to the Registration
      Statement.

Documents listed under points 1, 2 and 3 above are collectively referred to as
the "TRANSACTION DOCUMENTS".



                                       10

EX-5.4

                                                                     Exhibit 5.4





              [Letterhead of Uria, Menendez y CIA., Abogados, S.C.]




Teekay LNG Partners L.P.
Teekay Spain S.L., Teekay II Iberia S.L.,
Teekay Shipping Spain S.L., Naviera Teekay
Gas S.L., Naviera Teekay Gas II S.L., Naviera Teekay
Gas III S.L. and Naviera Teekay Gas IV S.L.

c/o Bayside House, Bayside Executive Park
West Bay Street and Blake Road
P.O. Box AP-59212
Nassau, Commonwealth of the Bahamas




                                                      Madrid, September 29, 2006


       Dear Sirs:


                             TEEKAY LNG PARTNERS L.P

       We have acted as special Spanish counsel as to matters of the law of
Spain for the sole stockholder company Teekay Spain, S.L., the sole stockholder
company Teekay II Iberia, S.L., Teekay Shipping Spain, S.L., the sole
stockholder company Naviera Teekay Gas, S.L., the sole stockholder company
Naviera Teekay Gas II, S.L., the sole stockholder company Naviera Teekay Gas
III, S.L., and the sole stockholder company Naviera Teekay Gas IV, S.L.
(collectively, the "SPANISH GUARANTORS") in connection with their preparation
and filing with the U.S. Securities and Exchange Commission (the "COMMISSION")
pursuant to the U.S. Securities Act of 1933, as amended (the "SECURITIES ACT"),
and the rules and regulations promulgated thereunder ("RULES") of a registration
statement on Form F-3 (such registration statement and any additional
registration statement filed pursuant to Rule 462(b) is referred to as the
"REGISTRATION STATEMENT"), for the registration of the sale from time to time of
up to $400,000,000 aggregate offering price of:

       (a)    common units (the "UNITS") representing limited partnership
              interests in Teekay LNG Partners L.P. (the "PARTNERSHIP");

       (b)    debt securities of the Partnership, which may be (i) co-issued by
              Teekay LNG Finance Corp. and (ii) either senior debt securities
              ("SENIOR DEBT SECURITIES") or subordinated debt securities
              ("SUBORDINATED DEBT SECURITIES" and,




              together with the Senior Debt Securities, collectively the "DEBT
              SECURITIES"); and

       (c)    guarantees (the "GUARANTEES" and, together with the Units and the
              Debt Securities, collectively the "SECURITIES") of the Debt
              Securities by one or more subsidiaries of the Partnership,
              including the Spanish Guarantors.

       We understand that the Securities will be sold or delivered from time to
time as set forth in the Registration Statement, the prospectus contained
therein (the "PROSPECTUS") and future supplements to the Prospectus (the
"PROSPECTUS SUPPLEMENTS").

       We understand that the Senior Debt Securities will be issued in one or
more series pursuant to an indenture (together with any supplemental indentures,
the "SENIOR INDENTURE") to be entered into between the Partnership and a trustee
thereunder, in substantially the form filed as an exhibit to the Registration
Statement. We understand that the Subordinated Debt Securities will be issued in
one or more series pursuant to a subordinated indenture (together with any
supplemental indentures, the "SUBORDINATED INDENTURE") to be entered into
between the Partnership and a trustee thereto, in substantially the form filed
as an exhibit to the Registration Statement.

       In arriving at the opinion expressed below, we have reviewed the
documentation listed in Scheduled I (the "DOCUMENTATION" or the "DOCUMENTS").

       In rendering the opinions expressed below, we have assumed:

       (a)    the genuineness of all signatures, stamps and seals appearing in
              the Documentation;

       (b)    the authenticity and completeness of all Documents submitted to us
              as originals and the conformity with the originals and the
              completeness of all documents submitted to us as copies;

       (c)    that each of the parties to the Documents examined (other than the
              Spanish Guarantors) is duly incorporated and validly existing
              under the laws of its country of incorporation;

       (d)    the power and authority to execute of, and the due execution by,
              all the parties (other than the Spanish Guarantors) to the
              Documents, in particular the Senior Indenture and the Subordinated
              Indenture, and that such execution will bind such parties and that
              the performance thereof is within the capacity and powers of each
              of the parties thereto (other than the Spanish Guarantors);


                                     - 2 -



       (e)    that there are no contractual or similar restrictions binding on
              any person which would affect the conclusions of this opinion
              resulting from any agreement or arrangement not being a document
              specifically examined by us for purposes of this opinion and there
              are no arrangements between any of the parties to the Documents
              examined which modify or supersede any of the terms thereof;

       (f)    that there are no matters or events of a factual nature not
              disclosed to us which would affect the conclusions herein;

       (g)    that all the Documents governed by the laws of a jurisdiction
              other than Spain constitute legal, valid, binding and enforceable
              obligations of the respective parties thereto under such laws; and

       (h)    that insofar as any obligation under the Documents falls to be
              performed in, or is otherwise subject to, any jurisdiction other
              than Spain, it will not be illegal or ineffective by virtue of any
              rule or law of, or contrary to public policy in, that
              jurisdiction.

