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<SEC-DOCUMENT>0000945234-03-000023.txt : 20030211
<SEC-HEADER>0000945234-03-000023.hdr.sgml : 20030211
<ACCEPTANCE-DATETIME>20030211080159
ACCESSION NUMBER:		0000945234-03-000023
CONFORMED SUBMISSION TYPE:	424B2
PUBLIC DOCUMENT COUNT:		4
FILED AS OF DATE:		20030211

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TEEKAY SHIPPING CORP
		CENTRAL INDEX KEY:			0000911971
		STANDARD INDUSTRIAL CLASSIFICATION:	DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			C5
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		424B2
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-102594
		FILM NUMBER:		03548666

	BUSINESS ADDRESS:	
		STREET 1:		TK HOUSE, BAYSIDE EXECUTIVE PARK
		STREET 2:		WEST BAY ST & BLAKE RD, PO BOX AP-59213
		CITY:			NASSAU BAHAMAS
		STATE:			C5
		ZIP:			00000
		BUSINESS PHONE:		8093228020

	MAIL ADDRESS:	
		STREET 1:		1 BENTALL CENTRE,STE 1400,505 BURRARD ST
		STREET 2:		VANCOUVER, BRITISH COLUMBIA
		CITY:			CANADA V7X 1M5
		STATE:			A6
		ZIP:			00000

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	VIKING STAR SHIPPING INC
		DATE OF NAME CHANGE:	19930914
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B2
<SEQUENCE>1
<FILENAME>o08807e424b2.htm
<DESCRIPTION>PRELIMINARY PROSPECTUS SUPPLEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>Preliminary Prospectus Supplement</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<TABLE width="100%" border="1" cellpadding="5"><TR><TD>
<FONT size="2" color="#C41E3A">The information in this
preliminary prospectus supplement is not complete and may be
changed. We may not deliver these securities until the
registration statement filed with the Securities and Exchange
Commission is effective and a final prospectus supplement is
delivered. This preliminary prospectus supplement and the
accompanying prospectus are not offers to sell these securities
and we are not soliciting offers to buy these securities in any
state where the offer or sale is not
permitted.</FONT><FONT size="2"> <BR>

</FONT>
</TD></TR></TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="50%"></TD>
    <TD width="50%"></TD>
</TR>

<TR valign="top">
    <TD align="left"><FONT size="2"> </FONT><I>PROSPECTUS SUPPLEMENT <FONT color="#C41E3A">Issued February&nbsp;10, 2003</FONT></I></TD>
    <TD align="right"><I><FONT color="#C41E3A">(Subject to Completion)</FONT></I></TD>
</TR>

</TABLE>

<DIV align="left">
<I><FONT size="2">(To Prospectus Dated January&nbsp;17,
2003)</FONT></I>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="96%"></TD>
    <TD width="4%"></TD>
</TR>

<TR valign="top">
    <TD align="center">
    <I><FONT size="5">5,000,000&nbsp;PEPS Units</FONT></I></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD align="center">
    <I><FONT size="4">(Initially Consisting of 5,000,000 Corporate
    Units)</FONT></I></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="right">
<IMG src="o08807teekay1.gif" alt="Teekay Logo">

<DIV align="center">
<I><FONT size="6">TEEKAY SHIPPING CORPORATION</FONT></I>
</DIV>

<P align="center">
<I><FONT size="4">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
PEPS<SUP>SM</SUP> Units</FONT></I>

<DIV align="center">
<I>(Premium Equity Participating Security Units&nbsp;&#151;
PEPS<SUP>SM</SUP> Units)</I>
</DIV>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<P align="left">
<B><I><FONT size="2">Each PEPS Unit will have a stated amount of
$25 and will consist of (a)&nbsp;a purchase contract issued by
us and (b)&nbsp;initially, $25 principal amount of our
subordinated notes due May&nbsp;18, 2006, which we refer to
collectively as a Corporate Unit.</FONT></I></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; &nbsp;</FONT></I></B></TD>
    <TD align="left">
    <B><I><FONT size="2">The purchase contract will obligate you to
    purchase from us, no later than February&nbsp;16, 2006, for a
    price of $25 in cash, the following number of shares of our
    common stock, subject to anti-dilution
    adjustments:</FONT></I></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; &nbsp;</FONT></I></B></TD>
    <TD align="left">
    <B><I><FONT size="2">if the average closing price of our common
    stock over the 20-trading day period ending on the third trading
    day prior to February&nbsp;16, 2006 equals or exceeds
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    of our common stock;</FONT></I></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; &nbsp;</FONT></I></B></TD>
    <TD align="left">
    <B><I><FONT size="2">if the average closing price of our common
    stock over the same period is less than
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;but
    greater than
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    a number of shares of our common stock having a value, based on
    the 20-trading day average closing price, equal to $25;
    and</FONT></I></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; &nbsp;</FONT></I></B></TD>
    <TD align="left">
    <B><I><FONT size="2">if the average closing price of our common
    stock over the same period is less than or equal to
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    of our common stock.</FONT></I></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; &nbsp;</FONT></I></B></TD>
    <TD align="left">
    <B><I><FONT size="2">We will also pay you quarterly contract
    adjustment payments at a rate
    of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% per
    year of the stated amount of $25 per PEPS Unit, or
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    year, subject to our right to defer contract adjustment
    payments, as described in this prospectus
    supplement.</FONT></I></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; &nbsp;</FONT></I></B></TD>
    <TD align="left">
    <B><I><FONT size="2">The notes will initially be our unsecured,
    subordinated obligations and bear interest at a rate
    of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% per
    year, payable quarterly, subject to our right to defer interest
    payments, as described in this prospectus supplement. On and
    after February&nbsp;16, 2006, except in the event of our earlier
    bankruptcy, insolvency or reorganization, the notes will be our
    senior, unsecured obligations. The notes will be remarketed as
    described in this prospectus supplement. Following a successful
    remarketing, the interest rate on the notes will be
    reset.</FONT></I></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; &nbsp;</FONT></I></B></TD>
    <TD align="left">
    <B><I><FONT size="2">You can create Treasury Units from
    Corporate Units by substituting Treasury securities for the
    notes comprising a part of the Corporate Units, and you can
    recreate Corporate Units by substituting notes for the Treasury
    securities comprising a part of the Treasury
    Units.</FONT></I></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; &nbsp;</FONT></I></B></TD>
    <TD align="left">
    <B><I><FONT size="2">The notes or, if substituted for the notes,
    the Treasury securities, will be pledged to us to secure your
    obligation under the related purchase contract.</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">
<B><I><FONT size="2">The PEPS Units have been approved for
listing on the New York Stock Exchange under the symbol
&#147;TK-prA.&#148; Our common stock is traded on the New York
Stock exchange under the symbol &#147;TK.&#148; On
February&nbsp;10, 2003, the reported last sale price of our
common stock on the New York Stock Exchange was $38.52 per
share.</FONT></I></B>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<P align="left">
<B><I>Investing in the PEPS Units involves risks. You should
carefully consider the &#147;Risk Factors&#148; beginning on
page&nbsp;S-18 of this prospectus supplement.</I></B>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="38%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="19%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="19%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="15%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Underwriting</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><I><FONT size="1">Price to</FONT></I></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Discounts And</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Proceeds to</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Public</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Commissions</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Company</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Per Corporate PEPS Unit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <I><FONT size="2">$25.00</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <I><FONT size="2">$</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <I><FONT size="2">$</FONT></I></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <I><FONT size="2">$125,000,000</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <I><FONT size="2">$</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <I><FONT size="2">$</FONT></I></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<P align="left">
<FONT size="2">We have granted the underwriters a 30-day option
to purchase up to 750,000 additional PEPS Units on the same
terms and conditions as set forth above solely to cover
over-allotments, if any.
</FONT>

<P align="left">
<FONT size="2">The Securities and Exchange Commission and state
and other regulators have not approved or disapproved these
securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
</FONT>

<P align="left">
<FONT size="2">Morgan Stanley &#38; Co. Incorporated and Salomon
Smith Barney Inc. expect to deliver the PEPS Units to purchasers
on or about February&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2003.
</FONT>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<P align="center">
<I>Joint Book-running Managers</I>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="50%"></TD>
    <TD width="50%"></TD>
</TR>

<TR valign="top">
    <TD align="left"><I><FONT size="4">MORGAN STANLEY</FONT></I></TD>
    <TD align="right"><I><FONT size="4">SALOMON SMITH BARNEY</FONT></I></TD>
</TR>

</TABLE>

<DIV align="left">
<FONT size="2">February&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2003
</FONT>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">PROSPECTUS SUPPLEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">INDEX OF SELECTED TERMS FOR THE PROSPECTUS SUPPLEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">PROSPECTUS SUPPLEMENT SUMMARY</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">RISK FACTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">USE OF PROCEEDS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">CAPITALIZATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">COMMON STOCK PRICE RANGE AND DIVIDENDS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">ACCOUNTING TREATMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">DESCRIPTION OF THE PEPS UNITS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">DESCRIPTION OF THE PURCHASE CONTRACTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">CERTAIN PROVISIONS OF THE PURCHASE CONTRACTS, THE PURCHASE CONTRACT AGREEMENT AND THE PLEDGE AGREEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#013">DESCRIPTION OF THE NOTES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#014">DESCRIPTION OF OUR OTHER INDEBTEDNESS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#015">TAX CONSEQUENCES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#016">REGULATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#017">TAXATION OF TEEKAY</A></TD></TR>
<TR><TD colspan="9"><A HREF="#018">UNDERWRITERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#019">LEGAL MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#020">EXPERTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#021">PROSPECTUS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#022">ABOUT THIS PROSPECTUS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#023">WHERE YOU CAN FIND MORE INFORMATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#024">SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#025">RISK FACTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#026">SERVICE OF PROCESS AND ENFORCEMENT OF LIABILITIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#027">TEEKAY SHIPPING CORPORATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#028">RECENT DEVELOPMENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#029">USE OF PROCEEDS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#030">CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#031">CAPITALIZATION AND INDEBTEDNESS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#032">SECURITIES WE MAY ISSUE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#033">DESCRIPTION OF CAPITAL STOCK</A></TD></TR>
<TR><TD colspan="9"><A HREF="#034">DESCRIPTION OF WARRANTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#035">DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#036">DESCRIPTION OF DEBT SECURITIES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#037">PLAN OF DISTRIBUTION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#038">EXPENSES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#039">LEGAL MATTERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#040">EXPERTS</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "PROSPECTUS SUPPLEMENT" -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Prospectus Supplement</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Index of Selected Terms for the Prospectus
    Supplement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-3
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Special Note Regarding Forward-Looking Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-3
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prospectus Supplement Summary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-5
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Risk Factors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-18
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Use of Proceeds
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-30
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selected Consolidated Financial and Other Data
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-31
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capitalization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-34
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Common Stock Price Range and Dividends
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-36
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounting Treatment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-37
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of the PEPS Units
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-38
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of the Purchase Contracts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-42
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Certain Provisions of the Purchase Contracts, the
    Purchase Contract Agreement and the Pledge Agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-54
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of the Notes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-58
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of our Other Indebtedness
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-63
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tax Consequences
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-65
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Regulation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-73
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Taxation of Teekay
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-78
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Underwriters
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-84
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Legal Matters
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-87
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Experts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">S-87
    </FONT></TD>
</TR>


<TR>
    <TD align="center" nowrap><B><FONT size="1">Prospectus</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">&nbsp;</FONT></B></TD>
</TR>

<TR>
    <TD align="center" colspan="3" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">About this Prospectus
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">1
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Where You Can Find More Information
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">2
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Special Note Regarding Forward-Looking Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">3
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Risk Factors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">4
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service of Process and Enforcement of Liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">4
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Teekay Shipping Corporation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">5
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Recent Developments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">5
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Use of Proceeds
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">5
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Ratio of Earnings to Fixed Charges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">6
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capitalization and Indebtedness
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">6
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Securities We May Issue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">8
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of Capital Stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">12
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of Warrants
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">16
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of Stock Purchase Contracts and Stock
    Purchase Units
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">19
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of Debt Securities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">20
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Plan of Distribution
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">32
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">34
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Legal Matters
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">34
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Experts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">34
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">This document is in two parts. The first part
is this prospectus supplement, which describes the terms of the
offering of PEPS Units and also adds to and updates information
contained in the accompanying prospectus and the documents
incorporated by reference into the prospectus. The second part
is the accompanying prospectus, which gives more general
information, some of which may not apply to the PEPS
Units.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">You should rely only on the information
contained or incorporated by reference in this prospectus
supplement and the accompanying prospectus. We have not
authorized anyone to provide you with information other than
that contained or incorporated by reference in this prospectus
supplement and the accompanying prospectus. The information in
this prospectus supplement and the accompanying prospectus may
be accurate only as of their respective dates.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">We are offering to sell the PEPS Units, and
are seeking offers to buy the PEPS Units, only in jurisdictions
where offers and sales are permitted. The distribution of this
prospectus supplement and the accompanying prospectus and the
offering of the PEPS Units in certain jurisdictions may be
restricted by law. Persons outside the United States who come
into possession of this prospectus supplement and the
accompanying prospectus must inform themselves about and observe
any restrictions relating to the offering of the PEPS Units and
the distribution of this prospectus supplement and the
accompanying prospectus outside the United States. This
prospectus supplement and the accompanying prospectus do not
constitute, and may not be used in connection with, an offer or
solicitation by anyone in any jurisdiction in which such offer
or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to any
person to whom it is unlawful to make such offer or
solicitation.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">PEPS<SUP>SM</SUP> Units is a service mark of
Morgan Stanley &#38; Co. Incorporated.</FONT></I>

<P align="center"><FONT size="2">S-2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "INDEX OF SELECTED TERMS FOR THE PROSPECTUS SUPPLEMENT" -->
<DIV align="left"><A NAME="001"></A></DIV>

<P align="center">
<B><FONT size="2">INDEX OF SELECTED TERMS FOR THE PROSPECTUS
SUPPLEMENT</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="88%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">additional amounts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">applicable market value
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">cash merger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">closing price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Corporate Unit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">current market price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">excluded additional amounts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">ex date
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">extension period
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">indenture
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">merger early settlement right
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">purchase contract agent
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">purchase contract settlement date
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">reference price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">remarketing date
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">reset effective date
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">reset rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">senior debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">settlement price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">settlement rate
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">taxing jurisdiction
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">threshold appreciation price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">trading day
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Treasury security
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Treasury Unit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">United States holder
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">S-65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<!-- link1 "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="center">
<B><FONT size="2">SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our disclosure and analysis in this prospectus
supplement, in the accompanying prospectus and in the documents
incorporated by reference contain forward-looking statements
within the meaning of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements may include
statements regarding, among other items:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our estimated results of operations for fiscal
    2002, and other future earnings and operating results;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">prospects and trends of the tanker industry;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">tanker supply and demand;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our market share in the Aframax tanker market and
    in the world shuttle tanker market;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">expectations as to funding our future capital
    requirements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">future capital expenditures;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our growth strategy and measures to implement our
    growth strategy;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the expected financing, benefits and results of
    our pending acquisition of Navion ASA;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">competition;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">regulatory matters; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">other discussions of future plans and strategies,
    anticipated developments and other matters that involve
    predictions of future events.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other statements contained in this prospectus
supplement, in the accompanying prospectus and in the documents
incorporated by reference are forward-looking statements and are
not based on historical fact, such as statements containing the
words &#147;believes,&#148; &#147;may,&#148; &#147;will,&#148;
&#147;estimates,&#148; &#147;continue,&#148;
&#147;anticipates,&#148; &#147;intends,&#148;
&#147;expects&#148; and words of similar import.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These forward-looking statements are subject to
risks, uncertainties and assumptions, including those risks
discussed in &#147;Risk Factors&#148; and those risks discussed
in documents incorporated by reference and in other reports we
file with the SEC. 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.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Actual results may differ materially from those
projected in forward-looking statements. Although we believe
that our estimates are reasonable, you should not unduly rely on
these estimates, which are based on our current expectations.
Factors that could cause actual results to differ materially
include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the cyclical nature of the tanker industry and
    its dependence on oil markets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the supply of tankers available to meet the
    demand for transportation of petroleum products;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our potential inability to close our pending
    acquisition of Navion ASA and our potential inability to
    integrate effectively the operations of Navion or any other
    future acquisition with our own;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2"> &#149; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;our
substantial dependence on spot oil voyages;
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">unforeseen information relating to our results
    for fiscal 2002 or accounting adjustments made during the 2002
    year-end financial statement close process;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">environmental and other regulations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the impact on the tanker industry of significant
    oil spills or similar events;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">possible disruption in commercial activities due
    to threatened or actual terrorist activity and armed conflict;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our potential inability to achieve and manage
    growth; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the risks discussed in &#147;Risk Factors&#148;
    and those risks discussed in documents incorporated by reference
    and in other reports we file with the SEC, including the factors
    described in &#147;Factors That May Affect Future Results&#148;
    in our annual report on Form&nbsp;20-F for the year ended
    December&nbsp;31, 2001 filed with the SEC on March&nbsp;29, 2002.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We undertake no obligation to update any
forward-looking statement or statements 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
impact 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. Neither we, nor any underwriters,
make any representation, warranty or assurance as to the
completeness or accuracy of these projections, and neither
express an opinion or any other form of assurance regarding them.
</FONT>

<P align="center"><FONT size="2">S-4
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "PROSPECTUS SUPPLEMENT SUMMARY" -->
<DIV align="left"><A NAME="003"></A></DIV>

<P align="center">
<B><FONT size="2">PROSPECTUS SUPPLEMENT SUMMARY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following summary contains basic information
about us and our PEPS Units. It does not contain all the
information that is important to you. You should read the
summary together with the more detailed information and
financial statements and notes to the financial statements
contained elsewhere or incorporated by reference into this
prospectus supplement or the accompanying prospectus. To fully
understand this offering, you should read all of these
documents. To the extent there is a conflict between the
information contained in this prospectus supplement, on the one
hand, and the information contained in the accompanying
prospectus or any document incorporated by reference, on the
other hand, the information in this prospectus supplement shall
control.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">In this prospectus supplement we use the terms
&#147;Teekay,&#148; &#147;we,&#148; &#147;us&#148; and
&#147;our&#148; to refer, depending on the context, to Teekay
Shipping Corporation, a Marshall Islands corporation, or to
Teekay Shipping Corporation and its consolidated subsidiaries.
Unless otherwise indicated, all dollar references in this
prospectus supplement are to U.S.&nbsp;dollars and financial
information presented in this prospectus supplement is prepared
in accordance with accounting principles generally accepted in
the United States.</FONT></I>

<P align="center">
<B><FONT size="2">TEEKAY SHIPPING CORPORATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Teekay is a leading provider of international
crude oil and petroleum product transportation services through
the world&#146;s largest fleet of medium-size oil tankers. We
provide transportation services to major oil companies, major
oil traders and government agencies worldwide. As of
December&nbsp;31, 2002, our fleet consisted of 102&nbsp;tankers
(including 12&nbsp;newbuildings, five vessels time-chartered-in
and four vessels owned by joint ventures). We believe our
Aframax fleet as of such date was approximately three times
larger than that of our nearest direct Aframax competitor.
Through our acquisition of Ugland Nordic Shipping AS, or UNS, in
2001, we are also the largest owner of shuttle tankers, which
engage in the transportation of oil from offshore production
platforms to onshore storage and refinery facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2002, our fleet
(excluding newbuildings) had a total cargo capacity of
approximately 9.0&nbsp;million deadweight tons. As of such date
our Aframax tankers represented approximately 12% of the total
tonnage of the world Aframax fleet, and our shuttle tankers
represented approximately 26% of the total tonnage of the world
shuttle tanker fleet.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Teekay organization was founded in 1973.
Teekay is incorporated under the laws of the Republic of The
Marshall Islands.
</FONT>

<P align="center">
<B><FONT size="2">RECENT DEVELOPMENTS</FONT></B>

<P align="left">
<B><FONT size="2">Recent Results</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on our preliminary review of unaudited
operating results for our quarter and fiscal year ended
December&nbsp;31, 2002, we expect to report net income of
approximately $33.1&nbsp;million, or $0.82 per share, for the
quarter ended December&nbsp;31, 2002, compared to net income of
$31.2&nbsp;million, or $0.78 per share, for the quarter ended
December&nbsp;31, 2001. We expect to report net voyage revenues
of approximately $155.1&nbsp;million for the quarter ended
December&nbsp;31, 2002, compared to $152.2&nbsp;million recorded
for the quarter ended December&nbsp;31, 2001, while income from
vessel operations is expected to increase to approximately
$48.6&nbsp;million for the quarter ended December&nbsp;31, 2002,
from $46.1&nbsp;million for the quarter ended December&nbsp;31,
2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect to report net income of approximately
$53.4&nbsp;million, or $1.33 per share, for the fiscal year
ended December&nbsp;31, 2002, compared to net income of
$336.5&nbsp;million, or $8.31 per share, for the fiscal year
ended December&nbsp;31, 2001. Net voyage revenues are expected
to be approximately $543.9&nbsp;million for the fiscal year
ended December&nbsp;31, 2002, compared to net voyage revenues of
$789.5&nbsp;million for our fiscal year ended December&nbsp;31,
2001, while income from vessel operations is expected to
decrease to approximately $119.3&nbsp;million for the fiscal
year ended December&nbsp;31, 2002, from $383.5&nbsp;million for
the fiscal year ended December&nbsp;31, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since our financial statements for the year ended
December&nbsp;31, 2002 have not been finalized, information
regarding our results for the quarter and the fiscal year ended
December&nbsp;31, 2002 are subject to change and, with
</FONT>

<P align="center"><FONT size="2">S-5
</FONT>

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<DIV align="left">
<FONT size="2">respect to the fiscal 2002 year-end results,
remain subject to a final audit by our outside independent
chartered accountants.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The decreases in our net voyage revenues and net
income for fiscal 2002 compared to fiscal 2001 primarily relate
to a decrease in our average time charter equivalent, or TCE,
rates during fiscal 2002. The decline in net voyage revenues was
partially offset by the increase in our fleet size as a result
of our acquisition of UNS, which was completed in the first half
of fiscal 2001. TCE rates recently have increased substantially.
Worldwide industry average Aframax spot TCE rates rose from
$14,822 per day in the third quarter of 2002 to $27,923 per day
in the fourth quarter. Increased tanker demand combined with
relatively tight tanker supply caused the recent increase in TCE
rates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Tanker demand increased as:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">global oil demand rose in the fourth quarter of
    2002, compared to third quarter levels, primarily due to
    seasonal factors and the shutdown of nuclear power plants in
    Japan;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">global oil production increased in the fourth
    quarter of 2002, compared to third quarter levels, with Iraq
    being the country most responsible for such increased production;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the general strike in Venezuela disrupted oil
    exports and reduced that country&#146;s production, which
    resulted in a partial replacement of short-haul crude supplies
    with long-haul supplies to meet the production shortfall; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">war fears in the Middle East also influenced the
    market as charterers transported increased amounts of oil due to
    fears of potential supply disruptions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Tanker supply remained tight in the fourth
quarter of 2002, primarily as a consequence of the sinking in
November 2002 of the tanker <I>Prestige</I>, a 26-year-old
single-hull vessel, which spilled approximately 27,000 metric
tonnes of heavy fuel oil off the Spanish coast. This incident
contributed to increased discrimination by charterers against
older single-hull tonnage, resulting in increased demand for
suitable tonnage.
</FONT>

<P align="left">
<B><FONT size="2">Regulatory Action Following <I>Prestige</I>
Sinking</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In response to the environmental contamination
caused by the sinking of the tanker <I>Prestige</I>, the
European Transport Commission issued a proposal on
December&nbsp;20, 2002, that would, among other things,
accelerate the phasing out of single-hull oil tankers and
prohibit the transport to or from European Union ports of heavy
grades of oil on single-hull tankers. Member countries are
currently examining the proposal and consulting with affected
parties. The European Transport Council is scheduled to meet on
March&nbsp;27, 2003, to vote on the proposal. Although
individual European Union members are not currently required to
implement such proposal, Spain has issued a Royal decree banning
the transport of heavy oils on single-hull tankers, and there
are indications that Portugal and Italy may unilaterally
implement similar measures. Some other countries, including the
United States, Japan and Australia, are also considering
revisions to their existing pollution regulations applicable to
tankers. See &#147;Regulation.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The proposed regulations may be amended before
they are adopted, if at all. If the proposals are adopted in
their current form, there could be a tightening in the world
tanker supply and a reallocation of affected tonnage. This could
result in firm tanker market conditions and increased TCE rates
for modern vessels. The proposals could, however, also result in
higher depreciation expenses related to a reduction of the
estimated useful life of single-hull vessels for accounting
purposes.
</FONT>

<P align="left">
<B><FONT size="2">Navion ASA</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We announced on December&nbsp;16, 2002, that we
and Statoil ASA have entered into a definitive agreement under
which we will acquire Statoil&#146;s wholly-owned subsidiary,
Navion ASA (excluding its oil drilling ship and related
operations and one floating production, storage and offload
vessel), on a debt-free basis, for approximately
$800&nbsp;million in cash. We anticipate funding our acquisition
of Navion by borrowing under a new credit facility, together
with available cash or cash generated from operations and
borrowings under other existing credit facilities. The closing
of the transaction is expected to take place in the second
quarter of 2003.
</FONT>

<P align="center"><FONT size="2">S-6
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Navion, based in Norway, operates primarily in
the shuttle tanker and the conventional crude oil and product
tanker markets. Its modern shuttle tanker fleet, which as of
December&nbsp;31, 2002 consisted of nine owned and 17
chartered-in vessels (including four vessels chartered-in from
our subsidiary Ugland Nordic Shipping), provides logistical
services to Statoil and other oil companies in the North Sea
under fixed-rate, long-term contracts of affreightment.
Navion&#146;s modern, chartered-in, conventional tanker fleet,
which as of December&nbsp;31, 2002 consisted of 12 crude oil
tankers and nine product tankers, operates primarily in the
Atlantic region, providing services to Statoil and other oil
companies. In addition, Navion owns two floating storage and
off-take vessels currently trading as conventional crude tankers
in the Atlantic region, and one gas carrier on long-term charter
to Statoil.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through a joint venture with Statoil, Navion is
responsible for meeting Statoil&#146;s transportation needs for
crude oil, condensate and refined petroleum products. As part of
this arrangement, Navion has a right of first refusal on
Statoil&#146;s oil transportation requirements at the prevailing
market rate until December&nbsp;31, 2007. After the acquisition,
we believe this arrangement may increase the utilization of our
conventional fleet. We also believe that the acquisition of
Navion will provide added stability to our cash flow and
earnings throughout the tanker market cycle, due to the
fixed-rate, long-term nature of Navion&#146;s shuttle tanker
contracts.
</FONT>

<P align="left">
<B><I><FONT size="2">Alliance Spirit</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February 1, 2003, one of our vessels, the
<I>Alliance Spirit</I>, was empty of cargo and waiting off
Skikda, Algeria to load crude oil when a severe storm arose and
pushed the vessel aground. Three other vessels, not in our
fleet, were also pushed aground by the storm. We contracted with
SMIT, an internationally recognized emergency response
organization, to assist us in refloating the vessel. However,
weather conditions remained severe, hampering recovery efforts
and inflicting further significant damage to the vessel. On
February&nbsp;6, 2003, the crew members of the vessel were
safely evacuated without injury.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The vessel is insured for its full value. We have
advised our hull and machinery insurer that the vessel is now a
constructive total loss and have requested payment to us of the
insurance proceeds. Efforts to salvage the vessel continue.
Approximately 1300&nbsp;metric tonnes of bunker fuel, as well as
small quantities of diesel fuel and lube oils, remain on board
the vessel. In addition, between 40 to 80 metric tonnes of
residual crude oil cargo remain in the cargo tanks. The bunker
fuel and lube tanks remain intact, and efforts to remove their
contents continue. The vessel could roll over or break apart,
resulting in a spillage or leakage of fuel and oil. We maintain
insurance coverage on the vessel for environmental damage or
pollution liability in an amount of $1&nbsp;billion. We believe
any liability resulting from the escape of any fuel or oil into
the environment would be substantially below this amount, and
that, under the applicable global convention, our liabilities
for any oil spill in this region relating to this incident would
be limited to approximately $32&nbsp;million.
</FONT>

<DIV align="center">
<HR size="1" width="30%" align="center" noshade>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Your investment in the PEPS Units will involve
risks. For a discussion of some of these risks, please see
&#147;Risk Factors,&#148; beginning on page&nbsp;S-18 and the
other information included in or incorporated by reference into
this prospectus supplement and the accompanying prospectus,
before deciding whether an investment in the PEPS Units is
suitable for you.
</FONT>

<P align="center"><FONT size="2">S-7
</FONT>

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<P align="center">
<B><FONT size="2">THE OFFERING</FONT></B>

<P align="left">
<B><FONT size="2">What are PEPS Units?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">PEPS Units may be either Corporate Units or
Treasury Units as described below. The PEPS Units offered will
initially consist of 5,000,000 Corporate Units (or 5,750,000
Corporate Units if the underwriters exercise their
over-allotment option in full), each with a stated amount of
$25. You can create Treasury Units from the Corporate Units in
the manner described below under &#147;How can I create Treasury
Units from Corporate Units?&#148; All references in this
prospectus supplement to our common stock include, among others,
the rights evidenced by such common stock to the extent provided
in the Rights Agreement dated as of September&nbsp;8, 2000,
between us and The Bank of New York, as rights agent.
</FONT>

<P align="left">
<B><FONT size="2">What are the components of a Corporate
Unit?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each Corporate Unit consists of a purchase
contract and, initially, $25 principal amount of our notes due
May&nbsp;18, 2006. The notes will be our unsecured obligations
and will initially be subordinated to all our senior debt.
However, on and after February&nbsp;16, 2006, except in the
event of our earlier bankruptcy, insolvency or reorganization,
the notes will be our senior, unsecured obligations. The note
that is a component of a Corporate Unit is owned by you, but it
will be pledged to us to secure your obligation under the
related purchase contract.
</FONT>

<P align="left">
<B><FONT size="2">What is a purchase contract?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each purchase contract underlying a PEPS Unit
obligates the holder of the purchase contract to purchase, and
obligates us to sell, on February&nbsp;16, 2006 (which we refer
to as the purchase contract settlement date), for $25 in cash
(which we refer to as the settlement price), a number of newly
issued shares of our common stock equal to the &#147;settlement
rate.&#148; The settlement rate will be calculated, subject to
adjustment under the circumstances set forth in
&#147;Description of the Purchase Contracts&#151; Anti-Dilution
Adjustments,&#148; as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">if the applicable market value (as defined below)
    of our common stock is equal to or greater than
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(which
    we refer to as the threshold appreciation price), the settlement
    rate will
    be &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    of our common stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">if the applicable market value of our common
    stock is less than the threshold appreciation price but greater
    than
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(which
    we refer to as the reference price), the settlement rate will be
    a number of shares of our common stock equal to $25 divided by
    the applicable market value; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">if the applicable market value of our common
    stock is less than or equal to the reference price, the
    settlement rate will
    be &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    of our common stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Applicable market value&#148; means the
average of the closing price per share of our common stock on
each of the 20 consecutive trading days ending on the third
trading day immediately preceding the purchase contract
settlement date. The reference price is the reported last sale
price of our common stock on the New York Stock Exchange on the
date of this prospectus supplement. The threshold appreciation
price represents
a &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
appreciation over the reference price.
</FONT>

<P align="left">
<B><FONT size="2">Can I settle purchase contracts
early?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You can settle purchase contracts at any time on
or prior to the fifth business day immediately preceding the
purchase contract settlement date by paying $25 cash per
purchase contract, in which
case &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock will be issued to you pursuant to each
purchase contract. In addition, if we are involved in a merger
in which at least 30% of the consideration for our common stock
consists of cash or cash equivalents, you will have the right to
accelerate and settle purchase contracts early at the settlement
rate in effect immediately prior to the closing of that merger.
Your early settlement right is subject to the condition that, if
required under the U.S.&nbsp;federal securities laws, we have a
registration statement under the U.S.&nbsp;Securities Act of
1933 in effect covering the shares of common stock and other
securities, if any, deliverable upon settlement of the purchase
contracts. We have agreed that, if required by U.S.&nbsp;federal
securities laws, we will use our best efforts to have a
</FONT>

<P align="center"><FONT size="2">S-8
</FONT>

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<DIV align="left">
<FONT size="2">registration statement in effect covering those
shares of common stock and other securities to be delivered in
respect of the purchase contracts being settled.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">What are Treasury Units?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Treasury Units are units created from Corporate
Units and consist of a purchase contract and a 1/40th, or 2.5%,
undivided beneficial ownership interest in a zero-coupon
U.S.&nbsp;Treasury security with a principal amount of $1,000
that matures on February&nbsp;15, 2006 (CUSIP
No.&nbsp;912803AJ2), which we refer to as a Treasury security.
The ownership interest in the Treasury security that is a
component of a Treasury Unit will be owned by you, but will be
pledged to us through the collateral agent to secure your
obligation under the related purchase contract.
</FONT>

<P align="left">
<B><FONT size="2">How can I create Treasury Units from Corporate
Units?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each holder of Corporate Units will have the
right, at any time on or prior to the fifth business day
immediately preceding the purchase contract settlement date, to
substitute for the related notes held by the collateral agent,
Treasury securities in a total principal amount at maturity
equal to the aggregate principal amount of the notes for which
substitution is being made. Because Treasury securities are
issued in integral multiples of $1,000, holders of Corporate
Units may make this substitution only in integral multiples of
40 Corporate Units. This substitution will create Treasury
Units, and the applicable notes will be released to the holder
and be separately tradable from the Treasury Units.
</FONT>

<P align="left">
<B><FONT size="2">How can I recreate Corporate Units from
Treasury Units?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each holder of Treasury Units will have the
right, at any time on or prior to the fifth business day
immediately preceding the purchase contract settlement date, to
substitute for the related Treasury securities held by the
collateral agent, notes having a principal amount equal to the
aggregate principal amount at stated maturity of the Treasury
securities for which substitution is being made. Because
Treasury securities are issued in integral multiples of $1,000,
holders of Treasury Units may make these substitutions only in
integral multiples of 40 Treasury Units. This substitution will
recreate Corporate Units and the applicable Treasury securities
will be released to the holder and be separately tradable from
the Corporate Units.
</FONT>

<P align="left">
<B><FONT size="2">What payments am I entitled to as a holder of
Corporate Units?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to our right to defer payments as
described below, holders of Corporate Units will be entitled to
receive in respect of each Corporate Unit quarterly cash
distributions consisting of interest payments calculated at the
rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
per year on the notes, and contract adjustment payments payable
by us at the rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
per year on the stated amount of $25 per Corporate Unit until
the earliest of the purchase contract settlement date, the early
settlement date (in the case of a cash merger early settlement)
and the most recent quarterly payment date on or before any
other early settlement of the related purchase contracts (in the
case of early settlement other than upon a cash merger).
</FONT>

<P align="left">
<B><FONT size="2">What payments will I be entitled to if I
convert my Corporate Units to Treasury Units?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to our right to defer contract adjustment
payments as described below, holders of Treasury Units will be
entitled to receive quarterly contract adjustment payments
payable by us at the rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
per year on the stated amount of $25 per Treasury Unit. There
will be no distributions in respect of the Treasury securities
that are a component of the Treasury Units but, subject to our
right to defer interest payments on the notes as described
below, holders of the Treasury Units will continue to receive
the scheduled quarterly interest payments on the notes that were
released to them when they created the Treasury Units as long as
they continue to hold the notes.
</FONT>

<P align="left">
<B><FONT size="2">Do we have the option to defer current
payments?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have the right to defer interest payments on
our notes until no later than February&nbsp;16, 2006. Any
deferred interest will accrue additional interest at a rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
per year, compounded quarterly, until paid. We also have the
right to defer contract adjustment payments until no later than
the date on which your purchase contract
</FONT>

<P align="center"><FONT size="2">S-9
</FONT>

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<DIV align="left">
<FONT size="2">is settled. Any deferred contract adjustment
payments will accrue additional contract adjustment payments at
a rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
per year, compounded quarterly, until paid.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">What are the payment dates for the PEPS
Units?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The payments described above in respect of the
PEPS Units will be payable quarterly in arrears on
February&nbsp;16, May&nbsp;16, August&nbsp;16 and
November&nbsp;16 of each year, commencing May&nbsp;16, 2003.
</FONT>

<P align="left">
<B><FONT size="2">What is remarketing?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The notes that comprise part of the Corporate
Units will be remarketed on the third business day immediately
preceding the purchase contract settlement date, which we refer
to as the remarketing date, at a price of approximately 100.25%
of the principal amount of the notes remarketed. To obtain that
price, the remarketing agent may increase or decrease the
interest rate on the notes. If the remarketing is successful,
any increase or decrease in the interest rate on the notes will
take effect on the third business day following the remarketing
date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the remarketing is successful, a portion of
the proceeds from the remarketing equal to the aggregate
principal amount of the notes sold in the remarketing that
comprised part of the Corporate Units will automatically be
applied to satisfy in full each Corporate Unit holder&#146;s
obligations to purchase common stock under the related purchase
contracts on the purchase contract settlement date. The
remarketing agent will deduct, as a remarketing fee, an amount
not exceeding 25 basis points (0.25%) of the aggregate principal
amount of the remarketed notes from proceeds from the
remarketing in excess of the aggregate principal amount of the
notes remarketed. Any remaining portion of the proceeds will be
for the benefit of the holders. Remarketing will be considered
successful if the resulting proceeds (net of any fees and
commissions, if any) are at least 100% of the aggregate
principal amount of the notes.
</FONT>

<P align="left">
<B><FONT size="2">What happens if the notes are not successfully
remarketed?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the notes have not been successfully
remarketed on the remarketing date, the interest rate on the
notes will not be reset and all holders of notes will have the
right to put the notes to us on the purchase contract settlement
date at a put price equal to $25 per note plus accrued and
unpaid interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A holder of a note that is part of a Corporate
Unit will be deemed to have automatically exercised this put
right unless, prior to 11:00&nbsp;a.m., New York City time, on
the second business day immediately preceding the purchase
contract settlement date such holder provides a written notice
of an intention to settle the related purchase contract with
separate cash and, on or prior to the business day immediately
preceding the purchase contract settlement date, delivers to the
collateral agent such separate cash. Unless a Corporate Unit
holder has settled the related purchase contracts with separate
cash on or prior to the purchase contract settlement date, the
put price will be delivered to the collateral agent, who will
apply such amount in satisfaction of such Corporate Unit
holder&#146;s obligations under the related purchase contract on
the purchase contract settlement date. Any remaining amount of
the put price following satisfaction of the purchase contract
will be paid to such Corporate Unit holder.
</FONT>

<P align="left">
<B><FONT size="2">Do I have to participate in the
remarketing?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You may elect not to participate in the
remarketing and to retain the notes underlying your Corporate
Units by (1)&nbsp;creating Treasury Units at any time on or
prior to the second business day prior to the remarketing date
or (2)&nbsp;notifying the purchase contract agent of your
intention to pay cash to satisfy your obligation under the
related purchase contracts on or prior to the fifth business day
before the purchase contract settlement date and delivering the
cash payment required under the purchase contracts to the
collateral agent on or prior to the fourth business day before
the purchase contract settlement date.
</FONT>

<P align="center"><FONT size="2">S-10
</FONT>

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<P align="left">
<B><FONT size="2">If I am holding a note as a separate security
from the Corporate Units, can I still participate in the
remarketing of the notes?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders of notes that are not part of the
Corporate Units may elect, in the manner described in this
prospectus supplement, to have their notes remarketed by the
remarketing agent along with the notes included in the Corporate
Units. See &#147;Description of the Notes&#151;Optional
Remarketing.&#148; Such holders may also participate in the
remarketing by recreating Corporate Units from their Treasury
Units at any time on or prior to the second business day
immediately prior to the remarketing date.
</FONT>

<P align="left">
<B><FONT size="2">Besides participating in a remarketing, how
else can I satisfy my obligation under the purchase
contracts?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders of Corporate Units or Treasury Units may
also satisfy their obligations, or their obligations will be
terminated, under the purchase contracts as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">through early settlement as described under
    &#147;Can I settle purchase contracts early?&#148; above;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">through cash settlement prior to the remarketing
    date in the case of holders of Corporate Units as described
    under &#147;Do I have to participate in the remarketing?&#148;
    above;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">through the automatic application of the proceeds
    of the Treasury securities in the case of the Treasury Units;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">through exercise of the put right, if the
    remarketing is unsuccessful and none of the above events has
    taken place, as described under &#147;What happens if the notes
    are not successfully remarketed?&#148; above; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">without any further action, upon the termination
    of the purchase contracts as a result of our bankruptcy,
    insolvency or reorganization.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">What interest payments will I receive on the
notes?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to our right to defer interest payments
on the notes as described above, interest on the notes will be
payable quarterly in arrears initially at the annual rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
per annum to, but excluding, the reset effective date, which
will be the third business day following the date of a
successful remarketing of the notes. Following a reset of the
interest rate, interest will be payable on the notes at the
reset rate from and including the reset effective date to, but
excluding, May&nbsp;18, 2006. If the notes are not successfully
remarketed, the interest rate will not be reset and the notes
will continue to bear interest at the initial interest rate.
</FONT>

<P align="left">
<B><FONT size="2">What are the interest payment dates on the
notes?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The interest payment dates on the notes are
February&nbsp;16, May&nbsp;16, August&nbsp;16 and
November&nbsp;16 of each year, commencing May&nbsp;16, 2003 and
ending on the maturity date of the notes, provided that
May&nbsp;16, 2006 will not be an interest payment date and the
interest payment date next following February&nbsp;16, 2006 will
be the maturity date of the notes.
</FONT>

<P align="left">
<B><FONT size="2">When will the interest rate on the notes be
reset and what is the reset rate?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The interest rate on the notes will be reset on
the date, if any, the notes are successfully remarketed and the
reset rate will become effective three business days thereafter.
The reset rate will be the interest rate determined by the
remarketing agent as the rate (subject to the last sentence of
this paragraph) the notes should bear in order for the notes
included in the Corporate Units to have an approximate aggregate
market value on the remarketing date of 100.25% of their
aggregate principal amount. The interest rate on the notes will
not be reset if the remarketing is unsuccessful. The reset rate
may not exceed the maximum rate, if any, permitted by applicable
law.
</FONT>

<P align="center"><FONT size="2">S-11
</FONT>

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<P align="left">
<B><FONT size="2">Are the notes redeemable?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The notes are not redeemable.
</FONT>

<P align="left">
<B><FONT size="2">What is the ranking of the notes?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The notes will be our general, unsecured
obligations and initially will be subordinate in right of
payment to all of our existing and future senior debt. However,
on and after February&nbsp;16, 2006, except in the event of our
earlier bankruptcy, insolvency or reorganization, the
subordination provisions of the notes and the related indenture
will no longer be applicable and the notes will be our senior,
unsecured obligations ranking equally in right of payment with
all our existing and future unsubordinated debt. The indenture
under which the notes will be issued will not limit our ability
to issue or incur other debt or issue preferred stock.
</FONT>

<P align="left">
<B><FONT size="2">What are the United States federal income tax
consequences for United States holders?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A PEPS Unit will initially consist of two
components, a purchase contract and a note. The purchase price
of each PEPS Unit will be allocated between the purchase
contract and the note in proportion to their respective fair
market values at the time of purchase. We expect that, as of the
date of issuance of the PEPS Units, the fair market value of
each purchase contract will be $0.00 and the fair market value
of each note will be $25.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to treat the notes as &#147;reset
bonds&#148; under Treasury regulations relating to variable rate
debt instruments and to take the position that a United States
holder will be required to include stated interest on the notes
as ordinary interest income in such holder&#146;s gross income
at the time the interest is paid or accrued in accordance with
such holder&#146;s regular method of accounting. However, if we
exercise our right to defer payments of stated interest on the
notes, the stated interest on the notes will become original
issue discount. In such case, a United States holder generally
will recognize interest income prior to the actual receipt of
the interest payments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a United States holder owns Treasury Units,
such holder will continue to take into account items of income
or deduction otherwise includible or deductible, respectively,
by such holder with respect to the Treasury securities and the
notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We intend to report the purchase contract
adjustment payments as ordinary income to holders. However,
prospective investors are urged to consult their own tax
advisors concerning alternative characterizations of such
payments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because there is no statutory, judicial or
administrative authority directly addressing the tax treatment
of PEPS Units or instruments similar to PEPS Units, United
States holders are urged to consult their own tax advisors
concerning the United States federal income tax consequences of
an investment in PEPS Units in light of their own particular
circumstances, as well as the effect of any state, local, or
foreign tax laws.
</FONT>

<P align="left">
<B><FONT size="2">FOR ADDITIONAL INFORMATION, SEE &#147;TAX
CONSEQUENCES&#151; MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES&#148; IN THIS PROSPECTUS SUPPLEMENT, STARTING ON
PAGE&nbsp;S-66.</FONT></B>

<P align="left">
<B><FONT size="2">What are the material United States federal
income tax consequences for Non-United States holders?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to certain exceptions, payments to
Non-United States holders of principal and interest (including
original issue discount, if any, and acquisition discount) on
the notes or the Treasury securities, contract adjustment
payments, and dividends, if any, paid on the shares of our
common stock acquired under the purchase contracts, and any gain
realized upon the sale, exchange or other disposition of the
purchase contracts, notes or Treasury securities, or shares of
our common stock acquired under the purchase contracts,
generally should not be subject to United States federal income
tax, including United States federal withholding tax.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Non-United States holders are urged to consult
their own tax advisors with respect to the United States
federal, state, local and foreign tax consequences of an
investment in PEPS Units in light of their own particular
circumstances.
</FONT>

<P align="center"><FONT size="2">S-12
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">FOR ADDITIONAL INFORMATION, SEE &#147;TAX
CONSEQUENCES&#151; MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES&#148; IN THIS PROSPECTUS SUPPLEMENT, STARTING ON
PAGE&nbsp;S-66</FONT></B>