For purposes of the opinion expressed below, we also assume that:

       (a)    the Registration Statement, and any amendments or supplements
              thereto (including any necessary post-effective amendments), shall
              have become effective under the Securities Act;

       (b)    all parties to the relevant indenture shall have complied with the
              terms and conditions thereof regarding the creation,
              authentication and delivery of any supplemental indenture to such
              indenture;

       (c)    a Prospectus Supplement shall have been prepared and filed with
              the Commission describing the Securities offered thereby;

       (d)    all Securities shall be issued and sold in compliance with
              applicable federal, state and foreign securities laws and in the
              manner stated in the Registration Statement and the appropriate
              Prospectus Supplement;

       (e)    a definitive purchase, underwriting or similar agreement with
              respect to any Securities offered will have been duly authorized
              and validly executed and delivered by the parties thereto;

       (f)    any Securities issuable upon conversion, exchange or exercise of
              any Security being offered will be duly authorized, created and,
              if appropriate, reserved for issuance upon such conversion,
              exchange or exercise;

       (g)    the Spanish Guarantors when granting the Guarantee are in
              compliance with their financing agreements they are a party to;
              and


                                     - 3 -



       (h)    the aim of the Guarantees would not be to facilitate the sale of
              the units of the Partnership.


       As to matters of fact material to the opinion expressed below, we have,
when relevant facts were not independently established by us, examined and
relied upon certificates of officials and other representatives of the Spanish
Guarantors; we have not checked the accuracy or completeness of, or otherwise
verified the information furnished with respect to matters in the Documentation
other than as specified above; and our opinions are rendered on the basis of
such reliance, but without independent check or verification, expect as so
specified.

       We do not represent ourselves to be familiar with the laws of any
jurisdiction other than Spain as they stand at present and, therefore, we
express no opinion on any question arising under any laws other than the laws of
Spain as they stand at present. In giving this opinion we have assumed that such
Documents listed herein, expressed to be governed by the laws of a country other
than Spain, are valid and binding under such laws.

       Our involvement in the transaction described herein has been limited to
our role as Spanish counsel to the Spanish Guarantors and, as a consequence
thereof, we assume no obligation to advise any other party to this transaction
and, furthermore, we assume no obligation to advise either you or any other
party of changes of law or facts that could occur after the date of the opinion,
even though the change may affect the legal analysis or conclusions given in
this opinion.

       Legal concepts are expressed in the Documents in English terms and may
not be identical or equivalent to those that exist under the laws of Spain.
Therefore, this opinion may only be relied upon provided that any issues of
interpretation arising thereunder would be interpreted as would be by a Spanish
Court.

       Based upon the foregoing, and subject to the further exceptions,
limitations and qualifications set forth below, it is our opinion that (a) upon
the due execution and delivery of the applicable indenture by the partiers
thereto substantially in the form examined by us and (b) when (i) the specific
terms of a particular Debt Security have been duly authorized by the Partnership
and, if applicable, Teekay LNG Finance Corp., and established in accordance with
the applicable indenture, (ii) any related Guarantees by the Spanish Guarantors
have been duly authorized thereby and (c) such Debt Security and any such
Guarantees have been duly executed, authenticated, issued for value and
delivered in accordance with the applicable indenture, such Guarantees will be
binding obligations of the Spanish Guarantors.

       The opinion expressed above, which shall be constructed as a validity
opinion., is subject to the following qualifications:

       1.     Under Spanish law, powers of attorney, appointments or
              authorisations granted, whether or not stated to be irrevocable,
              are generally revocable by the grantor, provided that the
              revocation is in good faith; however, this general rule would not
              prevail when the powers of attorney, appointments or
              authorisations are a


                                     - 4 -



              necessary consequence of the underlying relationship between its
              grantor and its beneficiary.

       2.     The effects and result of the operations involved in any
              applicable bankruptcy, insolvency, moratorium or similar laws
              affecting creditors' rights generally.

       3.     The obligations assumed by the relevant Spanish Guarantor are
              generally enforceable by the Spanish courts. However, it does not
              mean that the obligations will necessarily be enforced in all
              circumstances in accordance with their terms. In particular,
              enforcement before the Spanish courts will be subject to the
              following:

              a.     a Spanish court may refuse to give effect to any provision
                     of the Guarantees on the grounds that such provision
                     conflicts with Spanish public policy;

              b.     the Spanish courts will apply the law subject to the
                     equitable principles and may not grant enforcement in the
                     event that they deem that a right has not been exercised in
                     good faith or that it has been exercised in abuse of right
                     (abuso de derecho) and will not enforce an obligation in
                     case of fraud;

              c.     a Spanish court may issue an award of damages where
                     specific performance is deemed impracticable;

              d.     the validity and performance of contractual obligations may
                     not be left at the discretion of one of the contracting
                     parties as per Article 1,256 of the Spanish Civil Code;

              e.     a Spanish court may not enforce a contractual provision
                     which requires any party thereto to pay any amounts on the
                     grounds that such provision is a penalty within the meaning
                     of Articles 1,152 et seq. of the Civil Code, which the
                     court would consider excessive as a pre-estimate of damages
                     if the obligations secured by the penalty have partially or
                     irregularly complied with; in this event the court may
                     reduce the amount of the penalty; and

              f.     These principles are of general application, and in
                     applying such principles a court, among other things, might
                     not allow a creditor to accelerate maturity of a debt upon
                     the occurrence of a default deemed immaterial.

       4.     A guarantee such as the Guarantees shall be deemed to be null and
              void if the principal obligation secured is declared null and
              void; in addition, enforcement of guarantees may be limited since
              the guarantor may not be required to pay any amount in excess of
              the amount owed by the principal debtor or under conditions less
              favourable than those applying to the principal debtor.

       5.     If the choice in the indentures of the law of the state of New
              York (United State of America) is deemed to have been made with
              the aim of avoiding the


                                     - 5 -



              application of mandatory Spanish laws or legal requirements, said
              New York law may not be applied by Spanish courts, pursuant to
              Articles 12.3 and 12.4 of the Civil Code and Article 16 of the
              Rome Convention on the law applicable to contractual obligations.

       6.     The Spanish courts have exclusive jurisdiction, inter alia, with
              respect to matters relating to the incorporation, validity,
              nullity and dissolution of companies or legal entities having
              their domicile in the Spanish territory, and to any decisions and
              resolutions of their corporate bodies, as well as with respect to
              the validity or nullity of any recordings with a Spanish registry,
              and the recognition and enforcement in Spain of any judgment or
              arbitration award obtained in a foreign country.

       7.     In case of assignment of the rights of any of the parties under
              the Guarantees, said assignment will have to be formalised in an
              assignment deed granted before a notary public by the assignor and
              assignee to ensure the effectiveness of said transfer vis-a-vis
              third parties and notified to the assigned debtor so that a
              payment made to the assignor does not entail the release of the
              obligations of the debtor under the Debt Securities or Guarantees.

       8.     In case of succession, transfer or assignment of the contractual
              position of any of the parties under the Guarantees, said transfer
              or assignment will have to be formalised in a deed granted before
              a notary public by the transferor, the transferee and all other
              parties to the Guarantees to ensure the effectiveness of the said
              transfer vis-a-vis third parties.

       This opinion letter is rendered to the addressees identified herein in
connection with the above described transaction and we consent to the filing of
this opinion as an exhibit to the Registration Statement and to the references
to our firm in the Prospectus. In giving this consent, we do not hereby admit
that we are in the category of persons whose consent is required under Section 7
of the Securities Act or related Rules nor do we admit that we are experts with
respect to any part of the Registration Statement within the meaning of the term
"expert" as used in the Securities Act or related Rules.



       Very truly yours,

       /s/  Luis Figaredo Perez             /s/ Julio Lopez Quiroga


                                     - 6 -



                                   SCHEDULE I

                                LIST OF DOCUMENTS

(a)    Copy of the Registration Statement and the Prospectus.

(b)    Copy of the form of Senior Indenture to be filed as an exhibit to the
       Registration Statement.

(c)    The form of Subordinated Indenture to be filed as an exhibit to the
       Registration Statement.

(d)    Original of the Deed of Incorporation (Escritura de Constitucion) of
       Teekay Spain, S.L. granted on April 27, 2004 before the Notary Public of
       Madrid, Mr. Carlos Perez Baudin, with number 1,442 of his files.

(e)    Original of the Deed of Incorporation (Escritura de Constitucion) of
       Teekay II Iberia, S.L. granted on December 20, 2002 before the Notary
       Public of Madrid, Mr. Juan Carlos Caballeria Gomez, with number 3,386 of
       his files.

(f)    Original of the Deed of Incorporation (Escritura de Constitucion) of
       Teekay Shipping Spain, S.L. granted on September 24, 1987 before the
       Notary Public of Madrid, Mr. Juan Antonio Villena Ramirez, with number
       1,697 of his files.

(g)    Original of the Deed of Incorporation (Escritura de Constitucion) of
       Naviera Teekay Gas, S.L. granted on January 5, 1989 before the Notary
       Public of Madrid, Mr. Rafael Ruiz Gallardon, with number 21 of his files.

(h)    Original of the Deed of Incorporation (Escritura de Constitucion) of
       Naviera Teekay Gas II, S.L. granted on April 12, 2000 before the Notary
       Public of Madrid, Mr. Francisco Echevarri Lomo, with number 962 of his
       files.

(i)    Original of the Deed of Incorporation (Escritura de Constitucion) of
       Naviera Teekay Gas III, S.L. granted on July 6, 2000 before the Notary
       Public of Madrid, Mr. Francisco Echevarri Lomo, with number 1,791 of his
       files.

(j)    Original of the Deed of Incorporation (Escritura de Constitucion) of
       Naviera Teekay Gas IV, S.L. granted on September 17, 2001 before the
       Notary Public of Madrid, Mr. Francisco Echevarri Lomo, with number 2,568
       of his files.

(k)    Original of the Deed of Conversion (Escritura de Transformacion) of
       Teekay Shipping Spain, S.L. granted on November 26, 2004 before the
       Notary Public of Madrid, Mr. Juan Carlos Caballeria Gomez, with number
       4,214 of his files.


                                     - 7 -



(l)    Original of the Deed of Conversion (Escritura de Transformacion) of
       Naviera Teekay Gas, S.L. granted on November 26, 2004 before the Notary
       Public of Madrid, Mr. Juan Carlos Caballeria Gomez, with number 4,215 of
       his files.

(m)    Original of the Deed of Conversion (Escritura de Transformacion) of
       Naviera Teekay Gas II, S.L. granted on November 26, 2004 before the
       Notary Public of Madrid, Mr. Juan Carlos Caballeria Gomez, with number
       4,216 of his files.

(n)    Original of the Deed of Conversion (Escritura de Transformacion) of
       Naviera Teekay Gas III, S.L. granted on November 26, 2004 before the
       Notary Public of Madrid, Mr. Juan Carlos Caballeria Gomez, with number
       4,217 of his files.

(o)    Original of the Deed of Conversion (Escritura de Transformacion) of
       Naviera Teekay Gas IV, S.L. granted on November 26, 2004 before the
       Notary Public of Madrid, Mr. Juan Carlos Caballeria Gomez, with number
       4,218 of his files.

(p)    Original of the By-laws (Estatutos) of each one of the Spanish
       Subsidiaries.