<P align="left">
<B><FONT size="2">What are the rights and privileges of the
common stock?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The shares of our common stock that you will be
obligated to purchase under the purchase contracts have one vote
per share. For more information, please see the discussion of
our common stock in this prospectus supplement under the heading
&#147;Risk Factors,&#148; and in the accompanying prospectus
under the heading &#147;Description of Capital Stock.&#148;
</FONT>

<P align="left">
<B><FONT size="2">What are the uses of proceeds from the
offering?</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We estimate that the net proceeds from the
offering will be approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
(approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
if the underwriters exercise their over-allotment option in
full), after deducting the underwriters&#146; estimated
discounts and commissions and our estimated fees and expenses
for the offering.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect to use the net proceeds from the sale
of PEPS Units offered hereby to finance acquisitions and for
general corporate purposes. General corporate purposes may
include capital expenditures, working capital and the repayment
of debt. See &#147;Use of Proceeds&#148; in this prospectus
supplement.
</FONT>

<P align="center"><FONT size="2">S-13
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">THE OFFERING&#151; EXPLANATORY
DIAGRAMS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following diagrams demonstrate some of the
key features of the purchase contracts, notes, Corporate Units
and Treasury Units, and the transformation of Corporate Units
into Treasury Units and notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following diagrams assume that the notes are
successfully remarketed and the interest rate on the notes is
reset on the third business day immediately preceding the
purchase contract settlement date, the settlement rate is not
adjusted, early settlement does not apply and payments are not
deferred.
</FONT>

<P align="left">
<B><FONT size="2">Purchase Contract</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Corporate Units and Treasury Units both include a
purchase contract under which the holder agrees to purchase
shares of our common stock on the purchase contract settlement
date. In addition, these purchase contracts include unsecured
contract adjustment payments as shown in the diagrams on the
following pages.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <B><FONT size="2">Value of Shares Delivered Upon<BR>
    Settlement of a Purchase Contract</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">Number of Shares Delivered Upon<BR>
    Settlement of a Purchase Contract</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <IMG src="o08807o08807ab.gif" alt="(GRAPH VALUE OF SHARES)"></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <IMG src="o08807o08807bb.gif" alt="(GRAPH NUMBER OF SHARES)"></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <B><FONT size="2">Applicable Market
    Value<SUP>(6)</SUP></FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">Applicable Market
    Value<SUP>(6)</SUP></FONT></B></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>

<P align="left">
<FONT size="2">Notes:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)</FONT></TD>
    <TD align="left">
    <FONT size="2">If the applicable market value of our common
    stock is less than or equal to the reference price of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    the number of shares of our common stock to be delivered to a
    holder of a PEPS Unit will be calculated by dividing the stated
    amount of $25 by the reference price.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)</FONT></TD>
    <TD align="left">
    <FONT size="2">If the applicable market value of our common
    stock is between the reference price and the threshold
    appreciation price of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    the number of shares of our common stock to be delivered to a
    holder of a PEPS Unit will be calculated by dividing the stated
    amount of $25 by the applicable market value.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)</FONT></TD>
    <TD align="left">
    <FONT size="2">If the applicable market value of our common
    stock is greater than or equal to the threshold appreciation
    price, the number of shares of our common stock to be delivered
    to a holder of a PEPS Unit will be calculated by dividing the
    stated amount by the threshold appreciation price.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)</FONT></TD>
    <TD align="left">
    <FONT size="2">The reference price is the reported last sale
    price of our common stock on the New York Stock Exchange on the
    date of this prospectus supplement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)</FONT></TD>
    <TD align="left">
    <FONT size="2">The threshold appreciation price represents
    a &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% appreciation
    over the reference price.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(6)</FONT></TD>
    <TD align="left">
    <FONT size="2">The &#147;applicable market value&#148; means the
    average of the closing price per share of our common stock on
    each of the 20&nbsp;consecutive trading days ending on the third
    trading day immediately preceding the purchase contract
    settlement date.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-14
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Corporate Units</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A Corporate Unit consists of two components as
described below:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="37%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Purchase Contract</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Note</FONT></B></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Holder)<BR>
    <BR>
    Common Stock<BR>
    +<BR>
    Contract Adjustment<BR>
    Payments<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% per annum<BR>
    paid quarterly
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Holder)<BR>
    <BR>
    Interest<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% per annum<BR>
    paid quarterly<BR>
    <BR>
    (at reset rate from<BR>
    February&nbsp;16, 2006)
    </FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Teekay)<BR>
    <BR>
    $25 at Settlement<BR>
    (February&nbsp;16, 2006)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Holder)<BR>
    <BR>
    $25 at Maturity<BR>
    (May&nbsp;18, 2006)
    </FONT></TD>
</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The holder of a Corporate Unit owns the note that
    forms a part of the Corporate Unit, but will pledge it to us to
    secure its obligation under the related purchase contract.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The foregoing analysis assumes the notes are
    successfully remarketed on the third business day immediately
    preceding February&nbsp;16, 2006.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-15
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Treasury Units</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A Treasury Unit consists of two components as
described below:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Purchase Contract</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Treasury Security</FONT></B></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Holder)<BR>
    <BR>
    Common Stock<BR>
    +<BR>
    Contract Adjustment<BR>
    Payments<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% per annum<BR>
    paid quarterly
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Teekay)<BR>
    <BR>
    $25 at Settlement<BR>
    (February&nbsp;16, 2006)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Holder)<BR>
    <BR>
    $25 at Maturity<BR>
    (as a 1/40th, or 2.5%,<BR>
    ownership interest in<BR>
    $1,000 principal amount)<BR>
    (February&nbsp;15, 2006)
    </FONT></TD>
</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The holder owns the 1/40th, or 2.5%, ownership
    interest in the Treasury security that forms a part of the
    Treasury Unit, but will pledge it to us through the collateral
    agent to secure its obligations under the related purchase
    contract. Unless the purchase contract is terminated as a result
    of our bankruptcy, insolvency or reorganization or the holder
    recreates a Corporate Unit, the 1/40th, or 2.5%, ownership
    interest in the Treasury security will be used to satisfy the
    holder&#146;s obligation under the related purchase contract.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Treasury Units can only be created with integral
    multiples of 40 Corporate Units.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">The Notes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The notes have the terms described below:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="100%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Note</FONT></B></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Holder)<BR>
    <BR>
    Interest<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% per annum<BR>
    paid quarterly<BR>
    (at reset rate from<BR>
    February&nbsp;16, 2006)
    </FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Holder)<BR>
    <BR>
    $25 at Maturity<BR>
    (May&nbsp;18, 2006)
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">S-16
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Transforming Corporate Units into Treasury
Units and Notes</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Because Treasury Securities are issued in
    integral multiples of $1,000, the transformation of Corporate
    Units into Treasury Units requires integral multiples of
    40&nbsp;Corporate Units, and the transformation of Treasury
    Units into Corporate Units also requires multiples of
    40&nbsp;Treasury Units.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">To create a&nbsp;Treasury Unit, a holder
    separates a&nbsp;Corporate Unit into its components&#151; the
    purchase contract and the note&#151; and then combines each
    purchase contract with a 1/40th, or 2.5%, ownership interest in
    a Treasury security that matures on the day immediately
    preceding the purchase contract settlement date.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Each 1/40th, or 2.5%, ownership interest in the
    Treasury security together with a purchase contract constitutes
    a Treasury Unit. The note, which is no longer a component of the
    related Corporate Unit, is released to the holder and is
    tradable as a separate security.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">A holder owns the applicable ownership interest
    in the Treasury security that forms a part of the Treasury Unit,
    but will pledge it to us through the collateral agent to secure
    its obligation under the related purchase contract.
    </FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="17%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="17%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="18%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="16%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Purchase&nbsp;Contract</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Note</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Purchase&nbsp;Contract</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Treasury&nbsp;Security</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Note</FONT></B></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Holder)<BR>
    <BR>
    Common Stock<BR>
    +<BR>
    Contract Adjustment<BR>
    Payments<BR>&nbsp;&nbsp;&nbsp;&nbsp;% per annum<BR>
    paid quarterly
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Holder)<BR>
    <BR>
    Interest<BR>&nbsp;&nbsp;&nbsp;&nbsp;% per annum<BR>
    paid quarterly<BR>
    <BR>
    (at reset rate from<BR>
    February&nbsp;16, 2006)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Holder)<BR>
    <BR>
    Common Stock<BR>
    +<BR>
    Contract Adjustment<BR>
    Payments<BR>&nbsp;&nbsp;&nbsp;&nbsp;% per annum<BR>
    paid quarterly
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Holder)<BR>
    <BR>
    Interest<BR>&nbsp;&nbsp;&nbsp;&nbsp;% per annum<BR>
    paid quarterly<BR>
    <BR>
    (at reset rate from<BR>
    February&nbsp;16, 2006)
    </FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Teekay)<BR>
    <BR>
    $25 at Settlement<BR>
    (February&nbsp;16, 2006)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Holder)<BR>
    <BR>
    $25 at Maturity<BR>
    (May&nbsp;18, 2006)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Teekay)<BR>
    <BR>
    $25 at Settlement<BR>
    (February&nbsp;16, 2006)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Holder)<BR>
    <BR>
    (as a $1/40th, or 2.5%,<BR>
    ownership interest in<BR>
    $1,000 principal amount)<BR>
    $25 at Maturity<BR>
    (February&nbsp;15, 2006)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <BR>
    <FONT size="2">(Owed to Holder)<BR>
    <BR>
    $25 at Maturity<BR>
    (May&nbsp;18, 2006)
    </FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <B><FONT size="2">Corporate Unit</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="center" valign="top">
    <B><FONT size="2">Treasury Unit</FONT></B></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The holder can also transform Treasury Units and
    notes into Corporate Units. Following that transformation, the
    Treasury security, which will no longer be a component of the
    related Treasury Units, will be released to the holder and will
    be tradable as a separate security.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-17
</FONT>

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<DIV align="left"><A NAME="004"></A></DIV>

<P align="center">
<B><FONT size="2">RISK FACTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Before investing in our PEPS Units, you should
consider carefully the following factors, as well as the
information contained in the rest of this prospectus supplement,
the accompanying prospectus and in the documents that are
incorporated by reference into the accompanying prospectus.
</FONT>

<P align="center">
<B><FONT size="2">Risks Relating to Our PEPS Units</FONT></B>

<P align="left">
<B><FONT size="2">You Will Bear the Entire Risk of a Decline in
the Price of Our Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although as a holder of Corporate Units or
Treasury Units you will be the owner of the related notes or
applicable ownership interest in the Treasury securities, as the
case may be, you do have an obligation to buy shares of our
common stock pursuant to the purchase contract that is a part of
the Corporate Units and Treasury Units. On February&nbsp;16,
2006, unless you pay cash to satisfy your obligation under the
related purchase contracts or the purchase contracts are
terminated due to our bankruptcy, insolvency or reorganization,
(a)&nbsp;in the case of Corporate Units, either (1)&nbsp;the
proceeds derived from the successful remarketing of the notes or
(2)&nbsp;the put price paid upon the automatic put of the notes
if the remarketing is unsuccessful, or (b)&nbsp;in the case of
Treasury Units, the principal of the related Treasury securities
when paid at maturity, will automatically be used to purchase a
specified number of shares of our common stock on your behalf.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The number of shares of our common stock that you
will receive upon the settlement of a purchase contract is not
fixed but instead will depend on the average of the closing
price per share of our common stock on the 20 consecutive
trading days ending on the third trading day immediately
preceding February&nbsp;16, 2006. We refer to this average
closing price as the applicable market value. There can be no
assurance that the applicable market value of common stock
received by you on the purchase contract settlement date will be
equal to or greater than the price per share paid by you for our
common stock. If the applicable market value of our common stock
is less than
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
the market value of our common stock issued to you pursuant to
each purchase contract on February&nbsp;16, 2006 (assuming that
the market value on such date is the same as the applicable
market value of our common stock) will be less than the
effective price per share paid by you for our common stock on
the date of issuance of the PEPS Units. Accordingly, you will
bear the full risk that the market value of our common stock may
decline. Any such decline could be substantial.
</FONT>

<P align="left">
<B><FONT size="2">The Opportunity for Equity Appreciation
Provided by an Investment in the PEPS Units Is Less Than That
Provided by a Direct Investment in Our Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Your opportunity for equity appreciation afforded
by investing in the PEPS Units is less than your opportunity for
equity appreciation if you directly invested in our common
stock. This opportunity is less because the market value of our
common stock to be received by you pursuant to the purchase
contract on February&nbsp;16, 2006 (assuming that the market
value on such date is the same as the applicable market value of
our common stock), will only exceed the price per share paid by
you for our common stock on the purchase contract settlement
date if the applicable market value of our common stock exceeds
the threshold appreciation price (which represents an
appreciation
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
over the reference price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;).
If the applicable market value of our common stock exceeds the
reference price but falls below the threshold appreciation
price, you realize no equity appreciation of our common stock
for the period during which you own the purchase contract.
Furthermore, if the applicable market value of our common stock
equals or exceeds the threshold appreciation price, you would
receive on February&nbsp;16, 2006, only
approximately &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
of the value of the shares of common stock you could have
purchased with $25 at the reported last sale price of our common
stock on the date we price this offering of PEPS Units.
</FONT>

<P align="left">
<B><FONT size="2">The Trading Prices for the Corporate Units and
Treasury Units Will Be Directly Affected by the Trading Prices
of Our Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The trading prices of Corporate Units and
Treasury Units in the secondary market will be directly affected
by the trading prices of our common stock, the general level of
interest rates and our credit quality. It is impossible to
predict whether the price of our common stock or interest rates
will rise or fall. Trading prices of
</FONT>

<P align="center"><FONT size="2">S-18
</FONT>

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<DIV align="left">
<FONT size="2">our common stock will be influenced by our
operating results and prospects and by economic, political,
financial and other factors. In addition, general market
conditions, including the level of, and fluctuations in the
trading prices of stocks generally, and sales of substantial
amounts of common stock by us in the market after the offering
of the PEPS Units, or the perception that such sales could
occur, could affect the price of our common stock. Fluctuations
in interest rates may give rise to arbitrage opportunities based
upon changes in the relative value of our common stock
underlying the purchase contracts and of the other components of
the PEPS Units. Any such arbitrage could, in turn, affect the
trading prices of the Corporate Units, Treasury Units, the notes
and our common stock.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">If You Hold Corporate Units or Treasury Units,
You Will Not Be Entitled to Any Rights With Respect to Our
Common Stock, But You Will Be Subject to All Changes Made With
Respect to Our Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you hold Corporate Units or Treasury Units,
you will not be entitled to any rights with respect to our
common stock (including, without limitation, voting rights and
rights to receive any dividends or other distributions on our
common stock), but you will be subject to all changes affecting
our common stock. You will only be entitled to rights on our
common stock if and when we deliver shares of common stock in
exchange for Corporate Units or Treasury Units on
February&nbsp;16, 2006, or as a result of early settlement, as
the case may be, and the applicable record date, if any, for the
exercise of rights occurs after that date. For example, in the
event that an amendment is proposed to our charter documents
requiring shareholder approval and the record date for
determining the shareholders of record entitled to vote on the
amendment occurs prior to delivery of our common stock, you will
not be entitled to vote on the amendment, although you will
nevertheless be subject to any changes in the powers,
preferences or special rights of our common stock.
</FONT>

<P align="left">
<B><FONT size="2">We May Issue Additional Shares of Common Stock
and Thereby Materially and Adversely Affect the Price of Our
Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The number of shares of common stock that you are
entitled to receive on February&nbsp;16, 2006, or as a result of
early settlement of a purchase contract, is subject to
adjustment for certain events arising from stock splits and
combinations, stock dividends and certain other actions by us
that modify our capital structure. We will not adjust the number
of shares of common stock that you are to receive on
February&nbsp;16, 2006, or as a result of early settlement of a
purchase contract for other events, including offerings of
common stock for cash by us or in connection with acquisitions.
We are not restricted from issuing additional common stock
during the term of the purchase contracts and have no obligation
to consider your interests for any reason. If we issue
additional shares of common stock, it may materially and
adversely affect the price of our common stock and, because of
the relationship of the number of shares to be received on
February&nbsp;16, 2006, to the price of our common stock, such
other events may adversely affect the trading price of the
Corporate Units or Treasury Units.
</FONT>

<P align="left">
<B><FONT size="2">The Secondary Market for the Corporate Units,
Treasury Units or the Notes May Be Illiquid</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is not possible to predict how Corporate
Units, Treasury Units or the notes will trade in the secondary
market or whether any market will be liquid or illiquid. There
is currently no secondary market for either our Corporate Units,
Treasury Units or the notes. The Corporate Units have been
approved for listing on the New York Stock Exchange, subject to
official notice of issuance. If the Treasury Units or the notes
are separately traded to a sufficient extent that applicable
exchange listing requirements are met, we will try to list the
Treasury Units or the notes on the same exchange as the
Corporate Units. There can be no assurance as to the liquidity
of any market that may develop for the Corporate Units, the
Treasury Units or the notes, your ability to sell these
securities or whether a trading market, if it develops, will
continue. In addition, in the event you were to substitute
Treasury securities for the notes or the notes for Treasury
securities, thereby converting your Corporate Units to Treasury
Units or your Treasury Units to Corporate Units, as the case may
be, the liquidity of Corporate Units or Treasury Units could be
adversely affected. If the Corporate Units are listed, there can
be no assurance that the Corporate Units will not be delisted
from the New York Stock Exchange or that trading in the
Corporate Units will not be suspended as a result of your
election to create Treasury Units by substituting collateral,
which could
</FONT>

<P align="center"><FONT size="2">S-19
</FONT>

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<DIV align="left">
<FONT size="2">cause the number of Corporate Units to fall below
the requirement for listing securities on the New York Stock
Exchange.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Your Rights to the Pledged Securities Will Be
Subject to Our Security Interest</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although you will be the beneficial owner of the
notes or Treasury securities, as applicable, those securities
will be pledged to us through the collateral agent to secure
your obligations under the related purchase contracts. Thus,
your rights to the pledged securities will be subject to our
security interest. Additionally, notwithstanding the automatic
termination of the purchase contracts, in the event that we
become the subject of a case under applicable bankruptcy laws,
the delivery of the pledged securities to you may be delayed by
the imposition of any automatic stay under Section&nbsp;362 of
the U.S.&nbsp;Bankruptcy Code or such bankruptcy laws and claims
arising out of the notes, like all other claims in bankruptcy
proceedings, will be subject to the equitable jurisdiction and
powers of the bankruptcy court.
</FONT>

<P align="left">
<B><FONT size="2">We May Defer Current Payments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have the option to defer the payment of
contract adjustment payments on the purchase contracts until the
earlier of February&nbsp;16, 2006, or the date on which the
purchase contracts are settled. However, any deferred contract
adjustment payments will accrue additional contract adjustment
payments at the rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
per year, compounded quarterly, until paid. If the purchase
contracts are settled early, other than pursuant to a cash
merger, or if the purchase contracts are terminated due to our
bankruptcy, insolvency or reorganization, the right to receive
accrued and unpaid contract adjustment payments will terminate.
If the purchase contracts are terminated due to our bankruptcy,
insolvency or reorganization, the right to receive deferred
contract adjustment payments, if any, will also terminate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also have the right to defer interest payments
on the notes until no later than February&nbsp;16, 2006.
However, any deferred interest will accrue additional interest
at a rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
per year, compounded quarterly, until paid. If we defer interest
payments on the notes, a United States holder will generally
recognize interest income on the notes prior to the actual
receipt of the interest payments for United States federal
income tax purposes, because the stated interest on the notes
will become original issue discount. See &#147;Tax
Consequences&#151; United States Federal Income Tax
Consequences&#151; Notes.&#148; If we exercise our right to
defer payments of interest on the notes, the market price of the
Corporate Units is likely to decrease. In addition, the mere
existence of the right to defer interest payments may cause the
market price of the Corporate Units to be more volatile than the
market price of other securities that are not subject to such
deferrals.
</FONT>

<P align="left">
<B><FONT size="2">The United States Federal Income Tax
Consequences of the Purchase, Ownership and Disposition of the
PEPS Units Are Unclear</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No statutory, judicial or administrative
authority directly addresses the treatment of the PEPS Units or
instruments similar to the PEPS Units for United States federal
income tax purposes. As a result, the United States federal
income tax consequences of the purchase, ownership and
disposition of PEPS Units are not entirely clear. We intend to
treat the notes as &#147;reset bonds&#148; under Treasury
regulations relating to variable rate debt instruments and to
take the position that a United States holder will be required
to include stated interest on the notes as ordinary interest
income in such holder&#146;s gross income at the time the
interest is paid or accrued in accordance with such
holder&#146;s regular method of accounting. If we exercise our
right to defer payments of the stated interest on the notes, the
stated interest on the notes will become original issue
discount. In such case, a United States holder generally will
recognize interest income prior to the actual receipt of the
interest payments. For a discussion of tax related risks, see
&#147;Tax Consequences&#151; Material United States Federal
Income Tax Consequences.&#148;
</FONT>

<P align="left">
<B><FONT size="2">The Purchase Contract Agreement Will Not Be
Qualified Under the U.S.&nbsp;Trust Indenture Act and the
Obligations of the Purchase Contract Agent Are Limited</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase contract agreement between us and
the purchase contract agent will not be qualified as an
indenture under the U.S. Trust Indenture Act of 1939, and the
purchase contract agent will not be required to qualify as a
trustee under the Trust Indenture Act. Thus, you will not have
the benefit of the protection of the Trust Indenture Act with
respect to the purchase contract agreement or the purchase
contract agent. The notes
</FONT>

<P align="center"><FONT size="2">S-20
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<DIV align="left">
<FONT size="2">constituting a part of the Corporate Units will
be issued pursuant to an indenture, which will be qualified
under the Trust Indenture Act. If you hold Corporate Units, or
Treasury Units and notes, you will have the benefit of the
protections of the Trust Indenture Act only to the extent
applicable to the notes. Some of the protections generally
afforded the holder of a security issued under an indenture that
has been qualified under the Trust Indenture Act include:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">disqualification of the indenture trustee for
    &#147;conflicting interests,&#148; as defined under the Trust
    Indenture Act;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">provisions preventing a trustee that is also a
    creditor of the issuer from improving its own credit position at
    the expense of the security holders immediately prior to or
    after a default under the indenture; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the requirement that the indenture trustee
    deliver reports at least annually with respect to certain
    matters concerning the indenture trustee and the securities.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Our Substantial Debt Could Adversely Affect
Our Financial Condition and Prevent Us From Fulfilling Our
Obligations Under the Notes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have substantial debt and debt service
requirements. As of September&nbsp;30, 2002, we and our
subsidiaries had outstanding debt in an aggregate principal
amount of approximately $1.1&nbsp;billion, including
$84.4&nbsp;million of joint venture debt guaranteed by us or
certain of our subsidiaries. As of such date, we would have been
able to borrow an additional $419.4&nbsp;million under our
credit facilities. In addition, as of December&nbsp;31, 2002, we
and our subsidiaries had commitments from lenders for additional
credit facilities related to our proposed acquisition of Navion
ASA ($500&nbsp;million), vessel purchases ($77&nbsp;million) and
newbuildings ($232&nbsp;million).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amount of our debt could have important
consequences to you. For example, it could:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">make it more difficult for us to satisfy our
    obligations under the PEPS Units;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">increase our vulnerability to general adverse
    economic and industry conditions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">limit our ability to fund future capital
    expenditures, working capital and other general corporate
    requirements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">require us to dedicate a substantial portion of
    our cash flow from operations to make interest and principal
    payments on our debt;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">limit our flexibility in planning for, or
    reacting to, changes in our business and the shipping industry;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">place us at a competitive disadvantage compared
    to competitors that have less debt; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">limit our ability to borrow additional funds,
    even when necessary to maintain adequate liquidity.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">To Pay Amounts Due Under the PEPS Units and
Service Our Other Debt Will Require a Significant Amount of
Cash, Which May Not Be Available to Us</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The PEPS Units will be the sole obligations of
Teekay. Our ability to pay amounts due under the PEPS Units and
on our other debt will depend upon our future operating
performance and a number of other factors, many of which are
beyond our control. Such factors include the effect of the
general economy on the demand for oil and thus the oil shipping
market. In addition, we will rely on dividends and other
intercompany cash flows from our subsidiaries to repay our
obligations. Financing arrangements between some of our
subsidiaries and their respective lenders contain restrictions
on dividends by and distribution from such subsidiaries to us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we are unable to generate sufficient cash flow
to meet our debt service requirements, we may have to
renegotiate the terms of our debt. We may be unable to
renegotiate successfully those terms or refinance our debt when
required, in which event we would have to consider options such
as:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">sales of certain assets to meet our debt service
    obligations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">sales of equity; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">negotiations with our lenders to restructure
    applicable debt.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our credit agreements, existing debt indentures
and the indenture governing the notes may restrict our ability
to do some of these things.
</FONT>

<P align="center"><FONT size="2">S-21
</FONT>

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<P align="left">
<B><FONT size="2">The Notes Will Initially Be Our Unsecured,
Subordinated Obligations, Will Rank Below Our Existing and
Future Senior Debt and Will Be Effectively Subordinated to the
Debt And Liabilities of Our Subsidiaries. On and After
February&nbsp;16, 2006, Except in the Event of Our Earlier
Bankruptcy, Insolvency or Reorganization, the Notes Will Be Our
Senior, Unsecured Obligations, But Will Be Effectively
Subordinated to Our Existing and Future Senior Secured Debt, to
the Extent of Assets Securing Such Debt, and Will Be Effectively
Subordinated to the Debt and Liabilities of Our
Subsidiaries</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The notes will be unsecured and will initially
rank subordinate in right of payment to all of our existing and
future senior debt, and in the event of a bankruptcy,
liquidation, dissolution, reorganization or similar proceeding
of our company, our assets will be available to satisfy
obligations on our senior debt before any payment may be made on
the notes. In such an event, we may not have sufficient assets
remaining to pay outstanding amounts on the notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On and after February&nbsp;16, 2006, except in
the event of our earlier bankruptcy, insolvency or
reorganization, the notes will cease to be subordinated debt,
and will rank equally in right of payment with all of our then
existing and future senior, unsubordinated debt. In the event of
a bankruptcy, liquidation, dissolution, reorganization or
similar proceeding of our company, assets we have pledged to
satisfy our obligations on our senior, secured debt will be used
to satisfy such secured obligations before such assets would be
available to make any payment on the notes and our other senior,
unsecured debt. In addition, to the extent that such assets
cannot satisfy in full our senior, secured debt, the holders of
such debt would have a claim for any shortfall that would rank
equally in right of payment (or effectively senior if the debt
were issued by a subsidiary) with the notes and our other
senior, unsecured debt. In such an event, we may not have
sufficient assets remaining to pay outstanding amounts on the
notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the notes, whether subordinated or
senior, will be effectively subordinated to existing and future
liabilities of our subsidiaries. Our right to receive assets of
any subsidiaries upon their liquidation or reorganization, and
the rights of the holders of the notes to share in those assets,
would be subject to the prior satisfaction of claims of the
subsidiaries&#146; creditors. Consequently, the notes will be
effectively subordinate to all liabilities of any of our
subsidiaries. Substantially all of our business is currently
conducted through our subsidiaries, and we expect this to
continue.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The notes will be our obligations exclusively.
The indenture and the purchase contracts do not limit our
ability to incur senior or secured debt, or our ability or that
of any of our subsidiaries to incur other indebtedness and other
liabilities. Our ability to pay our obligations under the notes
may decrease if we, or any of our subsidiaries, incur additional
indebtedness or liabilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2002, we and our
subsidiaries had outstanding debt in an aggregate principal
amount of approximately $1.1&nbsp;billion, including
$84.4&nbsp;million of joint venture debt guaranteed by us or
certain of our subsidiaries. Of this $1.1&nbsp;billion, as of
such date we were directly obligated for or guaranteed
$686.1&nbsp;million, $704.1&nbsp;million was secured by our
assets or the assets of certain of our subsidiaries, and
$704.1&nbsp;million was directly obligated for or guaranteed by
our subsidiaries.
</FONT>

<P align="left">
<B><FONT size="2">Failure to Comply With Covenants Could Lead to
Acceleration of Debt</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our existing financing agreements and those of
our subsidiaries impose operating and financial restrictions
that restrict our actions. These restrictions limit or prohibit
our ability to, among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">incur additional debt;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">create liens;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">sell capital stock of subsidiaries or other
    assets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">make certain investments;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">engage in mergers and acquisitions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">make certain capital expenditures; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">pay dividends.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-22
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Failure to comply with any of the covenants in
our existing or future financing agreements could result in a
default under those agreements or under other agreements
containing cross-default provisions. A default would permit
lenders to accelerate the maturity of the debt under these
agreements and to foreclose upon any collateral securing that
debt. Under these circumstances, we might not have sufficient
funds or other resources to satisfy all of our obligations,
including our obligations under the notes. In addition, the
secured nature of a portion of our other debt, together with the
limitations imposed by financing agreements on our ability to
incur additional debt and to take other actions, might
significantly impair our ability to obtain other financing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Some of our existing financing agreements also
impose restrictions on changes of control of us or our
ship-owning subsidiaries, including requirements for prior
consent and that we make an offer to redeem certain debt. See
&#147;Description of Our Other Indebtedness.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Declining Market Values of Our Vessels Could
Adversely Affect Our Liquidity and Result in Breaches of Our
Financing Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Market values of tankers fluctuate depending upon
general economic and market conditions affecting the tanker
industry and competition from other shipping companies, other
types and sizes of vessels, and other modes of transportation.
In addition, as vessels become older, they generally decline
significantly in value. Declining vessel values of our tankers
could adversely affect our liquidity by limiting our ability to
raise cash by refinancing vessels. Declining vessel values could
also result in a breach of loan covenants and events of default
under relevant financing agreements that require us to maintain
certain loan-to-value ratios. If vessel values decline and we
are unable to decrease our debt or pledge additional collateral,
the lenders could accelerate our debt and foreclose on our
vessels pledged as collateral for the loans.
</FONT>

<P align="left">
<B><FONT size="2">We May Not Be Able to Pay Cash
Dividends</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In each quarter since the initial public offering
of our common stock in 1995, we have paid a cash dividend of
$0.215 per share. Any future cash dividends will depend upon our
results of operations, financial condition, cash requirements,
the availability of surplus and other factors, including the
ability of our subsidiaries to make distributions to us, which,
as described above, is restricted by financing arrangements. Any
failure to pay cash dividends could adversely affect the value
of our common stock and of the PEPS Units.
</FONT>

<P align="center">
<B><FONT size="2">Risks Relating to Our Business</FONT></B>

<P align="left">
<B><FONT size="2">The Cyclical Nature of the Tanker Industry
Causes Volatility in Our Profitability</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Historically, the tanker industry has been
cyclical, experiencing volatility in profitability due to
changes in the supply of, and demand for, tanker capacity.
Increases in tanker capacity supply or decreases in tanker
capacity demand could harm our business, financial condition and
results of operations. The supply of tanker capacity is a
function of the number of new vessels built, older vessels
scrapped, converted and lost and the number of vessels that are
out of service. The demand for tanker capacity is influenced by,
among other factors:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">global and regional economic conditions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">increases and decreases in industrial production
    and demand for crude oil and petroleum products;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">increases and decreases in OPEC production quotas;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the distance crude oil and petroleum products
    need to be transported by sea; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">developments in international trade and changes
    in seaborne and other transportation patterns.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because many of the factors influencing the
supply of and demand for tanker capacity are unpredictable, the
nature, timing and degree of changes in tanker industry
conditions are also unpredictable.
</FONT>

<P align="left">
<B><FONT size="2">We Depend Upon Oil Markets, Changes in Which
Could Result in Decreased Demand for Our Vessels and
Services</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Demand for our vessels and services in
transporting crude oil and petroleum products depends upon world
and regional oil markets. Any decrease in shipments of crude oil
in those markets could harm our business and results of
operations. Historically, those markets have been volatile as a
result of the many conditions and events that affect the price,
production and transport of oil, as well as competition from
alternative energy sources. A
</FONT>

<P align="center"><FONT size="2">S-23
</FONT>

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<DIV align="left">
<FONT size="2">slowdown of the economic recovery in the United
States and world economies may result in reduced consumption of
oil and a decreased demand for our vessels and services. In
addition, Venezuela is experiencing political unrest, which has
led to a shutdown of much of the country&#146;s economy,
including a significant decrease in its production of crude oil
and petroleum products. Continued political unrest in Venezuela
or similar unrest in other major oil-producing countries could
disrupt the export of petroleum from these or nearby countries
and adversely affect the demand for our vessels.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Continued Terrorist Attacks or War Could Lead
to Further Economic Instability and Decrease Demand for Oil,
Which Could Harm Our Business</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Terrorist attacks, such as the attacks that
occurred in New York, Pennsylvania and Washington,&nbsp;D.C., on
September&nbsp;11, 2001, and current and future war risks may
adversely affect our business, results of operation, financial
condition, ability to raise capital or future growth. The United
States has made strong overtures of going to war with Iraq.
Terrorist attacks and potential war in the Middle East may lead
to additional armed hostilities or to further acts of terrorism
and civil disturbance in the United States or elsewhere, which
may further contribute to economic instability and could
adversely affect oil markets. In addition, oil tankers, oil
pipelines and offshore oil fields could be targets of future
terrorist attacks. Any such attacks could lead to, among other
things, increased insurance costs for oil tanker operations,
increased tanker operational costs and inability to transport
oil from or to certain locations.
</FONT>

<P align="left">
<B><FONT size="2">Our Dependence on Spot Voyages May Result in
Significant Fluctuations in the Utilization of Our Vessels and
in Our Profitability</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the nine months ended September&nbsp;30,
2002 and the year ended December&nbsp;31, 2001, we derived
approximately 64% and 78%, respectively, of our net voyage
revenues from spot voyages or time charters and contracts of
affreightment priced on a spot market basis. Because we depend
on the spot charter market, declining charter rates in a given
period generally will result in corresponding declines in our
operating results for that period. The spot charter market is
highly competitive and spot charter rates are subject to
significant fluctuations based on tanker and oil supply and
demand. Charter rates have varied significantly in the last few
years. Future spot charters may not be available at rates that
will be sufficient to enable our vessels to be operated
profitably or provide sufficient cash flow to service the notes
or our other obligations. Although Navion&#146;s shuttle tanker
fleet operates on long-term fixed-rate contracts of
affreightment, its conventional tanker fleet generates revenues
from spot voyages and contracts of affreightment priced on a
spot market basis. Accordingly, these revenues historically have
been, and after our acquisition of Navion will continue to be,
subject to spot market price fluctuations.
</FONT>

<P align="left">
<B><FONT size="2">Reduction in Oil Produced From Offshore Oil
Fields Could Harm Our Shuttle Tanker Business</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Demand for our shuttle tankers in transporting
crude oil and petroleum products depends upon the amount of oil
produced from offshore oil fields, especially in the North Sea,
where our shuttle tankers primarily operate. As oil prices
increase, the prospect of exploration and development of
offshore oil fields, which cost more to develop than land oil
fields, becomes more attractive to oil companies. However, if
oil prices decline, it becomes less attractive for oil companies
to explore for oil offshore and develop offshore oil fields. If
the amount of oil produced from offshore oil fields declines,
especially in the North Sea, our shuttle tanker business could
be harmed. In addition, if for environmental or other reasons,
there is a change in policy towards using pipelines rather than
oceangoing vessels in transporting crude oil and petroleum
products from offshore oil fields, our shuttle tanker business
could be harmed. As of December&nbsp;31, 2002, we had
20&nbsp;vessels (including two new buildings) in our shuttle
tanker fleet. If we close our pending acquisition of Navion ASA,
we will acquire an additional nine owned and 13 chartered-in
shuttle tankers, which would increase our exposure to the
foregoing shuttle-tanker-related risks. Most of Navion&#146;s
shuttle tanker revenues are derived from long-term contracts of
affreightment. Revenue under most of the these contracts depends
upon the amount of oil we transport, the production of which is
beyond our control and which can vary depending upon the nature
of a given oil field and the field operator&#146;s production
decisions.
</FONT>

<P align="center"><FONT size="2">S-24
</FONT>

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<P align="left">
<B><FONT size="2">Our Substantial Operations Outside the United
States Expose Us to Political, Governmental and Economic
Instability, Which Could Harm Our Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because our operations are primarily conducted
outside of the United States, they may be affected by changing
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.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We derive a substantial portion of our total
revenues from our operations in the Indo-Pacific Basin. Past
political conflicts in this region, particularly in the Arabian
Gulf, have included attacks on tankers, mining of waterways and
other efforts to disrupt shipping in the area. Vessels trading
in this region have also been subject to, in limited instances,
acts of terrorism and piracy. Future hostilities or other
political instability in this region or other regions where we
operate could affect our trade patterns and harm our business.
For example, any war resulting from the recent disputes between
the United States and Iraq could significantly alter the supply
and transportation of oil in the Indo-Pacific Basin, which could
harm our business. In addition, tariffs, trade embargoes, and
other economic sanctions by the United States or other countries
against countries in the Indo-Pacific Basin or elsewhere as a
result of terrorist attacks or other hostilities may limit
trading activities with those countries, which could also harm
our business.
</FONT>

<P align="left">
<B><FONT size="2">Our Inability to Renew or Replace Long-Term
Charter Contracts Could Adversely Affect Our Operating Results
and Make Them More Volatile</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Thirty-four of our tankers, including all 20 of
our shuttle tankers, currently are subject to long-term charter
contracts. Sixteen of these contracts terminate by their terms
between March 2003 and August 2004. The 18 remaining contracts
terminate by their terms between October 2005 and April 2018. If
we complete our pending acquisition of Navion ASA, we will have
an additional nine owned and 13 chartered-in shuttle tankers
subject to fixed-rate contracts of affreightment with terms from
six months to the life of the oil field being served, and one
owned gas carrier subject to a 13&nbsp;year time charter. Our
inability to renew or replace long-term contracts on favorable
terms, if at all, or the early termination of a significant
number of these contracts, could harm our results of operations
and make them more volatile.
</FONT>

<P align="left">
<B><FONT size="2">The Intense Competition in Our Markets May
Lead to Reduced Profitability</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our vessels operate in highly competitive
markets. Competition arises primarily from other Aframax and
shuttle tanker owners, including major oil companies and
independent companies. We also compete with owners of other size
tankers. Our market share is insufficient to enforce any degree
of pricing discipline in the markets in which we operate and our
competitive position may erode in the future. Any new markets we
enter could include participants that have greater financial
strength and capital resources than us and we may not be
successful in entering into new markets.
</FONT>

<P align="left">
<B><FONT size="2">The Tanker Industry Is Subject to Substantial
Environmental and Other Regulations, Which May Significantly
Increase Our Expenses</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our operations are affected by extensive and
changing environmental protection laws and other regulations. We
have incurred, and expect to continue to incur, substantial
expenses in complying with these laws and regulations, including
expenses for ship modifications and changes in operating
procedures. Additional laws and regulations may be adopted that
could limit our ability to do business or further increase the
cost of our doing business. This could harm our business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The United States Oil Pollution Act of 1990
(&#147;OPA 90&#148;) in particular has increased our expenses.
OPA 90 provides for the phase-in of the exclusive use of
double-hull tankers at United States ports, as well as
potentially unlimited liability for owners, operators and demise
or bareboat charterers for oil pollution in U.S.&nbsp;waters. To
comply with OPA 90, tanker 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 contains financial responsibility requirements for
vessels operating in U.S.&nbsp;waters and requires owners and
operators of vessels to establish and maintain with the United
States Coast Guard evidence of insurance or of qualification as
a self-insurer or other evidence of financial responsibility
sufficient to meet their potential liabilities under OPA&nbsp;90.
</FONT>

<P align="center"><FONT size="2">S-25
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Following the example of OPA 90, the
International Maritime Organization, the United Nations&#146;
agency for maritime safety, adopted regulations for tanker
design and inspection that are designed to reduce oil pollution
in international waters and that will be phased in on a schedule
depending upon vessel age. In addition, as a result of the
November 2002 sinking of the tanker <I>Prestige</I> and related
oil spill, the European Union, the United States and certain
other countries are considering or have adopted stricter
technical and operational requirements for tankers, including
the accelerated phase-out of single-hull vessels, and
legislation that may affect the liability of tanker owners and
operators for oil pollution.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our shuttle tankers primarily operate in the
North Sea. In addition to the regulations imposed by the
International Maritime Organization, countries having
jurisdiction over North Sea areas impose regulatory requirements
in connection with operations in those areas. These regulatory
requirements, together with additional requirements imposed by
operators in North Sea oil fields, require us to make further
expenditures for sophisticated equipment, reporting and
redundancy systems on our shuttle tankers and for the training
of seagoing staff. Additional regulations and requirements may
be adopted or imposed that could limit our ability to do
business or further increase the cost of doing business in the
North Sea.
</FONT>

<P align="left">
<B><FONT size="2">We May Not Be Able to Successfully Integrate
Any Future Acquisitions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A principal component of our strategy is to
continue to grow by expanding our business both in the
geographic areas and markets where we have historically focused
as well as into new geographic areas, market segments and
services. We may not be successful in expanding our operations
and any expansion may not be profitable. Our strategy of growth
through acquisitions, including our pending acquisition of
Navion ASA, involves business risks commonly encountered in
acquisitions of companies, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">disruption of our ongoing business;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">difficulties in integrating the operations,
    personnel and business cultures of acquired companies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">difficulties of coordinating and managing
    geographically separate organizations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">adverse effects on relationships with our
    existing suppliers and customers, and those of the companies we
    acquire;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">difficulties entering geographic markets or new
    market segments in which we have no or limited experience; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">loss of key officers and employees of acquired
    companies.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Our failure to successfully and cost-effectively
integrate Navion or any other businesses we may acquire in the
future will harm our business and results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The process of integrating operations could also
cause an interruption of, or loss of momentum in, the activities
of one or more of an acquired company&#146;s businesses and our
businesses. Members of our senior management may be required to
devote considerable amounts of time to this integration process,
which will decrease the time they will have to manage our
business, service existing customers and attract new customers.
If our senior management is not able to effectively manage the
integration process, or if any significant business activities
are interrupted as a result of the integration process, our
business could suffer.
</FONT>

<P align="left">
<B><FONT size="2">We May Not Realize Expected Benefits from
Acquisitions, and Implementing Our Strategy of Growth Through
Acquisitions May Harm Our Financial Condition and
Performance</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Present and future acquisitions, including our
pending acquisition of Navion ASA, may not be profitable to us
at the time of their completion and may not generate revenues
sufficient to justify our investment. In addition, our
acquisition growth strategy exposes us to risks that may harm
our results of operations and financial condition, including
risks that we may:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">fail to realize anticipated benefits, such as
    cost-savings and revenue enhancements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">decrease our liquidity by using a significant
    portion of our available cash or borrowing capacity to finance
    acquisitions;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-26
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">incur additional indebtedness, which may result
    in significantly increased interest expense or financial
    leverage, or issue additional equity securities to finance
    acquisitions, which may result in significant shareholder
    dilution;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">incur or assume unanticipated liabilities, losses
    or costs associated with the business acquired; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">incur other significant charges, such as
    impairment of goodwill or other intangible assets, asset
    devaluation or restructuring charges.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect to realize financial and operating
benefits as a result of the pending Navion ASA acquisition,
including added stability to our cash flow and earnings
throughout the tanker market cycle as a result of the
fixed-rate, long-term nature of Navion&#146;s contracts of
affreightment related to its shuttle tanker business. However,
revenue under most of these contracts depends upon the amount of
oil we transport, the production of which is beyond our control
and which can vary depending upon the nature of a given oil
field and the field operator&#146;s production decisions. In
addition, Navion has a right of first refusal on Statoil&#146;s
oil transportation requirements at the prevailing market rate
until December&nbsp;31, 2007. Although we believe this
arrangement may increase the utilization of our conventional
fleet after the acquisition, we may be unable to achieve such
increased fleet utilization.
</FONT>

<P align="left">
<B><FONT size="2">The Strain That Growth Places Upon Our Systems
and Management Resources May Harm Our Business</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our growth has placed and will continue to place
significant demands on our management, operational and financial
resources. If we close our pending acquisition of Navion ASA, we
will have an additional 46 tankers, including 34 vessels
time-chartered in, worldwide to deploy, control and monitor.
These would represent an increase of 45% over our current fleet
of tankers. As we expand our operations, we must effectively
manage and monitor operations, control costs and maintain
effective quality and control in geographically dispersed
markets, which will increase our operating complexity. Our
future growth and financial performance will also depend on our
ability to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">recruit, train, manage and motivate our employees
    to support our expanded operations; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">continue to improve our customer support,
    financial controls and information systems.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These efforts may not be successful and may not
occur in a timely or cost-effective manner. Failure to
effectively manage our growth and the system and procedural
transitions required by expansion in a cost-effective manner or
at all could harm our business.
</FONT>

<P align="left">
<B><FONT size="2">Our Insurance May Not Be Sufficient to Cover
the Losses That May Occur to Our Property or as a Result of Our
Operations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The operation of oil tankers carries the risk of
environmental damage from an oil spill as well as the risk of
catastrophic marine disasters and property losses inherent to
any ocean-going vessel. We carry protection and indemnity
coverage to protect against most of the accident-related risks
involved in the conduct of our business and maintain
environmental damage and pollution coverage. We do not carry
insurance covering the loss of revenue resulting from vessel
off-hire time. All risks may not be adequately insured against,
and any particular claim may not be paid. In addition, we may
not be able to procure adequate coverage at commercially
reasonable rates in the future. Any uninsured loss could harm
our business and financial condition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">More stringent environmental regulations at times
in the past have resulted in increased costs for, and in the
future may result in the lack of availability of, insurance
against the risks of environmental damage or pollution. We
currently maintain $1&nbsp;billion in coverage for liability for
pollution, spillage or leakage of oil for each of our vessels. A
catastrophic spill could exceed the coverage available, which
could harm our business, financial condition and results of
operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;1, 2003, one of our vessels, the
<I>Alliance Spirit</I>, was empty of cargo and waiting off
Skikda, Algeria to load crude oil when a severe storm arose and
pushed aground the vessel and three other vessels, not in our
fleet. The vessel is listing heavily and could roll over or
break apart, resulting in a spillage or leakage of bunker fuel
or lube oils on board or residual crude oil cargo remaining in
the cargo tanks. Any damages resulting from this incident could
harm our financial condition to the extent not covered by
insurance.
</FONT>