(q)    Original of the Corporate Books (Libro registro de actas) of each one of
       the Spanish Subsidiaries, containing the Minutes of the government
       bodies' meetings.


                                     - 8 -

EX-8.1

                                                                     Exhibit 8.1

                                September 29 2006

Teekay LNG Partners L.P.
Teekay GP L.L.C.
TK House, Bayside Executive Park
West Bay Street and Blake Road
P.O. Box AP-59213
Nassau, Commonwealth of the Bahamas

         RE:   TEEKAY LNG PARTNERS L.P. REGISTRATION STATEMENT ON FORM F-3

Ladies and Gentlemen:

         We have acted as counsel to Teekay LNG Partners L.P., a Republic of The
Marshall Islands limited partnership (the "Partnership"), in connection with the
preparation and filing with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated thereunder
("Rules") of a registration statement on Form F-3 (such registration statement
and any additional registration statement filed pursuant to Rule 462(b) is
referred to as the "Registration Statement"), for the registration of the sale
from time to time of up to $400,000,000 aggregate offering price (or any such
further aggregate offering price as may be registered pursuant to Rule 462(b))
of:

               (a)   common units representing limited partnership interests in
                     the Partnership (the "Units");

               (b)   debt securities of the Partnership, which may be (i)
                     co-issued by Teekay LNG Finance Corp., a Republic of The
                     Marshall Islands corporation ("Teekay LNG Finance"), and
                     (ii) either senior debt securities (the "Senior Debt
                     Securities") or subordinated debt securities (the
                     "Subordinated Debt Securities" and, together with the
                     Senior Debt Securities, collectively the "Debt
                     Securities"); and

               (c)   guarantees (the "Guarantees" and, together with the Units
                     and the Debt Securities, collectively the "Securities") of
                     the Debt Securities by one or more of the following
                     subsidiaries of the Partnership (collectively, the
                     "Subsidiary Guarantors" and, together with the Partnership
                     and Teekay LNG Finance Corp., collectively the
                     "Registrants"): Teekay LNG Operating L.L.C., a Marshall
                     Islands limited liability company, African Spirit L.L.C., a
                     Marshall Islands limited liability company, Asian Spirit
                     L.L.C., a Marshall Islands limited liability company,
                     European Spirit L.L.C., a Marshall Islands limited
                     liability company, Teekay Luxembourg S.a.r.l., a Luxembourg
                     company, Teekay Spain, S.L., a



Teekay LNG Partners L.P.
Teekay GP L.L.C.
September 29, 2005
Page 2


                     Spanish company, Teekay II Iberia S.L., a Spanish company,
                     Teekay Shipping Spain, S.L., a Spanish company, Naviera
                     Teekay Gas, S.L., a Spanish company, Naviera Teekay Gas II,
                     S.L., a Spanish company, Naviera Teekay Gas III, S.L., a
                     Spanish company and Naviera Teekay Gas IV, S.L., a Spanish
                     company.

         The Securities will be sold or delivered from time to time as set forth
in the Registration Statement, the prospectus contained therein (the
"Prospectus") and supplements to the Prospectus (the "Prospectus Supplements").

         You have requested our opinion regarding certain United States federal
income tax considerations that may be relevant to prospective unitholders. In
formulating our opinion, we have examined and relied upon originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement, (ii) the certificate of the Partnership and the General Partner ("Tax
Certificate"), (iii) that certain First Amended and Restated Agreement of
Limited Partnership of Teekay LNG Partners L.P., dated as of May 10, 2005,
entered into by and between the General Partner, as the general partner, and
Teekay Shipping Corporation, a Republic of The Marshall Islands corporation
("TSC"), as the organizational limited partner, together with any other persons
who become partners (the "Partnership Agreement"), (iv) that certain letter
ruling dated September 20, 2005 received by the Partnership from the Internal
Revenue Service (the "Ruling"), and (v) such other documents, certificates and
records as we have deemed necessary or appropriate as a basis for the opinion
set forth below, including the time charters ("Charters") under which the
Partnership currently operates and will operate its vessels. We have not,
however, undertaken any independent investigation of any factual matter set
forth in any of the foregoing.

         In addition, we have assumed, with your permission, that (i) the
Partnership will operate in full compliance with the terms of the Partnership
Agreement and the Charters without waiver or breach of any material provision
thereof, (ii) the Ruling will not be revoked or modified, and (iii) the
statements concerning the Partnership and its operations contained in the
Registration Statement, and the representations made by Partnership and the
General Partner in the Tax Certificate, are true, correct and complete and will
remain true, correct and complete at all relevant times. We have also assumed,
with your permission, (iv) the authenticity of original documents submitted to
us, the conformity to the originals of documents submitted to us as copies, and
the due and valid execution and delivery of all such documents where due
execution and delivery are a prerequisite to the effectiveness thereof, and (v)
that any representation or statement made in the Tax Certificate with the
qualification "to the knowledge of" or "based on the belief of" the Partnership
or the General Partner, or other similar qualification, is true, correct and
complete and will remain true, correct and complete at all relevant times, in
each case without such qualification.

         Based upon the foregoing, and subject to the limitations,
qualifications, assumptions and caveats set forth herein, we hereby confirm our
opinions set forth in the Registration Statement under the heading "Material
U.S. Federal Income Tax Consequences." Furthermore, based upon the foregoing and
subject to the limitations, qualifications, assumptions and caveats set forth
herein, we


Teekay LNG Partners L.P.
Teekay GP L.L.C.
September 29, 2005
Page 3

are of the opinion that the discussion in the Registration Statement under the
heading "Material U.S. Federal Income Tax Consequences" with respect to legal
matters or legal conclusions as to which no opinion has been rendered, in all
material respects, is an accurate discussion of the material U.S. federal income
tax considerations that may be relevant to prospective unitholders who are
individual citizens or residents of the United States.