<P align="center"><FONT size="2">S-27
</FONT>

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<P align="left">
<B><FONT size="2">An Incident Involving Environmental Damage or
Pollution and Any of Our Vessels Could Harm Our Reputation and
Business</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Oil spills related to the sinkings of the tanker
<I>Erika</I> off the coast of France in 1999 and the tanker
<I>Prestige</I> off the coast of Spain in 2002, and other
tanker-related environmental incidents have created increased
demand for modern vessels operated by ship management companies
with a reputation for safety and environmental compliance. Any
event involving our tankers that results in material
environmental damage or pollution could harm our reputation for
safety and environmental compliance and decrease demand for our
services, which could harm our business. While we believe that
the grounding of the <I>Alliance Spirit</I> was weather related
and not caused by any deficiency in our operations, adverse
publicity or perceptions on the part of our customers could harm
our reputation and business.
</FONT>

<P align="left">
<B><FONT size="2">Our Operating Results Are Subject to Seasonal
Fluctuations</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our tankers operate in markets that have
historically exhibited seasonal variations in demand and,
therefore, in charter rates. This seasonality may result in
quarter-to-quarter volatility in our results of operations.
Tanker markets are typically stronger in the winter months as a
result of increased oil consumption in the northern hemisphere.
In addition, unpredictable weather patterns in these months tend
to disrupt vessel scheduling. The oil price volatility resulting
from these factors has historically led to increased oil trading
activities in the winter months. As a result, our revenues have
historically been weaker during our fiscal quarters ended
June&nbsp;30 and September&nbsp;30, and, conversely, revenues
have been stronger in our fiscal quarters ended March&nbsp;31
and December&nbsp;31.
</FONT>

<P align="left">
<B><FONT size="2">We Expend Substantial Sums During Construction
of Newbuildings Without Earning Revenue and Without Assurance
That They Will Be Completed</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are typically required to expend substantial
sums as progress payments during the construction of a
newbuilding, but we do not derive any revenue from the vessel
until after its delivery. If we were unable to obtain financing
required to complete payments on any of our newbuilding orders,
we could effectively forfeit all or a portion of the progress
payments previously made. We currently have 12 newbuildings on
order, with deliveries scheduled between March 2003 and October
2004. We may order additional newbuildings in the future.
</FONT>

<P align="left">
<B><FONT size="2">The Loss of Any Key Customer Could Result in a
Significant Loss of Revenue in a Given Period</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have derived, and believe that we will
continue to derive, a significant portion of our voyage revenues
from a limited number of customers. A single customer, an
international oil company, accounted for approximately
$131&nbsp;million, or 13%, of our consolidated voyage revenues
during the year ended December&nbsp;31, 2001. No other customer
accounted for more than 10% of our consolidated voyage revenues
in fiscal 2001 and no customer accounted for more than 10% of
our consolidated voyage revenues during the nine months ended
September&nbsp;30, 2002. Giving effect to our pending
acquisition of Navion ASA as if it had occurred on
January&nbsp;1, 2001, one customer would have accounted for
approximately $491&nbsp;million, or 26%, and $236&nbsp;million,
or 22%, respectively, of our consolidated voyage revenues during
the year ended December&nbsp;31, 2001 and the nine months ended
September&nbsp;30, 2002. No other customer would have accounted
for more than 10% of such consolidated voyage revenues during
either of such periods. The loss of any significant customer, or
a substantial decline in the amount of services requested by a
significant customer, could harm our results of operations.
</FONT>

<P align="left">
<B><FONT size="2">Exposure to Currency Exchange Rate and
Interest Rate Fluctuations Could Result in Fluctuations in Our
Net Income.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">While virtually all of our revenues are earned in
U.S.&nbsp;Dollars, a portion of our operating costs is incurred
in currencies other than U.S.&nbsp;Dollars. This partial
mismatch in operating revenues and expenses could lead to
fluctuations in net income due to changes in the value of the
U.S.&nbsp;Dollar relative to other currencies, in particular the
Japanese Yen, the Singapore Dollar, the Canadian Dollar, the
Norwegian Kroner, the British Pound and the Australian Dollar.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2002, approximately
$452.5&nbsp;million, or 46.6%, of our debt, bore interest at
floating interest rates. Increases in interest rates would
increase interest payments on this and any other floating-rate
debt, and could harm our results of operations. To partially
mitigate our floating interest rate exposure, as of
</FONT>

<P align="center"><FONT size="2">S-28
</FONT>

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<DIV align="left">
<FONT size="2">September&nbsp;30, 2002, we had entered into
three interest rate swaps, totaling $70&nbsp;million in notional
principal amount with maturities between December 2002 and May
2004. The average interest rate of the swaps is 6.48%. As of
September&nbsp;30, 2002, the fair value of these interest rate
swaps was negative $2.1&nbsp;million.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">We May Not Be Exempt From United States Tax on
Our United States Source Income, Which Would Reduce Our Net
Income and Cash Flow by the Amount of the Applicable
Tax.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we are not exempt from tax under
Section&nbsp;883 of the United States Internal Revenue Code, the
shipping income we derive from U.S.&nbsp;sources attributable to
our transportation of cargoes to or from the United States will
be subject to U.S.&nbsp;federal income tax. If we are subject to
such tax, our net income and cash flow would be reduced by the
amount of such tax. We currently claim an exemption under
Section&nbsp;883. Proposed regulations, if they become final as
proposed, may not permit us to continue to claim this exemption.
We can give no assurance that future changes and shifts in
ownership of our stock will not preclude us from being able to
satisfy the existing exemption requirements or, if we were to
initially qualify for an exception thereunder, the proposed
regulations as adopted and finalized.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the nine months ended September&nbsp;30, 2002
and the year ended December&nbsp;31, 2001, approximately 18.1%
and 18.0%, respectively, of our voyage revenues was derived from
U.S.&nbsp;sources attributable to the transportation of cargoes
to or from the United States. The average U.S.&nbsp;federal
income tax on such U.S.&nbsp;source income, in the absence of
exemption under Section&nbsp;883, would have been 4% thereof, or
approximately $4.1&nbsp;million for such nine-month period and
$7.5&nbsp;million for our fiscal year 2001.
</FONT>

<P align="left">
<B><FONT size="2">The International Nature of Our Operations May
Make the Outcome of Any Bankruptcy Proceedings Difficult to
Predict.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are incorporated under the laws of the
Republic of the Marshall Islands and our subsidiaries are
incorporated under the laws of various countries other than the
United States of America, and we conduct operations in countries
around the world. Consequently, in the event of any bankruptcy,
insolvency or similar proceeding involving us or one of our
subsidiaries, any bankruptcy laws of the Republic of the
Marshall Islands or other countries in which our subsidiaries
are organized or operate could apply. Under bankruptcy laws in
the United States, courts typically have jurisdiction over a
debtor&#146;s property, wherever located, including property
situated in other countries. There can be no assurance, however,
that courts in other countries that have jurisdiction over us
and our operations would recognize a United States bankruptcy
court&#146;s jurisdiction. Accordingly, difficulties may arise
in administering a United States bankruptcy case involving a
debtor with its principal operating assets outside the United
States, and any orders or judgments of a bankruptcy court in the
United States may not be enforceable.
</FONT>

<P align="center"><FONT size="2">S-29
</FONT>

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<!-- link1 "USE OF PROCEEDS" -->
<DIV align="left"><A NAME="005"></A></DIV>

<P align="center">
<B><FONT size="2">USE OF PROCEEDS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We estimate that the net proceeds from the
offering, after deducting the underwriters&#146; discounts and
commissions and fees and expenses payable by us, will be
approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
(approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
if the underwriters exercise their over-allotment option in
full).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect to use the net proceeds from the sale
of PEPS Units offered hereby to finance acquisitions and for
general corporate purposes. General corporate purposes may
include capital expenditures, working capital and the repayment
of debt.
</FONT>

<P align="center"><FONT size="2">S-30
</FONT>

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<!-- link1 "SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA" -->
<DIV align="left"><A NAME="006"></A></DIV>

<P align="center">
<B><FONT size="2">SELECTED CONSOLIDATED FINANCIAL AND OTHER
DATA</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following tables present our selected
financial and other data as at and for the nine-month periods
ended September&nbsp;30, 2002 and 2001 and the fiscal years
ended December&nbsp;31, 2001 and 2000, the nine-month period
ended December&nbsp;31, 1999 and the fiscal years ended
March&nbsp;31, 1999 and 1998. We derived the selected financial
data set forth below with respect to our statements of income
for the fiscal years ended December&nbsp;31, 2001 and 2000 and
the nine-month period ended December&nbsp;31, 1999 and our
balance sheets as at December&nbsp;31, 2001 and 2000, from our
audited consolidated financial statements that are included in
our Form&nbsp;20-F for the year ended December&nbsp;31, 2001. We
derived the income statement data for each of the fiscal years
ended March&nbsp;31, 1999 and 1998 and the balance sheet data as
at December&nbsp;31, 1999 and March&nbsp;31, 1999 and 1998, from
our audited consolidated financial statements not included in
our Form&nbsp;20-F. We derived the selected financial and other
data set forth below with respect to our statements of income
for each of the nine-month periods ended September&nbsp;30, 2002
and 2001 and our balance sheets as at September&nbsp;30, 2002
and 2001 from our unaudited consolidated financial statements
included in our Form&nbsp;6-K filed on November&nbsp;14, 2002
with respect to the our fiscal quarter ended September&nbsp;30,
2002. In management&#146;s opinion, the unaudited consolidated
financial statements reflect all adjustments necessary
(consisting only of normal recurring adjustments) for a fair
presentation of such financial data. Our results for the
nine-month period ended September&nbsp;30, 2002 are not
necessarily indicative of the eventual results for the year.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You should read the data below in conjunction
with our consolidated financial statements and the related
notes, the financial information and &#147;Management&#146;s
Discussion and Analysis of Results of Operations and Financial
Condition&#148; included in our Report on Form&nbsp;20-F for our
fiscal year ended December&nbsp;31, 2001 and our Report on
Form&nbsp;6-K for the quarter ended September&nbsp;30, 2002,
each of which is incorporated by reference into this prospectus
supplement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We changed our fiscal year end from March&nbsp;31
to December&nbsp;31, commencing December&nbsp;31, 1999, in order
to facilitate comparison of our operating results to those of
other companies in the transportation industry. Our financial
statements are prepared in accordance with accounting principals
generally accepted in the United States.
</FONT>

<P align="center"><FONT size="2">S-31
</FONT>

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<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="31%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Fiscal Years Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Nine Months Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mar.&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mar.&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dec.&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dec.&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dec.&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="3" align="center"><B><FONT size="1">(unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center"><B><FONT size="1">(unaudited)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="27" align="center"><B><FONT size="1">(nine months)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="27" align="center" nowrap><B><FONT size="1">(in thousands, except share data, ratios, fleet and ship data and per day data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Income Statement Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Voyage revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">406,036</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">411,922</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">377,882</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">893,226</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,039,056</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">825,910</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">560,492</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Voyage expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">100,776</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">93,511</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">129,532</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">248,957</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">249,562</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">188,637</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">171,764</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net voyage revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">305,260</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">318,411</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">248,350</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">644,269</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">789,494</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">637,273</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">388,728</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Operating expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Vessel operating expenses<SUP>(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">70,510</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">84,397</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">98,780</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">125,415</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">154,831</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">113,404</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">127,415</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Time charter hire expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,627</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">29,666</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">30,681</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">53,547</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">66,019</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">51,477</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">37,640</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Depreciation and amortization expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">94,941</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">93,712</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">68,299</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">100,153</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">136,283</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">99,473</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">110,136</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">General and administrative expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">21,542</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">25,002</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">27,018</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">37,479</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">48,898</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">35,572</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">42,824</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total operating expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">197,620</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">232,777</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">224,778</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">316,594</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">406,031</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">299,926</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">318,015</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Income from vessel operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">107,640</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">85,634</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">23,572</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">327,675</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">383,463</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">337,347</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">70,713</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(56,269</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(44,797</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(44,996</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(74,540</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(66,249</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(50,944</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(43,854</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Interest income
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,897</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,369</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,842</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">13,021</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9,196</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,867</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,691</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Other income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11,236</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,800</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(4,013</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,864</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,108</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11,051</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(9,265</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net income (loss)<SUP>(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">70,504</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">45,406</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(19,595</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">270,020</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">336,518</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">305,321</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">20,285</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Per Share Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net income (loss)&#151; basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.46</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1.46</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.54</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7.02</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8.48</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7.69</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.51</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net income (loss)&#151; diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.44</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1.46</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.54</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6.86</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8.31</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7.53</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.50</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cash earnings&#151; basic<SUP>(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5.78</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4.72</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1.19</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9.67</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11.91</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10.18</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3.22</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cash dividends declared
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.86</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.86</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.65</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.86</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.86</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.65</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.65</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Balance Sheet Data (at end of
    period):</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cash and marketable securities
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">115,254</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">132,256</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">226,381</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">223,123</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">196,004</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">171,095</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">172,234</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Capital stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">261,353</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">330,493</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">427,937</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">452,808</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">467,341</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">472,241</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">470,299</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,460,183</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,452,220</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,982,684</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,974,099</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,467,781</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,463,805</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,517,833</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">725,369</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">641,719</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,085,167</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">797,484</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">935,702</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">947,333</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">971,740</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">689,455</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">777,390</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">832,067</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,098,512</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,398,200</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,386,277</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,394,249</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Number of outstanding shares of common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">28,832,765</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">31,648,318</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">38,064,264</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">39,145,219</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">39,550,326</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">39,966,948</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">39,659,460</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Other Financial Data:</FONT></B></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">EBITDA<SUP>(4)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">209,582</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">186,069</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">95,875</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">451,066</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">539,324</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">462,892</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">187,752</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">EBITDA to interest expense<SUP>(4)(5)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3.8x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4.0x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.1x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6.1x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8.0x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8.9x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4.0x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total debt to LTM EBITDA<SUP>(4)(6)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3.5x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3.5x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8.3x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1.8x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1.7x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1.5x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3.6x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total debt to total capitalization<SUP>(7)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">51.3%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">45.2%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">56.6%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">42.1%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">39.8%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">40.3%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">40.7%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Net debt to total capitalization<SUP>(8)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">46.9%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">39.6%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">50.7%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">34.2%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">34.3%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">35.6%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">35.9%</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Ratio of earnings to fixed
    charges<SUP>(2)(9)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.3x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.0x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.6x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4.6x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5.8x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6.8x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1.5x</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cash earnings<SUP>(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">165,575</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">146,489</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">43,343</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">372,168</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">472,749</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">403,954</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">127,595</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Capital expenditures:
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Vessel and equipment purchases, gross
    <SUP>(10)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">197,199</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">85,445</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">23,313</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">43,512</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">184,983</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">167,071</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">93,115</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Drydocking
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,376</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11,749</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,598</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11,941</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">20,064</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14,450</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">23,027</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Total Fleet
    Data</FONT></B><SUP><FONT size="1">(11)</FONT></SUP><FONT size="1">:
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Average number of ships
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">43</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">47</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">65</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">72</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">82</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">81</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">84</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Average age of our fleet (in years at end of
    period)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7.8</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9.0</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10.2</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9.9</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10.7</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Operating cash flow per ship per
    day<SUP>(12)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12,682</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11,171</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,177</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16,687</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">17,682</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">20,116</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,378</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="1">Spot Aframax Fleet
    Data</FONT></B><SUP><FONT size="1">(13)</FONT></SUP><FONT size="1">:
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Average number of ships
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">42</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">43</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">55</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">59</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">60</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">60</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">59</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Average age of our fleet (in years at end of
    period)
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7.6</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8.0</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">8.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9.4</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9.1</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10.3</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">TCE per ship per day<SUP>(14)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">21,373</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">19,576</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">13,462</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">27,138</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">30,542</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">33,701</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">17,363</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Vessel operating expenses per ship per day
    <SUP>(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,554</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,969</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,621</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,980</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,374</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,321</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">5,592</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Operating cash flow per ship per
    day<SUP>(12)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12,664</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">10,903</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,731</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">18,145</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">19,747</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">22,714</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,795</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="right">
<I><FONT size="2">(Footnotes on following page)</FONT></I>

<P align="center"><FONT size="2">S-32
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<HR size="1" width="15%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)</FONT></TD>
    <TD align="left">
    <FONT size="2">Vessel operating expenses consist of all expenses
    relating to the operation of vessels (other than voyage
    expenses), including crewing, repairs and maintenance,
    insurance, stores and lubes, and communications expenses. Ship
    days are calculated on the basis of a 365-day year multiplied by
    the average number of owned vessels in our fleet for the
    respective year. Vessel operating expenses exclude vessels
    time-chartered-in.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)</FONT></TD>
    <TD align="left">
    <FONT size="2">Net income (loss) and the ratio of earnings to
    fixed charges for our fiscal year ended March&nbsp;31, 1999 have
    been restated to reflect early adoption of Statement of
    Financial Accounting Standards No.&nbsp;145,
    &#147;Extinguishment of Debt and Capital Lease
    Modification,&#148; which requires any gain or loss on debt
    extinguishments to be classified as income or loss from
    continuing operations, rather than as an extraordinary item as
    previously required under Statement of Financial Accounting
    Standards No.&nbsp;4.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)</FONT></TD>
    <TD align="left">
    <FONT size="2">Cash earnings represents net income (loss) before
    foreign exchange gains (losses) and depreciation and
    amortization expense. Cash earnings is included because it is
    used by certain investors to measure a company&#146;s financial
    performance as compared to other companies in the shipping
    industry. Cash earnings is not required by accounting principles
    generally accepted in the United States and should not be
    considered as an alternative to net income or any other
    indicator of our performance required by accounting principles
    generally accepted in the United States.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)</FONT></TD>
    <TD align="left">
    <FONT size="2">EBITDA represents net income (loss) before
    interest expense, income tax expense, depreciation and
    amortization expense, minority interest, and gains or losses
    arising from foreign exchange translation and disposal of
    assets. EBITDA is included because such data is used by certain
    investors to measure a company&#146;s financial performance.
    EBITDA is not required by accounting principles generally
    accepted in the United States and should not be considered as an
    alternative to net income or any other indicator of our
    performance required by accounting principles generally accepted
    in the United States.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)</FONT></TD>
    <TD align="left">
    <FONT size="2">For purposes of computing EBITDA to interest
    expense, interest expense includes capitalized interest but
    excludes amortization of loan costs.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(6)</FONT></TD>
    <TD align="left">
    <FONT size="2">Total debt to LTM EBITDA represents total debt as
    of the end of the period compared to EBITDA for the 12-month
    period then ended.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(7)</FONT></TD>
    <TD align="left">
    <FONT size="2">Total capitalization represents total debt,
    minority interest and total stockholders&#146; equity.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(8)</FONT></TD>
    <TD align="left">
    <FONT size="2">Net debt represents total debt less cash, cash
    equivalents and marketable securities. Total capitalization
    represents net debt, minority interest and total
    stockholders&#146; equity.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(9)</FONT></TD>
    <TD align="left">
    <FONT size="2">For purposes of computing the consolidated ratio
    of earnings to fixed charges, earnings consist of net income
    (loss) before income taxes, minority interest expense, equity
    income, interest expense and amortization of capitalized
    interest, deferred costs and bond premium. Fixed charges consist
    of interest expense, capitalized interest and amortization of
    deferred financing costs and bond premium.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(10)</FONT></TD>
    <TD align="left">
    <FONT size="2">Excludes vessels purchased in connection with our
    corporate acquisitions of Bona Shipbuilding Ltd. in 1999 and
    Ugland Nordic Shipping ASA in 2001.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(11)</FONT></TD>
    <TD align="left">
    <FONT size="2">Excludes vessels of our joint ventures,
    newbuildings and one Aframax tanker that has been subject to a
    bareboat charter.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(12)</FONT></TD>
    <TD align="left">
    <FONT size="2">Operating cash flow represents income from vessel
    operations plus depreciation and amortization expense (other
    than drydock amortization expense). Ship days are calculated on
    the basis of a 365-day fiscal year multiplied by the average
    number of vessels in our fleet for the respective year
    (excluding vessels of our joint ventures). Operating cash flow
    is not required by accounting principles generally accepted in
    the United States and should not be considered as an alternative
    to net income or any other indicator of our performance required
    by accounting principles generally accepted in the United States.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(13)</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes our core Aframax fleet that operates
    primarily in the spot charter market and excludes vessels that
    operate primarily under long-term fixed-rate contracts,
    including our ten Aframax-size shuttle tankers and our
    Aframax-size Australian-crewed vessels. Time charter equivalent
    and vessel operating expense data is separately presented only
    for this portion of our fleet because the remainder of our fleet
    generally has varying revenues and expense characteristics that
    make period-to-period comparisons not meaningful. Also excludes
    one Aframax tanker that has been subject to a bareboat charter
    and Aframax tankers of our joint ventures.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(14)</FONT></TD>
    <TD align="left">
    <FONT size="2">TCE, or time charter equivalent, is a measure of
    the revenue performance of a vessel, which, on a per voyage
    basis, is generally determined by Clarkson Research Studies Inc.
    (&#147;Clarkson&#148;) and other industry data sources by
    subtracting voyage expenses (except commissions) which are
    incurred in transporting cargo from gross revenue per voyage and
    dividing the remaining revenue by the total number of days
    required for the round-trip voyage. For purposes of calculating
    our average TCE for the year, TCE has been calculated consistent
    with Clarkson&#146;s method, by deducting total voyage expenses
    (except commissions) from total voyage revenues and dividing the
    remaining sum by our total voyage days in the year.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-33
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "CAPITALIZATION" -->
<DIV align="left"><A NAME="007"></A></DIV>

<P align="center">
<B><FONT size="2">CAPITALIZATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents our consolidated
capitalization at September&nbsp;30, 2002 to reflect:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)</FONT></TD>
    <TD align="left">
    <FONT size="2">our actual capitalization; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)</FONT></TD>
    <TD align="left">
    <FONT size="2">our capitalization as adjusted to give effect to
    this offering of PEPS Units as if it had occurred on
    September&nbsp;30, 2002, and the payment of estimated
    underwriting discount and commissions and estimated expenses
    with respect to this offering from cash then on hand.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You should read the following table in
conjunction with our historical and pro forma consolidated
condensed financial statements and related notes included in our
Report on Form&nbsp;20-F for our fiscal year ended
December&nbsp;31, 2001 and our Report on Form&nbsp;6-K for the
quarter ended September&nbsp;30, 2002, each of which is
incorporated by reference into the accompanying prospectus. See
&#147;Use of Proceeds&#148; and &#147;Description of Our Other
Indebtedness.&#148;
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30, 2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Actual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Pro Forma</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(dollars in thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and marketable securities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">175,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current portion of long-term debt<SUP>(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55,165</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt:<SUP>(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">916,575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    &nbsp;&nbsp;&nbsp;<FONT size="2">% notes due May&nbsp;18,
    2006<SUP>(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">916,575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,042</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholders&#146; equity:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital stock ($470,988 as of December&nbsp;31,
    2002)<SUP>(3)(4)</SUP>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">470,299</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Retained earnings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">929,426</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,476</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,394,249</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total capitalization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,386,031</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="15%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)</FONT></TD>
    <TD align="left">
    <FONT size="2">For information concerning our borrowing
    arrangements, see Note&nbsp;7 to our consolidated financial
    statements included in our Report on Form&nbsp;20-F for our 2001
    fiscal year, filed with the SEC on March&nbsp;29, 2002, and
    Note&nbsp;5 to our consolidated financial statements included in
    our Report on Form&nbsp;6-K for the quarter ended
    September&nbsp;30, 2002, filed with the SEC on November&nbsp;14,
    2002, which reports are incorporated herein by reference.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)</FONT></TD>
    <TD align="left">
    <FONT size="2">Issued in connection with the sale of the PEPS
    Units. Assumes no exercise of the underwriters&#146;
    over-allotment option.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)</FONT></TD>
    <TD align="left">
    <FONT size="2">Reflects an adjustment of approximately
    $5.0&nbsp;million, representing the present value of the
    contract adjustment payments payable in connection with the PEPS
    Units.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)</FONT></TD>
    <TD align="left">
    <FONT size="2">Excludes the effects of issuance costs allocated
    to the purchase contracts issued in connection with this
    offering.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2002, we and our
subsidiaries had outstanding indebtedness in an aggregate
principal amount of approximately $1.1&nbsp;billion, including
$84.4&nbsp;million of joint venture debt guaranteed by us or
certain of our subsidiaries. Of this $1.1&nbsp;billion, we were
directly obligated for or guaranteed $686.1&nbsp;million as of
September&nbsp;30, 2002, and $704.1&nbsp;million was secured by
our assets or the assets of certain of our subsidiaries.
</FONT>

<P align="center"><FONT size="2">S-34
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, as of December&nbsp;31, 2002, we and
our subsidiaries had commitments from lenders for additional
credit facilities related to our proposed acquisition of Navion
ASA ($500&nbsp;million), vessel purchases ($77&nbsp;million) and
newbuildings ($232&nbsp;million).
</FONT>

<P align="center"><FONT size="2">S-35
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "COMMON STOCK PRICE RANGE AND DIVIDENDS" -->
<DIV align="left"><A NAME="008"></A></DIV>

<P align="center">
<B><FONT size="2">COMMON STOCK PRICE RANGE AND
DIVIDENDS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our common shares are listed for trading on the
New York Stock Exchange under the symbol &#147;TK.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth on a per share
basis the high and low sales prices for consolidated trading in
our common shares on the New York Stock Exchange for the periods
indicated.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="62%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Common Share</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cash</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dividends</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Declared</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year ended March&nbsp;31, 1998
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.860</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year ended March&nbsp;31, 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.860</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Nine months ended December&nbsp;31, 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.645</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year ended December&nbsp;31, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.860</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year ended December&nbsp;31, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45.60</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52.61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38.62</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25.49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year ended December&nbsp;31, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40.58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">July 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">August 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">September 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31.94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27.90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth Quarter, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">October 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">November 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38.71</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">December 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Year ended December&nbsp;31, 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First Quarter, 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">January 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38.98</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.215</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">February (through February&nbsp;10, 2003)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Commencing with the fiscal quarter ended
September&nbsp;30, 1995, we have declared and paid quarterly
cash dividends in the amount of $0.215 per share on our common
stock. Subject to financial results and declaration by our board
of directors, we currently intend to continue to declare and pay
a regular quarterly dividend in such amount per share on our
common stock. Pursuant to our dividend reinvestment program,
holders of common stock are permitted to choose, in lieu of
receiving cash dividends, to reinvest any dividends in
additional shares of common stock at then prevailing market
prices, but without brokerage commissions or services charges.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The timing and amount of dividends, if any, will
depend, among other things, on our results of operations,
financial condition, cash requirements, restrictions in
financing agreements and other factors deemed relevant by our
board of directors. Because we are a holding company with no
material assets other than the stock of our subsidiaries, our
ability to pay dividends on our common stock is dependent on the
earnings and cash flow of our subsidiaries. Financing agreements
to which certain of our subsidiaries are party restrict these
subsidiaries from paying dividends to us. The indentures
relating to our 8.32% First Preferred Ship Mortgage Notes due
2008 and our 8.875% Senior Notes due 2011 and agreements
governing our credit facilities place limitations on our ability
to pay dividends based on our cumulative net income plus certain
additional amounts, including the proceeds received by us from
any issuance of our capital stock. After giving effect to the
anticipated net proceeds to us of this offering, we do not
believe that these restrictions will restrict payment of cash
dividends on our common stock for the foreseeable future.
</FONT>

<P align="center"><FONT size="2">S-36
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "ACCOUNTING TREATMENT" -->
<DIV align="left"><A NAME="009"></A></DIV>

<P align="center">
<B><FONT size="2">ACCOUNTING TREATMENT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The net proceeds of the offering of the Corporate
Units will be allocated between the notes and the purchase
contracts in proportion to their respective fair market values
at the time of the issuance. The present value of the Corporate
Units contract adjustment payments will be initially charged to
stockholders&#146; equity, with an offsetting credit to
liabilities. This liability is accreted over three years by
interest charges to the income statement based on a constant
rate calculation. Subsequent contract adjustment payments reduce
this liability.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase contracts are forward transactions
in our common stock. Upon settlement of each purchase contract,
we will receive $25 on the purchase contract and will issue the
requisite number of shares of our common stock. The $25 that we
receive will be credited to stockholders&#146; equity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Before the issuance of our common stock upon
settlement of the purchase contracts, the purchase contracts
will be reflected in our diluted earnings per share calculations
using the treasury stock method. Under this method, the number
of shares of our common stock used in calculating diluted
earnings per share is deemed to be increased by the excess, if
any, of the number of shares that would be issued upon
settlement of the purchase contracts (based on the settlement
formula applied at the end of the reporting period) over the
number of shares that could be purchased by us in the market (at
the average market price during the period) using the proceeds
receivable upon settlement. Consequently, we anticipate there
will be no dilutive effect on our earnings per share except
during periods when the average market price of our common stock
is above the threshold appreciation price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</FONT>

<P align="center"><FONT size="2">S-37
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "DESCRIPTION OF THE PEPS UNITS" -->
<DIV align="left"><A NAME="010"></A></DIV>

<P align="center">
<B><FONT size="2">DESCRIPTION OF THE PEPS UNITS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The following is a summary of the terms of the
PEPS Units. This summary, together with the summary of some of
the provisions of the related documents described below,
contains a description of all of the material terms of the PEPS
Units but is not necessarily complete. We refer you to the
copies of those documents which have been or will be filed and
incorporated by reference in the registration statement of which
this prospectus supplement and accompanying prospectus form a
part. This summary supplements the description of the stock
purchase units in the accompanying prospectus, and, to the
extent it is inconsistent, replaces the description in the
accompanying prospectus. All references in this prospectus
supplement to our common stock include, among others, the rights
evidenced by such common stock to the extent provided in the
Rights Agreement dated as of September&nbsp;8, 2000, between us
and The Bank of New York, as rights agent.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will issue the PEPS Units under a purchase
contract agreement to be entered into between us and The Bank of
New York, which we refer to as the purchase contract agent. PEPS
Units may be either Corporate Units or Treasury Units. The PEPS
Units will initially consist of 5,000,000 Corporate Units (or
5,750,000 Corporate Units if the underwriters exercise their
over-allotment option in full), each with a stated amount of $25.
</FONT>

<P align="left">
<B><FONT size="2">Corporate Units</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each Corporate Unit will consist of a unit
comprising:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(a)</FONT></TD>
    <TD align="left">
    <FONT size="2">a purchase contract under which
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="4%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)</FONT></TD>
    <TD align="left">
    <FONT size="2">the holder will agree to purchase from us, and we
    will agree to sell to the holder, not later than
    February&nbsp;16, 2006 (which we refer to as the purchase
    contract settlement date), for $25 in cash (which we refer to as
    the settlement price), a number of newly issued shares of our
    common stock equal to the settlement rate described below under
    &#147;Description of the Purchase Contracts&#151; Purchase of
    Common Stock,&#148; subject to anti-dilution adjustments, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)</FONT></TD>
    <TD align="left">
    <FONT size="2">subject to our right to defer these payments, we
    will pay the holder quarterly contract adjustment payments at
    the rate
    of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
    per year on the stated amount of $25, or
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    year, and
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(b)</FONT></TD>
    <TD align="left">
    <FONT size="2">a note issued by us having a $25 principal amount.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase price of each PEPS Unit will be
allocated between the related purchase contract and the note in
proportion to their respective fair market values at the time of
issuance. We expect that, at the time of issuance, the fair
market value of each note will be $25 and the fair market value
of each purchase contract will be $0.00. This position generally
will be binding on each beneficial owner of each PEPS Unit but
not on the United States Internal Revenue Service.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As long as a unit is in the form of a Corporate
Unit, your note forming a part of the Corporate Unit will be
pledged to us through the collateral agent to secure your
obligation to purchase common stock under the related purchase
contract.
</FONT>

<P align="left">
<B><FONT size="2">Creating Treasury Units</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each holder of Corporate Units will have the
right, at any time on or prior to the fifth business day
immediately preceding the purchase contract settlement date, to
substitute for the related notes held by the collateral agent,
zero-coupon Treasury securities that mature on February&nbsp;15,
2006 (CUSIP No.&nbsp;912803AJ2), which we refer to as Treasury
securities, in a total principal amount at maturity equal to the
aggregate principal amount of the notes for which substitution
is being made.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because Treasury securities are issued in
integral multiples of $1,000, holders of Corporate Units may
make this substitution only in integral multiples of 40
Corporate Units.
</FONT>

<P align="center"><FONT size="2">S-38
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each Treasury Unit will consist of a unit with a
stated amount of $25 comprising:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(a)</FONT></TD>
    <TD align="left">
    <FONT size="2">a purchase contract under which
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="4%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)</FONT></TD>
    <TD align="left">
    <FONT size="2">the holder will agree to purchase from us, and we
    will agree to sell to the holder, not later than the purchase
    contract settlement date, for $25 in cash, a number of newly
    issued shares of our common stock equal to the settlement rate,
    subject to anti-dilution adjustments, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)</FONT></TD>
    <TD align="left">
    <FONT size="2">subject to our right to defer these payments, we
    will pay the holder quarterly contract adjustment payments at
    the rate
    of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
    per year on the stated amount of $25, or
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
    year and
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(b)</FONT></TD>
    <TD align="left">
    <FONT size="2">a 1/40th, or 2.5%, undivided beneficial interest
    in a Treasury security with a principal amount of $1,000.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To create 40 Treasury Units, the Corporate Unit
holder will:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">deposit with the collateral agent a Treasury
    security that has a principal amount at maturity of $1,000,
    which must be purchased in the open market at the Corporate Unit
    holder&#146;s expense unless otherwise owned by the holder, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">transfer 40 Corporate Units to the purchase
    contract agent accompanied by a notice stating that the holder
    has deposited a Treasury security with the collateral agent and
    requesting the release to the holder of the 40 notes relating to
    the 40 Corporate Units.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon the deposit and receipt of an instruction
from the purchase contract agent, the collateral agent will
release the related notes from the pledge under the pledge
agreement, free and clear of our security interest, to the
purchase contract agent. The purchase contract agent then will:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">cancel the 40 Corporate Units,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">transfer the related 40 notes to the holder, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">deliver 40 Treasury Units to the holder.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Treasury security will be substituted for the
notes and will be pledged to us through the collateral agent to
secure the holder&#146;s obligation to purchase common stock
under the related 40 purchase contracts. The related notes
released to the holder thereafter will trade separately from the
resulting Treasury Units.
</FONT>

<P align="left">
<B><FONT size="2">Recreating Corporate Units</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each holder of Treasury Units will have the right
at any time on or prior to the fifth business day immediately
preceding the purchase contract settlement date, to substitute
for the related Treasury securities held by the collateral
agent, notes having a principal amount equal to the aggregate
principal amount at stated maturity of the Treasury securities
for which substitution is being made.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because Treasury securities are issued in
integral multiples of $1,000, holders of Treasury Units may make
these substitutions only in integral multiples of 40 Treasury
Units.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This substitution will recreate Corporate Units,
and the applicable Treasury securities will be released to the
holder and be separately tradable from the Corporate Units.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To recreate 40 Corporate Units from 40 Treasury
Units, the Treasury Unit holder will:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">deposit with the collateral agent 40 of our
    notes, which must be purchased in the open market at the
    holder&#146;s expense unless otherwise owned by the holder, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">transfer 40 Treasury Units to the purchase
    contract agent accompanied by a notice stating that the Treasury
    Unit holder has deposited 40 notes with the collateral agent and
    requesting the release to the holder of the Treasury security
    relating to the Treasury Units.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-39
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon the deposit and receipt of an instruction
from the purchase contract agent, the collateral agent will
release the related Treasury security from the pledge under the
pledge agreement, free and clear of our security interest, to
the purchase contract agent. The purchase contract agent will
then
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">cancel the 40 Treasury Units,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">transfer the related Treasury security to the
    holder, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">deliver 40 Corporate Units to the holder.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The substituted notes will be pledged to us
through the collateral agent to secure the Corporate Unit
holder&#146;s obligation to purchase common stock under the
related purchase contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders that elect to substitute pledged
securities, thereby creating Treasury Units or recreating
Corporate Units, will be responsible for any fees or expenses
payable in connection with the substitution.
</FONT>

<P align="left">
<B><FONT size="2">Current Payments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to our right to defer interest payments
on the notes until February&nbsp;16, 2006, holders of Corporate
Units will be entitled to receive quarterly cash distributions
consisting of interest payments calculated at the rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
per year on the note. Subject to our right to defer contract
adjustment payments until the purchase contract settlement date,
holders of the Corporate Units will also be entitled to receive
quarterly cash distributions consisting of contract adjustment
payments payable by us at the rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
per year on the stated amount of $25 per Corporate Unit until
the earliest of the purchase contract settlement date, the early
settlement date (in the case of a cash merger early settlement,
as described under &#147;Description of the Purchase
Contracts&#151; Early Settlement Upon Cash Merger&#148;) and the
most recent quarterly payment date on or before any other early
settlement of the related purchase contracts (in the case of an
early settlement other than upon a cash merger, as described in
&#147;Description of the Purchase Contracts&#151; Early
Settlement&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to our right to defer contract adjustment
payments until the date on which the purchase contracts are
settled, holders of Treasury Units will be entitled to receive
quarterly contract adjustment payments payable by us at the rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
per year on the stated amount of $25 per Treasury Unit until the
earliest of the purchase contract settlement date, the early
settlement date (in the case of a cash merger early settlement)
and the most recent quarterly payment date on or before any
other early settlement of the related purchase contracts (in the
case of an early settlement other than upon a cash merger).
There will be no distributions in respect of the Treasury
securities that are a component of the Treasury Units but,
subject to our right to defer interest payments on the notes
until February&nbsp;16, 2006, holders of the Treasury Units will
continue to receive the scheduled quarterly interest payments on
the notes that were released to them when the Treasury Units
were created for as long as they hold the notes.
</FONT>

<P align="left">
<B><FONT size="2">Ranking</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The notes will be our general, unsecured
obligations and initially will be subordinate in right of
payment to all of our existing and future senior debt. However,
on and after February&nbsp;16, 2006, except in the event of our
earlier bankruptcy, insolvency or reorganization, the
subordination provisions of the notes and the related indenture
will no longer be applicable and the notes will be our senior,
unsecured obligations ranking equally in right of payment with
all our existing and future unsubordinated debt. Our obligations
with respect to the contract adjustment payments will also be
subordinate in right of payment to our senior debt. &#147;Senior
debt&#148; with respect to payments on the notes (so long as the
notes remain subordinated obligations) and with respect to the
contract adjustment payments means the principal of, premium, if
any, and interest on debt, whether incurred on, prior to, or
after the date of the indenture relating to the notes or of the
purchase contract agreement, as the case may be, unless the
instrument creating or evidencing that debt or pursuant to which
that debt is outstanding states that those obligations are not
superior in right of payment to the notes, while they are
subordinated, or the purchase contracts or to other debt which
ranks equally with, or junior to, the notes, while they are
subordinated, or the purchase contracts. However, senior debt
shall not include any debt of Teekay that is expressly
subordinated in right of payment to any senior debt, any debt
that by operation of law is subordinate to Teekay&#146;s general
unsecured obligations, any debt which when incurred and without
regard to any election under Section&nbsp;1111(b) of
</FONT>

<P align="center"><FONT size="2">S-40
</FONT>

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<DIV align="left">
<FONT size="2">the U.S.&nbsp;Bankruptcy Code was without
recourse to Teekay, any debt of Teekay to any of its
subsidiaries or affiliates (or their subsidiaries), any debt of
Teekay to any employee of Teekay, amounts owed by Teekay for
compensation to employees or for services rendered to Teekay,
any redeemable capital stock of Teekay, amounts owing under
leases, any liability for taxes, or any debt for goods,
materials or services purchased in the ordinary course of
business or debt consisting of trade account payables or other
current liabilities (other than the current portion of long-term
debt which would otherwise constitute senior debt). The
indenture under which the notes will be issued will not limit
our ability to issue or incur other debt or issue preferred
stock. See &#147;Description of Debt Securities&#148; in the
accompanying prospectus.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Voting and Certain Other Rights</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders of purchase contracts forming part of the
Corporate Units or Treasury Units, in their capacities as such
holders, will have no voting or other rights in respect of the
common stock.
</FONT>

<P align="left">
<B><FONT size="2">Listing of the Securities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Corporate Units have been approved for
listing on the New York Stock Exchange, subject to official
notice of issuance. Unless and until substitution has been made
as described in &#147;&#151; Creating Treasury Units&#148; or
&#147;&#151; Recreating Corporate Units,&#148; the notes will
trade as a unit with the purchase contract components of the
Corporate Units. If the Treasury Units or the notes are
separately traded to a sufficient extent that applicable
exchange listing requirements are met, we will try to list the
Treasury Units or the notes on the same exchange as the
Corporate Units are then listed, if any, including, if
applicable, the New York Stock Exchange.
</FONT>

<P align="left">
<B><FONT size="2">Miscellaneous</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We or our affiliates may from time to time
purchase any of the securities offered by this prospectus
supplement which are then outstanding by tender, in the open
market or by private agreement.
</FONT>

<P align="center"><FONT size="2">S-41
</FONT>

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<!-- link1 "DESCRIPTION OF THE PURCHASE CONTRACTS" -->
<DIV align="left"><A NAME="011"></A></DIV>

<P align="center">
<B><FONT size="2">DESCRIPTION OF THE PURCHASE
CONTRACTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">This section summarizes some of the terms of
the purchase contract agreement, purchase contracts, pledge
agreement, remarketing agreement and indenture for the notes.
The summary should be read together with the purchase contract
agreement, pledge agreement, remarketing agreement and indenture
for the notes, forms of which have been or will be filed and
incorporated by reference as exhibits to the registration
statement of which this prospectus supplement and the
accompanying prospectus form a part.</FONT></I>

<P align="left">
<B><FONT size="2">Purchase of Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each purchase contract underlying a Corporate
Unit or Treasury Unit will obligate the holder of the purchase
contract to purchase, and us to sell, on the purchase contract
settlement date, for an amount in cash equal to the stated
amount of the Corporate Unit or Treasury Unit, a number of newly
issued shares of our common stock equal to the &#147;settlement
rate.&#148; The settlement rate will be calculated, subject to
adjustment under the circumstances described in &#147;&#151;
Anti-Dilution Adjustments,&#148; as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">If the applicable market value of our common
    stock is equal to or greater than the threshold appreciation
    price of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    the settlement rate will
    be &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    of our common stock, which is equal to the stated amount of $25
    divided by the threshold appreciation price.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2"> Accordingly, if the market value for the common
stock increases between the date of this prospectus supplement
and the period during which the applicable market value is
measured and the applicable market value is greater than the
threshold appreciation price, the aggregate market value of the
shares of common stock issued upon settlement of each purchase
contract will be higher than the stated amount, assuming that
the market price of the common stock on the purchase contract
settlement date is the same as the applicable market value of
the common stock. If the applicable market value is the same as
the threshold appreciation price, the aggregate market value of
the shares issued upon settlement will be equal to the stated
amount, assuming that the market price of the common stock on
the purchase contract settlement date is the same as the
applicable market value of the common stock.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">If the applicable market value of our common
    stock is less than the threshold appreciation price but greater
    than the reference price of
    $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    the settlement rate will be a number of shares of our common
    stock equal to the stated amount of $25 divided by the
    applicable market value.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2"> Accordingly, if the market value for the common
stock increases between the date of this prospectus supplement
and the period during which the applicable market value is
measured, but the applicable market value is less than the
threshold appreciation price, the aggregate market value of the
shares of common stock issued upon settlement of each purchase
contract will be equal to the stated amount, assuming that the
market price of the common stock on the purchase contract
settlement date is the same as the applicable market value of
the common stock.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">If the applicable market value of our common
    stock is less than or equal to the reference price, the
    settlement rate will
    be &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
    of our common stock, which is equal to the stated amount of $25
    divided by the reference price.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Accordingly, if the market value for the common
stock decreases between the date of this prospectus supplement
and the period during which the applicable market value is
measured and the applicable market value is less than the
reference price, the aggregate market value of the shares of
common stock issued upon settlement of each purchase contract
will be less than the stated amount, assuming that the market
price on the purchase contract settlement date is the same as
the applicable market value of the common stock. If the
applicable market value is the same as the reference price, the
aggregate market value of the shares will be equal to the stated
amount, assuming that the market price of the common stock on
the purchase contract settlement date is the same as the
applicable market value of the common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Applicable market value&#148; means the
average of the closing price per share of our common stock on
each of the 20 consecutive trading days ending on the third
trading day immediately preceding the purchase contract
</FONT>

<P align="center"><FONT size="2">S-42
</FONT>

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<DIV align="left">
<FONT size="2">settlement date. The reference price is the
reported last sale price of our common stock on the New York
Stock Exchange on the date of this prospectus supplement. The
threshold appreciation price represents
a &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
appreciation over the reference price.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Closing price&#148; of the common stock on
any date of determination means the closing sale price (or, if
no closing price is reported, the last reported sale price) of
the common stock on the New York Stock Exchange on that date or,
if the common stock is not listed for trading on the New York
Stock Exchange on any such date, as reported in the composite
transactions for the principal United States securities exchange
on which the common stock is so listed. If the common stock is
not so listed on a United States national or regional securities
exchange, the closing price means the last closing sale price of
the common stock as reported by the Nasdaq National Market, or,
if the common stock is not so reported, the last quoted bid
price for the common stock in the over-the-counter market as
reported by the National Quotation Bureau or similar
organization. If the bid price is not available, the closing
price means the market value of the common stock on the date of
determination as determined by a nationally recognized
independent investment banking firm retained by us for this
purpose.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A &#147;trading day&#148; means a day on which
the common stock
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">is not suspended from trading on any national or
    regional securities exchange or association or over-the-counter
    market at the close of business, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">has traded at least once on the national or
    regional securities exchange or association or over-the-counter
    market that is the primary market for the trading of the common
    stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will not issue any fractional shares of common
stock pursuant to the purchase contracts. In lieu of fractional
shares otherwise issuable (calculated on an aggregate basis) in
respect of purchase contracts being settled by a holder of
Corporate Units or Treasury Units, the holder will be entitled
to receive an amount of cash equal to the fraction of a share
times the applicable market value.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On the business day immediately preceding
February&nbsp;16, 2006, unless:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">a holder of Corporate Units or Treasury Units has
    settled the related purchase contracts prior to
    February&nbsp;16, 2006 through the early delivery of cash to the
    purchase contract agent in the manner described under
    &#147;&#151; Early Settlement,&#148; or &#147;&#151; Early
    Settlement Upon Cash Merger,&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">a holder of Corporate Units has settled the
    related purchase contracts with separate cash on the fourth
    business day immediately preceding February&nbsp;16, 2006
    pursuant to prior notice given in the manner described under
    &#147;&#151;Notice to Settle with Cash,&#148; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">an event described under
    &#147;&#151;Termination&#148; has occurred,
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">then,
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">in the case of Corporate Units where the
    remarketing of the notes has been successful, the portion of the
    proceeds from the remarketing equal to the principal amount of
    the notes remarketed will automatically be applied to satisfy in
    full the holders&#146; obligations to purchase shares of our
    common stock under the related purchase contracts,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">in the case of Corporate Units where the
    remarketing of the notes has not been successful, (1)&nbsp;if
    holders of Corporate Units exercise their put right with respect
    to the related notes, $25 of the put price per Corporate Unit
    received by the collateral agent or (2)&nbsp;if such holders
    elect not to exercise their put right, the cash delivered by
    such holders in settlement of the related purchase contracts, in
    each case will automatically be applied to satisfy in full the
    holders&#146; obligation to purchase common stock under the
    related purchase contracts, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">in the case of Treasury Units, the principal
    amount of the related Treasury securities, when paid at
    maturity, will automatically be applied to satisfy in full the
    holders&#146; obligations to purchase common stock under the
    related purchase contracts.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-43
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with settlement of any purchase
contract included in a Corporate Unit following a successful
remarketing or included in a Treasury Unit,
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the amount of any unpaid deferred contract
    adjustment payments shall be deducted from the proceeds to be
    applied to payment of the purchase price under such purchase
    contract, and shall be paid to the holder of such Corporate or
    Treasury Unit, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">such holder&#146;s obligation under the purchase
    contract to pay the purchase price for the shares of common
    stock shall be deemed satisfied in full.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The common stock will then be issued and
delivered to the holder or the holder&#146;s designee, upon
presentation and surrender of the certificate evidencing the
Corporate Units or Treasury Units and payment by the holder of
any transfer or similar taxes payable in connection with the
issuance of the common stock to any person other than the holder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each holder of Corporate Units or Treasury Units,
by acceptance of these securities, will be deemed to have:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">irrevocably agreed to be bound by the terms and
    provisions of the related purchase contracts and the pledge
    agreement and to have agreed to perform its obligations
    thereunder for so long as the holder remains a holder of the
    Corporate Units or Treasury Units, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">duly appointed the purchase contract agent as the
    holder&#146;s attorney-in-fact to enter into and perform the
    related purchase contracts and pledge agreement on behalf of and
    in the name of the holder.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, each beneficial owner of Corporate
Units or Treasury Units, by acceptance of the beneficial
interest therein, will be deemed to have agreed to treat:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">itself as the owner of the notes or the Treasury
    securities, as the case may be, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the notes as indebtedness for all United States
    federal income tax purposes.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Remarketing</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">General</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the remarketing agreement that we
will enter into with the purchase contract agent and the
remarketing agent, and subject to the terms of the remarketing
agreement among the remarketing agent, the purchase contract
agent and us, the remarketing agent will use its reasonable
efforts to remarket the notes held by Corporate Unit holders as
a part of Corporate Units on the third business day immediately
preceding the purchase contract settlement date, which we refer
to as the remarketing date, at a price of approximately 100.25%
of the principal amount of the notes remarketed. To obtain that
price, the remarketing agent may increase or decrease the
interest rate on the notes, provided that the reset rate will
not exceed the maximum rate permitted by applicable law. We
currently expect the remarketing agent to be Morgan Stanley
&#38; Co. Incorporated.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the remarketing of the notes is successful, a
portion of the proceeds from this remarketing equal to the
aggregate principal amount of the notes included in the
Corporate Units at the time of remarketing will automatically be
applied to satisfy in full the Corporate Unit holders&#146;
obligations to purchase common stock under the related purchase
contracts on the purchase contract settlement date. The
remarketing agent will deduct, as a remarketing fee, an amount
not exceeding 25 basis points (0.25%) of the aggregate principal
amount of the remarketed notes from any proceeds from the
remarketing in excess of the aggregate principal amount of the
notes remarketed. Any remaining portion of the proceeds will be
for the benefit of the holders of the notes included in the
remarketing. Remarketing will be considered successful if the
resulting proceeds (net of any fees and commissions, if any) are
at least 100% of the aggregate principal amount of the notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will cause a notice of failed remarketing to
be published on the business day immediately following the
remarketing date in a daily newspaper in the English language of
general circulation in The City of New York, which is expected
to be <I>The Wall Street Journal</I>, and on Bloomberg news. In
addition, we will request, not later than seven nor more than 15
calendar days prior to the remarketing date, that the depositary
notify its participants holding notes, Corporate Units and
Treasury Units of the remarketing, including, in the case of a
failed
</FONT>

<P align="center"><FONT size="2">S-44
</FONT>

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<DIV align="left">
<FONT size="2">remarketing, the procedures that must be followed
if a noteholder wishes to exercise its right to put its note to
us as described in this prospectus supplement. If required, we
will use our best efforts to ensure that a registration
statement with regard to the full amount of the notes to be
remarketed will be effective in a form that will enable the
remarketing agent to rely on it in connection with the
remarketing process.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Put
Right</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the notes underlying the Corporate Units have
not been successfully remarketed prior to the purchase contract
settlement date, the holders of notes will have the right to put
such notes to us on the purchase contract settlement date, at a
price equal to $25 for each note, plus accrued and unpaid
interest. The put right of holders of notes that are part of
Corporate Units will be automatically exercised unless such
holders (1)&nbsp;prior to 11:00&nbsp;a.m., New York City time,
on the second business day immediately preceding the purchase
contract settlement date, provide written notice of their
intention to settle the related purchase contract with separate
cash, and (2)&nbsp;on or prior to the business day immediately
preceding the purchase contract settlement date, deliver to the
collateral agent $25 in cash per purchase contract. Unless a
Corporate Unit holder has settled the related purchase contract
with separate cash on or prior to the purchase contract
settlement date, $25 of the put price will be delivered to the
collateral agent who will apply such amount in satisfaction of
such holder&#146;s obligations under the related purchase
contract on the purchase contract settlement date. Any remaining
amount of the put price following satisfaction of the purchase
contract will be paid to such Corporate Unit holder. If we fail
to deliver the put price to the collateral agent, we will be
deemed to have netted our obligation to pay the put price
against the holders&#146; obligation to pay the purchase price
under the related purchase contract on the purchase contract
settlement date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You may elect not to participate in the
remarketing and to retain the notes underlying your Corporate
Units by (1)&nbsp;creating Treasury Units at any time on or
prior to the second business day prior to the remarketing date
or (2)&nbsp;notifying the purchase contract agent of your
intention to pay cash to satisfy your obligation under the
related purchase contracts on or prior to the fifth business day
before the purchase contract settlement date and delivering the
cash payment required under the purchase contracts to the
collateral agent on or prior to the fourth business day before
the purchase contract settlement date.
</FONT>

<P align="left">
<B><FONT size="2">Early Settlement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to the conditions described below, a
holder of Corporate Units or Treasury Units may settle the
related purchase contracts in cash at any time on or prior to
5:00&nbsp;p.m., New York City time, on the fifth business day
immediately preceding the purchase contract settlement date by
presenting and surrendering the related Corporate Unit or
Treasury Unit certificates, if they are in certificated form, at
the offices of the purchase contract agent with the form of
&#147;Election to Settle Early&#148; on the reverse side of such
certificate completed and executed as indicated, accompanied by
payment to us in immediately available funds of an amount equal
to
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the stated amount of $25 times the number of
    purchase contracts being settled, plus
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">if the delivery is made with respect to any
    purchase contract during the period from the close of business
    on any record date next preceding any payment date to the
    opening of business on such payment date, an amount equal to the
    contract adjustment payments payable on the payment date with
    respect to the purchase contract.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">So long as the PEPS Units are evidenced by one or
more global security certificates deposited with the depositary,
procedures for early settlement will also be governed by
standing arrangements between the depositary and the purchase
contract agent. The early settlement right is also subject to
the condition that, if required under the U.S.&nbsp;federal
securities laws, we have a registration statement under the
U.S.&nbsp;Securities Act of 1933 in effect covering the shares
of common stock and other securities, if any, deliverable upon
settlement of a purchase contract. We have agreed that, if
required under the U.S.&nbsp;federal securities laws, we will
use our best efforts to (1)&nbsp;have a registration statement
in effect covering those shares of common stock and other
securities to be delivered in respect of the purchase contracts
being settled and (2)&nbsp;provide a prospectus in connection
therewith, in each case in a form that may be used in connection
with the early settlement right.
</FONT>

<P align="center"><FONT size="2">S-45
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon early settlement of the purchase contracts
related to any Corporate Units or Treasury Units:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">except as described below in &#147;&#151; Early
    Settlement Upon Cash Merger&#148; the holder will
    receive &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;newly
    issued shares of common stock per Corporate Unit or Treasury
    Unit, subject to adjustment under the circumstances described
    under &#147;&#151; Anti-Dilution Adjustments,&#148; accompanied
    by an appropriate prospectus if required by law,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the note or the Treasury security, as the case
    may be, related to the Corporate Units or Treasury Units will be
    transferred to the holder free and clear of our security
    interest,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the holder will receive any unpaid deferred
    contract adjustment payments,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the holder&#146;s right to receive future
    contract adjustment payments will terminate, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">no adjustment will be made to or for the holder
    on account of any contract adjustment payments referred to in
    the preceding bullet.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the purchase contract agent receives Corporate
Unit certificates or Treasury Unit certificates (if they are in
certificated form) accompanied by the completed &#147;Election
to Settle Early&#148; and required immediately available funds,
from a holder of Corporate Units or Treasury Units by
5:00&nbsp;p.m., New York City time, on a business day and all
conditions to early settlement have been satisfied, that day
will be considered the settlement date. If the purchase contract
agent receives the above after 5:00&nbsp;p.m., New York City
time, on a business day or at any time on a day that is not a
business day, the next business day will be considered the
settlement date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon early settlement of purchase contracts in
the manner described above, presentation and surrender of the
certificate evidencing the related Corporate Units or Treasury
Units (if they are in certificated form) and payment of any
transfer or similar taxes payable by the holder in connection
with the issuance of the related common stock to any person
other than the holder of the Corporate Units or Treasury Units,
we will cause the shares of common stock being purchased to be
issued, and the related notes or the Treasury securities, as the
case may be, securing the purchase contracts to be released from
the pledge under the pledge agreement described in &#147;&#151;
Pledged Securities and Pledge Agreement&#148; and transferred,
within three business days following the settlement date, to the
purchasing holder or the holder&#146;s designee.
</FONT>

<P align="left">
<B><FONT size="2">Notice to Settle with Cash</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A holder of Corporate Units may settle the
related purchase contracts with separate cash. A holder of
Corporate Units wishing to settle the related purchase contracts
with separate cash must notify the purchase contract agent by
presenting and surrendering the Corporate Unit certificates
evidencing the Corporate Units at the offices of the purchase
contract agent with the form of &#147;Notice to Settle by
Cash&#148; on the reverse side of the certificates completed and
executed as indicated on or prior to 5:00&nbsp;p.m., New York
City time, on the fifth business day immediately preceding the
purchase contract settlement date and delivering the required
cash payment to the collateral agent on or prior to
5:00&nbsp;p.m., New York City time, on the fourth business day
immediately preceding the purchase contract settlement date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a holder that has given notice of its
intention to settle the related purchase contracts with separate
cash fails to deliver the cash to the collateral agent on the
fourth business day immediately preceding the purchase contract
settlement date, such holder&#146;s notes will be included in
the remarketing of notes occurring on the third business day
immediately preceding the purchase contract settlement date.
</FONT>

<P align="left">
<B><FONT size="2">Early Settlement Upon Cash Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the purchase contract settlement date,
if we are involved in a merger in which at least 30% of the
consideration for our common stock consists of cash or cash
equivalents, which we refer to as a cash merger, then following
the cash merger, each holder of a purchase contract will have
the right to accelerate and settle such contract early at the
settlement rate in effect immediately prior to the closing of
the cash merger, provided that at such time, if so required
under the U.S.&nbsp;federal securities laws, there is in effect
a registration statement covering the common stock and other
securities, if any, to be delivered in respect of the purchase
contracts being settled. We refer to this right as the
&#147;merger early settlement right.&#148;
</FONT>

<P align="center"><FONT size="2">S-46
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will provide each of the holders with a notice
of the completion of a cash merger within five business days
thereof. The notice will specify a date, which shall be at least
five days after the date of the notice, but no later than the
earlier of 20&nbsp;days after the date of such notice and five
business days prior to the purchase contract settlement date by
which each holder&#146;s merger early settlement right must be
exercised. The notice will set forth, among other things, the
applicable settlement rate and the amount of the cash,
securities and other consideration receivable by the holder upon
settlement. To exercise the merger early settlement right, you
must deliver to the purchase contract agent, three business days
before the early settlement date, the certificate evidencing
your Corporate Units or Treasury Units if they are held in
certificated form, and payment of the applicable purchase price
in immediately available funds.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you exercise the merger early settlement
right, we will deliver to you on the early settlement date the
kind and amount of securities, cash or other property that you
would have been entitled to receive if you had settled the
purchase contract immediately before the cash merger at the
settlement rate in effect at such time plus accrued and unpaid
contract adjustment payments, including any unpaid deferred
contract adjustment payments, with respect to such purchase
contract. You will also receive the notes or Treasury securities
underlying the Corporate Units or Treasury Units, as the case
may be. If you do not elect to exercise your merger early
settlement right, your Corporate Units or Treasury Units will
remain outstanding and subject to normal settlement on the
purchase contract settlement date, subject to adjustment as
provided under &#147;&#151;Anti-Dilution Adjustments.&#148; We
have agreed that, if required under the U.S.&nbsp;federal
securities laws, we will use our best efforts to (1)&nbsp;have
in effect a registration statement covering the common stock and
other securities, if any, to be delivered in respect of the
purchase contracts being settled and (2)&nbsp;provide a
prospectus in connection therewith, in each case in a form that
may be used in connection with the early settlement upon a cash
merger.
</FONT>

<P align="left">
<B><FONT size="2">Contract Adjustment Payments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Contract adjustment payments in respect of
Corporate Units and Treasury Units will be fixed at a rate per
year
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
of the stated amount of $25 per purchase contract. Contract
adjustment payments payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. Contract
adjustment payments will accrue from the date of issuance of the
purchase contracts and will be payable quarterly in arrears on
February&nbsp;16, May&nbsp;16, August&nbsp;16 and
November&nbsp;16 of each year, commencing May&nbsp;16, 2003. We
have the right to defer the payment of these contract adjustment
payments as described below under &#147;&#151; Option to Defer
Contract Adjustment Payments.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Contract adjustment payments will be payable to
the holders of purchase contracts as they appear on the books
and records of the purchase contract agent at the close of
business on the relevant record dates, which will be on the
first day of the month in which the relevant payment date falls.
These distributions will be paid through the purchase contract
agent, who will hold amounts received in respect of the contract
adjustment payments for the benefit of the holders of the
purchase contracts relating to the Corporate Units. Subject to
any applicable laws and regulations, each such payment will be
made as described under &#147;&#151; Book-Entry System.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If any date on which contract adjustment payments
are to be made on the purchase contracts related to the
Corporate Units or Treasury Units is not a business day, then
payment of the contract adjustment payments payable on that date
will be made on the next succeeding day which is a business day,
and no interest or payment will be paid in respect of the delay.
However, if that business day is in the next succeeding calendar
year, that payment will be made on the immediately preceding
business day, in each case with the same force and effect as if
made on that payment date. A business day means any day other
than a Saturday, Sunday or any other day on which banking
institutions and trust companies in the City of New York are
permitted or required by any applicable law to close or a day
when the collateral agent or trustee are closed.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our obligations with respect to contract
adjustment payments will be subordinated and junior in right of
payment to our obligations under any of our senior debt.
</FONT>

<P align="left">
<B><FONT size="2">Option to Defer Contract Adjustment
Payments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may, at our option and upon prior written
notice to the holders of PEPS Units and the purchase contract
agent, defer contract adjustment payments on each related
purchase contract forming a part of a PEPS Unit until
</FONT>

<P align="center"><FONT size="2">S-47
</FONT>

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<DIV align="left">
<FONT size="2">no later than the purchase contract settlement
date or, if applicable, the date of any earlier settlement of
the purchase contract. However, deferred contract adjustment
payments will bear additional contract adjustment payments at
the rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
per year (compounding on each succeeding payment date) until
paid. If the purchase contracts are terminated (upon the
occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to us), the right to receive any
deferred contract adjustment payments, any accrued and unpaid
contract adjustment payments and all future contract adjustment
payments will also terminate.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that we elect to defer contract
adjustment payments on the purchase contracts, each holder of
PEPS Units will receive, on the earlier of the purchase contract
settlement date and the date of any earlier settlement of the
purchase contract, the aggregate amount of unpaid deferred
contract adjustment payments on the related purchase contract in
cash to the extent such amounts are not deducted from the cash
settlement payment made to us. In the event we exercise our
option to defer contract adjustment payments, then until the
deferred contract adjustment payments have been paid, we will
not, and will not permit our subsidiaries to, declare or pay
dividends on, make other distributions with respect to, or
redeem, purchase or acquire, or make a liquidation payment with
respect to, any of our capital shares or their shares; provided
that the foregoing will not restrict any of our subsidiaries
from declaring or paying such dividends, or making such
distributions, to us or any of our other subsidiaries.
</FONT>

<P align="left">
<B><FONT size="2">Additional Amounts</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All payments made by us under or with respect to
the PEPS Units (including interest payments payable on the notes
and contract adjustment payments on the purchase contracts that
form such PEPS Units) will be made free and clear of and without
withholding or deduction for or on account of any present or
future tax, duty, levy, impost, assessment or other governmental
charge (hereinafter &#147;Taxes&#148;) imposed or levied by or
on behalf of the Republic of the Marshall Islands or any
jurisdiction from or through which payment on the PEPS Units is
made, or any political subdivision thereof, or by any authority
or agency therein or thereof having power to tax (a &#147;taxing
jurisdiction&#148;), unless we are required to withhold or
deduct Taxes by law or by the interpretation or administration
thereof. If we are so required to withhold or deduct any amount
of interest for or on account of Taxes from any payment made
under or with respect to the PEPS Units, we will pay such
additional amounts of interest (&#147;additional amounts&#148;)
as may be necessary so that the net amount received by each
holder (including additional amounts) after such withholding or
deduction will not be less than the amount the holder would have
received if such Taxes had not been withheld or deducted;
provided that we will not pay additional amounts in connection
with any Taxes that are imposed due to any of the following
(&#147;excluded additional amounts&#148;):
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)</FONT></TD>
    <TD align="left">
    <FONT size="2">the holder or beneficial owner has some
    connection with the taxing jurisdiction other than merely
    holding the PEPS Units or receiving payments on the PEPS Units
    (such as citizenship, nationality, residence, domicile, or
    existence of a business, a permanent establishment, a dependent
    agent, a place of business or a place of management present or
    deemed present within the taxing jurisdiction);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)</FONT></TD>
    <TD align="left">
    <FONT size="2">any Tax imposed on or measured by net income;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(3)</FONT></TD>
    <TD align="left">
    <FONT size="2">the holder or beneficial owner fails to comply
    with any certification, identification or other reporting
    requirements concerning its nationality, residence, identity or
    connection with the taxing jurisdiction, if (A)&nbsp;such
    compliance is required by applicable law, regulation,
    administrative practice or treaty as a precondition to exemption
    from all or a part of the Tax, (B)&nbsp;the holder or beneficial
    owner is able to comply with such requirements without undue
    hardship and (C)&nbsp;at least 30 calendar days prior to the
    first payment date with respect to which such requirements under
    the applicable law, regulation, administrative practice of
    treaty shall apply, we have notified such holder that such
    holder will be required to comply with such requirements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(4)</FONT></TD>
    <TD align="left">
    <FONT size="2">the holder fails to present (where presentation
    is required) its PEPS Unit within 30&nbsp;calendar days after we
    have made available to the holder a payment, provided that we
    will pay additional amounts which a holder would have been
    entitled to had the PEPS Unit owned by such holder been present
    on any day (including the last day) within such 30-day period;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(5)</FONT></TD>
    <TD align="left">
    <FONT size="2">any estate, inheritance, gift, value added, use
    or sales Taxes or any similar Taxes;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-48
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(6)</FONT></TD>
    <TD align="left">
    <FONT size="2">where any additional amounts are imposed on a
    payment on the PEPS Units to an individual and are required to
    be made pursuant to any European Union Directive on the taxation
    of savings implementing the conclusions of the ECOFIN Council
    meeting of November&nbsp;26-27, 2000 or any law implementing or
    complying with, or introduced in order to conform to, such
    Directive; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(7)</FONT></TD>
    <TD align="left">
    <FONT size="2">where the holder or beneficial owner could avoid
    any additional amounts by requesting that a payment on the PEPS
    Units be made by, or presenting the relevant PEPS Units for
    payment to, another paying agent located in a Member State of
    the European Union.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will also (1)&nbsp;make such withholding or
deduction and (2)&nbsp;remit the full amount deducted or
withheld to the relevant authority in accordance with applicable
law. We will furnish to the holders of the PEPS Units, within
30&nbsp;days after the date the payment of any Taxes is due
pursuant to applicable law, certified copies of tax receipts
evidencing such payment by&nbsp;us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will indemnify and hold harmless each holder
for the amount (other than excluded additional amounts) of
(1)&nbsp;any Taxes not withheld or deducted by us and levied or
imposed by a taxing jurisdiction and paid by such holder as a
result of payments made under or with respect to the PEPS Units,
(2)&nbsp;any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, and
(3)&nbsp;any Taxes imposed by a taxing jurisdiction with respect
to any reimbursement under clause&nbsp;(1) or&nbsp;(2) of this
paragraph.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At least 30&nbsp;days prior to each date on which
any payment under or with respect to the PEPS Units is due and
payable, if we are aware that we are obligated to pay additional
amounts with respect to such payment, we will deliver to the
trustee and the purchase contract agent an officers&#146;
certificate stating the fact that such additional amounts will
be payable, the amounts so payable and such other information
necessary to enable the trustee or the purchase contract agent
to pay such additional amounts to holders on the payment date.
Whenever in the indenture or the purchase contract agreement
there is mentioned, in any context, the payment of any amount
payable under or with respect to any PEPS Unit (or component
thereof), such mention shall be deemed to include mention of the
payment of additional amounts provided for in this section to
the extent that, in such context, additional amounts are, were
or would be payable in respect thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will pay any stamp, administrative, court,
documentary, excise or property taxes arising in a taxing
jurisdiction in connection with the additional amounts and will
indemnify the holders of the PEPS for any such taxes paid by the
holders of the PEPS Units.
</FONT>

<P align="left">
<B><FONT size="2">Anti-Dilution Adjustments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The formula for determining the settlement rate
will be subject to adjustment, without duplication, upon the
occurrence of certain events, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(a)</FONT></TD>
    <TD align="left">
    <FONT size="2">the payment of dividends and distributions of
    shares of common stock on the outstanding shares of common stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(b)</FONT></TD>
    <TD align="left">
    <FONT size="2">the issuance to all holders of outstanding shares
    of common stock of rights, warrants or options (other than
    pursuant to any dividend reinvestment or share purchase plans or
    our rights agreement) entitling them, for a period of up to
    45&nbsp;days, to subscribe for or purchase shares of common
    stock at less than the current market price thereof;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(c)</FONT></TD>
    <TD align="left">
    <FONT size="2">subdivisions, splits and combinations of shares
    of common stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(d)</FONT></TD>
    <TD align="left">
    <FONT size="2">distributions to all holders of outstanding
    shares of common stock of evidences of our indebtedness, shares
    of capital stock, securities, cash or property (excluding any
    dividend or distribution covered by clause&nbsp;(a) or&nbsp;(b)
    above and any dividend or distribution paid exclusively in cash);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(e)</FONT></TD>
    <TD align="left">
    <FONT size="2">distributions consisting exclusively of cash to
    all holders of outstanding shares of common stock in an
    aggregate amount that, together with (1)&nbsp;other all-cash
    distributions made within the preceding 12&nbsp;months and
    (2)&nbsp;any cash and the fair market value, as of the
    expiration of the tender or exchange offer referred to below, of
    consideration payable in respect of any tender or exchange offer
    (other than consideration payable in respect of any odd-lot
    tender offer) by us or any of our subsidiaries for shares
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-49
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">of common stock concluded within the preceding
    12&nbsp;months, exceeds the product of $1.00 (appropriately
    adjusted from time to time for any stock dividends on or
    subdivisions or combinations of our common stock) multiplied by
    the number of shares of common stock outstanding on the record
    date for such distribution; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(f)</FONT></TD>
    <TD align="left">
    <FONT size="2">the successful completion of a tender or exchange
    offer made by us or any of our subsidiaries for shares of common
    stock which involves an aggregate consideration that, together
    with (1)&nbsp;any cash and the fair market value of other
    consideration payable in respect of any tender or exchange offer
    (other than consideration payable in respect of any odd-lot
    tender offer) by us or any of our subsidiaries for the common
    stock concluded within the preceding 12&nbsp;months and
    (2)&nbsp;the aggregate amount of any all-cash distributions to
    all holders of shares of common stock within the preceding
    12&nbsp;months, exceeds the product of $1.00 (appropriately
    adjusted from time to time for any stock dividends on or
    subdivisions or combinations of our common stock) multiplied by
    the number of shares of common stock outstanding on the
    expiration of the tender or exchange offer.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the rights provided for in our rights
agreement dated as of September&nbsp;8, 2000 have separated from
our common stock in accordance with the provisions of the rights
agreement so that the holders of the purchase contracts would
not be entitled to receive any rights in respect of the common
stock issuable on the purchase contract settlement date, the
settlement rate will be adjusted as if we distributed to all
holders of our common stock, evidences of indebtedness, shares
of capital stock, securities, cash or property as described
under clause&nbsp;(d) above, subject to readjustment in the
event of the expiration, termination or redemption of the
rights. In lieu of any such adjustment, we may amend our rights
agreement to provide that on the purchase contract settlement
date the holders will receive, in addition to the common stock
issuable on such date, the rights which would have attached to
such shares of common stock if the rights had not become
separated from the common stock under our rights agreement. To
the extent that we adopt any future rights plan, on the purchase
contract settlement date you will receive, in addition to the
common stock, the rights under the future rights plan whether or
not the rights have separated from the common stock on the
purchase contract settlement date and no adjustment to the
settlement rate shall be made in accordance with clause&nbsp;(d)
above.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The &#147;current market price&#148; per share of
common stock on any day means the average of the daily closing
prices for the five consecutive trading days selected by us
commencing not more than 30 trading days before, and ending not
later than, the earlier of the day in question and the day
before the &#147;ex&nbsp;date&#148; with respect to the issuance
or distribution requiring the computation. For purposes of this
paragraph, the term &#147;ex&nbsp;date,&#148; when used with
respect to any issuance or distribution, will mean the first
date on which the common stock trades regular way on the
applicable exchange or in the applicable market without the
right to receive the issuance or distribution.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the case of certain reclassifications,
consolidations, mergers, or conversions that cause our common
stock to be converted into the right to receive other
securities, cash or property, each purchase contract then
outstanding would, without the consent of the holders of the
related Corporate Units or Treasury Units, as the case may be,
become a contract to purchase such other securities, cash and
property instead of our common stock. Upon the purchase contract
settlement date following the occurrence of any such
transaction, a holder will receive the kind and amount of
securities, cash or other property that the holder would have
been entitled to receive if the purchase contract had been
settled immediately before the transaction at the settlement
rate in effect at that time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As discussed more fully in &#147;Tax
Consequences&#151; Material United States Federal Income Tax
Consequences&#151; Purchase Contracts&#151; Adjustments to
Settlement Rate,&#148; if at any time we make a distribution of
property (e.g., cash, evidences of indebtedness or other
property, but generally not shares of our capital stock or
rights to subscribe for our capital stock) to our shareholders
that is taxable to the shareholders as a dividend for United
States federal income tax purposes and, pursuant to the
settlement rate adjustment provisions of the purchase contract
agreement, the settlement rate is increased, such increase may
give rise to a taxable dividend to a United States holder of
PEPS Units even though such United States holder would not
receive any cash related thereto.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, we may make increases in the
settlement rate as our board of directors deems advisable to
avoid or diminish any United States federal income tax to
holders of our common stock resulting from any dividend or
</FONT>

<P align="center"><FONT size="2">S-50
</FONT>

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<DIV align="left">
<FONT size="2">distribution of capital stock (or rights to
acquire capital stock) or from any event treated as such for
United States federal income tax purposes or for any other
reasons.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Adjustments to the settlement rate will be
calculated to the nearest 1/10,000th of a share. No adjustment
in the settlement rate will be required unless the adjustment
would require an increase or decrease of at least one percent in
the settlement rate. However, any adjustments which are not
required to be made because they would have required an increase
or decrease of less than one percent will be carried forward and
taken into account in any subsequent adjustment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will be required, within ten business days
following the adjustment to the settlement rate, to provide
written notice to the purchase contract agent of the occurrence
of the adjustment and a statement in reasonable detail setting
forth the method by which the adjustment to the settlement rate
was determined and setting forth the revised settlement rate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each adjustment to the settlement rate will
result in a corresponding adjustment to the number of shares of
common stock issuable upon early settlement of a purchase
contract. Each adjustment to the settlement rate will also
result in an adjustment to the applicable market value for
purposes of determining the settlement ratio on the settlement
date.
</FONT>

<P align="left">
<B><FONT size="2">Termination</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase contracts, and our rights and
obligations and the rights and obligations of the holders of the
Corporate Units and Treasury Units under the purchase contracts,
including the right and obligation to purchase shares of common
stock and the right to receive accrued contract adjustment
payments, including any deferred contract adjustment payments,
will immediately and automatically terminate, without any
further action, upon the termination of the purchase contracts
as a result of our bankruptcy, insolvency or reorganization.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon any termination, the collateral agent will
release the related notes or the Treasury securities, as the
case may be, held by it to the purchase contract agent for
distribution to the holders, subject, in the case of the
Treasury securities, to the purchase contract agent&#146;s
disposition of the subject securities for cash, and the payment
of this cash to the holders, to the extent that the holders
would otherwise have been entitled to receive less than $1,000
principal amount or interest, as the case may be, at maturity of
any such security. Upon any termination, however, the release
and distribution may be subject to the automatic stay under
Section&nbsp;362 of the U.S.&nbsp;Bankruptcy Code or other
applicable bankruptcy laws and claims arising out of the notes,
like all other claims in bankruptcy proceedings, will be subject
to the equitable jurisdiction and powers of the bankruptcy
court. In the event that we become the subject of a case under
the applicable bankruptcy law, the delay may occur as a result
of an automatic stay under such law and continue until the
automatic stay has been lifted. If the holder&#146;s purchase
contract is terminated as a result of our bankruptcy, insolvency
or reorganization, such holder will have no right to receive any
accrued contract adjustment payments.
</FONT>

<P align="left">
<B><FONT size="2">Pledged Securities and Pledge
Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pledged securities will be pledged to us through
the collateral agent, for our benefit, pursuant to the pledge
agreement to secure the obligations of holders of Corporate
Units and Treasury Units to purchase shares of common stock
under the related purchase contracts. The rights of holders of
Corporate Units and Treasury Units to the related pledged
securities will be subject to our security interest created by
the pledge agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No holder of Corporate Units or Treasury Units
will be permitted to withdraw the pledged securities related to
the Corporate Units or Treasury Units from the pledge
arrangement except:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">to substitute Treasury securities for the notes,
    as provided for under &#147;Description of the PEPS Units&#151;
    Creating Treasury Units,&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">to substitute notes for the Treasury securities,
    as provided for under &#147;Description of the PEPS Units&#151;
    Recreating Corporate Units,&#148; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">upon the termination or early settlement of the
    related purchase contracts.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-51
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to the security interest and the terms of
the purchase contract agreement and the pledge agreement, each
holder of Corporate Units will be entitled through the purchase
contract agent and the collateral agent to all of the
proportional rights of a holder of notes, including voting and
redemption rights. Each holder of Treasury Units will retain
beneficial ownership of the related Treasury securities pledged
in respect of the related purchase contracts. We will have no
interest in the pledged securities other than our security
interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as described in &#147;Certain Provisions
of the Purchase Contracts, Purchase Contract Agreement and the
Pledge Agreement&#151; General,&#148; the collateral agent will,
upon receipt, if any, of payments on the pledged securities,
distribute the payments to the purchase contract agent, which
will in turn distribute those payments, together with contract
adjustment payments received from us, to the persons in whose
names the related Corporate Units or Treasury Units are
registered at the close of business on the record date
immediately preceding the date of payment.
</FONT>

<P align="left">
<B><FONT size="2">Book-Entry System</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Depository Trust Company, which we refer to
along with its successors in this capacity as the depositary,
will act as securities depositary for the Corporate Units and
Treasury Units. The Corporate Units and Treasury Units will be
issued only as fully registered securities registered in the
name of Cede&nbsp;&#38; Co., the depositary&#146;s nominee. One
or more fully registered global security certificates,
representing the total aggregate number of Corporate Units and
Treasury Units, will be issued and will be deposited with the
depositary and will bear a legend regarding the restrictions on
exchanges and registration of transfer referred to below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The laws of some jurisdictions may require that
some purchasers of securities take physical delivery of
securities in definitive form. These laws may impair the ability
to transfer beneficial interests in the Corporate Units or the
Treasury Units so long as the Corporate Units or the Treasury
Units are represented by global security certificates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The depositary is a limited-purpose trust company
organized under the New York Banking Law, a &#147;banking
organization&#148; within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a &#147;clearing
corporation&#148; within the meaning of the New York Uniform
Commercial Code and a &#147;clearing agency&#148; registered
pursuant to the provisions of Section&nbsp;17A of the
U.S.&nbsp;Securities Exchange Act of 1934. The depositary holds
securities that its participants deposit with the depositary.
The depositary also facilitates the settlement among
participants of securities transactions, including transfers and
pledges, in deposited securities through electronic computerized
book-entry changes in participants&#146; accounts, thereby
eliminating the need for physical movement of securities
certificates. Direct participants include securities brokers and
dealers, banks, trust companies, clearing corporations and
certain other organizations. The depositary is owned by a number
of its direct participants and by the New York Stock Exchange,
the American Stock Exchange, Inc., and the National Association
of Securities Dealers, Inc. Access to the depositary&#146;s
system is also available to others, including securities brokers
and dealers, banks and trust companies that clear transactions
through or maintain a direct or indirect custodial relationship
with a direct participant. The rules applicable to the
depositary and its participants are on file with the SEC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the depositary notifies us that it is unwilling
    or unable to continue as a depositary for the global security
    certificates and no successor depositary has been appointed
    within 90&nbsp;days after this notice,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the depositary at any time ceases to be a
    clearing agency registered under the Securities Exchange Act
    when the depositary is required to be so registered to act as
    the depositary and no successor depositary has been appointed
    within 90&nbsp;days after we learn that the depositary has
    ceased to be so registered, or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">we, in our sole discretion, determine that the
    global security certificates shall be so exchangeable,
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">certificates for the Corporate Units or Treasury
Units will be printed and delivered in exchange for beneficial
interests in the global security certificates. Any global
Corporate Unit or Treasury Unit that is exchangeable pursuant to
the preceding sentence will be exchangeable for Corporate Unit
or Treasury Unit certificates registered in the names directed
by the depositary. We expect that these instructions will be
based upon directions
</FONT>

<P align="center"><FONT size="2">S-52
</FONT>

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<DIV align="left">
<FONT size="2">received by the depositary from its participants
with respect to ownership of beneficial interests in the global
security certificates.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As long as the depositary or its nominee is the
registered owner of the global security certificates, the
depositary or its nominee, as the case may be, will be
considered the sole owner and holder of the global security
certificates and all Corporate Units or Treasury Units
represented by these certificates for all purposes under the
Corporate Units or Treasury Units and the purchase contract
agreement. Except in the limited circumstances referred to
above, owners of beneficial interests in global security
certificates
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">will not be entitled to have such global security
    certificates or the Corporate Units or Treasury Units
    represented by these certificates registered in their names,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">will not receive or be entitled to receive
    physical delivery of Corporate Unit or Treasury Unit
    certificates in exchange for beneficial interests in global
    security certificates, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">will not be considered to be owners or holders of
    the global security certificates or any Corporate Units or
    Treasury Units represented by these certificates for any purpose
    under the Corporate Units or Treasury Units or the purchase
    contract agreement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All payments on the Corporate Units or Treasury
Units represented by the global security certificates and all
transfers and deliveries of notes or Treasury securities and
shares of common stock will be made to the depositary or its
nominee, as the case may be, as the holder of the securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Ownership of beneficial interests in the global
security certificates will be limited to participants or persons
that may hold beneficial interests through institutions that
have accounts with the depositary or its nominee. Ownership of
beneficial interests in global security certificates will be
shown only on, and the transfer of those ownership interests
will be effected only through, records maintained by the
depositary or its nominee, with respect to participants&#146;
interests, or any participant, with respect to interests of
persons held by the participant on their behalf. Procedures for
settlement of purchase contracts on February&nbsp;16, 2006 or
upon early settlement will be governed by arrangements among the
depositary, participants and persons that may hold beneficial
interests through participants designed to permit settlement
without the physical movement of certificates. Payments,
transfers, deliveries, exchanges and other matters relating to
beneficial interests in global security certificates may be
subject to various policies and procedures adopted by the
depositary from time to time. None of us, the purchase contract
agent or any agent of ours, or the purchase contract agent will
have any responsibility or liability for any aspect of the
depositary&#146;s or any participant&#146;s records relating to,
or for payments made on account of, beneficial interests in
global security certificates, or for maintaining, supervising or
reviewing any of the depositary&#146;s records or any
participant&#146;s records relating to these beneficial
ownership interests.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although the depositary has agreed to the
foregoing procedures in order to facilitate transfer of
interests in the global security certificates among
participants, the depositary is under no obligation to perform
or continue to perform these procedures, and these procedures
may be discontinued at any time. We will not have any
responsibility for the performance by the depositary or its
direct participants or indirect participants under the rules and
procedures governing the depositary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information in this section concerning the
depositary and its book-entry system has been obtained from
sources that we believe to be reliable, but we have not
attempted to verify the accuracy of this information.
</FONT>

<P align="center"><FONT size="2">S-53
</FONT>

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<!-- link1 "CERTAIN PROVISIONS OF THE PURCHASE CONTRACTS, THE PURCHASE CONTRACT AGREEMENT AND THE PLEDGE AGREEMENT" -->
<DIV align="left"><A NAME="012"></A></DIV>

<P align="center">
<B><FONT size="2">CERTAIN PROVISIONS OF THE PURCHASE CONTRACTS,
THE PURCHASE CONTRACT AGREEMENT AND THE PLEDGE
AGREEMENT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">This summary summarizes some of the other
provisions of the purchase contract agreement and the pledge
agreement. This summary should be read together with the
purchase contract agreement and pledge agreement, forms of which
have been or will be filed and incorporated by reference as
exhibits to the registration statement of which this prospectus
supplement and the accompanying prospectus form a
part.</FONT></I>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as described in &#147;Description of the
Purchase Contracts&#151; Book-Entry System,&#148; payments on
the PEPS Units will be made, purchase contracts (and documents
relating to the Corporate Units, Treasury Units and purchase
contracts) will be settled, and transfers of the Corporate Units
and Treasury Units will be registrable, at the office of the
purchase contract agent in the Borough of Manhattan, The City of
New York. In addition, if the Corporate Units and Treasury Units
do not remain in book-entry form, payment on the PEPS Units may
be made, at our option, by check mailed to the address of the
holder entitled to payment as shown on the security register or
by a wire transfer to the account designated by the holder by a
prior written notice.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shares of common stock will be delivered on
February&nbsp;16, 2006 (or earlier upon early settlement), or,
if the purchase contracts have terminated, the related pledged
securities will be delivered (potentially after a delay as a
result of the imposition of the automatic stay under the
U.S.&nbsp;Bankruptcy Code or other applicable bankruptcy law,
see &#147;Description of the Purchase Contracts&#151;
Termination&#148;) at the office of the purchase contract agent
upon presentation and surrender of the applicable certificate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you fail to present and surrender the
certificate evidencing the Corporate Units or Treasury Units to
the purchase contract agent on or prior to the purchase contract
settlement date, the shares of common stock issuable upon
settlement of the related purchase contract will be registered
in the name of the purchase contract agent. The shares, together
with any distributions, will be held by the purchase contract
agent as agent for your benefit until the certificate is
presented and surrendered or you provide satisfactory evidence
that the certificate has been destroyed, lost or stolen,
together with any indemnity that may be required by the purchase
contract agent and us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the purchase contracts terminate prior to the
purchase contract settlement date, the related pledged
securities are transferred to the purchase contract agent for
distribution to the holders, and a holder fails to present and
surrender the certificate evidencing the holder&#146;s Corporate
Units or Treasury Units to the purchase contract agent, the
related pledged securities delivered to the purchase contract
agent and payments on the pledged securities will be held by the
purchase contract agent as agent for the benefit of the holder
until the applicable certificate is presented or the holder
provides the evidence and indemnity described above.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase contract agent will have no
obligation to invest or to pay interest on any amounts held by
the purchase contract agent pending payment to any holder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No service charge will be made for any
registration of transfer or exchange of the Corporate Units or
Treasury Units, except for any tax or other governmental charge
that may be imposed in connection with a transfer or exchange.
</FONT>

<P align="left">
<B><FONT size="2">Modification</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase contract agreement and the pledge
agreement will contain provisions permitting us and the purchase
contract agent, and in the case of the pledge agreement, the
collateral agent, to modify the purchase contract agreement or
the pledge agreement without the consent of the holders for any
of the following purposes:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">to evidence the succession of another person to
    our obligations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">to add to the covenants for the benefit of
    holders or to surrender any of our rights or powers under those
    agreements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">to evidence and provide for the acceptance of
    appointment of a successor purchase contract agent or a
    successor collateral agent or securities intermediary;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-54
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">to make provision with respect to the rights of
    holders pursuant to adjustments in the settlement rate due to
    consolidations, mergers or other reorganization events;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">to cure any ambiguity, to correct or supplement
    any provisions that may be inconsistent; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">to make any other provisions with respect to such
    matters or questions, provided that such action shall not
    materially adversely affect the interest of the holders.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase contract agreement and the pledge
agreement will contain provisions permitting us and the purchase
contract agent, and in the case of the pledge agreement, the
collateral agent, with the consent of the holders of not less
than a majority of the purchase contracts at the time
outstanding to modify the terms of the purchase contracts, the
purchase contract agreement or the pledge agreement. However, no
such modification may, without the consent of the holder of each
outstanding purchase contract affected by the modification,
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">change any payment date,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">change the amount or type of pledged securities
    related to the purchase contract, impair the right of the holder
    of any pledged securities to receive distributions on the
    pledged securities or otherwise adversely affect the
    holder&#146;s rights in or to the pledged securities,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">change the place or currency of payment or reduce
    any contract adjustment payments or any deferred contract
    adjustment payments,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">impair the right to institute suit for the
    enforcement of the purchase contract or payment of any contract
    adjustment payments or any deferred contract adjustment payments,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">reduce the number of shares of common stock
    purchasable under the purchase contract, increase the price to
    purchase shares of common stock upon settlement of the purchase
    contract, change the purchase contract settlement date or the
    right to early settlement or otherwise adversely affect the
    holder&#146;s rights under the purchase contract, or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">reduce the above-stated percentage of outstanding
    purchase contracts the consent of the holders of which is
    required for the modification or amendment of the provisions of
    the purchase contracts, the purchase contract agreement or the
    pledge agreement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If any amendment or proposal referred to above
would adversely affect only the Corporate Units or the Treasury
Units, then only the affected class of holders will be entitled
to vote on the amendment or proposal, and the amendment or
proposal will not be effective except with the consent of the
holders of not less than a majority of the affected class or of
all of the holders of the affected classes, as applicable.
</FONT>

<P align="left">
<B><FONT size="2">No Consent to Assumption</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each holder of Corporate Units or Treasury Units,
by acceptance of these securities, will under the terms of the
purchase contract agreement and the Corporate Units or Treasury
Units, as applicable, be deemed expressly to have withheld any
consent to the assumption (i.e., affirmance) of the related
purchase contracts by us or our trustee if we become the subject
of a case under the U.S.&nbsp;Bankruptcy Code or other
applicable bankruptcy law or other similar provision for
reorganization or liquidation.
</FONT>