         This opinion addresses only the matters of United States federal income
taxation specifically described under the heading "Material U.S. Federal Income
Tax Consequences" in the Registration Statement. This opinion does not address
any other United States federal tax consequences or any state, local or foreign
tax consequences that may result from the Offering or any other transaction
undertaken in connection with or in contemplation of thereof.

         We hereby consent to the discussion of this opinion in the Registration
Statement, to the filing of this opinion as an exhibit to the Registration
Statement and to the use of our name under the captions "Legal Matters" and
"Material U.S. Federal Income Tax Consequences" in the Registration Statement.
In giving this consent, we do not admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act, nor do we admit
that we are experts with respect to any part of the Registration Statement
within the meaning of "expert" as used in the Securities Act or the rules and
regulations of the Commission promulgated thereunder.

                                        Very truly yours,


                                        /s/ Perkins Coie LLP

EX-8.2

                                                                     EXHIBIT 8.2

                                        WATSON, FARLEY & WILLIAMS (NEW YORK) LLP
Our reference: 02375.50030/19083447 v3                           100 Park Avenue
                                                        New York, New York 10017

                                                              Tel (212) 922 2200

                                                              Fax (212) 922 1512

September 29, 2006

Teekay LNG Partners L.P.
Bayside House, Bayside Executive Park
West Bay Street and Blake Road
Nassau, Commonwealth of the Bahamas



REGISTRATION STATEMENT ON FORM F-3

Dear Sirs:

We have acted as special counsel as to matters of the law of the Republic of The
Marshall Islands ("MARSHALL ISLANDS LAW") for Teekay LNG Partners L.P. (the
"PARTNERSHIP") in connection with the preparation and filing with the Securities
and Exchange Commission (the "COMMISSION"), pursuant to the Securities Act of
1933, as amended (the "SECURITIES ACT"), and the rules and regulations
promulgated thereunder ("RULES"), of a registration statement on Form F-3 (such
registration statement and any additional registration statement filed pursuant
to Rule 462(b) is referred to as the "REGISTRATION STATEMENT") for the
registration of the sale from time to time of up to $400,000,000 aggregate
offering price (or any such further aggregate offering price as may be
registered pursuant to Rule 462(b)) of:

(a)   Common units (the "UNITS") representing limited partnership interests in
      the Partnership;

(b)   Debt securities (the "DEBT SECURITIES") of the Partnership, which may be
      co-issued by Teekay LNG Finance Corp. in the form of either senior debt
      securities or subordinated debt securities; and

(c)   Guarantees (the "GUARANTEES", and together with the Units and the Debt
      Securities, the "Securities") of the Debt Securities by one or more
      subsidiaries of the Partnership.

The Securities will be sold or delivered from time to time as set forth in the
Registration Statement, the prospectus contained therein (the "PROSPECTUS") and
supplements to the Prospectus.

In rendering this opinion, we have examined originals or photocopies of all such
documents, including certificates of public officials and of representatives of
the Partnership and the Partnership's general partner, Teekay GP L.L.C., as we
have deemed necessary. In such examination, we have assumed the


London o Athens o Paris o New York o Singapore o Bangkok o Rome o Hamburg

Watson, Farley & Williams (New York) LLP is a limited liability partnership
registered in England and Wales with registered number OC312253. It is regulated
by the Law Society of England and Wales and its members are solicitors or
registered foreign lawyers. A list of members of Watson, Farley & Williams (New
York) LLP and their professional qualifications is open to inspection at the
above address. Any reference to a 'partner' in relation to Watson, Farley &
Williams (New York) LLP means a member, partner, consultant or employee of
Watson, Farley & Williams (New York) LLP or an affiliated undertaking.

Watson, Farley & Williams (New York) LLP or an affiliated undertaking has an
office in each of the cities listed above.



Teekay LNG Partners L.P.
September 29, 2006                                                        Page 2


genuineness of all signatures, the authenticity of all documents submitted to us
as originals, and the conformity with the original documents of all documents
submitted to us as photocopies. As to any questions of fact material to our
opinion, we have, when relevant facts were not independently established, relied
upon the aforesaid certificates.

This opinion is limited to Marshall Islands Law and is as of the date hereof.

Based on the foregoing and having regard to legal considerations which we deem
relevant, we are of the opinion that the statements in the Prospectus under the
caption "Non-United States Tax Consequences - Marshall Islands Tax
Consequences", insofar as such statements constitute summaries of the legal
matters referred to therein, fairly present the information expected to be
relevant to holders of Units offered pursuant to the Prospectus and fairly
summarize the matters referred to therein.

We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the references to our firm in the Prospectus. In giving this
consent, we do not hereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act or related Rules nor
do we admit that we are experts with respect to any part of the Registration
Statement within the meaning of the term "expert" as used in the Securities Act
or related Rules.

Very truly yours,

/S/ WATSON, FARLEY & WILLIAMS (NEW YORK) LLP

EX-12.1

                                                                               .
                                                                               .
                                                                               .