<P align="left">
<B><FONT size="2">Consolidation, Merger, Sale or
Conveyance</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will covenant in the purchase contract
agreement that we will not merge with and into, consolidate with
or convert into any other entity or sell, assign, transfer,
lease or convey all or substantially all of our properties and
assets to any person or entity, unless (1)&nbsp;the successor
entity is an entity organized under the laws of the United
States of America or a U.S.&nbsp;state or the District of
Columbia, or the laws of the Republic of the Marshall Islands,
(2)&nbsp;that entity expressly assumes our obligations (modified
as described below) under the purchase contracts, the purchase
contract agreement, the pledge agreement and the remarketing
agreement and (3)&nbsp;immediately before and after the merger,
consolidation, conversion, sale, assignment, transfer, lease or
conveyance, neither we nor the successor entity is in default of
payment obligations under the purchase contracts,
</FONT>

<P align="center"><FONT size="2">S-55
</FONT>

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<DIV align="left">
<FONT size="2">the purchase contract agreement, the pledge
agreement and the remarketing agreement or in material default
in the performance of any other covenants under these agreements.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the case of mergers, consolidations or
conversions that cause our common stock to be converted into the
right to receive other securities, cash or property, each
purchase contract then outstanding would, without the consent of
the holders of the related Corporate Units or Treasury Units, as
the case may be, become a contract to purchase such other
securities, cash and property instead of our common stock. Upon
the purchase contract settlement date following the occurrence
of any such transaction, a holder will receive the kind and
amount of securities, cash or other property that the holder
would have been entitled to receive if the purchase contract had
been settled immediately before the transaction at the
settlement rate in effect at that time.
</FONT>

<P align="left">
<B><FONT size="2">Title</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We, the purchase contract agent and the
collateral agent may treat the registered owner of any Corporate
Units or Treasury Units as the absolute owner of the Corporate
Units or Treasury Units for the purpose of making payment and
settling the related purchase contracts and for all other
purposes.
</FONT>

<P align="left">
<B><FONT size="2">Replacement of PEPS Unit
Certificates</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that physical certificates have been
issued, any mutilated Corporate Unit or Treasury Unit
certificate will be replaced by us at the expense of the holder
upon surrender of the certificate to the purchase contract
agent. Corporate Unit or Treasury Unit certificates that become
destroyed, lost or stolen will be replaced by us at the expense
of the holder upon delivery to us and the purchase contract
agent of evidence of their destruction, loss or theft
satisfactory to us and the purchase contract agent. In the case
of a destroyed, lost or stolen Corporate Unit or Treasury Unit
certificate, an indemnity satisfactory to the purchase contract
agent and us may be required at the expense of the holder of the
Corporate Units or Treasury Units evidenced by the certificate
before a replacement will be issued.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Notwithstanding the foregoing, we will not be
obligated to issue any Corporate Unit or Treasury Unit
certificates on or after the business day immediately preceding
the purchase contract settlement date (or after early
settlement) or after the purchase contracts have terminated. The
purchase contract agreement will provide that, in lieu of the
delivery of a replacement Corporate Unit or Treasury Unit
certificate following the purchase contract settlement date, the
purchase contract agent, upon delivery of the evidence and
indemnity described above, will deliver the shares of common
stock issuable pursuant to the purchase contracts included in
the Corporate Units or Treasury Units evidenced by the
certificate, or, if the purchase contracts have terminated prior
to the purchase contract settlement date, transfer the pledged
securities included in the Corporate Units or Treasury Units
evidenced by the certificate.
</FONT>

<P align="left">
<B><FONT size="2">Governing Law</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase contract agreement, the pledge
agreement and the purchase contracts will be governed by, and
construed in accordance with, the laws of the State of New York.
</FONT>

<P align="left">
<B><FONT size="2">Information Concerning the Purchase Contract
Agent</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Bank of New York will be the purchase
contract agent. The purchase contract agent will act as the
agent for the holders of Corporate Units and Treasury Units from
time to time. The purchase contract agreement will not obligate
the purchase contract agent to exercise any discretionary
actions in connection with a default under the terms of the
Corporate Units and Treasury Units or the purchase contract
agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase contract agreement will contain
provisions limiting the liability of the purchase contract
agent. The purchase contract agreement will contain provisions
under which the purchase contract agent may resign or be
replaced. This resignation or replacement would be effective
upon the acceptance of appointment by a successor.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Bank of New York maintains commercial banking
relationships with us, serves as the trustee under indentures
for our debt securities, and acts as the transfer agent for our
common stock.
</FONT>

<P align="center"><FONT size="2">S-56
</FONT>

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<P align="left">
<B><FONT size="2">Information Concerning the Collateral
Agent</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Bank of New York will be the collateral
agent. The collateral agent will act solely as our agent and
will not assume any obligation or relationship of agency or
trust for or with any of the holders of the Corporate Units or
Treasury Units except for the obligations owed by a pledgee of
property to the owner of the property under the pledge agreement
and applicable law.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The pledge agreement will contain provisions
limiting the liability of the collateral agent. The pledge
agreement will contain provisions under which the collateral
agent may resign or be replaced. This resignation or replacement
would be effective upon the acceptance of appointment by a
successor. Since The Bank of New York is serving as both the
collateral agent and the purchase contract agent, if an event of
default, except an event of default occurring as a result of a
failed remarketing, occurs under the purchase contract agreement
or the pledge agreement, The Bank of New York will resign as the
collateral agent, but remain as the purchase contract agent. We
will then select a new collateral agent in accordance with the
terms of the pledge agreement.
</FONT>

<P align="left">
<B><FONT size="2">Miscellaneous</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase contract agreement will provide that
we will pay all fees and expenses other than underwriters&#146;
expenses (including counsel) related to the offering of the
Corporate Units, the retention of the collateral agent and the
enforcement by the purchase contract agent of the rights of the
holders of the PEPS Units.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Should you elect to substitute the related
pledged securities, create Treasury Units or recreate Corporate
Units, you shall be responsible for any fees or expenses payable
in connection with that substitution, as well as any
commissions, fees or other expenses incurred in acquiring the
pledged securities to be substituted, and we shall not be
responsible for any of those fees or expenses.</FONT></B>

<P align="center"><FONT size="2">S-57
</FONT>

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<!-- link1 "DESCRIPTION OF THE NOTES" -->
<DIV align="left"><A NAME="013"></A></DIV>

<P align="center">
<B><FONT size="2">DESCRIPTION OF THE NOTES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The following description is a summary of the
terms of the notes. The descriptions in this prospectus
supplement and the accompanying prospectus contain a description
of certain terms of the notes and the subordinated indenture but
do not purport to be complete, and reference is hereby made to
the subordinated indenture and supplemental indenture
No.&nbsp;1, which have been or will be filed as exhibits or
incorporated by reference to the registration statement, and to
the U.S.&nbsp;Trust Indenture Act of 1939. This summary
supplements the description of the subordinated debt securities
in the accompanying prospectus and, to the extent it is
inconsistent, replaces the description in the accompanying
prospectus.</FONT></I>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The notes will be issued under the subordinated
indenture to be dated as of
February&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2003 between us
and The Bank of New York, as indenture trustee, as amended and
supplemented by supplemental indenture No.&nbsp;1, to be dated
as of February&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2003,
between us and the indenture trustee (as so amended and
supplemented, the &#147;indenture&#148;). The notes initially
will be issued in an aggregate principal amount equal to
$125,000,000. If the over-allotment option is exercised in full
by the underwriters, an additional $18,750,000 of the notes will
be issued.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The notes will be our unsecured obligations and
initially will be subordinate in right of payment to all of our
existing and future senior debt. On and after February&nbsp;16,
2006, except in the event of our earlier bankruptcy, insolvency
or reorganization, the subordination provisions of the notes and
the subordinated indenture will no longer be applicable and the
notes will be our senior, unsecured obligations ranking equally
in right of payment with all of our existing and future
unsubordinated debt.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a holding company that derives all our
income from our subsidiaries. Accordingly, our ability to
service our debt, including our obligations under the notes, and
other obligations are primarily dependent on the earnings of our
respective subsidiaries and the payment of those earnings to us,
in the form of dividends, loans or advances and through
repayment of loans or advances from us. In addition, any payment
of dividends, loans or advances by those subsidiaries could be
subject to statutory or contractual restrictions. Our
subsidiaries have no obligation to pay any amounts due on the
notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The notes will not be subject to a sinking fund
provision, will not be subject to defeasance or covenant
defeasance, and except as described below under &#147;&#151; Put
Option Upon a Failed Remarketing&#148; will not be subject to
redemption prior to maturity. The entire principal amount of the
notes will mature and become due and payable, together with any
accrued and unpaid interest thereon, on May&nbsp;18, 2006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture trustee will initially be the
security registrar and the paying agent for the notes. Notes
will be issued in certificated form, in denominations of $25 and
integral multiples of $25, without coupons, and may be
transferred or exchanged, without service charge but upon
payment of any taxes or other governmental charges payable in
connection with the transfer or exchange, at the office
described below. Payments on the notes issued as a global
security will be made to the depositary or a successor
depositary. Principal and interest with respect to certificated
notes will be payable, the transfer of the notes will be
registrable and notes will be exchangeable for notes of a like
aggregate principal amount in denominations of $25 and integral
multiples of $25, at the office or agency maintained by us for
this purpose in The City of New York. We have initially
designated the corporate trust office of the indenture trustee
as that office. However, at our option, payment of interest may
be made by check mailed to the address of the holder entitled to
payment or by wire transfer to an account appropriately
designated by the holder entitled to payment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture does not contain provisions that
afford holders of the notes protection in the event we are
involved in a highly leveraged transaction or other similar
transaction that may adversely affect such holders. The
indenture does not limit our ability to issue or incur other
debt or issue preferred stock.
</FONT>

<P align="left">
<B><FONT size="2">Ranking</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The notes will be unsecured and will initially be
subordinate in right of payment to all of our existing and
future senior debt. &#147;Senior debt&#148; with respect to
payments on the notes, so long as they are subordinated, means
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">the principal of, premium, if any, and interest
on debt, whether incurred on, prior to, or after the date of the
indenture, unless the instrument creating or evidencing that
debt or pursuant to which that debt is outstanding states that
those obligations are not superior in right of payment to the
notes while they are subordinated, or to other debt which ranks
equally with, or junior to, the notes while they are
subordinated. However, senior debt shall not include any debt of
Teekay that is expressly subordinated in right of payment to any
Senior debt, any debt that by operation of law is subordinate to
Teekay&#146;s general unsecured obligations, any debt which,
when incurred and without regard to any election under
Section&nbsp;1111(b) of the U.S.&nbsp;Bankruptcy Code, was
without recourse to Teekay, any debt of Teekay to any of its
subsidiaries or affiliates (or their subsidiaries), any debt of
Teekay to any employee of Teekay, amounts owed by Teekay for
compensation to employees or for services rendered to Teekay,
any redeemable capital stock of Teekay, amounts owing under
leases, any liability for taxes, or any debt for goods,
materials or services purchased in the ordinary course of
business or debt consisting of trade account payables or other
current liabilities (other than the current portion of long-term
debt which would otherwise constitute senior debt). In the event
of a bankruptcy, liquidation, dissolution, reorganization or
similar proceeding of our company, our assets will be available
to satisfy obligations of our senior debt before any payment may
be made on the notes. We may not have sufficient assets
remaining to pay amounts on any or all of the notes.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On and after February&nbsp;16, 2006, except in
the event of our earlier bankruptcy, insolvency or
reorganization, the subordination provisions of the notes and
the subordinated indenture will no longer be applicable and the
notes will rank equally in right of payment to all of our then
existing and future unsubordinated debt.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the notes, whether or not they are
subordinated, will be effectively subordinated to existing and
future senior secured debt, to the extent of the assets securing
the debt, and all liabilities of our subsidiaries. Our right to
receive assets of any subsidiaries upon their liquidation or
reorganization, and the rights of the holders of the notes to
share in those assets, would be subject to the satisfaction of
claims of the subsidiaries&#146; creditors. Consequently, the
notes will be effectively subordinate to all liabilities of any
of our subsidiaries and any subsidiaries that we may in the
future acquire or establish. Substantially all of our business
is currently conducted through our subsidiaries, and we expect
this to continue.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The notes are our obligations exclusively. The
indenture does not limit our ability to incur senior or secured
debt, or our ability or that of any of our presently existing or
future subsidiaries, to incur other indebtedness and other
liabilities. We may have difficulty paying our obligations under
the notes if we, or any of our subsidiaries, incur additional
indebtedness or liabilities.
</FONT>

<P align="left">
<B><FONT size="2">Interest</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each note will bear interest initially at the
rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
per year from the original issuance date, payable quarterly in
arrears on February&nbsp;16, May&nbsp;16, August&nbsp;16 and
November&nbsp;16 of each year, commencing May&nbsp;16, 2003
(provided that May&nbsp;16, 2006 will not be an interest payment
date and the interest payment date next following
February&nbsp;16, 2006 will be the maturity date of the notes),
to the person in whose name the note is registered at the close
of business on the first day of the month in which the interest
payment date falls.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The applicable interest rate on the notes will be
reset to the reset rate upon successful remarketing as described
above under &#147;Description of the Purchase Contracts&#151;
Remarketing.&#148; The reset rate will become effective on the
reset effective date, which is three business days immediately
following a successful remarketing. If the notes are not
successfully remarketed, the interest rate on the notes will not
be reset.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amount of interest payable on the notes for
any period will be computed (1)&nbsp;for any full quarterly
period on the basis of a 360-day year of twelve 30-day months
and (2)&nbsp;for any period shorter than a full quarterly
period, on the basis of a 30-day month and, for any period less
than a month, on the basis of the actual number of days elapsed
per 30-day month. In the event that any date on which interest
is payable on the notes is not a business day, then payment of
the interest payable on such date will be made on the next day
that is a business day (and without any interest or other
payment in respect of any such delay), except that, if such
business day is in the next calendar year, then such payment
will be made on the preceding business day.
</FONT>

<P align="center"><FONT size="2">S-59
</FONT>

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<P align="left">
<B><FONT size="2">Additional Amounts</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All payments made by us under or with respect to
the notes will be made free and clear of and without withholding
or deduction for or an account of any present or future tax,
duty, levy, impost, assessment or other governmental charge
(hereinafter &#147;Taxes&#148;) imposed or levied by or on
behalf of the Republic of the Marshall Islands or any
jurisdiction from or through which payment on the notes is made,
or any political subdivision thereof, or by any authority or
agency therein or thereof having power to tax, unless we are
required to withhold or deduct Taxes by law or by the
interpretation or administration thereof. If we are so required
to withhold or deduct any amount of interest for or on account
of Taxes from any payment made under or with respect to the
notes, we will, subject to certain limitations and exceptions
described under &#147;Description of the Purchase
Contracts&#151; Additional Amounts,&#148; pay such additional
amounts of interest (&#147;additional amounts&#148;) as may be
necessary so that the net amount received by each holder
(including additional amounts) after such withholding or
deduction will not be less than the amount the holder would have
received if such Taxes had not been withheld or deducted. See
&#147;Description of the Purchase Contracts&#151; Additional
Amounts.&#148;
</FONT>

<P align="left">
<B><FONT size="2">Market Reset Rate</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The reset rate will be equal to the rate (subject
to the last sentence of this paragraph) that is sufficient to
allow a successful remarketing of the notes and will be
determined by the remarketing agent. The reset rate will be the
rate determined by the remarketing agent in its reasonable
discretion as the rate the notes should bear in order to allow a
successful remarketing of the notes and for the notes that are
remarketed to have an aggregate market value approximately equal
to 100.25% of the principal amount of such notes, provided that
the reset rate will not exceed the maximum rate permitted by
applicable law.
</FONT>

<P align="left">
<B><FONT size="2">Option to Defer Interest Payments on the
Notes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">So long as no event of default has occurred and
is continuing, we have the right under the indenture at any time
to defer the payment of interest on the notes for a period not
extending beyond February&nbsp;16, 2006. Accordingly, any unpaid
deferred interest will be payable on that date. We refer to any
such period of deferral as an &#147;extension period.&#148; At
the end of an extension period, which must be an interest
payment date, we must pay all interest then accrued and unpaid
(together with accrued interest on such deferred interest at a
rate
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
per year compounded quarterly) to the holders of notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During any extension period, we will not:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">declare or pay dividends on, make other
    distributions with respect to, or redeem, purchase or acquire,
    or make a liquidation payment with respect to, any of our
    capital shares;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">permit our subsidiaries to declare or pay
    dividends on, make other distributions with respect to, or
    redeem, purchase or acquire, or make a liquidation payment with
    respect to, any of our capital shares or their shares; provided
    that the foregoing will not restrict any of our subsidiaries
    from declaring or paying such dividends, or making such
    distributions, to us or any of our other subsidiaries;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">make any payment of principal, interest or
    premium, if any, on or repay, repurchase or redeem any security
    that ranks <I>pari passu</I> with the notes; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">make any payment of principal, interest or
    premium, if any, on or repay, repurchase or redeem any debt
    securities that rank subordinate in right of payment to the
    notes or make any guarantee payments with respect to any
    guarantee by us of the debt of any subsidiary of ours if such
    guarantee ranks subordinate in right of payment to the notes.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to the expiration of any extension period,
we may further extend the extension period but not beyond
February&nbsp;16, 2006. Upon the termination of any extension
period and the payment of all amounts then due on any interest
payment date, we may elect to begin a new extension period,
subject to the same requirements as described above. No interest
will be due and payable during an extension period except that,
prior to the end thereof, we at our option may prepay on any
interest payment date all or any portion of the interest accrued
</FONT>

<P align="center"><FONT size="2">S-60
</FONT>

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<DIV align="left">
<FONT size="2">during the elapsed portion of the extension
period. We must give the indenture trustee written notice of our
election of any extension period (or our further extension) at
least five business days prior to the earlier of:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the date interest on the notes would have been
    payable except for the election to begin or extend the extension
    period;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the date the indenture trustee is required to
    give notice to any securities exchange or to holders of
    interests in the notes of the record date or the date the
    interest is payable; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the record date.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture trustee must give notice of our
election to begin a new extension period or continue an
extension period to the holders of the notes.
</FONT>

<P align="left">
<B><FONT size="2">Optional Remarketing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On or prior to the fifth business day immediately
preceding the remarketing date, but no earlier than the payment
date immediately preceding such date, holders of notes that are
not components of Corporate Units may elect to have their notes
remarketed in the same manner and at the same price as notes
that are components of Corporate Units by delivering their notes
along with a notice of this election to the custodial agent. The
custodial agent will hold the notes in an account separate from
the collateral account in which the pledged securities will be
held. Holders of notes electing to have their notes remarketed
will also have the right to withdraw the election on or prior to
the fifth business day immediately preceding the remarketing
date. Holders of Treasury Units that are also holders of notes
that are not part of the Corporate Units may also participate in
any remarketing by recreating Corporate Units from their
Treasury Units at any time on or prior to the second business
day immediately prior to any of the remarketing dates.
</FONT>

<P align="left">
<B><FONT size="2">Put Option Upon a Failed Remarketing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a successful remarketing of the notes
underlying the Corporate Units has not occurred prior to the
purchase contract settlement date, the holders of any notes will
have the right to put such notes to us on the purchase contract
settlement date, upon at least two business days&#146; prior
notice (unless automatically exercised as described in
&#147;Description of the Purchase
Contracts&#151;Remarketing&#148;), at a price equal to $25 for
each note, plus accrued and unpaid interest.
</FONT>

<P align="left">
<B><FONT size="2">Events of Default</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the events of default described in
the accompanying prospectus under &#147;Description of Debt
Securities&#151; Events of Default,&#148; it shall be an event
of default under the notes if we fail on the date payment is due
to pay the put price of any notes following the exercise of the
put right by any holder of notes.
</FONT>

<P align="left">
<B><FONT size="2">Book-Entry System</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Notes released from the pledge following
substitution or settlement of the purchase contracts will be
issued in the form of one or more global certificates, which are
referred to as global securities, registered in the name of the
depositary or its nominee. Except under the limited
circumstances described below or except upon recreation of
Corporate Units, notes represented by the global securities will
not be exchangeable for, and will not otherwise be issuable as,
notes in certificated form. The global securities described
above may not be transferred except 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 to a
successor depositary or its nominee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The laws of some jurisdictions may require that
some purchasers of securities take physical delivery of the
securities in certificated form. These laws may impair the
ability to transfer beneficial interests in such a global
security.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as provided below, owners of beneficial
interests in such a global security will not be entitled to
receive physical delivery of notes in certificated form and will
not be considered the holders (as defined in the
</FONT>

<P align="center"><FONT size="2">S-61
</FONT>

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<DIV align="left">
<FONT size="2">indenture) thereof for any purpose under the
indenture, and no global security representing notes shall be
exchangeable, except for another global security of like
denomination and tenor to be registered in the name of the
depositary or its nominee or a successor depositary or its
nominee. Accordingly, each beneficial owner must rely on the
procedures of the depositary or if such person is not a
participant, on the procedures of the participant through which
such person owns its interest to exercise any rights of a holder
under the indenture.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the depositary notifies us that it is unwilling
    or unable to continue as a depositary for the global security
    certificates and no successor depositary has been appointed
    within 90&nbsp;days after this notice,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the depositary at any time ceases to be a
    clearing agency registered under the Securities Exchange Act
    when the depositary is required to be so registered to act as
    the depositary and no successor depositary has been appointed
    within 90&nbsp;days after we learn that the depositary has
    ceased to be so registered,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">an event of default occurs and is continuing with
    respect to the notes, or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">we determine in our sole discretion that we will
    no longer have notes represented by global securities,
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">certificates for the notes will be printed and
delivered in exchange for beneficial interests in the global
security certificates. Any global note that is exchangeable
pursuant to the preceding sentence shall be exchangeable for
note certificates registered in the names directed by the
depositary. We expect that these instructions will be based upon
directions received by the depositary from its participants with
respect to ownership of beneficial interests in the global
security certificates.
</FONT>

<P align="center"><FONT size="2">S-62
</FONT>

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<!-- link1 "DESCRIPTION OF OUR OTHER INDEBTEDNESS" -->
<DIV align="left"><A NAME="014"></A></DIV>

<P align="center">
<B><FONT size="2">DESCRIPTION OF OUR OTHER
INDEBTEDNESS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a summary of our primary debt.
This summary is qualified in its entirety by reference to the
full text of the documents that govern the transactions so
summarized.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As at September&nbsp;30, 2002, we and our
subsidiaries had outstanding debt for borrowed money under
existing credit agreements in the aggregate principal amount of
approximately $1.1&nbsp;billion, including $84.4&nbsp;million of
joint venture debt guaranteed by us or by certain of our
subsidiaries. Of this $1.1&nbsp;billion, we were directly
obligated for or guaranteed $686.1&nbsp;million at
September&nbsp;30, 2002. The following chart indicates, on a
consolidated basis, as of October&nbsp;1, 2002, the aggregate
principal amount of debt that will be due and payable in our
upcoming fiscal years.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="81%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Fiscal Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2002&nbsp;(October&nbsp;1 to December&nbsp;31)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17&nbsp;million</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65&nbsp;million</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85&nbsp;million</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111&nbsp; million</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">181&nbsp; million</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2007
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">85&nbsp;million</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2008
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29&nbsp;million</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48&nbsp;million</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2010
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2011
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">351&nbsp; million</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2012
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, as of December&nbsp;31, 2002, we and
our subsidiaries had commitments from lenders for additional
credit facilities related to our proposed acquisition of Navion
ASA ($500&nbsp;million), vessel purchases ($77&nbsp;million) and
newbuildings ($232&nbsp;million).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 1996, we issued $225&nbsp;million of
our 8.32% First Preferred Ship Mortgage Notes due 2008 in a
public offering registered under the U.S.&nbsp;Securities Act of
1933. These notes currently are collateralized by first
preferred mortgages granted on seven of our Aframax tankers,
together with other related collateral, and are guaranteed by
our subsidiaries that own the mortgaged vessels. Upon these
notes achieving investment grade status and subject to other
conditions, the guarantees of the notes will terminate, all of
the collateral securing our obligations and the guarantors under
the related indenture and security documents will be released
and specified covenants under the indenture will no longer be
applicable to us. These notes are subject to a sinking fund,
which will retire $45&nbsp;million principal amount of these
notes on each February&nbsp;1, commencing February&nbsp;1, 2004.
These notes are listed for trading on the New York Stock
Exchange.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January 1998, we negotiated a reducing
revolving credit facility with nine commercial banks which, as
of September&nbsp;30, 2002, provided for borrowings of up to
$110&nbsp;million in order to refinance certain debt and to
provide working capital. This facility is secured by first
priority mortgages granted on eight of our Aframax tankers,
together with other related collateral, and a guarantee from us
for all amounts outstanding under the facility. Interest
payments are based on LIBOR plus a specified margin that depends
on our capital structure as calculated on a quarterly basis. At
September&nbsp;30, 2002, the margin was 0.5%. The amount
available under the facility reduces by $10&nbsp;million
semi-annually with a final balloon reduction in January 2006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;22, 2001, we issued
$250&nbsp;million aggregate principal amount of senior notes
bearing interest at 8.875% per year and maturing on
July&nbsp;15, 2011. On December&nbsp;6, 2001, we issued an
additional $100&nbsp;million aggregate principal amount of such
notes. These notes are senior unsecured obligations, and are not
guaranteed by any of our subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bona Shipholding Ltd. has a revolving credit
facility with 13 commercial banks which, as of
September&nbsp;30, 2002, provided for borrowings of up to
$359.4&nbsp;million. This facility is secured by first priority
mortgages granted on 25 Bona and Teekay vessels. In connection
with the Bona acquisition, Teekay agreed to guarantee all of
Bona&#146;s obligations under this facility. The facility was
amended in September 2001. The facility is subject to a
</FONT>

<P align="center"><FONT size="2">S-63
</FONT>

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<DIV align="left">
<FONT size="2">financial covenant that requires Teekay to
maintain a minimum level of free cash based on its consolidated
financial statements. As of September&nbsp;30, 2002, Teekay was
in compliance with this covenant. Interest payments are based on
LIBOR plus a specified margin that depends on Teekay&#146;s
capital structure as calculated on a quarterly basis. At
September&nbsp;30, 2002, the margin was 0.75%. The amount
available under the facility reduces by approximately
$19&nbsp;million semi-annually with a final balloon reduction in
December 2008.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2002, UNS had a number of
single and multi-ship mortgage loans totaling
$309.4&nbsp;million. Teekay currently does not guarantee any of
the obligations of UNS under these facilities. UNS term loans
are collateralized by first priority mortgages granted on the 14
vessels to which the loans relate (including two newbuildings),
together with certain other related collateral, and guarantees
from UNS. UNS credit facilities are subject to certain financial
covenants which include specified minimum levels of
(1)&nbsp;free cash, (2)&nbsp;equity (based on book value),
(3)&nbsp;working capital, (4)&nbsp;value adjusted equity or
total value adjusted assets, (5)&nbsp;committed capital and a
minimum earnings to interest ratio. As of September&nbsp;30,
2002, UNS was in compliance with all such covenants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indenture relating to our 8.32% First
Preferred Ship Mortgage Notes due 2008 and certain of the
agreements governing our (and our subsidiaries&#146;) credit
facilities provide that our ability to pay dividends is subject
to limitations based upon our cumulative net income plus certain
additional amounts, including the proceeds received by us from
any issuance of our capital stock. In addition, credit
agreements to which some of our subsidiaries are parties, and
guarantees executed by us in connection with them, contain
various covenants which restrict our operations and those of our
subsidiaries. These credit agreements and guarantees contain
covenants that require those subsidiaries or us, as the case may
be, to conduct their or our operations, including, for those
subsidiaries, the operations of their respective vessels, in
accordance with certain standards set forth in the credit
agreements or guarantees. Certain credit agreements related to
our secured debt contain &#147;hull covenants&#148; that require
the applicable subsidiaries to deliver additional collateral to
the lenders under the applicable credit agreement, or prepay a
certain amount of the debt, in the event that the value of the
subject vessels falls below a fixed percentage of the amount of
the debt then outstanding under the credit agreement. The
minimum combined value of the subject vessels must remain at
between 125% and 133% of the outstanding debt under our
revolving credit agreements. We believe that as of
September&nbsp;30, 2002 we were in compliance with all of the
covenants in effect at that time.
</FONT>

<P align="center"><FONT size="2">S-64
</FONT>

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<!-- link1 "TAX CONSEQUENCES" -->
<DIV align="left"><A NAME="015"></A></DIV>

<P align="center">
<B><FONT size="2">TAX CONSEQUENCES</FONT></B>

<P align="left">
<B><FONT size="2">Material United States Federal Income Tax
Consequences</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following summary describes the material
United States federal income tax consequences of the purchase,
ownership and disposition of PEPS Units, purchase contracts,
notes and Treasury securities that are or may be the components
of a PEPS Unit, and shares of our common stock acquired under a
purchase contract. Except where indicated, this summary deals
only with holders who purchase PEPS Units in the initial
offering at their original offering price and hold the PEPS
Units, purchase contracts, notes, Treasury securities and shares
of our common stock as capital assets. The following discussion,
as well as the conclusions regarding certain issues of United
States federal income tax law that are reflected in that
discussion, are based upon the provisions of the United States
Internal Revenue Code of 1986, as amended (the
&#147;Code&#148;), applicable Treasury regulations (including
proposed Treasury regulations) issued thereunder, Internal
Revenue Service rulings and pronouncements and judicial
decisions now in effect, all of which are subject to change,
possibly with retroactive effect.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This discussion does not address all aspects of
United States federal income taxation that may be relevant to
holders in light of their particular circumstances, such as
holders that are subject to special rules under United States
federal income tax law (for example, (1)&nbsp;dealers in
securities or currencies, (2)&nbsp;financial institutions,
(3)&nbsp;investors in pass-through entities, (4)&nbsp;tax-exempt
organizations or pension plans, (5)&nbsp;life insurance
companies, (6)&nbsp;persons holding PEPS Units, purchase
contracts, notes, Treasury securities or shares of our common
stock as a hedge or as part of a straddle, constructive sale,
conversion transaction, or other risk management transaction, or
(7)&nbsp;persons whose &#147;functional currency&#148; is not
the U.S.&nbsp;dollar). Furthermore, this discussion does not
address alternative minimum taxes or any state, local or foreign
tax laws.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD></TD>
    <TD>
    <B><I><FONT size="2">Risk of Recharacterization</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No statutory, administrative or judicial
authority directly addresses the treatment of PEPS Units or
instruments similar to PEPS Units for United States federal
income tax purposes. As a result, no assurance can be given that
the United States Internal Revenue Service (&#147;Internal
Revenue Service&#148;) will agree with the United States federal
income tax consequences described herein or that, if the
Internal Revenue Service were to take a contrary position, such
position would not ultimately be sustained by the courts. The
discussion below assumes that, for United States federal income
tax purposes, (1)&nbsp;the purchase contracts and the notes will
be treated as separate securities, (2)&nbsp;the purchase
contracts will be treated as forward contracts to purchase
shares of our common stock and the contract adjustment payments
will be treated as payments to holders for investing in such
contracts, and (3)&nbsp;the notes will be treated as
indebtedness for United States federal income tax purposes.
Nevertheless, the Internal Revenue Service could conceivably
assert a different position with respect to one or more of the
foregoing assumptions, and were such position to prevail, a
holder could experience United States federal income tax
consequences that are different from those described herein.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Prospective investors are urged to consult
their own tax advisors with respect to the United States federal
income tax consequences of the purchase, ownership, and
disposition of PEPS Units, purchase contracts, notes and
Treasury securities and shares of our common stock acquired
under a purchase contract in light of their own particular
circumstances, as well as the effect of any state, local, or
foreign tax laws or any applicable tax treaty.</FONT></B>

<DIV>&nbsp;</DIV>

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</TR>

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    <TD></TD>
    <TD>
    <B><I><FONT size="2">United States Holders</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following summary is addressed to United
States holders. As used in this section of the prospectus
supplement, a &#147;United States holder&#148; means a holder
that is (1)&nbsp;an individual citizen or resident of the United
States, (2)&nbsp;a corporation, partnership or other entity
created or organized in or under the laws of the United States
or any political subdivision thereof, (3)&nbsp;an estate the
income of which is subject to United States federal income
taxation regardless of its source, or (4)&nbsp;a trust if a
court within the United States is able to exercise primary
supervision over the administration of the trust and one or more
United States persons have the authority to control all
substantial decisions of the trust, or a trust that was in
existence on August&nbsp;20, 1996, was treated as a United
States person on August&nbsp;19, 1996 and elected to be treated
as a United States person at all times thereafter.
</FONT>

<P align="center"><FONT size="2">S-65
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <U><FONT size="2">PEPS Units</FONT></U></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Allocation of Purchase
Price.</FONT></I><FONT size="2"> A United States holder&#146;s
acquisition of a PEPS Unit will be treated as the acquisition of
a unit consisting of two components, a purchase contract and a
related note. The purchase price of each PEPS Unit will be
allocated between the purchase contract and the note
constituting such unit in proportion to their respective fair
market values at the time of purchase. Such allocation will
establish the United States holder&#146;s initial tax basis in
the purchase contract and the note. We expect to report the fair
market value of each purchase contract as $0.00 and the fair
market value of each note as $25. This position will be binding
on each United States holder (but not on the Internal Revenue
Service) unless such United States holder explicitly discloses a
contrary position on a statement attached to its timely filed
United States federal income tax return for the taxable year in
which a PEPS Unit is acquired. Thus, absent such disclosure, a
United States holder should allocate the purchase price for a
PEPS Unit in accordance with the values reported by us. The
remainder of this discussion assumes that this allocation of the
purchase price will be respected for United States federal
income tax purposes. If these allocations are not respected, the
timing and amount of interest income reported by a United States
holder and the amount of capital gain or loss ultimately
realized upon the disposition of shares of our common stock
acquired under the purchase contracts could be affected.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Ownership of Notes and Treasury
Securities.</FONT></I><FONT size="2"> Each beneficial owner of
Corporate Units or Treasury Units, by acceptance of the
beneficial interest therein, will be deemed to have agreed to
(i)&nbsp;treat itself as the owner of the notes or Treasury
securities constituting a part of the units owned, as the case
may be, and (ii)&nbsp;treat the notes as indebtedness for all
United States federal income tax purposes. The remainder of this
discussion assumes that such treatment will be respected for
United States federal income tax purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Sale, Exchange or Other Disposition of PEPS
Units.</FONT></I><FONT size="2"> If a United States holder
sells, exchanges or otherwise disposes of a PEPS Unit, such
United States holder will be treated as having sold, exchanged
or disposed of each of the purchase contract and the note or the
Treasury securities, as the case may be, that constitute such
unit. The proceeds realized on such sale, exchange or other
disposition will be allocated between the purchase contract and
the note or the Treasury securities, as the case may be, in
proportion to their respective fair market values at the time of
such sale, exchange or other disposition. As a result, a United
States holder generally will recognize gain or loss equal to the
difference between (i)&nbsp;the portion of the proceeds received
by such United States holder that is allocable to the purchase
contract and the note or the Treasury securities, as the case
may be, and (ii)&nbsp;such United States holder&#146;s
respective adjusted tax bases in the purchase contract and the
note or the Treasury securities, as the case may be.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Such gain or loss generally will be capital gain
or loss, provided that any proceeds attributable to accrued and
unpaid interest on the notes or deferred contract adjustment
payments will be treated as ordinary interest income to the
extent not previously included in income. Such gain or loss
generally will be long-term capital gain or loss if the United
States holder held the PEPS Units for more than one year
immediately prior to the sale, exchange or other disposition. In
the case of Treasury securities with a term of one year or less,
however, such gain will be ordinary income to the extent that
any acquisition discount has accrued but has not been included
in income. Under current law, net capital gains of individuals
are, under certain circumstances, taxed at lower rates than
items of ordinary income. The deductibility of capital losses is
subject to significant limitations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Capital gain or loss realized by a United States
holder with respect to the notes or Treasury securities and
ordinary income attributable to accrued acquisition discount on
the Treasury securities generally should be treated as United
States source income for United States foreign tax credit
purposes. Any gain realized on the sale, exchange or other
disposition of the notes that is treated as ordinary income
because it is attributable to accrued and unpaid interest will
be treated as interest for United States federal income tax
purposes and for purposes of computing a United States
holder&#146;s foreign tax credit limitation. See &#147;Tax
Consequences&#151; Material United States Federal Income Tax
Consequences&#151; Notes&#151; Interest Income and Original
Issue Discount.&#148; Prospective investors are urged to consult
their own tax advisors concerning the effect, if any, of gain or
loss realized with respect to the purchase contracts on the
computation of their United States foreign tax credit limitation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the sale, exchange or other disposition of a
PEPS Unit by a United States holder occurs when the purchase
contract has a negative value, the United States holder should
be considered to have received additional consideration for the
note or the Treasury securities, as the case may be, in an
amount equal to such negative
</FONT>

<P align="center"><FONT size="2">S-66
</FONT>

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<DIV align="left">
<FONT size="2">value, and to have paid such amount to be
released from its obligation under the purchase contract. United
States holders are urged to consult their own tax advisors
regarding the United federal income tax consequences of a sale,
exchange or other disposition of a PEPS Unit at a time when the
purchase contract has a negative value.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><U><FONT size="2">Notes</FONT></U>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Interest Income and Original Issue
Discount.</FONT></I><FONT size="2"> As discussed more fully
below, the treatment of the notes is unclear. We intend to treat
the notes as &#147;reset bonds&#148; under Treasury regulations
relating to variable rate debt instruments. Assuming that the
notes are reset bonds, if the notes are successfully remarketed,
they will be treated, solely for purposes of the original issue
discount rules of the Code, as maturing on the date immediately
preceding the purchase contract settlement date and as being
reissued on the purchase contract settlement date at the reset
price.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Treasury regulations would require deferrable
interest on the notes to be treated as original issue discount
from the date of the issuance of the notes, unless the
likelihood of deferral is remote. We have determined that the
likelihood of the deferral of interest payments is remote, and,
subject to the possible alternative characterization described
below, the notes will not have any original issue discount in
the absence of actual deferral. Therefore, we intend to take the
position that a United States holder will be required to include
stated interest on the notes as ordinary interest income in such
holder&#146;s gross income at the time the interest is paid or
accrued in accordance with such holder&#146;s regular method of
accounting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we exercise our right to defer payments of
stated interest on the notes, the stated interest on the notes
will become original issue discount. In such case, a United
States holder, in general, will be required to accrue original
issue discount as ordinary interest income using a constant
yield method prescribed by Treasury regulations. As a result,
the interest income that such holder is required to accrue may
exceed the interest payments that such holder actually receives.
The amount of original issue discount includible in income by
the United States holder will be the sum of the &#147;daily
portions&#148; of original issue discount with respect to that
note for each day during the taxable year, or portion of the
taxable year, in which the United States holder holds that note.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest income from the notes generally should
constitute foreign source income for United States federal
income tax purposes and, with certain exemptions, should be
treated separately, together with other items of &#147;passive
income&#148; or, in the case of certain holders, &#147;financial
services income&#148; for purposes of computing the foreign tax
credit allowable under the Code. A United States holder may be
eligible, subject to a number of limitations, for a foreign tax
credit or deduction against such United States holder&#146;s
United States federal income tax liability for taxes withheld on
the notes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Possible Alternative
Recharacterization.</FONT></I><FONT size="2"> The treatment of
instruments involving a reset mechanism identical to the reset
provided under the terms of the notes is unclear. For example,
it is possible that the Internal Revenue Service could treat the
notes as &#147;contingent payment debt instruments.&#148; In
that event, a United States holder of the notes would be
required to accrue original interest discount as ordinary
interest income based on the &#147;comparable yield&#148; of the
notes. In general, the comparable yield of the notes would be
the rate at which we would issue a fixed rate debt instrument
with terms and conditions similar to the notes. We would be
required to provide holders with a projected payment schedule
and the comparable yield to determine interest accruals. If the
amount of an actual payment in a taxable year were different
from the projected payment (including, for example, as a result
of deferral of an interest payment), a United States holder
would be required to take into account the amount of such
difference (which would possibly result in additional interest
income or a reduction in the amount of interest income that such
holder would be required to include in income based on the
comparable yield, depending on whether such difference was
positive or negative) for the taxable year. In addition, any
gain recognized by a United States holder upon a sale, exchange
or other disposition of the notes generally would be treated as
ordinary interest income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The remainder of this discussion assumes that the
notes will not have any original issue discount.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Tax Basis in Notes.</FONT></I><FONT size="2">
A United States holder&#146;s tax basis in the notes will be
equal to the portion of the purchase price for the PEPS Units
allocated to the notes (as described in &#147;Tax
Consequences&#151; Material United States Federal Income Tax
Consequences&#151;PEPS Units&#151; Allocation of Purchase
Price&#148;).
</FONT>

<P align="center"><FONT size="2">S-67
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Sale, Exchange or Other Disposition of
Notes.</FONT></I><FONT size="2"> Upon the sale, exchange or
other disposition of a note (including the remarketing of such
note), a United States holder will recognize gain or loss equal
to the difference between (i) the amount realized (less any
remarketing fee) by such United States holder and (ii) such
United States holder&#146;s adjusted tax basis in the note. Such
gain or loss generally will be capital gain or loss, provided
that any proceeds attributable to accrued and unpaid interest on
the notes will be treated as ordinary interest income to the
extent not previously included in income. Such gain or loss
generally will be long-term capital gain or loss if the Untied
States holder held the note for more than one year immediately
prior to such sale, exchange or other disposition. Such gain or
loss generally should be treated as United States source income
for United States foreign tax credit purposes. However, any gain
realized on the sale, exchange or other disposition of the notes
that is treated as ordinary income because it is attributable to
accrued and unpaid interest will be treated as interest for
United States federal income tax purposes and for purposes of
computing a United States holder&#146;s foreign tax credit
limitation. See &#147;Tax Consequences&#151; Material United
States Federal Income Tax Consequences&#151; Notes&#151;
Interest Income and Original Issue Discount.&#148; Under current
law, net capital gains of individuals are, under certain
circumstances, taxed at lower rates than items of ordinary
income. The deductibility of capital losses is subject to
significant limitations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <U><FONT size="2">Purchase Contracts</FONT></U></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Contract Adjustment
Payments.</FONT></I><FONT size="2"> Because there is no direct
authority addressing the treatment of the contract adjustment
payments or of deferred contract adjustment payments, such
treatment is unclear. Contract adjustment payments may
constitute taxable ordinary income to a United States holder
when received or accrued (in each case, including contract
adjustment payments that are offset against an amount payable
upon settlement of a purchase contract). To the extent we are
required to file information returns with respect to contract
adjustment payments, we intend to report these payments as
ordinary taxable income to the holder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prospective investors are urged to consult their
own tax advisors concerning contract adjustment payments,
including the possibility that any contract adjustment payment
may be treated as a loan, purchase price adjustment, rebate or
payment analogous to an option premium, rather than being
includible in income on a current basis, and the effect, if any,
of such payments on the computation of their United States
foreign tax credit limitation. The treatment of contract
adjustment payments could affect your adjusted tax basis in a
purchase contract or shares of our common stock acquired under a
purchase contract or the amount that you realize on the sale,
exchange or other disposition of a PEPS Unit or the termination
of a purchase contract. The following discussion assumes that
the contract adjustment payments constitute ordinary income to a
United States holder on a current basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Acquisition of Our Common Stock Under a
Purchase Contract.</FONT></I><FONT size="2"> A United States
holder of PEPS Units generally will not recognize gain or loss
on the acquisition of our common stock under a purchase
contract, except with respect to any cash paid in lieu of a
fractional share of our common stock. A United States
holder&#146;s aggregate initial tax basis in the common stock
received under a purchase contract generally should equal
(1)&nbsp;the purchase price paid for such common stock, less
(2)&nbsp;the portion of such purchase price and tax basis
allocable to the fractional share. Any amount offset against the
purchase price payable on settlement of a purchase contract as a
deferred contract adjustment payment should be treated as having
been received by the United State holder and paid as part of the
purchase price. For United States federal income tax purposes,
the holding period for common stock received under a purchase
contract should commence on the day after such common stock is
acquired.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Early Settlement of a Purchase
Contract.</FONT></I><FONT size="2"> A United States holder of a
PEPS Unit will not recognize gain or loss on the receipt of such
United States holder&#146;s proportionate share of notes or
Treasury securities upon early settlement of a purchase contract
and will have the same adjusted tax basis in, and holding period
for, such notes or Treasury securities as before such early
settlement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Termination of a Purchase
Contract.</FONT></I><FONT size="2"> If a purchase contract
terminates, a United States holder of a PEPS Unit will recognize
gain or loss equal to the difference between (1)&nbsp;the amount
realized (if any) upon the termination of such contract and
(2)&nbsp;such United States holder&#146;s adjusted tax basis (if
any) in the purchase contracts at the time of such termination.
Any such gain or loss will be capital gain or loss. The
deductibility of capital losses is subject to significant
limitations. Prospective investors are urged to consult their
own tax advisors
</FONT>