EXHIBIT 12.1
STATEMENT REGARDING COMPUTATION OF RATIOS
TEEKAY LNG PARTNERS L.P.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
DEFINED IN ITEM 503(D) OF REGULATION S-K
(IN THOUSANDS EXCEPT RATIOS)



                                                                                YEARS ENDED DECEMBER 31,
                                                                              -----------------------------
                                                                                          2004
                                                                              -----------------------------
                                             YEARS ENDED DECEMBER 31,         JANUARY 1 TO       MAY 1 TO
                                          -------------------------------      APRIL 30,       DECEMBER 31,
                                           2001        2002        2003           2004             2004
                                          ------     --------     -------     ------------     ------------
                                                                                
FIXED CHARGES:
 Interest expense and amortization of
   deferred financing costs               20,104       18,109      34,862        21,475           50,485
 Write-off of capitalized loan costs           0            0           0             0                0
 Capitalized interest                        191        6,037      14,005         2,607            2,575
                                          -----------------------------------------------------------------
TOTAL FIXED CHARGES (A)                   20,295       24,146      48,867        24,082           53,060
                                          -----------------------------------------------------------------

EARNINGS:
Add:
 Net Income (loss)                         2,129     (113,770)    (59,432)       16,164          (84,395)
 Add: Minority interest expense
   (income)                                  259          200         200           100                0
 Add: Income taxes expense (recovery)       (663)       2,164       3,033          (645)             967
 --------------------------------------------------------------------------------------------------------
 Pretax income (loss) from continuing
   operations before adjustment for
   minority interests in consolidated
   subsidiaries                            1,725     (111,406)    (56,199)       15,619          (83,428)
 --------------------------------------------------------------------------------------------------------

 Fixed charges                            20,295       24,146      48,867        24,082           53,060

 Amortization of capitalized interest          0            0           0             0                0

Subtract:

 Capitalized interest                       (191)      (6,037)    (14,005)       (2,607)          (2,575)
 Minority interest expense of
   subsidiaries that have not incurred
   fixed charges                            (259)        (200)       (200)         (100)               0
                                          -----------------------------------------------------------------
TOTAL EARNINGS AVAILABLE TO COVER FIXED
 CHARGES (B)                              21,570      (93,497)    (21,537)       36,994          (32,943)
                                          -----------------------------------------------------------------

RATIO OF EARNINGS TO FIXED CHARGES
 (B/A)                                      1.28        (3.87)      (0.44)         1.54            (0.62)

DOLLAR AMOUNT OF DEFICIENCY IN EARNINGS
 TO FIXED CHARGES                                    (117,643)    (70,404)                       (86,003)


                                            YEARS ENDED DECEMBER 31,
                                          -----------------------------
                                                      2005
                                          -----------------------------     SIX MONTHS
                                          JANUARY 1 TO      MAY 10 TO         ENDED
                                             MAY 9,        DECEMBER 31,      JUNE 30,
                                              2005             2005            2006
                                          ------------     ------------     ----------
                                                                   
FIXED CHARGES:
 Interest expense and amortization of
   deferred financing costs                  35,679           37,623          40,005
 Write-off of capitalized loan costs          7,462                0               0
 Capitalized interest                             0            2,493             600
                                          ----------------------------------------------
TOTAL FIXED CHARGES (A)                      43,141           40,116          40,605
                                          ----------------------------------------------

EARNINGS:
Add:
 Net Income (loss)                           29,215           50,332         (14,758)
 Add: Minority interest expense
   (income)                                       0                0            (617)
 Add: Income taxes expense (recovery)         2,648           (2,910)           (378)
 ---------------------------------------------------------------------------------------
 Pretax income (loss) from continuing
   operations before adjustment for
   minority interests in consolidated
   subsidiaries                              31,863           47,422         (15,753)
 ---------------------------------------------------------------------------------------

 Fixed charges                               43,141           40,116          40,605

 Amortization of capitalized interest             0               22             104

Subtract:
 Capitalized interest                             0           (2,493)           (600)
 Minority interest expense of
   subsidiaries that have not incurred
   fixed charges                                  0                0               0
                                          ----------------------------------------------
TOTAL EARNINGS AVAILABLE TO COVER FIXED
 CHARGES (B)                                 75,004           85,067          24,356
                                          ----------------------------------------------

RATIO OF EARNINGS TO FIXED CHARGES
 (B/A)                                         1.74             2.12            0.60

DOLLAR AMOUNT OF DEFICIENCY IN EARNINGS
 TO FIXED CHARGES                                                            (16,249)

EX-15.1

                                                                    EXHIBIT 15.1

                    ACKNOWLEDGEMENT OF INDEPENDENT REGISTERED
                             PUBLIC ACCOUNTING FIRM

To the Board of Directors and Unitholders of
Teekay LNG Partners L.P.

We are aware of the incorporation by reference in the Registration Statement
(Form F-3) of Teekay LNG Partners L.P for the registration of a maximum
aggregate offering of $400,000,000 of common units and debt securities of our
reports dated May 1, 2006 and August 1, 2006, relating to the unaudited
consolidated interim financial statements of Teekay LNG Partners L.P. that are
included in its Forms 6-K for the three months ended March 31, 2006 and the
three and the six months ended June 30, 2006, respectively.

Pursuant to Rule 436(c) of the Securities Act of 1933, our reports are not a
part of the registration statements prepared or certified by accountants within
the meaning of Section 7 or 11 of the Securities Act of 1933.