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<DIV align="left">
<FONT size="2">concerning the effect, if any, of such gain or
loss on the computation of their United States foreign tax
credit limitation. A United States holder will not recognize
gain or loss on the receipt of its notes or Treasury securities
upon termination of a purchase contract and such United States
holder will have the same adjusted tax basis in such notes or
Treasury securities as before such termination.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Adjustment to Settlement
Rate.</FONT></I><FONT size="2"> A United States holder of PEPS
Units might be treated as receiving a constructive distribution
from us if (1)&nbsp;the settlement rate is adjusted, and, as a
result of such adjustment, such United States holder&#146;s
proportionate interest in our assets or earnings and profits is
increased, and (2)&nbsp;the adjustment is not made pursuant to a
bona fide, reasonable anti-dilution formula. An adjustment in
the settlement rate would not be considered made pursuant to
such a formula if the adjustment were made to compensate a
United States holder for certain taxable distributions with
respect to our common stock. Thus, under certain circumstances,
an increase in the settlement rate might give rise to a taxable
dividend to a United States holder of PEPS Units even though
such United States holder would not receive any cash related
thereto.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <U><FONT size="2">Ownership of Common Stock Acquired Under the
    Purchase Contract</FONT></U></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Dividends.</FONT></I><FONT size="2"> Subject
to the discussion under &#147;Special Tax Provisions&#148;
below, dividends, if any, paid by us on our common stock will be
taxable to United States holders of our common stock as ordinary
income to the extent that such dividends are paid out of
Teekay&#146;s current or accumulated earnings and profits (as
determined for United States federal income tax purposes). Any
distribution by Teekay in excess of its current and accumulated
earnings and profits will be treated first as a return of
capital, which will reduce the United States holder&#146;s
adjusted tax basis in our common stock (but not below zero). To
the extent such a distribution exceeds the United States
holder&#146;s adjusted tax basis in our common stock, the
distribution will be taxable as capital gain.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dividends received on our common stock by a
corporate holder generally will not be eligible for the
dividends received deduction. Dividends, if any, received on our
common stock by United States holders generally will constitute
foreign source income for United States federal income tax
purposes and, with certain exemptions, will be treated
separately, together with other items of &#147;passive
income&#148; for purposes of computing the foreign tax credit
allowable under the Code. A United States holder may be
eligible, subject to a number of limitations, for a foreign tax
credit or deduction against such United States holder&#146;s
United States federal income tax liability for taxes withheld on
the dividends. Our conclusions in this paragraph are based on
our belief that our shipping income qualifies for exemption from
United&nbsp;States taxation under Section&nbsp;883 of the Code
and that none of our United States source shipping income will
be &#147;effectively connected&#148; with the conduct of a trade
or business within the United States. See &#147;Taxation of
Teekay&#151;United States Taxation.&#148; To the extent that we
are unable to qualify for the exemption under Section&nbsp;883
and our United State source shipping income is treated as
&#147;effectively connected&#148; with the conduct of a trade or
business within the United States, the computation of a United
States holder&#146;s foreign tax credit limitation may be
affected.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Sale, Exchange or Other Disposition of Common
Stock.</FONT></I><FONT size="2"> Subject to the discussion of
&#147;Special Tax Provisions&#148; below, a United States holder
generally will recognize capital gain or loss equal to the
difference between (1)&nbsp;the amount realized by such United
States holder and (2)&nbsp;such United States holder&#146;s
adjusted tax basis in our common stock. Such capital gain or
loss generally will be long-term capital gain or loss if the
United States holder held such common stock for more than one
year at the time of disposition. Under current law, net capital
gains of individuals are, under certain circumstances, taxed at
lower rates than items of ordinary income. The deductibility of
capital losses is subject to significant limitations. Subject to
certain exceptions, capital gain or loss realized by a United
States holder generally will be treated as United States source
income for United States foreign tax credit purposes.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <U><FONT size="2">Special Tax Provisions</FONT></U></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain provisions of the Code deal specifically
with the United States federal income tax treatment of
investments by United States persons in non-United States
corporations and may alter the tax treatment of income, gains,
and losses described above or propose special rules for foreign
tax credits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Passive Foreign Investment
Company.</FONT></I><FONT size="2"> Special rules are applicable
to United States holders that hold stock in a &#147;passive
foreign investment company&#148; (&#147;PFIC&#148;). In general,
a non-United States corporation generally will be a PFIC for any
taxable year in which either (1)&nbsp;75% or more of its gross
income is &#147;passive income&#148; or (2)&nbsp;50% or more of
the average value of its assets consists of assets that produce,
or that are held for the
</FONT>

<P align="center"><FONT size="2">S-69
</FONT>

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<DIV align="left">
<FONT size="2">production of, &#147;passive income.&#148;
Passive income for this purpose generally includes dividends,
interest, royalties, rents, and gains from commodities and
securities transactions. Based upon the present and anticipated
composition of our gross income and assets and the gross income
and assets of each of our subsidiaries, we expect that Teekay,
together with its subsidiaries, will not be treated as a PFIC
for any taxable year. Although we expect that we, together with
our subsidiaries, will not be treated as a PFIC for any taxable
year, the determination of whether a corporation is a PFIC is
made on an annual basis and our operations and business plans
may change. Therefore, no assurance can be given that Teekay,
together with its subsidiaries, will not be treated as a PFIC.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If, contrary to our expectations, we were
classified as a PFIC, each United States person that is treated
as owning shares of our common stock for purposes of the PFIC
rules may be subject to increased tax liability upon the sale,
exchange or other disposition of shares of our common stock or
upon the receipt of certain distributions, unless such holder
makes one of two elections. If a United States holder makes a
&#147;qualified electing fund&#148; election, such holder
generally would be taxed annually on the holder&#146;s pro rata
portion of Teekay&#146;s earnings and profits, whether or not
such earnings and profits are distributed in the form of
dividends or otherwise. If, alternatively, a United States
holder makes a &#147;mark-to-market&#148; election, such holder
generally would be taxed annually on an amount equal to the
excess, if any, of (1)&nbsp;the fair market value of such
holder&#146;s shares of our common stock as of the close of the
holder&#146;s taxable year, over (2)&nbsp;such holder&#146;s
adjusted tax basis in such shares. Persons who are considering
purchasing our common shares should be aware that if, contrary
to our expectations, we were classified as a PFIC, we might not
be willing or able to satisfy recordkeeping requirements that
would enable United States persons to make a &#147;qualified
electing fund&#148; election. <B>Potential investors are urged
to consult their own tax advisors with respect to how the PFIC
rules could affect their tax situation.</B>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Controlled Foreign Corporation and Foreign
Personal Holding Company.</FONT></I><FONT size="2"> United
States federal income tax law contains special rules regarding
the federal income tax treatment of United States persons who
own stock in a non-United States corporation that is classified
as a &#147;controlled foreign corporation&#148;
(&#147;CFC&#148;) or a &#147;foreign personal holding
company&#148; (&#147;FPHC&#148;). Based upon the expected
distribution of our common shares among holders, we do not
expect to be classified as a CFC or a FPHC. Although we expect
that we will not be classified as a CFC or a FPHC for any year,
future changes of ownership could cause Teekay to become a CFC
or a FPHC. In general, if, contrary to our expectations, we were
classified as a CFC or a FPHC, some or all United States holders
would be subject to special rules under United States federal
income tax law. <B>Potential investors are urged to consult
their own tax advisors with respect to how the CFC rules and the
FPHC rules could affect their tax situation.</B>
</FONT>

<DIV>&nbsp;</DIV>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <U><FONT size="2">Substitution of Treasury Securities to Create
    Treasury Units</FONT></U></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A United States holder of Corporate Units that
delivers Treasury securities to the collateral agent in
substitution for notes generally will not recognize gain or loss
upon the delivery of such Treasury securities or the release of
the notes to such United States holder. Such United States
holder will continue to take into account items of income or
deduction otherwise includible or deductible, respectively, by
such United States holder with respect to such Treasury
securities and notes. Such United States holder&#146;s adjusted
tax basis in the purchase contracts, the notes and the Treasury
securities generally will not be affected by such delivery and
release. <B>United States holders are urged to consult their own
tax advisors concerning the United States federal income tax
consequences of purchasing, owning and disposing of the Treasury
securities so delivered to the collateral agent as well as the
effect of any state, local or foreign tax laws.</B>
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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    <TD width="3%"></TD>
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</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <U><FONT size="2">Recreation of Corporate Units</FONT></U></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A United States holder of Treasury Units that
delivers notes to the collateral agent in substitution for
pledged Treasury securities (such pledged Treasury securities
having previously been substituted by such holder to create
Treasury Units) generally will not recognize gain or loss upon
the delivery of such notes or the release of the pledged
Treasury securities to such United States holder. Such United
States holder will continue to take into account items of income
or deduction otherwise includible or deductible, respectively,
by such United States holder with respect to such Treasury
securities. Such United States holder&#146;s tax basis in the
purchase contracts, the notes and the Treasury securities
generally will not be affected by such delivery and release.
<B>United States holders are urged to consult their own advisors
concerning the United States federal income tax</B>
</FONT>

<P align="center"><FONT size="2">S-70
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<DIV align="left">
<B><FONT size="2">consequences of purchasing, owning and
disposing of the Treasury securities so released to them, as
well as the effect of any state, local, or foreign tax laws or
any applicable treaty.</FONT></B>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <U><FONT size="2">Non-United States Holders</FONT></U></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following summary is addressed to Non-United
States holders. As used in this section of the prospectus
supplement, a &#147;Non-United States holder&#148; is a holder
that is not a United States holder. Special rules may apply if a
Non-United States holder is a &#147;controlled foreign
corporation,&#148; &#147;passive foreign investment
company,&#148; or &#147;foreign personal holding company,&#148;
or is otherwise subject to special treatment under the Code (for
example, if such holder is a financial institution or is a
person owning, directly, indirectly or by attribution, 10% or
more of the voting power of our capital stock). <B>Non-United
States holders are urged to consult their own tax advisors with
respect to the United States federal, state, local and foreign
tax consequences of the purchase, ownership and disposition of
PEPS Units, purchase contracts, notes and Treasury securities,
and shares of our common stock acquired under a purchase
contract in light of their own particular circumstances, as well
as the effect of any applicable tax treaty</B>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Payments of Interest; Contract Adjustment
Payments; Dividends.</FONT></I><FONT size="2"> Payments of
principal and interest (including original issue discount, if
any, and acquisition discount) on the notes or the Treasury
securities, contract adjustment payments and dividends, if any,
paid on the shares of our common stock acquired under the
purchase contracts generally should not be subject to United
States federal income tax, including United States federal
withholding tax, if paid to a Non-United States holder, provided
that (1)&nbsp;such payments are not effectively connected with
the conduct of a trade or business by such Non-United States
holder within the United States, and, if certain treaty
provisions apply, are not attributable to a permanent
establishment maintained by such holder in the United States and
(2)&nbsp;the Non-United States holder complies with applicable
certification requirements relating to its non-United States
status (including, in general, furnishing a properly executed
Internal Revenue Service Form&nbsp;W-8BEN (or any successor
thereto) or a substitute form).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Sale, Exchange, or Other Disposition of Notes,
Purchase Contracts, Notes, Treasury Securities or Shares of
Common Stock.</FONT></I><FONT size="2"> Any gain realized upon
the sale, exchange or other disposition of the purchase
contracts, notes or Treasury securities or shares of our common
stock acquired under the purchase contracts generally should not
be subject to United States federal income tax, including United
States federal withholding tax, unless (1)&nbsp;the gain is
effectively connected with the conduct by the Non-United States
holder of a trade or business within the United States, and, if
certain treaty provisions apply, are attributable to a permanent
establishment maintained by such holder in the United States, or
(2)&nbsp;in the case of a Non-United States holder who is a
nonresident alien individual, the Non-United States holder is
present in the United States for 183&nbsp;days or more in the
taxable year of the sale, exchange or other disposition and
certain other conditions are met. However, any gain realized on
the sale, exchange or other disposition of the notes or the
Treasury securities, as the case may be, that is treated as
ordinary income because it is attributable to accrued and unpaid
interest or accrued acquisition discount will be subject to the
discussion in &#147;&#151;Payments of Interest; Contract
Adjustment Payments; Dividends,&#148; above.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">United States Federal Income
Tax.</FONT></I><FONT size="2"> If a Non-United States holder is
engaged in a trade or business in the United States, interest
(including original issue discount, if any, and acquisition
discount) on the notes or Treasury securities, a dividend, if
any, paid on shares of our common stock acquired under the
purchase contracts, a contract adjustment payment and any gain
realized upon the sale, exchange or other disposition of the
purchase contracts, notes or Treasury securities or shares of
our common stock acquired under the purchase contracts that is
effectively connected with the conduct of that trade or business
(and, if certain treaty provisions apply, are attributable to a
permanent establishment maintained by such holder in the United
States) are not subject to United States federal withholding
tax, but instead generally are subject to United States federal
income tax in the same manner as if the Non-United States holder
were a United States holder. In order to claim an exemption from
the United State federal withholding tax, such Non-United States
holder must comply with applicable certification requirements
(including, in general, furnishing a properly executed Internal
Revenue Service Form&nbsp;W-8ECI (or any successor thereto) or a
substitute form). A Non-United States corporation receiving
effectively connected dividends may also be subject to an
additional &#147;branch profits tax&#148; imposed at a rate of
30% (or a lower treaty rate).
</FONT>

<P align="center"><FONT size="2">S-71
</FONT>

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<DIV>&nbsp;</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Backup Withholding Tax and Information
    Reporting</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">United States
Holders.</FONT></I><FONT size="2"> Unless a United States holder
is an exempt recipient, such as a corporation, payments with
respect to PEPS Units, purchase contracts, notes or Treasury
securities, or our common stock acquired under a purchase
contract, the proceeds received with respect to a fractional
share of our common stock upon the settlement of a purchase
contract, and the proceeds received from the sale, exchange or
other disposition of PEPS Units, purchase contracts, notes or
Treasury securities, or shares of our common stock acquired
under a purchase contract, may be subject to information
reporting and may also be subject to United States federal
backup withholding tax if such United States holder fails to
supply an accurate taxpayer identification number or otherwise
fails to comply with applicable United States information
reporting or certification requirements. The United States
federal backup withholding tax rate for 2003 is 30% (scheduled
to be reduced gradually to 28% by the year 2006). If the backup
withholding tax applies to a United States holder, such holder
may use the amounts withheld as a refund or credit against such
holder&#146;s United States federal income tax liability as long
as such holder provides certain information to the Internal
Revenue Service.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Non-United States
Holders.</FONT></I><FONT size="2"> Payments with respect to PEPS
Units, purchase contracts, notes or Treasury securities, or our
common stock acquired under a purchase contract, the proceeds
received with respect to a fractional share of our common stock
upon the settlement of a purchase contract, and the proceeds
received from the sale, exchange or other disposition of PEPS
Units, purchase contracts, notes or Treasury securities, or
shares of our common stock acquired under a purchase contract,
may be subject to information reporting and may also be subject
to United States federal backup withholding tax, unless a
Non-United States holder complies with certification procedures
to establish that such holder is not a United States person or
is otherwise exempt from information reporting and backup
withholding. If backup withholding tax applies to a Non-United
States holder, such holder may use the amounts withheld as a
refund or credit against such holder&#146;s United States
federal income tax liability as long as such holder provides
certain information to the Internal Revenue Service.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Marshall
Islands Tax Consequences</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the advice of Watson, Farley&nbsp;&#38;
Williams, our Republic of The Marshall Islands counsel, because
we and our subsidiaries do not, and we do not expect that we and
our subsidiaries will, conduct business or operations in the
Republic of The Marshall Islands, and because all documentation
related to the offering will be executed outside of the Republic
of The Marshall Islands, under current Marshall Islands law no
taxes or withholding will be imposed by the Republic of The
Marshall Islands on distributions made to holders of the PEPS
Units and shares of our common stock acquired under a purchase
contract, or on the notes and Treasury securities that are or
may be components of a PEPS Unit, so long as such persons do not
reside in, maintain offices in, nor engage in business in the
Republic of The Marshall Islands. Furthermore, no stamp, capital
gains or other taxes will be imposed by the Republic of The
Marshall Islands on the ownership or disposition by such persons
of the PEPS Units and shares of our common stock acquired under
a purchase contract, and the notes and Treasury securities that
are or may be components of a PEPS Unit. Such persons will also
not be required by the Republic of The Marshall Islands to file
a tax return in connection with the ownership or disposition by
such persons of the PEPS Units and shares of our common stock
acquired under a purchase contract, and the notes and Treasury
securities that are or may be components of a PEPS Unit, or in
respect of any distributions made in respect thereof.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bahamian Tax
Consequences</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the advice of Graham, Thompson &#38;
Co., Bahamian counsel to the Company, under current Bahamian law
no taxes or withholdings will be imposed by the Commonwealth of
the Bahamas on distributions made in respect of the PEPS Units
or the underlying common stock and no stamp, capital gains or
other taxes will be imposed by the Commonwealth of the Bahamas
on the ownership or disposition of the PEPS Units or the
underlying common stock, as there are no personal income or
corporation taxes, capital gains taxes or death duties in the
Commonwealth of the Bahamas. Holders of the PEPS Units or the
underlying common stock will not be required by the Commonwealth
of the Bahamas to file a tax return in connection with the
ownership or disposition of the PEPS Units or the underlying
common stock, or the receipt of any distributions made in
respect of the common stock. In addition, no taxes or
withholding will be imposed by the Commonwealth of the Bahamas
on payments to be made in respect of the notes.
</FONT>

<P align="center"><FONT size="2">S-72
</FONT>

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<DIV align="left"><A NAME="016"></A></DIV>

<P align="center">
<B><FONT size="2">REGULATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business and the operation of our vessels are
materially affected by government regulation in the form of
international conventions, national, state and local laws and
regulations in force in the jurisdictions in which the vessels
operate, as well as in the country or countries of their
registration. Because such conventions, laws and regulations are
often revised, we cannot predict the ultimate cost of complying
with such conventions, laws and regulations or the impact they
may have on the resale price or useful life of our vessels.
Additional conventions, laws and regulations may be adopted
which could limit our ability to do business or increase the
cost of our doing business and which may have a material adverse
effect on our operations. We are required by various
governmental and quasi-governmental agencies to obtain certain
permits, licenses and certificates with respect to our
operations. Subject to the discussion below and to the fact that
the kinds of permits, licenses and certificates required for the
operations of our vessels will depend upon a number of factors,
we believe that we have been and will be able to obtain all
permits, licenses and certificates material to the conduct of
our operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that the heightened environmental and
quality concerns of insurance underwriters, regulators and
charterers will impose greater inspection and safety
requirements on all vessels in the tanker market and will
accelerate the scrapping of older vessels throughout the
industry.
</FONT>

<P align="left">
<B><FONT size="2">International Maritime Organization</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;6, 1992, the International Maritime
Organization adopted regulations that set forth new and upgraded
requirements for pollution prevention for tankers. These
regulations, which went into effect on July&nbsp;6, 1995 in many
jurisdictions in which our tanker fleet operates, provide that:
</FONT>
<P>

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    <TD width="2%"></TD>
    <TD width="95%"></TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">tankers between 25 and 30&nbsp;years old must be
    of double-hull construction or of a mid-deck design with double
    side construction, unless they have wing tanks or double-bottom
    spaces, not used for the carriage of oil, which cover at least
    30% of the length of the cargo tank section of the hull, or are
    capable of hydrostatically balanced loading which ensures at
    least the same level of protection against oil spills in the
    event of collision or stranding;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">tankers 30&nbsp;years old or older must be of
    double-hull construction or mid-deck design with double-side
    construction; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">all tankers will be subject to enhanced
    inspections.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Also, under International Maritime Organization
regulations, a tanker must be of double-hull construction or a
mid-deck design with double side construction or be of another
approved design ensuring the same level of protection against
oil pollution in the event that such tanker (a)&nbsp;is the
subject of a contract for a major conversion or original
construction on or after July&nbsp;6, 1993, (b)&nbsp;commences a
major conversion or has its keel laid on or after
January&nbsp;6, 1994, or (c)&nbsp;completes a major conversion
or is a newbuilding delivered on or after July&nbsp;6, 1996.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;27, 2001, the International
Maritime Organization revised its regulations relating to
prevention of pollution from tankers. These regulations, which
took effect on September&nbsp;1, 2002, generally provide that
single-hull tankers must be phased out between 2003 and 2015.
These regulations identify three categories of single-hull
tankers, which include double-bottom and double-side tankers:
</FONT>
<P>

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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;Category 1 oil tanker&#148; means any oil
    tanker of 20,000&nbsp;dwt and above carrying crude oil, fuel
    oil, heavy diesel oil or lubricating oil as cargo, and of
    30,000&nbsp;dwt and above carrying other oils, which does not
    have segregated ballast tanks;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;Category 2 oil tanker&#148; means any oil
    tanker of 20,000&nbsp;dwt and above carrying crude oil, fuel
    oil, heavy diesel oil or lubricating oil as cargo, and of
    30,000&nbsp;dwt and above carrying other oils, which has
    segregated ballast tanks; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;Category&nbsp;3 oil tanker&#148; means an
    oil tanker of 5,000 dwt and above but less than the tonnage
    specified for Category&nbsp;1 and 2 oil tankers.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-73
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of the non-double-hull tankers we operate are
Category&nbsp;2 oil tankers. As illustrated in the following
table, the new regulations provide for the phase-out on a
rolling basis of Category 1 single-hull oil tankers by 2007 and
of Category&nbsp;2 oil tankers by 2015.
</FONT>

<P align="center">
<B><FONT size="2">Phase-Out Dates For Single-Hull
Tankers</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="44%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="53%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap>&nbsp;<B><FONT size="1">Category of Oil Tanker</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Year to be Removed from Service</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Category 1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">2003 for ships delivered in 1973 or earlier<BR>
    2004 for ships delivered in 1974 and 1975<BR>
    2005* for ships delivered in 1976 and 1977<BR>
    2006* for ships delivered in 1978, 1979 and 1980<BR>
    2007* for ships delivered in 1981 or later
    </FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Category 2
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">2003 for ships delivered in 1973 or earlier<BR>
    2004 for ships delivered in 1974 and 1975<BR>
    2005 for ships delivered in 1976 and 1977<BR>
    2006 for ships delivered in 1978 and 1979<BR>
    2007 for ships delivered in 1980 and 1981<BR>
    2008 for ships delivered in 1982<BR>
    2009 for ships delivered in 1983<BR>
    2010* for ships delivered in 1984<BR>
    2011* for ships delivered in 1985<BR>
    2012* for ships delivered in 1986<BR>
    2013* for ships delivered in 1987<BR>
    2014* for ships delivered in 1988<BR>
    2015* for ships delivered in 1989 or later
    </FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Category 3
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">2003 for ships delivered in 1973 or earlier<BR>
    2004 for ships delivered in 1974 and 1975<BR>
    2005 for ships delivered in 1976 and 1977<BR>
    2006 for ships delivered in 1978 and 1979<BR>
    2007 for ships delivered in 1980 and 1981<BR>
    2008 for ships delivered in 1982<BR>
    2009 for ships delivered in 1983<BR>
    2010 for ships delivered in 1984<BR>
    2011 for ships delivered in 1985<BR>
    2012 for ships delivered in 1986<BR>
    2013 for ships delivered in 1987<BR>
    2014 for ships delivered in 1988<BR>
    2015 for ships delivered in 1989 or later
    </FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left"><HR size="1" noshade></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="15%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*</FONT></TD>
    <TD align="left">
    <FONT size="2">Subject to compliance with Condition Assessment
    Scheme Survey.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">However, under certain conditions,
Category&nbsp;2 and Category&nbsp;3 oil tankers may continue in
operation beyond the date set forth in the table above.
Category&nbsp;2 and Category&nbsp;3 oil tankers fitted with
double bottoms or double sides may continue in service until
25&nbsp;years after their delivery date. Category&nbsp;2 or 3
oil tankers that are single hull may continue in service until
25&nbsp;years after their delivery date or 2017, whichever is
earlier, if fitted with wing tanks or double bottoms or operated
with hydrostatically balanced loading. Category&nbsp;1 oil
tankers over 25&nbsp;years old must have wing tanks or double
bottoms or operate with hydrostatically balanced loading.
However, a port state may declare that it does not accept entry
of such vessels after their phase-out date. The European Union,
Cyprus and Malta have already declared that they will not permit
the entry of such vessels.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Vessels must pass a Condition Assessment Scheme
Survey after 2005 for Category&nbsp;1 oil tankers, and after
2010 for Category&nbsp;2 oil tankers. The Conditional Assessment
Scheme Survey includes surveys of the hull
</FONT>

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<DIV align="left">
<FONT size="2">structure, including cargo tanks, pump rooms,
cofferdams, pipe tunnels, void spaces within the cargo area and
all ballast tanks.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the current International Maritime
Organization regulations, our vessels will be able to operate
for substantially all of their respective economic lives before
being required to have double-hulls. Although 21 of our vessels
are over 15&nbsp;years old (including the eight oil/bulk/ore
carriers we acquired in the Bona acquisition), IMO regulations
do not require any of our vessels to be phased-out until 2007.
However, compliance with the regulations regarding inspections
of all vessels may adversely affect our operations. We cannot at
the present time evaluate the likelihood or magnitude of any
such adverse effect on our operations due to uncertainty of
interpretation of the International Maritime Organization
regulations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The operation of our vessels is also affected by
the requirements set forth in the International Maritime
Organization&#146;s International Management Code for the Safe
Operation of Ships and Pollution Prevention (the &#147;ISM
Code&#148;). The ISM Code requires shipowners and bareboat
charterers to develop and maintain an extensive &#147;Safety
Management System&#148; that includes the adoption of a safety
and environmental protection policy setting forth instructions
and procedures for safe operation and describing procedures for
dealing with emergencies. The failure of a shipowner or bareboat
charterer to comply with the ISM Code may subject that party to
increased liability, may decrease available insurance coverage
for the affected vessels and may result in a denial of access
to, or detention in, certain ports. Currently, each of our
applicable vessels is ISM code-certified. However, we cannot
assure that such certification will be maintained indefinitely.
</FONT>

<P align="left">
<B><FONT size="2">The United States Oil Pollution Act of 1990
(&#147;OPA 90&#148;)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">OPA 90 established an extensive regulatory and
liability regime for the protection and cleanup of the
environment from oil spills. OPA 90 affects all owners and
operators whose vessels trade to the United States or its
territories or possessions or whose vessels operate in
U.S.&nbsp;waters, which include the U.S.&nbsp;territorial sea
and its two hundred nautical mile exclusive economic zone.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under OPA 90, vessel owners, operators and
bareboat (or &#147;demise&#148;) charterers are
&#147;Responsible Parties&#148; and are jointly, severally and
strictly liable (unless the spill results solely from the act or
omission of a third party, an act of God or an act of war) for
all containment and clean-up costs and other damages arising
from discharges or threatened discharges of oil from their
vessels. These other damages are defined broadly to include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">natural resources damages and the costs of
    assessment thereof;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">real and personal property damages;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">net loss of taxes, royalties, rents, fees and
    other lost revenues due to property or natural resources damage;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">lost profits or impairment of earning capacity
    due to property or natural resources damage;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">net cost of public services necessitated by a
    spill response, such as protection from fire, safety or health
    hazards; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">loss of subsistence use of natural resources.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">OPA 90 limits the liability of responsible
parties to the greater of $1,200 per gross ton or
$10&nbsp;million per tanker that is over 3,000 gross tons
(subject to possible adjustment for inflation). These limits of
liability would not apply if the incident was proximately caused
by violation of applicable United States federal safety,
construction or operating regulations or by the Responsible
Party&#146;s gross negligence or willful misconduct, or if the
Responsible Party fails or refuses to report the incident or to
cooperate and assist in connection with the oil removal
activities. We currently plan to continue to maintain for each
of our vessels pollution liability coverage in the amount of
$1&nbsp;billion per incident through protection and indemnity
clubs. A catastrophic spill could exceed the coverage available,
which could materially adversely affect our business, financial
condition and results of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under OPA 90, with limited exceptions, all newly
built or converted tankers operating in United States waters
must be built with double hulls, and existing vessels that do
not comply with the double hull requirement
</FONT>

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<DIV align="left">
<FONT size="2">must be phased out over a 20-year period
(1995-2015) based on size, age and hull construction. Vessels
with double sides and double bottoms are granted an additional
five years of service life before being phased out. Of our
vessels, 21 are over 15&nbsp;years old (including the eight
oil/bulk/ore carriers we acquired in the Bona acquisition). Two
of those vessels are double hull and sixteen have double sides
or double bottoms, the oldest of which would not be phased out
until 2009. Our oldest single-hull tanker is part of our shuttle
tanker fleet and does not trade in the United States.
Notwithstanding the phase out period, OPA 90 currently permits
existing single-hull tankers to operate until the year 2015 if
their operations within United States waters are limited to
discharging at the Louisiana Off-shore Oil Platform, or
off-loading by means of lightering activities within authorized
lightering zones more than 60 miles offshore.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">OPA 90 requires owners and operators of vessels
to establish and maintain with the United States Coast Guard
evidence of financial responsibility sufficient to meet their
potential liabilities under OPA 90. In December 1994, the
U.S.&nbsp;Coast Guard implemented regulations requiring evidence
of financial responsibility in the amount of $1,500 per gross
ton for tankers, coupling the OPA limitation on liability of
$1,200 per gross ton with the Comprehensive Environmental
Response, Compensation, and Liability Act liability limit of
$300 per gross ton. Under the regulations, evidence of financial
responsibility may be demonstrated by insurance, surety bond,
self-insurance or guaranty. Under OPA 90, an owner or operator
of a fleet of tankers is required only to demonstrate evidence
of financial responsibility in an amount sufficient to cover the
tanker in the fleet having the greatest maximum limited
liability under OPA 90.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The U.S.&nbsp;Coast Guard&#146;s regulations
concerning certificates of financial responsibility provide, in
accordance with OPA 90, that claimants may bring suit directly
against an insurer or guarantor that furnishes certificates of
financial responsibility; and, in the event that such insurer or
guarantor is sued directly, it is prohibited from asserting any
contractual defense that it may have had against the responsible
party and is limited to asserting those defenses available to
the responsible party and the defense that the incident was
caused by the willful misconduct of the responsible party.
Certain organizations that had typically provided certificates
of financial responsibility under pre-OPA 90 laws, including the
major protection and indemnity organizations, declined to
furnish evidence of insurance for vessel owners and operators if
they are subject to direct actions or required to waive
insurance policy defenses.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The U.S.&nbsp;Coast Guard&#146;s financial
responsibility regulations may also be satisfied by evidence of
surety bond, guaranty or by self-insurance. Under the
self-insurance provisions, the ship owner or operator must have
a net worth and working capital, measured in assets located in
the United States against liabilities located anywhere in the
world, that exceeds the applicable amount of financial
responsibility. We have complied with the U.S.&nbsp;Coast Guard
regulations by providing a financial guaranty from a related
company evidencing sufficient self-insurance for all our vessels
trading into the United States. If other vessels in our fleet
trade to the United States in the future, we expect to provide
guaranties through self-insurance, or to obtain such guaranties
from third party insurers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">OPA 90 specifically permits individual states to
impose their own liability regimes with regard to oil pollution
incidents occurring within their boundaries, and some states in
the United States have enacted legislation providing for
unlimited liability for oil spills. We intend to comply with all
applicable and implemented state regulations in the ports where
our vessels call.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Owners or operators of tankers operating in
United States waters are required to file vessel response plans
with the U.S.&nbsp;Coast Guard, and their tankers are required
to operate in compliance with their Coast Guard approved plans.
The response plans must, among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">address a &#147;worst case&#148; scenario and
    identify and ensure, through contract or other approved means,
    the availability of necessary private response resources to
    respond to a &#147;worst case discharge;&#148;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">describe crew training and drills; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">identify a qualified individual with full
    authority to implement removal actions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have filed vessel response plans with the
U.S.&nbsp;Coast Guard for the tankers we own and have received
approval of such plans for all vessels in our fleet that operate
in United States waters.
</FONT>

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<P align="left">
<B><FONT size="2">Environmental Regulation&#151; Other
Environmental Initiatives</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The European Union is considering legislation
that will affect the operation of tankers and the liability of
owners for oil pollution. It is impossible to predict what
legislation, if any, may be promulgated by the European Union or
any other country or authority.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In response to the environmental contamination
caused by the sinking of the tanker <I>Prestige</I>, the
European Transport Commission issued a proposal on
December&nbsp;20, 2002, that would, among other things,
accelerate the phasing out of single-hull oil tankers and
prohibit the transport to or from European Union ports of heavy
grades of oil on single-hull tankers. Member countries are
currently examining the proposal and consulting with affected
parties. The European Transport Council is scheduled to meet on
March&nbsp;27, 2003, to vote on the proposal. Although
individual European Union members are not currently required to
implement such proposal, Spain has issued a Royal decree banning
the transport of heavy oils on single-hull tankers, and there
are indications that Portugal and Italy may unilaterally
implement similar measures. Some other countries, including the
United States, Japan and Australia, are also considering
revisions to their existing pollution regulations applicable to
tankers. The proposed regulations may be amended before they are
adopted, if at all.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although the United States is not a party, many
countries have ratified and follow the liability scheme adopted
by the International Maritime Organization and set out in the
International Convention on Civil Liability for Oil Pollution
Damage, 1969, as amended (the &#147;CLC&#148;), and the
Convention for the Establishment of an International Fund for
Oil Pollution of 1971, as amended. Under these conventions, a
vessel&#146;s registered owner is strictly liable for pollution
damage caused on the territorial waters of a contracting state
by discharge of persistent oil, subject to certain complete
defenses. Approximately one-quarter of the countries that have
ratified the CLC have increased the liability limits through a
1992 Protocol to the CLC. The liability limits in the countries
that have ratified this Protocol are currently approximately
$3.8&nbsp;million plus approximately $528 per gross registered
ton above 5,000 gross tons with an approximate maximum of
approximately $75&nbsp;million, with the exact amount tied to a
unit of account which varies according to a basket of
currencies. The right to limited liability is forfeited under
the CLC where the spill is caused by the owner&#146;s actual
fault or privity and, under the 1992 Protocol, where the spill
is caused by the owner&#146;s intentional or reckless conduct.
Vessels trading to contracting states must provide evidence of
insurance covering the limited liability of the owner. In
jurisdictions where the CLC has not been adopted, various
legislative schemes or common law govern, and liability is
imposed either on the basis of fault or in a manner similar to
the CLC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the International Maritime
Organization, various countries and states, such as Australia,
the United States and the State of California, and various
regulators, such as port authorities, the U.S.&nbsp;Coast Guard
and the U.S.&nbsp;Environmental Protection Agency, have either
adopted legislation or regulations, or are separately
considering the adoption of legislation or regulations, aimed at
regulating the discharge of ballast water as a potential
pollutant.
</FONT>

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<!-- link1 "TAXATION OF TEEKAY" -->
<DIV align="left"><A NAME="017"></A></DIV>

<P align="center">
<B><FONT size="2">TAXATION OF TEEKAY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following discussion is a summary of the
principal United States, Bahamian, Bermudian, Marshall Islands
and Norwegian tax laws applicable to us. The following
discussion of tax matters, as well as the conclusions regarding
certain issues of tax law that are reflected in such discussion,
are based on current law and upon the advice received by us from
our counsel. This advice is based, in part, on representations
made by our officers, some of which relate to anticipated future
factual matters and circumstances. No assurance can be given
that changes in or interpretation of existing laws will not
occur or will not be retroactive or that anticipated future
factual matters and circumstances will in fact occur. Our views
and those of our counsel have no binding effect or official
status of any kind, and no assurance can be given that the
conclusions discussed below would be sustained if challenged by
taxing authorities.
</FONT>

<P align="left">
<B><FONT size="2">United States Taxation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following discussion is based on the advice
of Seward &#38; Kissel, LLP, special United States tax counsel
to us. The following discussion is based upon the provisions of
the Code, existing and proposed U.S.&nbsp;Treasury Department
regulations, administrative rulings, pronouncements and judicial
decisions, all as of the date of this prospectus.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Teekay has made special U.S.&nbsp;tax elections
in respect of each of its vessel-owning or vessel-operating
subsidiaries that are potentially subject to U.S.&nbsp;tax as a
result of deriving income attributable to the transportation of
cargoes to or from the United States. No such U.S.&nbsp;tax
elections have been made by Teekay in respect of its
vessel-owning or vessel-operating subsidiaries that operate
exclusively outside the United States because these subsidiaries
are not subject to U.S.&nbsp;tax.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effect of the special U.S.&nbsp;tax elections
is to ignore or disregard the subsidiaries, for which elections
have been made, as separate taxable entities from that of their
parent, Teekay. Therefore, for purposes of the ensuing
U.S.&nbsp;tax discussion, Teekay, and not the subsidiaries
subject to this election, will be treated as the owner or
operator of the vessels.
</FONT>

<P align="left">
<B><FONT size="2">Taxation of Our Shipping Income: In
General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We anticipate that Teekay will derive
substantially all of its gross income from the use and operation
of vessels in international commerce and that this income will
principally consist of freights from the transportation of
cargoes, hire or lease from time or voyage charters and the
performance of services directly related thereto, which we refer
to as &#147;shipping income.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shipping income that is attributable to
transportation that begins or ends, but that does not both begin
and end, in the United States will be considered to be 50%
derived from sources within the United States. Shipping income
attributable to transportation that both begins and ends in the
United States will be considered to be 100% derived from sources
within the United States. Teekay does not engage in
transportation that gives rise to 100% U.S.&nbsp;source income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Shipping income attributable to transportation
exclusively between non-U.S.&nbsp;ports will be considered to be
100% derived from sources outside the United States. Shipping
Income derived from sources outside the United States will not
be subject to U.S.&nbsp;federal income tax.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based upon Teekay&#146;s anticipated shipping
operations, Teekay&#146;s vessels will operate in various parts
of the world, including to or from U.S.&nbsp;ports. Unless
exempt from U.S.&nbsp;taxation under Section&nbsp;883 of the
Code, Teekay will be subject to U.S.&nbsp;federal income
taxation, in the manner discussed below, to the extent its
shipping income is considered derived from sources within the
United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the nine months ended September&nbsp;30, 2002
and the year ended December&nbsp;31, 2001, approximately 36.2%
and 36.0%, respectively, of Teekay&#146;s shipping income was
attributable to the transportation of cargoes either to or from
a U.S. port. Accordingly, 18.1% and 18.0%, respectively, of
Teekay&#146;s shipping income would be treated as derived from
U.S.&nbsp;sources for such nine-month period and the year ended
December 31, 2001, respectively. In the absence of exemption
from tax under Section&nbsp;883, Teekay would have been subject
to a 4% tax on its gross
</FONT>

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<DIV align="left">
<FONT size="2">U.S. source shipping income equal to
approximately $4.1&nbsp;million for the nine&nbsp;months ended
September&nbsp;30, 2002 and $7.5&nbsp;million for the year ended
December&nbsp;31, 2001.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Application of Code Section&nbsp;883</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Section&nbsp;883 of the Code, Teekay will
be exempt from U.S.&nbsp;taxation on its U.S.&nbsp;source
shipping income if:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(i)</FONT></TD>
    <TD align="left">
    <FONT size="2">Teekay is organized in a qualified foreign
    country which is one that grants an equivalent exemption from
    tax to corporations organized in the United States in respect of
    the shipping income for which exemption is being claimed under
    Section&nbsp;883 and which we refer to as the &#147;country of
    organization requirement&#148;; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(ii)</FONT></TD>
    <TD align="left">
    <FONT size="2">Teekay can satisfy any one of the following three
    (3)&nbsp;stock ownership requirements:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="4%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">more than 50% of Teekay&#146;s stock, in terms of
    value, is beneficially owned by individuals who are residents of
    a qualified foreign country, which we refer to as the
    &#147;beneficial ownership requirement&#148;;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Teekay is a &#147;controlled foreign
    corporation&#148; within the meaning of Section&nbsp;957 of the
    Code and more than 50% of our shipping income is includible in
    the gross income of U.S.&nbsp;persons that own 10% or more of
    our stock, which we refer to as the &#147;CFC requirement&#148;;
    or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Teekay&#146;s stock is &#147;primarily and
    regularly&#148; traded on an established securities market
    located in the United States, which we refer to as the
    &#147;publicly-traded requirement&#148;;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The U.S.&nbsp;Treasury Department has recognized
the Marshall Islands, Teekay&#146;s country of incorporation, as
a qualified foreign country. Accordingly, we satisfy the country
of organization requirement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Therefore, Teekay&#146;s eligibility to qualify
for exemption under Section&nbsp;883 is wholly dependent upon
Teekay being able to satisfy one of the three (3)&nbsp;stock
ownership requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Proposed regulations interpreting
Section&nbsp;883 were promulgated by the U.S.&nbsp;Treasury
Department in August 2002, which we refer to as the
&#147;proposed regulations.&#148; These regulations superseded
and replaced in their entirety the regulations initially
proposed interpreting Section&nbsp;883 promulgated by the
U.S.&nbsp;Treasury Department in February 2000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The proposed regulations will apply to taxable
years beginning thirty days or more after the date the
regulations are published as final regulations in the Federal
Register. As a result, such regulations will not be effective
for calendar year taxpayers like us until the calendar year 2004
at the earliest. At this time, it is unclear when the proposed
regulations will be finalized and whether they will be finalized
in their present form. For purposes of the ensuing discussion,
however, we have assumed that the proposed regulations will be
finalized in their current form without change.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the current ownership of Teekay&#146;s
stock, we believe Teekay&#146;s ability to satisfy the
beneficial ownership requirement will prove to be problematic
since we do not believe that Teekay can document, as required by
the proposed regulations, more than 50% of its stock is owned by
individuals who are residents of qualified foreign countries,
who we refer to as &#147;qualified shareholders.&#148;
Furthermore, Teekay is unable to satisfy the CFC requirement
since it is currently not a controlled foreign corporation,
which we refer to as &#147;CFC,&#148; within the meaning of
Section&nbsp;957 of the Code, and we do not anticipate that
Teekay will become a CFC based on the current ownership of its
stock by U.S.&nbsp;persons. A CFC is a foreign corporation more
than 50% of the stock of which, by vote or by value, is actually
or constructively owned by one or more U.S.&nbsp;persons, each
of whom owns 10% or more of the total voting power of such stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In respect of the publicly-traded requirement,
the proposed regulations provide, in pertinent part, that stock
of a foreign corporation will be considered to be
&#147;primarily traded&#148; on an established securities market
if the number of shares that are traded during any taxable year
on that market exceeds the number of shares traded during that
year on any other established securities market. At present, the
sole class of stock of Teekay that is issued and outstanding is
its common stock, and its common shares are listed only on The
New York Stock
</FONT>

<P align="center"><FONT size="2">S-79
</FONT>

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<DIV align="left">
<FONT size="2">Exchange, or NYSE. Since the NYSE is an
established securities market in the United States, Teekay is
able to satisfy the &#147;primarily traded&#148; requirement.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The proposed regulations further provide that
stock will generally be considered to be &#147;regularly
traded&#148; on an established securities market if:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">stock representing more than 50% of the
    issuer&#146;s outstanding classes of stock, by voting power and
    value, is listed on such market, which we refer to as the
    &#147;50% listing threshold&#148;; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">with respect to the class of stock relied on to
    satisfy the 50% listing threshold:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="7%"></TD>
    <TD width="4%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">such class of stock is traded on such market,
    other than in de minimis quantities, on at least 60&nbsp;days
    during the taxable year, or 1/6 of the days in a short taxable
    year, which we refer to as the &#147;trading frequency
    threshold&#148;; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the aggregate number of shares of such class of
    stock traded on such market is at least 10% of the average
    number of shares of such class of stock outstanding during such
    year, or as appropriately adjusted in the case of a short
    taxable year, which we refer to as the &#147;trading volume
    threshold.&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Teekay currently satisfies the 50% listing
threshold since all its common stock is listed on the NYSE.
Furthermore, Teekay&#146;s common stock is currently traded on
the NYSE at a level sufficient to satisfy the trading frequency
and trading volume thresholds. Even if this were not the case,
the proposed regulations provide that the trading frequency
threshold and the trading volume threshold will be deemed
satisfied if stock is traded on an established securities market
in the United States and the stock is regularly quoted by
dealers making a market in the stock, which we refer to as the
&#147;U.S.&nbsp;securities market exception.&#148; Teekay&#146;s
common stock is currently regularly quoted on the NYSE by one or
more dealers that make a market in its common stock and we
anticipate that this will continue to be the case. Therefore,
Teekay&#146;s common stock would also be considered to be
&#147;regularly traded&#148; based on the U.S.&nbsp;securities
market exception.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Notwithstanding the foregoing, the proposed
regulations provide, in pertinent part, that Teekay&#146;s stock
will not be considered to be regularly traded on an established
securities market for any taxable year in which 50% or more of
its stock is actually or constructively owned within the meaning
of the proposed regulations, at any time during the year, by
persons who each own 5% or more of its stock, which we refer to
as the &#147;5% override rule.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For purposes of being able to determine the
persons who own 5% or more of Teekay&#146;s stock, which we
refer to as &#147;5% shareholders,&#148; the proposed
regulations permit Teekay to rely on those persons which are
identified on Form&nbsp;13G filings with the United States
Securities and Exchange Commission, or the &#147;SEC,&#148; as
having a 5% or more beneficial interest in Teekay&#146;s common
stock. The proposed regulations further provide that an
investment company identified on a SEC Form&nbsp;13G filing
which is registered under the Investment Company Act of 1940, as
amended, will not be treated as a 5% shareholder if no person
actually or constructively owns 5% or more of the outstanding
interests of the investment company and 5% or more of the value
of Teekay&#146;s common stock, which we refer to as the
&#147;investment company exception.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event the 5% override rule is triggered
based on its &#147;at any time during the year&#148; standard,
the proposed regulations provide that the 5% override rule will
not apply for such year if Teekay can establish that among the
closely-held group of 5% shareholders, there are sufficient 5%
shareholders that are considered to be qualified shareholders
for purposes of Section&nbsp;883 to preclude non-qualified 5%
shareholders in the closely-held group from owning 50% or more
of Teekay&#146;s stock for more than half the number of days
during such year, which we refer to as the &#147;5% override
rule exemption.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the 5% shareholders currently identified
on SEC Form&nbsp;13G filings or otherwise known to it, Teekay
would presently be subject to the 5% override rule unless one 5%
shareholder is able to qualify for the investment company
exception. To date, Teekay has been unable to obtain the
necessary information to determine whether or not such 5%
shareholder qualifies for this exception. Furthermore, if Teekay
were subject to the 5% override rule, it is not clear that
Teekay would be able to qualify for the 5% override rule
exemption based on the proposed regulations as currently drafted.
</FONT>