Vancouver, Canada,                                         /s/ Ernst & Young LLP
September 29, 2006                                         Chartered Accountants

EX-23.1

                                                                    EXHIBIT 23.1

                    CONSENT OF INDEPENDENT REGISTERED PUBLIC
                                ACCOUNTING FIRM

We consent to the reference to our firm under the caption "Experts" in this
Registration Statement (Form F-3) and related Prospectus of Teekay LNG Partners
L.P. for the registration of a maximum aggregate offering of $400,000,000 of
common units and debt securities and to the incorporation by reference therein
of our report dated February 21, 2006, with respect to the consolidated
financial statements of Teekay LNG Partners L.P. included in its Annual Report
(Form 20-F) for the year ended December 31, 2005, filed with the Securities and
Exchange Commission.




Vancouver, Canada,                                         /s/ Ernst & Young LLP
September 29, 2006                                         Chartered Accountants

EX-25.1

                                                                    EXHIBIT 25.1

================================================================================

                                    FORM T-1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                            STATEMENT OF ELIGIBILITY
                   UNDER THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE

                      CHECK IF AN APPLICATION TO DETERMINE
                      ELIGIBILITY OF A TRUSTEE PURSUANT TO
                             SECTION 305(b)(2) [  ]
                           ---------------------------

                              THE BANK OF NEW YORK
               (Exact name of trustee as specified in its charter)

New York                                                   13-5160382
(State of incorporation                                    (I.R.S. employer
if not a U.S. national bank)                               identification no.)

One Wall Street, New York, N.Y.                            10286
(Address of principal executive offices)                   (Zip code)

                           ---------------------------

                            TEEKAY LNG PARTNERS L.P.
               (Exact name of obligor as specified in its charter)

Republic of the Marshall Islands                           98-0454169
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                            TEEKAY LNG FINANCE CORP.
               (Exact name of obligor as specified in its charter)

Republic of the Marshall Islands                           98-0506852
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)



                           ---------------------------

                           TEEKAY LNG OPERATING L.L.C.
               (Exact name of obligor as specified in its charter)

Republic of the Marshall Islands                           66-0657756
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                              AFRICAN SPIRIT L.L.C.
               (Exact name of obligor as specified in its charter)

Republic of the Marshall Islands                           98-0428182
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                               ASIAN SPIRIT L.L.C.
               (Exact name of obligor as specified in its charter)

Republic of the Marshall Islands                           98-0447129
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                             EUROPEAN SPIRIT L.L.C.
               (Exact name of obligor as specified in its charter)

Republic of the Marshall Islands                           98-0428235
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                           TEEKAY LUXEMBOURG S.A.R.L.
               (Exact name of obligor as specified in its charter)

Luxembourg                                                 98-0442934
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)



                                     - 2 -

                           ---------------------------

                               TEEKAY SPAIN, S.L.
               (Exact name of obligor as specified in its charter)

Spain                                                      98-0442935
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                              TEEKAY II IBERIA S.L.
               (Exact name of obligor as specified in its charter)

Spain                                                      98-0442936
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                           TEEKAY SHIPPING SPAIN, S.L.
               (Exact name of obligor as specified in its charter)

Spain                                                      98-0442937
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                            NAVIERA TEEKAY GAS, S.L.
               (Exact name of obligor as specified in its charter)

Spain                                                      98-0442938
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                           NAVIERA TEEKAY GAS II, S.L.
               (Exact name of obligor as specified in its charter)

Spain                                                      98-0442939
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)



                                     - 3 -

                           ---------------------------

                          NAVIERA TEEKAY GAS III, S.L.
               (Exact name of obligor as specified in its charter)

Spain                                                      98-0442940
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                           NAVIERA TEEKAY GAS IV, S.L.
               (Exact name of obligor as specified in its charter)

Spain                                                      98-0442941
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)




Bayside House, Bayside Executive Park                      N/A
West Bay Street and Blake Road                             (Zip code)
P.O. Box AP-59212
Nassau, Commonwealth of the Bahamas
(Address of principal executive offices)

                           ---------------------------

                             Senior Debt Securities
                       (Title of the indenture securities)

================================================================================


                                     - 4 -


1.    GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:

      (a)   NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
            IT IS SUBJECT.




- ------------------------------------------------------------------------------------------------------------
                       Name                                                        Address
- ---------------------------------------------------------------- --------------------------------------------

                                                              
        Superintendent of Banks of the State of New York         One State Street, New York, N.Y.
                                                                 10004-1417, and Albany, N.Y.
                                                                 12223

        Federal Reserve Bank of New York                         33 Liberty Street, New York, N.Y.
                                                                 10045

        Federal Deposit Insurance Corporation                    Washington, D.C.  20429

        New York Clearing House Association                      New York, New York   10005



      (b)   WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.

      Yes.

2.    AFFILIATIONS WITH OBLIGOR.

      IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
      AFFILIATION.

      None.

16.   LIST OF EXHIBITS.

      EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
      INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
      7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
      229.10(d).

      1.    A copy of the Organization Certificate of The Bank of New York
            (formerly Irving Trust Company) as now in effect, which contains the
            authority to commence business and a grant of powers to exercise
            corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
            filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
            Form T-1 filed with Registration Statement No. 33-21672, Exhibit 1
            to Form T-1 filed with Registration Statement No. 33-29637 and
            Exhibit 1 to Form T-1 filed with Registration Statement No.
            333-121195.)

      4.    A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
            T-1 filed with Registration Statement No. 333-121195.)



                                     - 5 -


      6.    The consent of the Trustee required by Section 321(b) of the Act.
            (Exhibit 6 to Form T-1 filed with Registration Statement No.
            333-106702.)

      7.    A copy of the latest report of condition of the Trustee published
            pursuant to law or to the requirements of its supervising or
            examining authority.




                                     - 6 -


                                    SIGNATURE

         Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 27th day of September, 2006.

                                     THE BANK OF NEW YORK


                                     By:  /S/ Beata Hryniewicka
                                          --------------------------------------
                                          Name:  Beata Hryniewicka
                                          Title: Assistant Vice President


                                     - 7 -

EX-25.2

                                                                    EXHIBIT 25.2

================================================================================

                                    FORM T-1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                            STATEMENT OF ELIGIBILITY
                   UNDER THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE

                      CHECK IF AN APPLICATION TO DETERMINE
                      ELIGIBILITY OF A TRUSTEE PURSUANT TO
                             SECTION 305(b)(2) [  ]

                           ---------------------------

                              THE BANK OF NEW YORK
               (Exact name of trustee as specified in its charter)

New York                                                   13-5160382
(State of incorporation                                    (I.R.S. employer
if not a U.S. national bank)                               identification no.)

One Wall Street, New York, N.Y.                            10286
(Address of principal executive offices)                   (Zip code)

                           ---------------------------

                            TEEKAY LNG PARTNERS L.P.
               (Exact name of obligor as specified in its charter)

Republic of the Marshall Islands                           98-0454169
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                            TEEKAY LNG FINANCE CORP.
               (Exact name of obligor as specified in its charter)

Republic of the Marshall Islands                           98-0506852
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)




                           ---------------------------

                           TEEKAY LNG OPERATING L.L.C.
               (Exact name of obligor as specified in its charter)

Republic of the Marshall Islands                           66-0657756
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                              AFRICAN SPIRIT L.L.C.
               (Exact name of obligor as specified in its charter)

Republic of the Marshall Islands                           98-0428182
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                               ASIAN SPIRIT L.L.C.
               (Exact name of obligor as specified in its charter)

Republic of the Marshall Islands                           98-0447129
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                             EUROPEAN SPIRIT L.L.C.
               (Exact name of obligor as specified in its charter)

Republic of the Marshall Islands                           98-0428235
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                           TEEKAY LUXEMBOURG S.A.R.L.
               (Exact name of obligor as specified in its charter)

Luxembourg                                                 98-0442934
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)


                                     - 2 -

                           ---------------------------

                               TEEKAY SPAIN, S.L.
               (Exact name of obligor as specified in its charter)

Spain                                                      98-0442935
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                              TEEKAY II IBERIA S.L.
               (Exact name of obligor as specified in its charter)

Spain                                                      98-0442936
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                           TEEKAY SHIPPING SPAIN, S.L.
               (Exact name of obligor as specified in its charter)

Spain                                                      98-0442937
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                            NAVIERA TEEKAY GAS, S.L.
               (Exact name of obligor as specified in its charter)

Spain                                                      98-0442938
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                           NAVIERA TEEKAY GAS II, S.L.
               (Exact name of obligor as specified in its charter)

Spain                                                      98-0442939
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)


                                     - 3 -

                           ---------------------------

                          NAVIERA TEEKAY GAS III, S.L.
               (Exact name of obligor as specified in its charter)

Spain                                                      98-0442940
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)

                           ---------------------------

                           NAVIERA TEEKAY GAS IV, S.L.
               (Exact name of obligor as specified in its charter)

Spain                                                      98-0442941
(State or other jurisdiction of                            (I.R.S. employer
incorporation or organization)                             identification no.)



Bayside House, Bayside Executive Park                      N/A
West Bay Street and Blake Road                             (Zip code)
P.O. Box AP-59212
Nassau, Commonwealth of the Bahamas
(Address of principal executive offices)


                           ---------------------------

                          Subordinated Debt Securities
                       (Title of the indenture securities)

================================================================================


                                     - 4 -


1.    GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:

      (a)   NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
            IT IS SUBJECT.



- -------------------------------------------------------------------------------------------------------------
                       Name                                                        Address
- ---------------------------------------------------------------- --------------------------------------------

                                                              
        Superintendent of Banks of the State of New York         One State Street, New York, N.Y.
                                                                 10004-1417, and Albany, N.Y.
                                                                 12223

        Federal Reserve Bank of New York                         33 Liberty Street, New York, N.Y.
                                                                 10045

        Federal Deposit Insurance Corporation                    Washington, D.C.  20429

        New York Clearing House Association                      New York, New York   10005


      (b)   WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.

      Yes.

2.    AFFILIATIONS WITH OBLIGOR.

      IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
      AFFILIATION.

      None.

16.   LIST OF EXHIBITS.

      EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
      INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
      7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
      229.10(d).

      1.    A copy of the Organization Certificate of The Bank of New York
            (formerly Irving Trust Company) as now in effect, which contains the
            authority to commence business and a grant of powers to exercise
            corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
            filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
            Form T-1 filed with Registration Statement No. 33-21672, Exhibit 1
            to Form T-1 filed with Registration Statement No. 33-29637 and
            Exhibit 1 to Form T-1 filed with Registration Statement No.
            333-121195.)

      4.    A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
            T-1 filed with Registration Statement No. 333-121195.)



                                     - 5 -


      6.    The consent of the Trustee required by Section 321(b) of the Act.
            (Exhibit 6 to Form T-1 filed with Registration Statement No.
            333-106702.)

      7.    A copy of the latest report of condition of the Trustee published
            pursuant to law or to the requirements of its supervising or
            examining authority.




                                     - 6 -


                                    SIGNATURE

         Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 27th day of September, 2006.

                                           THE BANK OF NEW YORK


                                            By: /S/ Beata Hryniewicka
                                                --------------------------------
                                                Name:  Beata Hryniewicka
                                                Title: Assistant Vice President



                                     - 7 -