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</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In response to an invitation for public comment
on the proposed regulations from the U.S.&nbsp;Treasury
Department, we submitted written comments requesting certain
modifications be made to the 5% override rule, the 5% override
rule exemption which, if accepted and reflected in the final
regulations, would render Teekay not subject to the 5% override
rule based on its existing shareholdings. However, no assurance
can be given that our proposed modifications will ultimately be
accepted and reflected in the final regulations or that, even if
the modifications are accepted, future changes or shifts in the
ownership of Teekay&#146;s stock would not subject it to the 5%
override rule and thereby preclude Teekay from qualifying for
exemption under Section&nbsp;883.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Until the proposed regulations are promulgated in
final form and come into force, however, Teekay intends to take
the position on its U.S. tax return filings that it satisfies
the publicly-traded requirement and thereby qualifies for
exemption from tax under Section&nbsp;883 in respect of its U.S.
source shipping income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To the extent Teekay is unable to qualify for
exemption from tax under Section&nbsp;883, Teekay&#146;s
U.S.&nbsp;source shipping income will become subject to the 4%
gross basis tax regime or, alternatively, to the net basis and
branch tax regime described below.
</FONT>

<P align="left">
<B><FONT size="2">Taxation in Absence of Internal Revenue Code
Section&nbsp;883 Exemption</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">4% Gross Basis Tax Regime</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To the extent the benefits of Section&nbsp;883
are unavailable with respect to any item of U.S.&nbsp;source
income, Teekay&#146;s U.S.&nbsp;source shipping income, to the
extent not considered to be &#147;effectively connected&#148;
with the conduct of a U.S.&nbsp;trade or business, as discussed
below, would be subject to a 4% tax imposed by Code
Section&nbsp;887 on a gross basis, without benefit of
deductions. Since under the sourcing rules described above, no
more than 50% of Teekay&#146;s shipping income would be treated
as being derived from U.S.&nbsp;sources, the maximum effective
rate of U.S.&nbsp;federal income tax on Teekay&#146;s shipping
income would never exceed 2% under the 4% gross basis tax regime.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Net Basis and Branch Tax Regime</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To the extent the benefits of the
Section&nbsp;883 exemption are unavailable and Teekay&#146;s
U.S.&nbsp;source shipping income is considered to be
&#147;effectively connected&#148; with the conduct of a
U.S.&nbsp;trade or business, as described below, any such
&#147;effectively connected&#148; U.S.&nbsp;source shipping
income, net of applicable deductions, would be subject to the
U.S.&nbsp;federal corporate income tax currently imposed at
rates of up to 35%. In addition, Teekay may be subject to the
30% &#147;branch-level&#148; taxes on earnings effectively
connected with the conduct of such trade or business, as
determined after allowance for certain adjustments, and on
certain interest paid or deemed paid attributable to the conduct
of its U.S.&nbsp;trade or business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Teekay&#146;s U.S.&nbsp;source shipping income
will be considered &#147;effectively connected&#148; with the
conduct of a U.S.&nbsp;trade or business only if:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Teekay has, or is considered to have, a fixed
    place of business in the United States involved in the earning
    of shipping income; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Substantially all of Teekay&#146;s
    U.S.&nbsp;source shipping income is attributable to regularly
    scheduled transportation, such as the operation of a vessel that
    follows a published schedule with repeated sailings at regular
    intervals between the same points for voyages that begin or end
    in the United States.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Currently, we do not intend to have, or permit
circumstances that would result in having, any of Teekay&#146;s
vessels operating to the United States on a regularly scheduled
basis. Based on the foregoing and on the expected mode of
Teekay&#146;s shipping operations and other activities described
in this Prospectus Supplement, we believe that none of
Teekay&#146;s U.S.&nbsp;source shipping income will be
&#147;effectively connected&#148; with the conduct of a
U.S.&nbsp;trade or business.
</FONT>

<P align="left">
<I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on Sale of
Vessels</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To the extent any of Teekay&#146;s vessels makes
more than an occasional voyage to U.S.&nbsp;ports, Teekay may be
considered to be engaged in the conduct of a U.S.&nbsp;trade or
business. As a result, except to the extent the gain on
</FONT>

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<DIV align="left">
<FONT size="2">the sale of a vessel is incidental to
Teekay&#146;s shipping income, any U.S.&nbsp;source gain on the
sale of a vessel may be partly or wholly subject to
U.S.&nbsp;federal income tax as &#147;effectively
connected&#148; income (determined under rules different from
those discussed above) under the net basis and branch tax regime
described above. To the extent circumstances permit, we intend
to structure sales of Teekay&#146;s vessels in such a manner,
including effecting the sale and delivery of vessels outside of
the United States, as to not give rise to U.S.&nbsp;source gain.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Bahamian Taxation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the advice of Graham, Thompson &#38;
Co., our Bahamian counsel, we and our subsidiaries will not be
subject to taxation under the laws of the Bahamas, and
distributions by our subsidiaries to us also will not be subject
to any Bahamian tax.
</FONT>

<P align="left">
<B><FONT size="2">Bermudian Taxation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the advice of Appleby Spurling &#38;
Kempe, our Bermudian counsel, we and our subsidiaries will not
be subject to taxation under the laws of Bermuda, and
distributions by our subsidiaries to us also will not be subject
to any Bermudian tax.
</FONT>

<P align="left">
<B><FONT size="2">Marshall Islands Taxation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the advice of Watson, Farley &#38;
Williams, our Republic of Marshall Islands counsel, because we
and our subsidiaries do not, and we do not expect that we and
our subsidiaries will, conduct business or operations in the
Republic of the Marshall Islands, we and our subsidiaries will
not be subject to taxation under the laws of the Republic of the
Marshall Islands, and distributions by our subsidiaries to us
will not be subject to Marshall Islands tax.
</FONT>

<P align="left">
<B><FONT size="2">Norwegian Taxation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following discussion is based on the advice
of Thommessen Krefting Greve Lund, our Norwegian counsel, and
the tax laws of Norway and regulations, rulings and judicial
decisions thereunder, all as in effect as of the date of this
prospectus and subject to possible change on a retroactive
basis. The following discussion is for general information
purposes only and does not purport to be a comprehensive
description of all of the Norwegian income tax considerations
applicable to UNS.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1996, Norway introduced a new regime
for the taxation of the shipping industry. If a company meets
certain requirements, it may choose to be taxed according to
this regime, which results in deferral of taxation for income
related to shipping activities until the accumulated untaxed
profits are distributed to shareholders outside the regime or
upon the company&#146;s exit from the regime. A company within
the regime will, however, be liable to pay without the benefit
of deferral a 28% tax on investment income and a tonnage tax
based on the registered tonnage of its fleet. The rates for
tonnage tax are set annually by the Norwegian parliament. To the
extent the debt in average during an income year is below 50% of
the assets, a deemed interest factor will be added to the
company&#146;s taxable income.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To qualify for the shipping taxation regime, the
shipping activities of UNS have been separated from other
activities, such as management functions. While UNS as the
parent company does not qualify under the shipping tax regime,
Ugland Nordic Investment AS, a wholly owned subsidiary of UNS,
owns the assets and companies engaged in shipping activities
(the &#147;Qualifying Company&#148;). These companies engaged in
shipping activities constitute &#147;shipping companies&#148;
under the tax regime and has been assessed as such in recent
years including 2001 by the revenue authorities. Under the
regime, the shipping companies may not have employees;
consequently, all service and management functions must be
obtained from a related or unrelated entity that is separate
from the shipping companies. Intra-group services are required
to be priced in accordance with market terms and UNS is subject
to a 28% non-deferred tax with respect to the net income of any
management and other services it provides.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the Qualifying Company were to cease to
qualify for the shipping company tax regime, it would be taxed
on its accumulated untaxed profits and gains, taking into
account both value appreciations and retained earnings
</FONT>

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<DIV align="left">
<FONT size="2">during the period it has been under the regime
and any deferred tax positions that may have been transferred to
the Qualifying Company upon entry into the regime. The
Qualifying Company would cease to qualify under the regime if
any of the shipping companies disposed of all of its vessels
and/or ownership interests in other shipowning companies
qualifying under the tax regime and the proceeds from such sale
were not reinvested in a shipowning company qualifying under the
tax regime or a replacement vessel, or an agreement to build a
replacement vessel were not entered into within a year from the
sale.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To the extent untaxed profits are distributed
from the Qualifying Company to shareholders outside the regime,
which would include dividends or other distributions paid by the
Qualifying Company to UNS, the Qualifying Company will be taxed
at a rate of 28% of the distributed amount as grossed-up for
such taxes. Further, dividends paid from UNS to a non-Norwegian
shareholder will be subject to a Norwegian withholding tax of
25%, unless a lower tax has been agreed upon in an applicable
tax treaty.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We record deferred taxes under the Norwegian
shipping tax regime on our consolidated financial statements in
accordance with accounting principles generally accepted in the
United States. See Note&nbsp;1 to our audited consolidated
financial statements included in our annual report on
Form&nbsp;20-F for the year ended December&nbsp;31, 2001, which
is incorporated by reference into the accompanying prospectus.
</FONT>

<P align="center"><FONT size="2">S-83
</FONT>

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<DIV align="left"><A NAME="018"></A></DIV>

<P align="center">
<B><FONT size="2">UNDERWRITERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the terms and subject to the conditions
contained in an underwriting agreement between us and Morgan
Stanley&nbsp;&#38; Co. Incorporated and Salomon Smith Barney
Inc. dated as of the date of this prospectus supplement, the
underwriters named below have severally agreed to purchase, and
we have agreed to sell to them, severally, at a discount to the
public offering price as indicated on the cover of this
prospectus supplement, the respective number of PEPS Units set
forth opposite their names.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="81%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">PEPS Units</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Morgan Stanley&nbsp;&#38; Co. Incorporated
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Salomon Smith Barney Inc.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriters are offering the PEPS Units
subject to their acceptance of the PEPS Units from us and
subject to prior sale. The underwriting agreement provides that
the obligations of the underwriters to pay for and accept
delivery of the PEPS Units are conditioned upon the delivery of
legal opinions by their counsel and to certain other conditions.
The underwriters are obligated to purchase all the PEPS Units,
other than those covered by the underwriters&#146;
over-allotment option, if any are purchased.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The underwriters initially propose to offer part
of the PEPS Units directly to the public at the public offering
price set forth on the cover page of this prospectus supplement.
The underwriters may also offer the PEPS Units to securities
dealers at a price that represents a concession not in excess of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
PEPS Unit. After the initial offering of the PEPS Units, the
offering price and other selling terms may from time to time be
changed by the underwriters.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have granted to the underwriters an option,
exercisable for 30&nbsp;days from the date of this prospectus
supplement, to purchase up to an additional 750,000 PEPS Units
at the public offering price on the cover page of this
prospectus supplement less underwriting discounts and
commissions. The underwriters may exercise this option solely to
cover over-allotments, if any, made in connection with this
offering. If the option is exercised, each underwriter will
become obligated, subject to certain conditions, to purchase
approximately the same percentage of additional PEPS Units as
the number set forth next to the underwriter&#146;s name in the
preceding table bears to the total number of PEPS Units offered
by the underwriters.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table shows the per unit and total
offering price, the underwriting discounts and commissions to be
paid by us to the underwriters and the proceeds before expenses
to us. The information is presented assuming either no exercise
or full exercise by the underwriters of the over-allotment
option.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="50%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per PEPS Unit</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Without Option</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">With Option</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Offering Price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">125,000,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">143,750,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Underwriting discount and commissions
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds, before expenses, to us
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We, our directors, executive officers and certain
shareholders, have agreed with the underwriters that, without
the prior written consent of Morgan Stanley&nbsp;&#38; Co.
Incorporated and Salomon Smith Barney Inc., we will not during
the period ending 90&nbsp;days after the date of this prospectus
supplement:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">offer, pledge, sell, contract to sell, sell any
    option or contract to purchase, purchase any option or contract
    to sell, grant any option, right or warrant to purchase, lend or
    otherwise transfer or dispose of, directly or indirectly, any
    PEPS Units, purchase contracts or common shares or any
    securities convertible into or exercisable or exchangeable for
    the PEPS Units, purchase contracts or common shares; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">enter into any swap or other arrangement that
    transfers to another, in whole or in part, any of the economic
    consequences of ownership of the PEPS Units, purchase contracts
    or common shares,
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">S-84
</FONT>

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<P align="left">
<FONT size="2">whether any such transaction described above is
to be settled by delivery of common shares or such other
securities, in cash or otherwise. The foregoing sentence shall
not apply to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="4%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the sale of any PEPS Units to the underwriters
    pursuant to the underwriting agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the sale or issuance by us of shares of common
    stock pursuant to employee benefit, option or stock repurchase
    plans;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">issuance by us of shares of common stock upon the
    exercise of an option or warrant or the conversion of a security
    outstanding on the date of this prospectus supplement of which
    the underwriters have been advised in writing;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">except in our case, transactions relating to
    common shares or other securities acquired in open market
    transactions after the completion of the offering contemplated
    herein; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2"> &#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">dispositions of shares or our common stock or
    other securities issued by us by gift to members of our
    directors&#146; or officers&#146; immediate families, to trusts
    established for the benefit of members of our directors&#146; or
    officers&#146; immediate families, or to charitable
    organizations (provided that any such person, trust, or
    charitable organization agrees as a condition to receiving such
    gifts to be bound by the terms of the foregoing sentence).
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Prior to this offering, there has been no public
market for the PEPS Units. The PEPS Units have been approved for
listing on the New York Stock Exchange, subject to official
notice of issuance. The underwriters have advised us that they
presently intend to make a market in the PEPS Units prior to the
commencement of trading on the New York Stock Exchange. The
underwriters are not obligated to make a market in the PEPS
Units, however, and may discontinue market making activities at
any time without notice. No assurance can be given as to the
liquidity of any trading market for the PEPS Units.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have agreed to indemnify the underwriters
against certain liabilities, including liabilities under the
U.S.&nbsp;Securities Act of 1933 and to contribute to payments
the underwriters may be required to make under the Securities
Act.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To facilitate the offering of the PEPS Units, the
underwriters may engage in transactions that stabilize, maintain
or otherwise affect the price of the PEPS Units. Specifically,
the underwriters may over-allot in connection with the offering,
creating a short position in the PEPS Units for their own
account. A short sale is covered if the short position is no
greater than the number of PEPS Units available for purchase by
the underwriters under the over-allotment option. The
underwriters can close out a covered short sale by exercising
the over-allotment option or purchasing PEPS Units in the open
market. In determining the source of PEPS Units to close out a
covered short sale, the underwriters will consider, among other
things, the open market price of the PEPS Units compared to the
price available under the over-allotment option. The
underwriters may also sell PEPS Units in excess of the
over-allotment option, creating a naked short position. The
underwriters must close out any naked short position by
purchasing PEPS Units in the open market. A naked short position
is more likely to be created if the underwriters are concerned
that there may be downward pressure on the price of the PEPS
Units in the open market after pricing that could adversely
affect investors who purchase PEPS Units in the offering. As an
additional means of facilitating the offering of PEPS Units, the
underwriters may bid for and purchase these PEPS Units in the
open market to stabilize the price of these PEPS Units. Finally,
the underwriting syndicate may reclaim selling concessions
allowed to an underwriter or a dealer for distributing the PEPS
Units in the offering, if the syndicate repurchases previously
distributed PEPS Units in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market price of
the PEPS Units above independent market levels or prevent or
retard a decline in the market price of the PEPS Units. The
underwriters are not required to engage in these activities, and
may end any of these activities at any time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We estimate that our expenses for this offering,
not including the underwriting discounts and commissions, will
be approximately $1&nbsp;million.
</FONT>

<P align="center"><FONT size="2">S-85
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain of the underwriters and their affiliates
have provided, from time to time and may provide in the future,
investment banking, commercial banking and other services to us.
They have received customary fees and expenses for these
transactions.
</FONT>

<P align="center"><FONT size="2">S-86
</FONT>

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<!-- link1 "LEGAL MATTERS" -->
<DIV align="left"><A NAME="019"></A></DIV>

<P align="center">
<B><FONT size="2">LEGAL MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The validity of the common stock underlying the
purchase contracts and certain other legal matters under
Marshall Islands law will be passed upon for us by our Marshall
Islands counsel, Watson, Farley &#38; Williams, New York, New
York. The validity of the purchase contracts and the notes under
New York law and certain other legal matters will be passed upon
for us by our United States counsel, Perkins Coie LLP, Portland,
Oregon. Perkins Coie LLP may rely on the opinions of Watson,
Farley &#38; Williams for all matters of Marshall Islands law.
Certain other legal matters will be passed upon for us by
Seward&nbsp;&#38; Kissel, LLP, New York, New York, as to U.S.
tax law, by Graham, Thompson&nbsp;&#38; Co., Nassau, the
Bahamas, as to Bahamian law, by Appleby Spurling&nbsp;&#38;
Kempe, Hamilton, Bermuda, as to Bermudian law, and by Thommessen
Krefting Greve Lund, Oslo, Norway, as to Norwegian law. Certain
matters in connection with the offering will be passed upon for
the underwriters by Shearman &#38; Sterling, Menlo Park,
California as to United States law.
</FONT>

<!-- link1 "EXPERTS" -->
<DIV align="left"><A NAME="020"></A></DIV>

<P align="center">
<B><FONT size="2">EXPERTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated financial statements and
schedule of Teekay and its subsidiaries appearing in
Teekay&#146;s Annual Report on Form&nbsp;20-F filed with the SEC
on March&nbsp;29, 2002, as of December&nbsp;31, 2001 and 2000,
and for the fiscal years ended December&nbsp;31, 2001 and 2000,
and the nine months ended December&nbsp;31, 1999, have been
audited by Ernst &#38; Young LLP, independent chartered
accountants, as set forth in their report thereon included
therein and incorporated herein by reference, which report, as
to the year 2001, is based in part on the report of
Deloitte&nbsp;&#38; Touche, independent auditors. Such
consolidated financial statements are incorporated herein by
reference in reliance upon such reports given on the authority
of such firms as experts in accounting and auditing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With respect to the unaudited consolidated
interim financial information and schedule for each of the
three-month periods ended March&nbsp;31, 2002, June&nbsp;30,
2002 and September&nbsp;30, 2002 incorporated by reference in
this prospectus supplement, Ernst &#38; Young LLP have reported
that they have applied limited procedures in accordance with
professional standards for a review of such information.
However, their separate reports, included in Teekay&#146;s
Report on Form&nbsp;6-K for each of the quarterly periods listed
above and incorporated herein by reference, state that they did
not audit and they do not express an opinion on the unaudited
consolidated interim financial information and schedule.
Accordingly, the degree of reliance on their reports on such
information should be restricted considering the limited nature
of the review procedures applied. Ernst &#38; Young LLP are not
subject to the liability provisions of Section&nbsp;11 of the
U.S.&nbsp;Securities Act of 1933 for their reports on the
unaudited consolidated interim financial information and
schedule because the reports are not a &#147;report&#148; or a
&#147;part&#148; of the registration statement prepared or
certified by the auditors within the meaning of Sections&nbsp;7
and 11 of the Securities Act of 1933.
</FONT>

<P align="center"><FONT size="2">S-87
</FONT>

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<DIV align="left">
<FONT size="2"> <B>PROSPECTUS</B>
</FONT>
</DIV>

<P align="center">
<B>$500,000,000</B>

<P align="center">
<IMG src="o08807teekay1.gif" alt="Teekay Logo">

<P align="center">
<B><FONT size="5">TEEKAY SHIPPING CORPORATION</FONT></B>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<P align="center">
<B>Common Stock</B>

<DIV align="center">
<B>Preferred Stock</B>
</DIV>

<DIV align="center">
<B>Warrants</B>
</DIV>

<DIV align="center">
<B>Stock Purchase Contracts</B>
</DIV>

<DIV align="center">
<B>Stock Purchase Units</B>
</DIV>

<DIV align="center">
<B>Debt Securities</B>
</DIV>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
may offer common stock, preferred stock, warrants, stock
purchase contracts, stock purchase units or debt securities from
time to time. When we decide to sell a particular class or
series of securities, we will provide specific terms of the
offered securities in a prospectus supplement. The securities
offered by this prospectus will have an aggregate public
offering price of up to $500,000,000.
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
may sell these securities directly or to or through underwriters
or dealers, and also to other purchasers through agents. The
names of any underwriters or agents will be set forth in an
accompanying prospectus supplement.
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
should read this prospectus and any prospectus supplement
carefully before you invest. We may not use this prospectus to
sell securities unless it includes a prospectus supplement.
</FONT>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
common stock is traded on the New York Stock Exchange under the
symbol &#147;TK.&#148; On January&nbsp;16, 2003, the closing
sale price of our common stock as quoted on the New York Stock
Exchange was $43.16 per share.
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
principal executive headquarters are located at TK House,
Bayside Executive Park, West Bay Street &#38; Blake Road, P.O.
Box AP-59213, Nassau, The Bahamas. Our telephone number at such
address is (242)&nbsp;502-8820. Our principal operating office
is located at Suite&nbsp;2000, Bentall Five, 550 Burrard Street,
Vancouver, B.C. Canada V6C&nbsp;2K2. Our telephone number at
such address is (604) 683-3529.
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Investing
in our securities involves risks. You should carefully consider
the risk factors set forth in the applicable supplement to this
prospectus before investing in any securities that may be
offered. See &#147;Risk Factors&#148; on page&nbsp;4.</I>
</FONT>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Neither
the Securities and Exchange Commission nor any state or other
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.</B>
</FONT>

<P align="center">
<FONT size="2">Prospectus dated January&nbsp;17, 2003.
</FONT>

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<!-- link1 "PROSPECTUS" -->
<DIV align="left"><A NAME="021"></A></DIV>


<!-- TOC -->
<!-- /TOC -->

<!-- link1 "ABOUT THIS PROSPECTUS" -->
<DIV align="left"><A NAME="022"></A></DIV>

<P align="center">
<B><FONT size="2">ABOUT THIS PROSPECTUS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This prospectus is part of a registration
statement we filed with the SEC using a shelf registration
process. Under this shelf process, we may sell the common stock,
preferred stock, warrants, stock purchase contracts, stock
purchase units or debt securities described in this prospectus
in one or more offerings up to a total dollar amount of
$500,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we offer
securities, we will provide you with a prospectus supplement
that will describe the specific amounts, prices and terms of the
offered securities. The prospectus supplement may also add,
update or change information contained in this prospectus. You
should read carefully both this prospectus and any prospectus
supplement together with additional information described below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This prospectus does not contain all the
information provided in the registration statement we filed with
the SEC. For further information about us or the securities
offered hereby, you should refer to that registration statement,
which you can obtain from the SEC as described below under
&#147;Where You Can Find More Information.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">In this prospectus we use the terms
&#147;Teekay,&#148; &#147;we,&#148; &#147;us&#148; and
&#147;our&#148; to refer to Teekay Shipping Corporation, a
Marshall Islands corporation. Unless otherwise indicated, all
dollar references in this prospectus are to U.S.&nbsp;dollars
and financial information presented in this prospectus is
prepared in accordance with accounting principles generally
accepted in the United States.</FONT></I>

<P align="center"><FONT size="2">1
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "WHERE YOU CAN FIND MORE INFORMATION" -->
<DIV align="left"><A NAME="023"></A></DIV>

<P align="center">
<B><FONT size="2">WHERE YOU CAN FIND MORE INFORMATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We file annual and special reports and other
information with the SEC. You can read and copy any materials we
file with the SEC at its Public Reference Room at 450&nbsp;Fifth
Street,&nbsp;N.W., Washington,&nbsp;D.C. 20549. You can obtain
information about the operation of the SEC&#146;s Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
also maintains an Internet site that contains reports and other
information we file electronically with the SEC, which you can
access at http://www.sec.gov. In addition, you can obtain
information about us at the offices of the New&nbsp;York Stock
Exchange, 20&nbsp;Broad Street, New&nbsp;York,
New&nbsp;York&nbsp;10005.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have filed with the SEC a registration
statement on Form&nbsp;F-3 under the Securities Act of 1933.
This prospectus, which forms a part of the registration
statement, does not contain all of the information in the
registration statement, as permitted by SEC rules and
regulations. You may inspect and copy the registration
statement, including exhibits, at the SEC&#146;s public
reference facilities or its Internet site. Our statements in
this prospectus about the contents of any contract or other
document are not necessarily complete. You should refer to the
copy of each contract or other document we have filed as an
exhibit to the registration statement for complete information.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The SEC allows us to &#147;incorporate by
reference&#148; into this prospectus information we file with
the SEC. This means we can disclose important information to you
by referring you to those documents. The information we
incorporate by reference is considered a part of this
prospectus, except for any information superseded by information
in this prospectus or any prospectus supplement, and information
that we file subsequently with the SEC may automatically update
and supersede the information in this prospectus or the
prospectus supplement, including information previously
incorporated by reference. We incorporate by reference the
documents listed below:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our Annual Report on Form&nbsp;20-F for the year
    ended December&nbsp;31, 2001, filed on March&nbsp;29, 2002;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our Reports on Form&nbsp;6-K filed on
    April&nbsp;2, May&nbsp;15, August&nbsp;14, November&nbsp;14, and
    December&nbsp;16, 2002, respectively;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the &#147;Description of Securities to be
    Registered&#148; contained in our Registration Statement on
    Form&nbsp;20-F filed on July&nbsp;13, 1995, including any
    amendments or reports filed for the purpose of updating such
    description;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">all other Reports on Form&nbsp;20-F that we file
    after the date of this prospectus; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">any Reports on Form&nbsp;6-K that we file after
    the date of this prospectus that we identify in such Reports as
    being incorporated by reference into this prospectus.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You may request a copy of these filings at no
cost, by writing or telephoning us at the following address:
</FONT>

<P align="center">
<FONT size="2">Teekay Shipping Corporation
</FONT>

<DIV align="center">
<FONT size="2">c/o Teekay Shipping (Canada) Ltd.
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">550 Burrard Street, Suite&nbsp;2000
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Vancouver, B.C. CANADA V6C&nbsp;2K2
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Attention: Investor Relations
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">Telephone: (604)&nbsp;844-6654
</FONT>
</DIV>

<P align="center"><FONT size="2">2
</FONT>

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<!-- link1 "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS" -->
<DIV align="left"><A NAME="024"></A></DIV>

<P align="center">
<B><FONT size="2">SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our disclosure and analysis in this prospectus,
in any prospectus supplement and in the documents incorporated
by reference contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements may include statements
regarding, among other items:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our future earnings and other operating results;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">prospects and trends of the tanker industry;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">tanker supply and demand;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our market share in the Indo-Pacific Basin and
    Atlantic region Aframax tanker markets and in the world shuttle
    tanker market;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">expectations as to funding our future capital
    requirements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">future capital expenditures;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our growth strategy and measures to implement our
    growth strategy;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the expected financing, benefits and results of
    our proposed acquisition of Navion ASA;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">competition;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">regulatory matters; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">other discussions of future plans and strategies,
    anticipated developments and other matters that involve
    predictions of future events.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other statements contained in this prospectus, in
any prospectus supplement and in the documents incorporated by
reference are forward-looking statements and are not based on
historical fact, such as statements containing the words
&#147;believes,&#148; &#147;may,&#148; &#147;will,&#148;
&#147;estimates,&#148; &#147;continue,&#148;
&#147;anticipates,&#148; &#147;intends,&#148;
&#147;expects&#148; and words of similar import.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These forward-looking statements are subject to
risks, uncertainties and assumptions, including those risks
discussed in &#147;Risk Factors&#148; and &#147;Special Note
Regarding Forward-Looking Statements&#148; in any prospectus
supplement, and those risks discussed in documents incorporated
by reference and in other reports we file with the SEC. 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.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Actual results may differ materially from those
projected in forward-looking statements. Although we believe
that our estimates are reasonable, you should not unduly rely on
these estimates, which are based on our current expectations.
Factors that could cause actual results to differ materially
include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the cyclical nature of the tanker industry and
    its dependence on oil markets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the supply of tankers available to meet the
    demand for transportation of petroleum products;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our potential inability to close our proposed
    acquisition of Navion ASA and our potential inability to
    integrate effectively the operations of Navion or any other
    future acquisition with our own;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our substantial dependence on spot oil voyages;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">environmental and other regulations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the impact on the tanker industry of significant
    oil spills or similar events;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">possible disruption in commercial activities due
    to threatened or actual terrorist activity and armed conflict;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our potential inability to achieve and manage
    growth; and
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">3
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the risks discussed in &#147;Risk Factors&#148;
    or &#147;Special Note Regarding Forward-Looking Statements&#148;
    in any prospectus supplement, and those risks discussed in
    documents incorporated by reference and in other reports we file
    with the SEC, including the factors described in &#147;Factors
    That May Affect Future Results&#148; in our annual report on
    Form&nbsp;20-F filed with the SEC on March&nbsp;29, 2002.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We undertake no obligation to update any
forward-looking statement or statements 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
impact 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. We do not make any representation,
warranty or assurance as to the completeness or accuracy of
these projections, and neither express an opinion or any other
form of assurance regarding them.
</FONT>

<!-- link1 "RISK FACTORS" -->
<DIV align="left"><A NAME="025"></A></DIV>

<P align="center">
<B><FONT size="2">RISK FACTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Investing in the securities to be offered
pursuant to this prospectus may involve a high degree of risk.
You should carefully consider the important factors set forth
under the heading &#147;Risk Factors&#148; in the accompanying
prospectus supplement before investing in any securities that
may be offered.
</FONT>

<!-- link1 "SERVICE OF PROCESS AND ENFORCEMENT OF LIABILITIES" -->
<DIV align="left"><A NAME="026"></A></DIV>

<P align="center">
<B><FONT size="2">SERVICE OF PROCESS AND ENFORCEMENT OF
LIABILITIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We and most of our subsidiaries are incorporated
in the Republic of the Marshall Islands, and other of our
subsidiaries are incorporated in Bermuda, the Bahamas, Canada,
Japan, Singapore, Australia, United Kingdom, Norway, India, the
Philippines, Liberia and the United States. Most of our
directors and executive officers and those of our subsidiaries
are residents of countries other than the United States.
Substantially all of our and our subsidiaries&#146; assets and a
substantial portion of the assets of our directors and officers
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
subsidiaries or our directors and officers or to realize against
them judgments obtained in United States courts. In addition,
you should not assume that courts in countries in which we or
our subsidiaries are incorporated or where our assets or the
assets of our subsidiaries are located:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">would enforce judgments of U.S.&nbsp;courts
    obtained in actions against us or our subsidiaries based upon
    civil liabilities provisions of applicable U.S.&nbsp;federal and
    state securities laws; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">would enforce, in original actions, liabilities
    against us or our subsidiaries based upon these laws.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">4
</FONT>

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<!-- link1 "TEEKAY SHIPPING CORPORATION" -->
<DIV align="left"><A NAME="027"></A></DIV>

<P align="center">
<B><FONT size="2">TEEKAY SHIPPING CORPORATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Teekay is a leading provider of international
crude oil and petroleum product transportation services through
the world&#146;s largest fleet of medium-size oil tankers. We
provide transportation services to major oil companies, major
oil traders and government agencies worldwide. As of
December&nbsp;31, 2002, our fleet consisted of 102&nbsp;tankers
(including 12&nbsp;newbuildings, five vessels time-chartered-in
and four vessels owned by joint ventures). We believe our
Aframax fleet as of such date was approximately three times
larger than that of our nearest direct Aframax competitor.
Through our acquisition of Ugland Nordic Shipping AS in 2001, we
are also the largest owner of shuttle tankers, which engage in
the transportation of oil from offshore production platforms to
onshore storage and refinery facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of December&nbsp;31, 2002, our fleet
(excluding newbuildings) had a total cargo capacity of
approximately 9.0&nbsp;million deadweight tons. As of such date
our Aframax tankers represented approximately 12% of the total
tonnage of the world Aframax fleet, and our shuttle tankers
represented approximately 26% of the total tonnage of the world
shuttle tanker fleet.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Teekay organization was founded in 1973.
Teekay is incorporated under the laws of the Republic of The
Marshall Islands.
</FONT>

<!-- link1 "RECENT DEVELOPMENTS" -->
<DIV align="left"><A NAME="028"></A></DIV>

<P align="center">
<B><FONT size="2">RECENT DEVELOPMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We announced on December&nbsp;16, 2002, that we
and Statoil ASA have entered into a definitive agreement under
which we will acquire Statoil&#146;s wholly-owned subsidiary,
Navion ASA, on a debt-free basis, for approximately
$800&nbsp;million in cash. We anticipate funding the acquisition
by drawing on a new credit facility together with available cash
or cash generated from operations and drawings on other existing
credit facilities. The closing of the transaction is expected to
take place in the second quarter of&nbsp;2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Navion, based in Norway, operates primarily in
the shuttle tanker and the conventional crude oil and product
tanker markets. Its modern shuttle tanker fleet of nine owned
and 17 chartered-in vessels (including four vessels chartered-in
from our subsidiary Ugland Nordic Shipping), provides logistical
services to Statoil and other oil companies in the North Sea
under fixed-rate, long-term contracts of affreightment.
Navion&#146;s modern, chartered-in conventional tanker fleet of
12 crude oil tankers and nine product tankers operates primarily
in the Atlantic region, providing services to Statoil and other
oil companies. In addition, Navion owns two floating storage and
off-take vessels currently trading as conventional crude tankers
in the Atlantic region, and one gas carrier on long-term charter
to Statoil.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through a joint venture with Statoil, Navion is
responsible for meeting Statoil&#146;s transportation needs for
crude oil, condensate and refined petroleum products. As part of
this arrangement, Navion has a right of first refusal on
Statoil&#146;s oil transportation requirements at the prevailing
market rate until December&nbsp;31, 2007. We believe this
arrangement will increase the utilization of our conventional
fleet. The acquisition of Navion will also provide added
stability to our cash flow and earnings throughout the business
cycle, due to the fixed-rate, long-term nature of Navion&#146;s
shuttle tanker contracts.
</FONT>

<!-- link1 "USE OF PROCEEDS" -->
<DIV align="left"><A NAME="029"></A></DIV>

<P align="center">
<B><FONT size="2">USE OF PROCEEDS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise indicated in an accompanying
prospectus supplement, we expect to use the net proceeds from
the sale of securities offered hereby to finance acquisitions
and general corporate purposes. General corporate purposes may
include capital expenditures, working capital and the repayment
of debt. Additional information on the use of net proceeds from
the sale of securities offered by this prospectus may be set
forth in the prospectus supplement.
</FONT>

<P align="center"><FONT size="2">5
</FONT>

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<!-- link1 "CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES" -->
<DIV align="left"><A NAME="030"></A></DIV>

<P align="center">
<B><FONT size="2">CONSOLIDATED RATIO OF EARNINGS TO FIXED
CHARGES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents our consolidated
ratio of earnings to fixed charges for the periods indicated. We
changed our fiscal year end from March&nbsp;31 to
December&nbsp;31, commencing December&nbsp;31, 1999, in order to
facilitate comparison of our operating results to those of other
companies in the transportation industry.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="36%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Nine Months</FONT></B></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Fiscal Year Ended</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dec.&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dec.&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dec.&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mar.&nbsp;31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Mar.&nbsp;31,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">(nine months)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ratio of Earnings to Fixed Charges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.5x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.8x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.6x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.6x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.0x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.3x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">As amended by early adoption of Statement of
    Financial Accounting Standards No.&nbsp;145,
    &#147;Extinguishment of Debt and Capital Lease
    Modification,&#148; which requires any gain or loss on debt
    extinguishments to be classified as income or loss from
    continuing operations, rather than as an extraordinary item as
    previously required under Statement of Financial Accounting
    Standards No.&nbsp;4.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For purposes of computing the consolidated ratio
of earnings to fixed charges, earnings consist of net income
(loss) before extraordinary items, income taxes, minority
interest expense, equity income, interest expense and
amortization of capitalized interest, deferred costs and bond
premium. Fixed charges consist of interest expense, capitalized
interest and amortization of deferred financing costs and bond
premium. In the fiscal year ended December&nbsp;31, 1999 (nine
months), our earnings were insufficient to cover fixed charges
by $19.9&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If this prospectus is used to offer preferred
stock, we will include in the applicable prospectus supplement a
ratio of combined fixed charges and preference dividends to
earnings. As of December&nbsp;31, 2002, we have issued no
preference dividends.
</FONT>

<!-- link1 "CAPITALIZATION AND INDEBTEDNESS" -->
<DIV align="left"><A NAME="031"></A></DIV>

<P align="center">
<B><FONT size="2">CAPITALIZATION AND INDEBTEDNESS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents our capitalization
and indebtedness as of September&nbsp;30, 2002.
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">September&nbsp;30, 2002</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(unaudited)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(in thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current portion of long-term debt(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55,165</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">916,575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,042</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholders&#146; equity:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital stock ($470,988 as of December&nbsp;31,
    2002)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">470,299</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Retained earnings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">929,426</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accumulated other comprehensive loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,476</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,394,249</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total capitalization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,386,031</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)</FONT></TD>
    <TD align="left">
    <FONT size="2">For information concerning our borrowing
    arrangements, see Note&nbsp;7 to our consolidated financial
    statements included in our Report on Form&nbsp;20-F for our 2001
    fiscal year, filed with the SEC on March&nbsp;29, 2002, and
    Note&nbsp;5 to our consolidated financial statements included in
    our Report on Form&nbsp;6-K for the quarter ended
    September&nbsp;30, 2002, filed with the SEC on November&nbsp;14,
    2002, which reports are incorporated herein by reference.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2002, we and our
subsidiaries had outstanding indebtedness in an aggregate
principal amount of approximately $1.1&nbsp;billion, including
$84.4&nbsp;million of joint venture debt guaranteed by us or
certain of our subsidiaries. Of this $1.1&nbsp;billion, we were
directly obligated for or guaranteed $686.1&nbsp;million as of
September&nbsp;30, 2002, and $704.1&nbsp;million was secured by
our assets or the assets of certain of our subsidiaries.
</FONT>

<P align="center"><FONT size="2">6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "SECURITIES WE MAY ISSUE" -->
<DIV align="left"><A NAME="032"></A></DIV>

<P align="center">
<B><FONT size="2">SECURITIES WE MAY ISSUE</FONT></B>

<P align="left">
<B><FONT size="2">OVERVIEW</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This prospectus describes the securities we may
issue from time to time. This section provides some information
about the manner in which the securities may be held, then
describes the terms of the five basic categories of securities:
our common stock; our preferred stock; our warrants; our stock
purchase contracts and units; and our debt securities, which may
be senior or subordinated.
</FONT>

<P align="left">
<B><FONT size="2">PROSPECTUS SUPPLEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This prospectus provides you with a general
description of the securities we may offer. Each time we sell
securities, we will provide a prospectus supplement that will
contain specific information about the terms of that offering.
The prospectus supplement may also add to or change information
contained in this prospectus. If so, the prospectus supplement
should be read as superseding this prospectus. You should read
both this prospectus and any prospectus supplement together with
additional information described under the heading &#147;Where
You Can Find More Information.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The prospectus supplement to be attached to the
front of this prospectus will describe the terms of any
securities that we offer and any initial offering price to the
public in that offering, the purchase price and net proceeds
that we will receive and the other specific terms related to our
offering of the securities. For more details on the terms of the
securities, you should read the exhibits filed with our
registration statement, of which this prospectus is a part.
</FONT>

<P align="left">
<B><FONT size="2">LEGAL OWNERSHIP OF SECURITIES</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of
Securities</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Book-Entry Holders.
</FONT></I></B><FONT size="2">We will issue debt securities in
book-entry form only, unless we specify otherwise in the
applicable prospectus supplement. If securities are issued in
book-entry form, this means the securities will be represented
by one or more global securities registered in the name of a
financial institution that holds them as depositary on behalf of
other financial institutions that participate in the
depositary&#146;s book-entry system. These participating
institutions, in turn, hold beneficial interests in the
securities on behalf of themselves or their customers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will only recognize the person in whose name a
security is registered as the holder of that security.
Consequently, for securities issued in global form, we will
recognize only the depositary as the holder of the securities
and all payments on the securities will be made to the
depositary. The depositary passes along the payments it receives
to its participants, which in turn pass the payments along to
their customers who are the beneficial owners. The depositary
and its participants do so under agreements they have made with
one another or with their customers; they are not obligated to
do so under the terms of the securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result, investors in securities issued in
book-entry form will not own securities directly. Instead, they
will own beneficial interests in a global security, through a
bank, broker or other financial institution that participates in
the depositary&#146;s book-entry system or holds an interest
through a participant. As long as the securities are issued in
global form, investors will be indirect holders, and not
holders, of the securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Street Name Holders.
</FONT></I></B><FONT size="2">In the future, we may terminate a
global security or issue securities initially in non-global
form. In these cases, investors may choose to hold their
securities in their own names or in &#147;street name.&#148;
Securities held by an investor in street name would be
registered in the name of a bank, broker or other financial
institution that the investor chooses, and the investor would
hold only a beneficial interest in those securities through an
account he or she maintains at that institution.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For securities held in street name, we will
recognize only the intermediary banks, brokers and other
financial institutions in whose names the securities are
registered as the holders of those securities and all payments
on those securities will be made to them. These institutions
pass along the payments they receive to their customers who are
the beneficial owners, but only because they agree to do so in
their customer agreements or because they
</FONT>

<P align="center"><FONT size="2">7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">are legally required to do so. Investors who hold
securities in street name will be indirect holders, not holders,
of those securities.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Legal
Holders.</FONT></I></B><FONT size="2"> We, and any third parties
employed by us or acting on your behalf, such as trustees,
depositories and transfer agents, are obligated only to the
legal holders of the securities. We do not have obligations to
investors who hold beneficial interests in global securities, in
street name or by any other indirect means. This will be the
case whether an investor chooses to be an indirect holder of a
security or has no choice because we are issuing the securities
only in global form.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For example, once we make a payment or give a
notice to the legal holder, we have no further responsibility
for the payment or notice even if that legal holder is required,
under agreements with depositary participants or customers or by
law, to pass it along to the indirect holders but does not do
so. Similarly, if we want to obtain the approval of the holders
for any purpose (for example, to amend an indenture or to
relieve ourselves of the consequences of a default or of our
obligation to comply with a particular provision of the
indenture), we would seek the approval only from the legal
holders, and not the indirect holders, of the securities.
Whether and how the legal holders contact the indirect holders
is up to the legal holders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">When we refer to &#147;you,&#148; we mean those
who invest in the securities being offered by this prospectus,
whether they are the legal holders or only indirect holders of
those securities. When we refer to your securities, we mean the
securities in which you hold a direct or indirect interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Special Considerations for Indirect
Holders. </FONT></I></B><FONT size="2">If you hold securities
through a bank, broker or other financial institution, either in
book-entry form or in street name, you should check with your
own institution to find out:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">how it handles securities payments and notices;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">whether it imposes fees or charges;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">how it would handle a request for the
    holders&#146; consent, if ever required;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">whether and how you can instruct it to send you
    securities registered in your own name so you can be a legal
    holder, if that is permitted in the future;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">how it would exercise rights under the securities
    if there were a default or other event triggering the need for
    holders to act to protect their interests; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">if the securities are in book-entry form, how the
    depositary&#146;s rules and procedures will affect these matters.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">GLOBAL SECURITIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">What is a Global
Security?</FONT></I></B><FONT size="2"> A global security
represents one or any other number of individual securities.
Generally, all securities represented by the same global
securities will have the same terms. We may, however, issue a
global security that represents multiple securities that have
different terms and are issued at different times. We call this
kind of global security a master global security.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each security issued in book-entry form will be
represented by a global security that we deposit with and
register in the name of a financial institution that we select
or its nominee. The financial institution that is selected for
this purpose is called the depositary. Unless we specify
otherwise in the applicable prospectus supplement, The
Depository Trust Company, New York, New York, known as the
&#147;DTC,&#148; will be the depositary for all securities
issued in book-entry form.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A global security may not be transferred to or
registered in the name of anyone other than the depositary or
its nominee, unless special termination situations arise or as
otherwise described in the prospectus supplement. We describe
those situations below under &#147;&#151;&nbsp;Special
Situations When a Global Security Will Be Terminated.&#148; As a
result of these arrangements, the depositary, or its nominee,
will be the sole registered owner and holder of all securities
represented by a global security, and investors will be
permitted to own only beneficial interests in a global security.
Beneficial interests must be held by means of an account with a
broker, bank or other financial
</FONT>

<P align="center"><FONT size="2">8
</FONT>

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<DIV align="left">
<FONT size="2">institution that in turn has an account with the
depositary or with another institution that does. Thus, an
investor whose security is represented by a global security will
not be a holder of the security, but only an indirect holder of
a beneficial interest in the global security.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Special Considerations for Global
Securities. </FONT></I></B><FONT size="2">As an indirect holder,
an investor&#146;s rights relating to a global security will be
governed by the account rules of the investor&#146;s financial
institution and of the depositary, as well as general laws
relating to securities transfers. We do not recognize this type
of investor as a holder of securities and instead will deal only
with the depositary that holds the global security.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If securities are issued only in the form of a
global security, an investor should be aware of the following:
</FONT>
<P>

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    <TD width="2%"></TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">An investor cannot cause the securities to be
    registered in his or her name and cannot obtain physical
    certificates for his or her interest in the securities, except
    in the special situations we describe below.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">An investor will be an indirect holder and must
    look to his or her own bank or broker for payments on the
    securities and protection of his or her legal rights relating to
    the securities, as we describe under &#147;&#151;&nbsp;Legal
    Ownership of Securities&nbsp;&#151; Holders of Securities&#148;
    above.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">An investor may not be able to sell interests in
    the securities to some insurance companies and to other
    institutions that are required by law to own their securities in
    non-book-entry form.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">An investor may not be able to pledge his or her
    interest in a global security in circumstances where
    certificates representing the securities must be delivered to
    the lender or other beneficiary of the pledge in order for the
    pledge to be effective.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The depositary&#146;s policies, which may change
    from time to time, will govern payments, transfers, exchanges
    and other matters relating to an investor&#146;s interest in a
    global security. Neither we nor any third parties employed by us
    or acting on your behalf, such as trustees and transfer agents,
    have any responsibility for any aspect of the depositary&#146;s
    actions or for its records of ownership interests in a global
    security. We and the trustee do not supervise the depositary in
    any way.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The DTC requires that those who purchase and sell
    interests in a global security within its book-entry system use
    immediately available funds, and your broker or bank may require
    you to do so as well.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Financial institutions that participate in the
    depositary&#146;s book-entry system, and through which an
    investor holds its interest in a global security, may also have
    their own policies affecting payments, notices and other matters
    relating to the security. There may be more than one financial
    intermediary in the chain of ownership for an investor. We do
    not monitor and are not responsible for the actions of any of
    those intermediaries.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Special Situations When a Global Security
Will Be Terminated.</FONT></I></B><FONT size="2"> In a few
special situations described below, a global security will be
terminated and interests in it will be exchanged for
certificates in non-global form representing the securities it
represented. After that exchange, the choice of whether to hold
the securities directly or in street name will be up to the
investor. Investors must consult their own banks or brokers to
find out how to have their interests in a global security
transferred on termination to their own names, so that they will
be holders. We have described the rights of holders and street
name investors above under &#147;&#151;&nbsp;Legal Ownership of
Securities&nbsp;&#151; Holders of Securities.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The special situations for termination of a
global security are as follows:
</FONT>
<P>

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    <FONT size="2">if the depositary notifies us that it is
    unwilling, unable or no longer qualified to continue as
    depositary for that global security and we do not appoint
    another institution to act as depositary within a specified time
    period;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">if we elect to terminate that global security; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">if an event of default has occurred with regard
    to securities represented by that global security and it has not
    been cured or waived.
    </FONT></TD>
</TR>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The prospectus supplement may also list
additional situations for terminating a global security that
would apply to a particular series of securities covered by the
prospectus supplement. If a global security is terminated, only
the depositary is responsible for deciding the names of the
institutions in whose names the securities represented by the
global security will be registered and, therefore, who will be
the holders of those securities.
</FONT>

<P align="center"><FONT size="2">10
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<P align="center">
<B><FONT size="2">DESCRIPTION OF CAPITAL STOCK</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may issue common stock or preferred stock, in
one or more distinct series, from time to time. This section
summarizes the material terms of our common stock and material
terms that would be common to all series of our preferred stock.
Most of the terms of any series of preferred stock that we may
offer will be described in the applicable prospectus supplement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our authorized capital stock consists of
725,000,000&nbsp;shares of common stock, $0.001 par value per
share, of which 39,691,710&nbsp;shares were issued and
outstanding as of December&nbsp;31, 2002, and
25,000,000&nbsp;shares of undesignated preferred stock,
$1.00&nbsp;par value, of which no shares were issued and
outstanding as of that date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a summary description of our
capital stock.
</FONT>

<P align="left">
<B><FONT size="2">COMMON STOCK</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each outstanding share of our common stock
entitles the holder to one vote on all matters submitted to a
vote of shareholders. Subject to preferences that may be
applicable to any outstanding shares of our preferred stock,
holders of common stock are entitled to receive ratably any
dividends declared from time to time by our Board of Directors
out of funds legally available therefor. Holders of our common
stock generally do not have conversion, redemption or preemptive
rights to subscribe for any of our securities. All outstanding
shares of common stock are, and any shares of common stock that
may be sold in this offering when issued and paid for will be,
fully paid and nonassessable. The rights, preferences and
privileges of holders of our common stock are subject to the
rights of the holders of any shares of preferred stock that we
may issue.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;19, 2001, we announced that our
Board of Directors had authorized the repurchase of up to
2,000,000&nbsp;shares of our common stock in the open market. As
of December&nbsp;31, 2002, we had repurchased
561,700&nbsp;shares of our common stock at an average price of
$27.97&nbsp;per share.
</FONT>

<P align="left">
<B><FONT size="2">PREFERRED STOCK</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following description of our preferred stock
and the description of the terms of a particular series of
preferred stock that we may include in any related prospectus
supplement are not complete. These descriptions are qualified in
their entirety by reference to our articles of incorporation and
any resolution adopted by our Board of Directors and filed with
the Registrar of Corporations of the Republic of the Marshall
Islands fixing the rights, preferences and limitations of any
series of preferred stock we may offer. The relevant prospectus
supplement for any such series of preferred stock will contain a
description of certain U.S.&nbsp;federal income tax consequences
relating to the purchase and ownership of such series of
preferred stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Board of Directors may from time to time, and
without further action by our shareholders, direct the issuance
of shares of preferred stock in one or more series and may, at
the time of issuance, determine the rights, preference and
limitations of each such series. Satisfaction of any dividend
preferences of outstanding shares of preferred stock would
reduce the amount of funds available for the payment of
dividends on shares of common stock. Holders of shares of our
preferred stock may be entitled to receive a preference payment
in the event of any liquidation, dissolution or winding-up of
Teekay before any payment is made to the holders of shares of
our common stock. The voting, dividend, liquidation, redemption,
conversion or other rights of any preferred stock we may issue
could adversely affect the voting power and other rights of the
holders of our common stock and may have the effect of
decreasing the market price of our common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The prospectus supplement relating to any series
of preferred stock we may issue will specify:
</FONT>
<P>

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    <FONT size="2">the maximum number of shares;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
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    <FONT size="2">the designation of the shares;
    </FONT></TD>
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<TR>
    <TD>&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the annual dividend rate, if any, whether the
    dividend rate is fixed or variable, the date dividends will
    accrue, the dividend payment dates, and whether dividends will
    be cumulative;
    </FONT></TD>
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</TABLE>

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    <FONT size="2">the price, terms and conditions for redemption,
    if any, including redemption at our option or at the option of
    the holders, the time period for redemption, and whether
    accumulated dividends or premiums will be paid;
    </FONT></TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the liquidation preference, if any, and whether
    any accumulated dividends will be paid upon the liquidation,
    dissolution or winding up of our affairs;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">any sinking fund or similar provision, and, if
    so, the terms and provisions relating to the purpose and
    operation of the fund;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the terms and conditions, if any, for conversion
    or exchange into or for shares of any other class or classes of
    our capital stock or any series of any other class or classes,
    any other series of the same class, or any other securities or
    assets, including the price or the rate of conversion or
    exchange and the method, if any, of adjustment;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the voting rights, if any; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">any or all other preferences and relative,
    participating, optional or other special rights, privileges or
    qualifications, limitations or restrictions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Preferred stock will be fully paid and
nonassessable upon issuance. The preferred stock or any series
of preferred stock may be represented, in whole or in part, by
one or more global certificates, which will have an aggregate
principal amount equal to that of the preferred stock
represented by the global certificate. See &#147;Securities We
May Issue&nbsp;&#151; Global Securities.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each global certificate will:
</FONT>
<P>

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    <TD><FONT size="2">&#149;</FONT></TD>
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    <FONT size="2">be registered the name of a depository or a
    nominee of the depository identified in the prospectus
    supplement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">be deposited with such depository or nominee or a
    custodian for the depository; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">bear a legend regarding the restrictions on
    exchanges and registration of transfer and any other matters as
    may be provided for under the certificate of designation.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">ANTI-TAKEOVER PROVISIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Preferred Stock Authorization.
</FONT></I></B><FONT size="2">As noted above, our Board of
Directors, without shareholder approval, has the authority under
our articles of incorporation to issue preferred stock with
rights superior to the rights of the holders of common stock. As
a result, preferred stock could be issued quickly and easily,
could adversely affect the rights of holders of common stock and
could be issued with terms calculated or which have a tendency
to delay or prevent a change of control of Teekay or make
removal of management more difficult.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Shareholder Rights Plan.
</FONT></I></B><FONT size="2">We have a shareholders rights plan
pursuant to which holders of our common stock have been granted
one purchase right on each outstanding share of common stock.
Each purchase right, when exercisable, initially entitles its
registered holder to purchase from us one share of our common
stock at a price of $150&nbsp;per share, subject to certain
anti-dilution adjustments. The purchase rights are not currently
exercisable and will become exercisable only upon the earlier of:
</FONT>
<P>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ten days after a person becomes an
    &#147;acquiring person,&#148; which refers to a person who
    either (a)&nbsp;did not beneficially own 15% or more of our
    outstanding common stock on September&nbsp;8, 2000 (the
    effective date of the shareholder rights plan), and subsequently
    acquires beneficial ownership of 20% or more of our outstanding
    common stock, or (b)&nbsp;did beneficially own 15% or more of
    our outstanding common stock on September&nbsp;8, 2000, and
    subsequently acquires beneficial ownership of an additional 5%
    or more of our outstanding common stock; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ten business days (or such later date as may be
    determined by our Board of Directors) following a
    &#147;triggering event,&#148; which refers to the commencement
    or announcement of an intention to make a tender offer or
    exchange offer the consummation of which would result in either
    (a)&nbsp;the beneficial ownership by a person who did not
    beneficially own 15% or more of our outstanding common stock on
    </FONT></TD>
</TR>

</TABLE>

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    <TD></TD>
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    <FONT size="2">September&nbsp;8, 2000, of 20% or more of our
    outstanding common stock, or (b)&nbsp;the beneficial ownership
    by a person who did beneficially own 15% or more of our
    outstanding common stock on September&nbsp;8, 2000, of an
    additional 5% or more of our outstanding common stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise approved by our Board of
Directors, if a person becomes an acquiring person, the purchase
rights held at any time by the acquiring person and its
affiliates will become null and void and nontransferable, and
the remaining purchase rights will entitle each other right
holder to purchase, for the purchase price, the number of shares
of our common stock which at the time of the transaction would
have a market value equal to twice the purchase price.
Additionally, at any time prior to an acquiring person&#146;s
becoming the holder of 50% or more of our outstanding shares of
common stock, our Board of Directors may exchange the purchase
rights (other than the purchase rights owned by the acquiring
person and its affiliates), at an exchange ratio of one share of
our common stock per purchase right.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After a person becomes an acquiring person, each
of the following events would entitle each holder of a purchase
right (other than the acquiring person and its affiliates) to
purchase, for the purchase price, that number of shares of
common stock of another corporation which at the time of the
event would have a market value equal to twice the purchase
price:
</FONT>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the acquisition of us in a merger by such other
    corporation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">a business combination between us and such other
    corporation; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the sale, lease, exchange or transfer of 50% or
    more of our assets or assets accounting for 50% or more of our
    net income or revenues, in one or more transactions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At any time prior to the earlier of a triggering
offer or any person becoming an acquiring person, our Board of
Directors may redeem the purchase rights in whole, but not in
part, at a price of $.0001 per purchase right. In addition, the
Board may also waive, within a specified period, the effect of
such triggering event or a person being an acquiring person.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase rights have certain anti-takeover
effects and will cause substantial dilution to a person or group
that attempts to acquire us on terms not approved by our Board
of Directors. The purchase rights will not interfere with any
merger or other business combination approved by our Board of
Directors, since the Board of Directors may, at its option,
redeem all of the then-outstanding purchase rights or waive the
application of the shareholder rights plan in connection with a
specific transaction. The shareholder rights plan and the rights
expire in September 2010. The description and terms of the
purchase rights are set forth in a Rights Agreement that is
filed as an exhibit to the registration statement of which this
prospectus forms a part.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Shareholder Meetings, Quorum, Voting and
Consents. </FONT></I></B><FONT size="2">Our bylaws establish
advance notice procedures with respect to business brought
before an annual meeting by a shareholder and the nomination of
candidates for election as directors, other than nominations
made by or at the direction of our Board of Directors. Under our
bylaws, special meetings of the shareholders may be called only
by our Board of Directors. No business other than that stated in
the notice of meeting may be transacted at any special meeting.
Our articles of incorporation provide that a majority of the
shares entitled to vote on any matter shall constitute a quorum
at a meeting of shareholders, unless the matter has been
recommended by a majority of our Continuing Directors (as
defined in our bylaws), in which case one-third of the shares
entitled to vote on the matter shall constitute a quorum. In
addition, under Marshall Islands law, shareholder actions taken
without a shareholder meeting or a vote must be taken by
unanimous written consent of the shareholders. These provisions
may have the effect of delaying or preventing consideration of
certain shareholder proposals until the next annual meeting, if
at all, unless a special meeting is called by our Board of
Directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Election of Directors.
</FONT></I></B><FONT size="2">Our bylaws provide for a
&#147;staggered board,&#148; with our Board of Directors divided
into three classes, as nearly equal in number as possible, and
the directors in each class serving three-year terms and one
class being elected each year by our shareholders. Vacancies on
the Board of Directors are filled by our Board of Directors.
Because this system of electing directors and filling vacancies
generally makes it more difficult for shareholders to replace a
majority of the Board of Directors, it may tend to discourage a
third party from making a tender offer or otherwise attempting
to gain control of us.
</FONT>

<P align="center"><FONT size="2">13
</FONT>

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<P align="left">
<B><FONT size="2">OTHER MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Sales of Assets, Mergers and Dissolution.
</FONT></I></B><FONT size="2">Under the Marshall Islands
Business Corporations Act, the sale of all or substantially all
of Teekay&#146;s assets not made in the usual or regular course
of Teekay&#146;s business or the non-judicial dissolution and
liquidation of Teekay are required to be approved by the holders
of two-thirds of the outstanding shares of our capital stock
entitled to vote on such matter (and by the holders of a
majority of shares of each class of shares entitled to vote
separately as a class) or by a unanimous written consent of all
holders of capital stock entitled to vote on the matter. In
addition, the holders of one-half of the outstanding shares of
capital stock entitled to vote may institute judicial
dissolution proceedings in specified circumstances in accordance
with the Marshall Islands Business Corporations Act. In the
event of the dissolution of Teekay, the holders of our common
stock will be entitled to share <I>pro rata</I> in our net
assets available for distribution to them, after payment to all
creditors and the liquidation preferences of any of our
outstanding preferred stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Marshall Islands Business Corporations
Act, a merger or consolidation involving Teekay (other than with
subsidiaries at least 90% of whose shares are owned by Teekay)
is required to be approved by the holders of a majority of the
outstanding shares of our capital stock entitled to vote on the
matter, and by the holders of a majority of any class of shares
entitled to vote separately as a class.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Dissenters&#146; Rights of Appraisal and
Payment.</FONT></I></B><FONT size="2"> Under the Marshall
Islands Business Corporations Act, our shareholders have the
right to dissent from various corporate actions, including any
merger or certain sales of all or substantially all of our
assets not made in the usual course of our business, and receive
payment of the fair value of their shares. In the event of any
further amendment of our articles of incorporation, a
shareholder also has the right to dissent and receive payment
for his or her shares if the amendment alters certain rights in
respect of those shares. A condition for such payment is that
the dissenting shareholders follow the procedures set forth in
the Marshall Islands Business Corporations Act. In the event
that we fail to agree with any dissenting shareholder on a price
for the shares, such procedures involve, among other things, the
institution of court proceedings in either the Marshall Islands
or the country where our shares are primarily traded, which is
the United States. The value of the shares of a dissenting
shareholder is fixed by the court after reference, if the court
so elects, to the recommendations of a court-appointed appraiser.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Amendment of Articles of Incorporation.
</FONT></I></B><FONT size="2">Under the Marshall Islands
Business Corporations Act, amendments to the articles of
incorporation of a Marshall Islands corporation generally may be
authorized by vote of the holders of a majority of all
outstanding shares entitled to vote. The approval of the holders
of a majority of the outstanding shares of an adversely affected
class or series of stock is also required for certain amendments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Limitations on Dividends.
</FONT></I></B><FONT size="2">Neither Marshall Islands law nor
our articles of incorporation or bylaws limit the right to own
our securities, including the rights of non-resident or foreign
shareholders to hold or exercise voting rights on the
securities. The indenture relating to our 8.32% First Preferred
Ship Mortgage Notes due 2008 and certain of the credit
agreements covering our and our subsidiaries&#146; credit
facilities provide that our ability to pay dividends is subject
to limitations based upon our cumulative net income plus certain
additional amounts, including the proceeds received by us from
any issuance of our capital stock.
</FONT>

<P align="center"><FONT size="2">14
</FONT>

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<DIV align="left"><A NAME="034"></A></DIV>

<P align="center">
<B><FONT size="2">DESCRIPTION OF WARRANTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may issue warrants for the purchase of debt
securities, common stock or preferred stock. Warrants may be
issued independently or together with any debt securities,
common stock or preferred stock offered by any prospectus
supplement and may be attached to or separate from the debt
securities, common stock or preferred stock. The warrants are to
be issued under warrant agreements to be entered into between us
and a bank or trust company named in the prospectus supplement
as warrant agent relating to the particular issue of warrants.
The warrant agent will act solely as our agent in connection
with the warrants and will not assume any obligation or
relationship of agency or trust for or with any holders of
warrants or beneficial owners of warrants. This section is, and
any applicable prospectus supplement will provide, a summary of
the material terms of the warrant agreement; this Section does
not, and any prospectus supplement will not, describe every
aspect of the warrants. For more information, you should review
the applicable warrant agreement we will file with the SEC
promptly after any offering of warrants, because it, and not
this description or the description in any prospectus
supplement, will define your rights as a warrant holder.
</FONT>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If warrants are offered, the prospectus
supplement will describe the terms of the warrants, including
the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the offering price;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the designation, aggregate principal amount and
    terms of the debt securities purchasable upon exercise of the
    debt warrants and the price at which such debt securities may be
    purchased upon such exercise;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the designation, number of shares and terms of
    the common stock purchasable upon exercise of the common stock
    warrants and the price at which such shares of common stock may
    be purchased upon such exercise;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the designation, number of shares and terms of
    the preferred stock purchasable upon exercise of the preferred
    stock warrants and the price at which such shares of preferred
    stock may be purchased upon such exercise;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">if applicable, the designation and terms of the
    debt securities, common stock or preferred stock with which the
    warrants are issued and the number of warrants issued with each
    such debt security or share of common stock or preferred stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">if applicable, the date on and after which the
    warrants and the related debt securities, common stock or
    preferred stock will be separately transferable;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the date on which the right to exercise the
    warrants shall commence and the date on which such right shall
    expire;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">whether the warrants will be sold with any other
    offered securities and, if so, the amount and terms of these
    other securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the amount of warrants outstanding;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">a discussion of certain U.S.&nbsp;federal income
    tax, accounting and other special considerations, procedures and
    limitations relating to the warrants; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">any other material terms of the warrants.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Warrants may be exchanged for new warrants of
different denominations. If in registered form, warrants may be
presented for registration of transfer, and may be exercised at
the corporate trust office of the warrant agent or any other
office indicated in the prospectus supplement. Before the
exercise of their warrants, holders of warrants will not have
any of the rights of holders of the securities purchasable upon
such exercise, including the right to receive payments of
principal of, or any premium or interest on, the debt securities
purchasable upon such exercise or to enforce the covenants in
the indenture or to receive payments of dividends, if any, on
the common stock or preferred stock purchasable upon such
exercise or to exercise any applicable right to vote. If we
maintain
</FONT>

<P align="center"><FONT size="2">15
</FONT>

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<DIV align="left">
<FONT size="2">the ability to reduce the exercise price of any
stock warrant and such right is triggered, we will comply with
the U.S.&nbsp;federal securities laws, including Rule&nbsp;14e-4
under the Securities Exchange Act of 1934, to the extent
applicable.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Exercise of Warrants</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each warrant will entitle the holder to purchase
such principal amount of debt securities or such number of
shares of common stock or preferred stock at such exercise price
as shall in each case be set forth in, or can be calculated
according to information contained in, the prospectus supplement
relating to the warrant. Warrants may be exercised at such times
as are set forth in the prospectus supplement relating to such
warrants. After the close of business on the expiration date of
the warrants, or such later date to which we may extend such
expiration date, unexercised warrants will become void.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to any restrictions and additional
requirements that may be set forth in the prospectus supplement,
warrants may be exercised by delivery to the warrant agent of
the certificate evidencing such warrants properly completed and
duly executed and of payment as provided in the prospectus
supplement of the amount required to purchase the debt
securities, common stock or preferred stock purchasable upon
such exercise. The exercise price will be the price applicable
on the date of payment in full, as set forth in the prospectus
supplement relating to the warrants. Upon receipt of such
payment and the certificate representing the warrants to be
exercised, properly completed and duly executed at the corporate
trust office of the warrant agent or any other office indicated
in the prospectus supplement, we will, as soon as practicable,
cause to be issued and delivered the debt securities, common
stock or preferred stock purchasable upon such exercise. If
fewer than all of the warrants represented by such certificate
are exercised, a new certificate will be issued for the
remaining amount of warrants.
</FONT>

<P align="left">
<B><FONT size="2">Additional Provisions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The exercise price payable and the number of
shares of common stock or preferred stock purchasable upon the
exercise of each common stock warrant or preferred stock warrant
will be subject to adjustment in certain events, as described in
the applicable prospectus supplement, including the issuance of
any stock dividend to the holders of the relevant class of
stock, or a combination, subdivision or reclassification of the
relevant class of stock. In lieu of adjusting the number of
shares of common stock or preferred stock purchasable upon
exercise of each stock warrant, we may elect to adjust the
number of stock warrants. No adjustment in the number of shares
purchasable upon exercise of the stock warrants will be required
until cumulative adjustments require an adjustment of at least
1% of such number. We may, at our option, reduce the exercise
price at any time. No fractional shares will be issued upon
exercise of stock warrants, but we will pay the cash value of
any fractional shares otherwise issuable.
</FONT>

<P align="left">
<B><FONT size="2">No Rights as Holders of Securities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders of stock warrants will not be entitled,
by virtue of being such holders, to vote, to consent, to receive
dividends, to receive notice as shareholders with respect to any
meeting of shareholders for the election of our directors or any
other matter, or to exercise any rights whatsoever as our
shareholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders of debt warrants will not be entitled, by
virtue of being such holders, to vote, to consent, to receive
payment of principal or any interest or premium on the
underlying securities or to exercise any rights whatsoever as
holders of the underlying securities.
</FONT>

<P align="left">
<B><FONT size="2">Modifications to Warrants</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are three types of changes we can make to a
warrant agreement and the warrants issued thereunder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Changes Requiring Approval of Each Holder.
</FONT></I></B><FONT size="2">First, with respect to a specific
title of warrants, there are changes that cannot be made to the
warrants without the approval of each holder of the warrants of
such title. Those types of changes include modifications and
amendments that:
</FONT>
<P>

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    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">accelerate the expiration date;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">16
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">reduce the percentage of holders of outstanding
    debt warrants whose consent is required for a modification or
    amendment; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">otherwise materially and adversely affect other
    terms that may be set forth in the prospectus supplement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Changes Not Requiring Approval.
</FONT></I></B><FONT size="2">The second type of change does not
require any vote by holders of the warrants. This type of change
is limited to clarifications and other changes that would not
materially and adversely affect the interests of holders of the
warrants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Changes Requiring a Majority Vote.
</FONT></I></B><FONT size="2">Any other change to a warrant
agreement and the warrants requires an affirmative vote by
holders of at least a majority in number of the then outstanding
unexercised warrants affected thereby. Most changes fall into
this category.
</FONT>

<P align="center"><FONT size="2">17
</FONT>

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<!-- link1 "DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS" -->
<DIV align="left"><A NAME="035"></A></DIV>

<P align="center">
<B><FONT size="2">DESCRIPTION OF STOCK PURCHASE
CONTRACTS</FONT></B>

<DIV align="center">
<B><FONT size="2">AND STOCK PURCHASE UNITS</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may issue stock purchase contracts
representing contracts obligating holders to purchase from us,
and us to sell to the holders, a specified number of shares of
our common stock or preferred stock (or a range of numbers of
shares pursuant to a predetermined formula) at a future date or
dates. The price per share of common or preferred stock and the
number of shares of common or preferred stock may be fixed at
the time the stock purchase contracts are issued or may be
determined by reference to a specific formula set forth in the
stock purchase contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The stock purchase contracts may be issued
separately or as a part of units, often known as stock purchase
units, consisting of a stock purchase contract and either:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">our debt securities or our preferred stock; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">debt obligations of third parties, including
    U.S.&nbsp;Treasury securities.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Such debt securities or third party debt
obligations would secure the holders&#146; obligations to
purchase the common or preferred stock under the stock purchase
contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The stock purchase contracts may require us to
make periodic payments to the holders of the stock purchase
units or vice versa, and such payments may be unsecured or
pre-funded on some basis. The stock purchase contracts may
require holders to secure their obligations in a specified
manner, and in certain circumstances we may deliver newly
issued, prepaid stock purchase contracts, often known as prepaid
securities, upon release to a holder of any collateral securing
such holder&#146;s obligations under the original stock purchase
contract.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The applicable prospectus supplement will
describe the terms of any stock purchase contracts or stock
purchase units, and, if applicable, prepaid securities. The
description in the applicable prospectus supplement will not
contain all of the information that you may find useful. For
more information, you should review: the applicable stock
purchase contracts; any collateral and depositary arrangements
relating to such stock purchase contracts or stock purchase
units; and any prepaid securities and the documents pursuant to
which the prepaid securities will be issued. These documents
will be filed with the SEC promptly after the offering of the
stock purchase contracts or stock purchase units, as necessary.
Material U.S.&nbsp;federal income tax considerations applicable
to the stock purchase contracts and the stock purchase units
will also be discussed in the applicable prospectus supplement.
</FONT>

<P align="center"><FONT size="2">18
</FONT>

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<!-- link1 "DESCRIPTION OF DEBT SECURITIES" -->
<DIV align="left"><A NAME="036"></A></DIV>

<P align="center">
<B><FONT size="2">DESCRIPTION OF DEBT SECURITIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may issue debt securities from time to time in
one or more distinct series. This section summarizes the
material terms of our senior or subordinated debt securities
that are common to all series. Most of the financial and other
terms of any series of debt securities that we offer will be
described in the prospectus supplement to be attached to the
front of this prospectus.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As required by U.S.&nbsp;federal law for all
bonds and notes of companies that are publicly offered, the debt
securities will be governed by a document called an
&#147;indenture.&#148; An indenture is a contract between us and
a financial institution, in this case, The Bank of New York,
acting as trustee on your behalf. The indenture will be subject
to and governed by the Trust Indenture Act of 1939, as amended.
The trustee has two main roles:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">First, the trustee can enforce your rights
    against us if we default, subject to some limitations.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Second, the trustee performs certain
    administrative duties for us, which include sending you interest
    payments and notices.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because we may issue both senior debt securities
and subordinated debt securities, our references to the
indenture are to each of the senior debt indenture and the
subordinated debt indenture, unless the context requires
otherwise. In this section, we refer to these indentures
collectively as the &#147;indentures.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because this section is a summary of the material
terms of the indentures, it does not describe every aspect of
the debt securities. We urge you to read the indentures because
they, and not this description, define your rights as a holder
of debt securities. Some of the definitions are repeated in this
prospectus, but for the rest you will need to read the
indentures. We have filed the forms of the indentures as
exhibits to a registration statement that we have filed with the
SEC, of which this prospectus is a part. See &#147;Where You Can
Find More Information&#148; for information on how to obtain
copies of the indentures. In this section, &#147;Teekay&#148; or
the &#147;Company&#148; means Teekay Shipping Corporation and
not any of its subsidiaries.
</FONT>

<P align="left">
<B><FONT size="2">GENERAL</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The debt securities will be unsecured obligations
of Teekay. The senior debt securities will rank equally with all
of our other senior unsecured and unsubordinated indebtedness.
The subordinated debt securities will be subordinate and junior
in right of payment to all our existing and future Senior
Indebtedness (as defined in the form of subordinated debt
indenture).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You should read the prospectus supplement for the
following terms of the series of debt securities offered by the
prospectus supplement:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The title of the debt securities and whether the
    debt securities will be senior debt securities or subordinated
    debt securities.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The aggregate principal amount of the debt
    securities, the percentage of their principal amount at which
    the debt securities will be issued, and the date or dates when
    the principal of the debt securities will be payable or how
    those dates will be determined.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The interest rate or rates, which may be fixed or
    variable, that the debt securities will bear, if any, and how
    the rate or rates will be determined.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The date or dates from which any interest will
    accrue or how the date or dates will be determined, the date or
    dates on which any interest will be payable, any regular record
    dates for these payments or how these dates will be determined,
    and the basis on which any interest will be calculated, if other
    than on the basis of a 360-day year of twelve 30-day months.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The place or places, if any, other than or in
    addition to the Borough of Manhattan, New York City, of payment,
    transfer, conversion and exchange of the debt securities, and
    where notices or demands to or upon us in respect of the debt
    securities may be served.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Any optional redemption provisions.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">19
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Any sinking fund or other provisions that would
    obligate us to repurchase or redeem the debt securities.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Whether the amount of payments of principal of or
    any premium or interest on the debt securities will be
    determined with reference to an index, formula or other method,
    which could be based on one or more commodities, equity or other
    indices, and how these amounts will be determined.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Any changes or additions to the events of default
    under the applicable indenture or our covenants, including
    additions of any restrictive covenants, with respect to the debt
    securities.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">If not the principal amount of the debt
    securities, the portion of the principal amount that will be
    payable upon acceleration of the maturity of the debt securities
    or how that portion will be determined.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Any changes or additions to the provisions
    concerning defeasance and covenant defeasance contained in the
    indenture that will be applicable to the debt securities.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Any provisions granting special rights to the
    holders of the debt securities upon the occurrence of specified
    events.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">If other than the trustee, the name of any paying
    agent, security registrar and transfer agent for the debt
    securities.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">If the debt securities are not to be issued in
    book-entry form only and held by The Depository Trust Company,
    as depositary, the form of such debt securities, including
    whether such debt securities are to be issuable in permanent or
    temporary global form, as registered securities, bearer
    securities or both, any restrictions on the offer, sale or
    delivery of bearer securities and the terms, if any, upon which
    bearer securities of the series may be exchanged for registered
    securities of the series and vice versa, if permitted by
    applicable law and regulations.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">If other than U.S.&nbsp;dollars, the currency or
    currencies of such debt securities.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The person to whom any interest in a debt
    security will be payable, if other than the registered holder at
    the close of business on the regular record date.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The denomination or denominations that the debt
    securities will be issued, if other than denominations of $1,000
    or any integral multiples in the case of the registered
    securities, and $5,000 or any integral multiples in the case of
    the bearer securities.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Whether such debt securities will be convertible
    into or exchangeable for any other securities and, if so, the
    terms and conditions upon which such debt securities will be so
    convertible or exchangeable.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">A discussion of U.S.&nbsp;federal income tax,
    accounting and other special considerations, procedures and
    limitations with respect to the debt securities.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Whether and under what circumstances we will pay
    additional amounts to holders in respect of any tax assessment
    or government charge, and, if so, whether we will have the
    option to redeem the debt securities rather than pay such
    additional amounts.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Any other terms of the debt securities that are
    consistent with the provisions of the indenture.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">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 such debt securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures do not limit the amount of debt
securities that we are authorized to issue from time to time.
The indentures also provide that there may be more than one
trustee thereunder, each for one or more series of debt
securities. At a time when two or more trustees are acting under
the indenture, each with respect to only certain series, the
term &#147;debt securities&#148; 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 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.
</FONT>

<P align="center"><FONT size="2">20
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">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.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There is no requirement that we issue debt
securities in the future under any indenture, and we may use
other indentures or documentation, containing different
provisions, in connection with future issues of other debt
securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may issue the debt securities as original
issue discount securities, which are debt securities, including
any zero-coupon debt securities, that are issued and sold at a
discount from their stated principal amount. Original issue
discount securities provide that, upon acceleration of their
maturity, an amount less than their principal amount will become
due and payable. We will describe the U.S.&nbsp;federal income
tax consequences and other considerations applicable to original
issue discount securities in any prospectus supplement relating
to them.
</FONT>

<P align="left">
<B><FONT size="2">CONVERSION AND EXCHANGE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If any debt securities are convertible into or
exchangeable for other securities, the prospectus supplement
will explain the terms and conditions of such conversion or
exchange, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the securities issuable upon conversion or
    exchange;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the conversion price or exchange ratio, or the
    calculation method for such price or ratio;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the conversion or exchange period, or how such
    period will be determined;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">if conversion or exchange will be mandatory or at
    the option of the holder or Teekay;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">any requirements with respect to the reservation
    of shares of securities for purposes of conversion;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">provisions for adjustment of the conversion price
    or the exchange ratio; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">provisions affecting conversion or exchange in
    the event of the redemption of the debt securities.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Such terms may also include provisions under
which the number or amount of other securities to be received by
the holders of such debt securities upon conversion or exchange
would be calculated according to the market price of such other
securities as of a time stated in the prospectus supplement.
</FONT>

<P align="left">
<B><FONT size="2">ADDITIONAL MECHANICS</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Form,
Exchange and Transfer</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The debt securities will be issued:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">as registered securities; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">if so provided in the prospectus supplement, as
    bearer securities (unless otherwise stated in the prospectus
    supplement, with interest coupons attached); or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">in global form (see &#147;Securities We May
    Issue&nbsp;&#151; Global Securities&#148;); or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">in denominations that are even multiples of
    $1,000, in the case of registered securities, and in even
    multiples of $5,000, in the case of bearer securities, unless
    otherwise specified in the applicable prospectus supplement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You may have your registered securities divided
into registered securities of smaller denominations or combined
into registered securities of larger denominations, as long as
the aggregate principal amount is not changed. This is called an
&#147;exchange.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You may exchange or transfer registered
securities of a series at the office of the trustee in
New&nbsp;York City. That office is currently located at The Bank
of New&nbsp;York, 101&nbsp;Barclay Street, Floor&nbsp;21 West,
New&nbsp;York, New&nbsp;York 10286, Attn: Corporate Trust
Administration. The trustee maintains the list of registered
holders and acts as our securities registrar for registering
debt securities in the names of holders and transferring debt
</FONT>

<P align="center"><FONT size="2">21
</FONT>

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<DIV align="left">
<FONT size="2">securities. However, we may appoint another
trustee to act as our securities registrar or we may act as our
own securities registrar. If we designate additional securities
registrars, they will be named in the prospectus supplement. We
may cancel the designation of any particular securities
registrar. We may also approve a change in the office through
which any securities registrar acts. If provided in the
prospectus supplement, you may exchange your bearer securities
for registered securities of the same series so long as the
total principal amount is not changed. Unless otherwise
specified in the prospectus supplement, bearer securities will
not be issued in exchange for registered securities.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You will not be required to pay a service charge
to transfer or exchange debt securities, but you may in certain
circumstances be required to pay for any tax or other
governmental charge associated with the exchange or transfer.
The transfer or exchange will only be made if the transfer agent
is satisfied with your proof of ownership and/or transfer
documentation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the debt securities are redeemable and we
redeem less than all of the debt securities of a particular
series, we may block the transfer or exchange of debt securities
for 15&nbsp;days before the day we mail the notice of redemption
or publish such notice (in the case of bearer securities) and
ending on the day of that mailing or publication in order to
freeze the list of holders to prepare the mailing. At our
option, we may mail or publish such notice of redemption through
an electronic medium. We may also refuse to register transfers
or exchanges of debt securities selected for redemption, except
that we will continue to permit transfers and exchanges of the
unredeemed portion of any debt security being partially redeemed.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Paying and
Paying Agents</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you are a holder of registered securities, we
will pay interest to you if you are a direct holder in the list
of registered holders at the close of business on a particular
day in advance of each due date for interest, even if you no
longer own the security on the interest due date. That
particular time and day, usually about two weeks in advance of
the interest due date, is called the &#147;Regular Record
Date&#148; and is stated in the prospectus supplement. Holders
buying and selling debt securities must work out between them
how to compensate for the fact that we will pay all the interest
for an interest period to the one who is the registered holder
on the Regular Record Date. The most common manner is to adjust
the sales price of the debt securities to prorate interest
fairly between buyer and seller. This prorated interest amount
is called &#147;accrued interest.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With respect to registered securities, we will
pay interest, principal and any other money due on the debt
securities at the corporate trust office of the trustee in
New&nbsp;York City. That office is currently located at The Bank
of New&nbsp;York, 101 Barclay Street, Floor&nbsp;21 West,
New&nbsp;York, New&nbsp;York 10286, Attn:&nbsp;Corporate Trust
Administration. You must make arrangements to have your payments
picked up at or wired from that office. We may also choose to
pay interest by mailing checks or making wire transfers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Street name&#148; and other indirect
holders should consult their banks or brokers for information on
how they will receive payments.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If bearer securities are issued, unless otherwise
provided in the prospectus supplement, we will maintain an
office or agency outside the United States for the payment of
all amounts due on the bearer securities. The initial locations
of such offices and agencies will be specified in the prospectus
supplement. Unless otherwise provided in the prospectus
supplement, payment of interest on any bearer securities on or
before maturity will be made only against surrender of coupons
for such interest installments as they mature. Unless otherwise
provided in the prospectus supplement, no payment with respect
to any bearer security will be made at any office or agency of
Teekay in the United States or by check mailed to any address in
the United States or by transfer to an account maintained with a
bank located in the United States. Notwithstanding the
foregoing, payments of principal and any premium or interest on
bearer securities payable in U.S.&nbsp;dollars may be made, at
the office of our paying agent in New&nbsp;York City if (but
only if) payment of the full amount in U.S.&nbsp;dollars at all
offices or agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar
restrictions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Regardless of who acts as the paying agent, all
money paid by us to a paying agent that remains unclaimed at the
end of two years after the amount is due to registered holders
will be repaid to us. After that two-year period, you may look
only to us for payment and not to the trustee, any other paying
agent or anyone else.
</FONT>

<P align="center"><FONT size="2">22
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may also arrange for additional payment
offices, and may cancel or change these offices, including our
use of the trustee&#146;s corporate trust office. We may also
choose to act as our own paying agent. We must notify you of
changes in identities of the paying agents for any particular
series of debt securities.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notices</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With respect to registered securities, we and the
trustee will send notices regarding the debt securities only to
registered holders, using their addresses as listed in the list
of registered holders. With respect to bearer securities, we and
the trustee will give notice by publication in a newspaper of
general circulation in New York City or in such other cities
that may be specified in a prospectus supplement. At our option,
we may send or publish notices through an electronic medium as
specified in the applicable prospectus supplement.
</FONT>

<P align="left">
<B><FONT size="2">EVENTS OF DEFAULT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You will have special rights if an event of
default occurs in respect of the debt securities of your series
and is not cured, as described later in this subsection.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">What is an Event of
Default?</FONT></I></B><FONT size="2"> The term &#147;event of
default&#148; in respect of the debt securities of your series
means any of the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We do not pay the principal of or any premium on
    a debt security of such series on its due date.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We do not pay interest on a debt security of such
    series within 30&nbsp;days after its due date, whether at
    maturity, upon redemption or upon acceleration.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We do not deposit any sinking fund payment in
    respect of debt securities of such series on its due date.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We remain in breach of a covenant in respect of
    debt securities of such series for 60&nbsp;days after we receive
    a written notice of default stating we are in breach and
    requiring that we remedy the breach. The notice must be sent by
    either the trustee or holders of 25% of the principal amount of
    debt securities of such series.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We file for bankruptcy or certain other
    bankruptcy, insolvency or reorganization events occur.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Any other event of default in respect of debt
    securities of such series described in the prospectus supplement
    occurs.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The events of default described above may be
added to or modified as described in the applicable prospectus
supplement. An event of default for a particular series of debt
securities does 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 or interest, if any) if it considers such withholding
of notice to be in the best interests of the holders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Remedies if an Event of Default Occurs.
</FONT></I></B><FONT size="2">If an event of default has
occurred and has not been cured with respect to one or more
series of debt securities, the trustee or the holders of 25% in
principal amount of the debt securities of the affected series
may declare the entire principal amount of all the debt
securities of that series to be due and immediately payable.
Only a portion of the principal is payable if the securities
were issued at a discount. This is called a declaration of
acceleration of maturity. If an event of default occurs because
of certain events in bankruptcy, insolvency or reorganization,
the principal amount of all the debt securities of that series
will be automatically accelerated, without any action by the
trustee or any holder. There are special notice and timing rules
which apply to the acceleration of subordinated debt securities
which are designed to protect the interests of holders of senior
debt. A declaration of acceleration of maturity may be cancelled
by the holders of a majority in principal amount of the debt
securities of the affected series if:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">we have paid or deposited with the trustee a sum
    sufficient in cash to pay all principal, interest and additional
    amounts, if any, which have become due other than by the
    declaration of acceleration of maturity;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">23
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">all existing events of default, other than the
    nonpayment of principal of or any premium or interest on the
    debt securities of such series which have become due solely
    because of the acceleration, have been cured or waived; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the rescission would not conflict with any
    judgment or decree of a court of competent jurisdiction.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except in cases of default, where the trustee has
some special duties, the trustee is not required to take any
action under the indenture at the request of the holders unless
the holders offer the trustee reasonable protection from
expenses and liability, called an &#147;indemnity.&#148; If
reasonable indemnity is provided, the holders of a majority in
principal amount of the outstanding debt securities of the
relevant series may direct the time, method and place of
conducting any lawsuit or other formal legal action seeking any
remedy available to the trustee. The trustee may refuse to
follow those directions in certain circumstances. No delay or
omission in exercising any right or remedy accruing upon any
event of default will be treated as a waiver of such right,
remedy or event of default.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Before you are allowed to bypass the trustee and
bring your own lawsuit or other formal legal action or take
other steps to enforce your rights or protect your interests
relating to the debt securities, the following must occur:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">you must give the trustee written notice that an
    event of default has occurred and remains uncured;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the holders of not less than 25% in principal
    amount of all outstanding debt securities of the relevant series
    must make a written request that the trustee take action because
    of the default and must offer reasonable indemnity to the
    trustee against the cost and other liabilities of taking that
    action;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the trustee must not have taken action for
    60&nbsp;days after receipt of the above notice and offer of
    indemnity; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the holders of a majority in principal amount of
    the debt securities must not have given the trustee a direction
    inconsistent with the above notice during the 60-day period.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">However, notwithstanding the conditions described
above, you are entitled at any time to bring a lawsuit for the
payment of money due on your debt securities on or after the due
date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders of a majority in principal amount of the
debt securities of the affected series may waive any past
defaults other than:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the payment of principal or any premium or
    interest; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">in respect of a covenant or other provision that
    cannot be modified or amended without the consent of each holder.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Street name&#148; and other indirect
holders should consult their banks or brokers for information on
how to give notice or direction or to make a request of the
trustee and to make or cancel a declaration of
acceleration.</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each year, we will furnish to the trustee a
written statement of certain of our officers certifying that, to
their knowledge, we are in compliance with the indentures and
the debt securities, or else specifying any default.
</FONT>

<P align="left">
<B><FONT size="2">MERGER OR CONSOLIDATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise provided in the applicable
prospectus supplements, we may not, in a single transaction or a
series of related transactions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">consolidate with or merge with or into any other
    person or permit any other person to consolidate with or merge
    with or into us, or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">directly or indirectly, transfer, sell, lease or
    otherwise dispose of all or substantially all of our assets,
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">unless, in either such case:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">in a transaction in which we do not survive or in
    which we sell, lease or otherwise dispose of all or
    substantially all of our assets, the successor entity to us is
    organized under the laws of the United States or other specified
    jurisdictions and expressly assumes, by a supplemental indenture
    executed and delivered to the trustee in form satisfactory to
    the trustee, all of our obligations under the indenture;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">24
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">immediately before and after giving effect to the
    transaction, no default on the debt securities exists; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">certain other conditions are met.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">MODIFICATION OR WAIVER</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There are three types of changes we can make to
the indentures and the debt securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Changes Requiring Approval of Each Holder.
</FONT></I></B><FONT size="2">First, there are changes that
cannot be made to the debt securities without the approval of
each holder. Following is a list of some of those types of
changes:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">changing the stated maturity of the principal of
    or any interest on a debt security;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">reducing any amounts due on a debt security or
    payable upon acceleration of the maturity of a debt security
    following a default;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">adversely affecting any right of repayment at the
    holder&#146;s option;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">changing the place (except as otherwise described
    in this prospectus or the applicable prospectus supplement) or
    currency of payment on a debt security;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">impairing the holder&#146;s right to sue for
    payment of or to convert or exchange a security;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">in the case of subordinated debt securities,
    modifying the subordination provisions in a manner that is
    adverse to holders of the subordinated debt securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">in the case of senior debt securities, modifying
    the securities to subordinate the securities to other
    indebtedness;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">reducing the percentage of holders of debt
    securities whose consent is needed to modify or amend the
    indenture, waive compliance with certain provisions of the
    indenture or waive certain defaults;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">changing any of our obligations to pay additional
    amounts which are required to be paid to holders with respect to
    taxes imposed on such holders in certain circumstances; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">other provisions that are specified in the
    prospectus supplement or the indenture.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Changes Requiring a Majority Vote.
</FONT></I></B><FONT size="2">The second type of change to the
indenture and the outstanding debt securities is the kind that
requires a vote in favor by holders owning a majority of the
outstanding principal amount of the particular series affected.
Separate votes will be needed for each series even if they are
affected in the same way. Most changes fall into this category,
except for clarifying changes and certain other changes that
would not adversely affect holders of the outstanding debt
securities in any material respect. The same vote would be
required for us to obtain a waiver of all or part of certain
covenants in the applicable indenture, or a waiver of a past
default. However, we cannot obtain a waiver of a payment default
or any other aspect of the indentures or the outstanding debt
securities described previously under &#147;&#151;&nbsp;Changes
Requiring Approval of Each Holder&#148; unless we obtain your
individual consent to the waiver.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Changes Not Requiring Approval.
</FONT></I></B><FONT size="2">The third type of change does not
require any vote by holders of outstanding debt securities. This
type is limited to making clarifications, curing ambiguities,
defects or inconsistencies and certain other changes that would
not adversely affect holders of the outstanding debt securities
in any material respect. Qualifying or maintaining the
qualification of the indentures under the Trust Indenture Act
does not require any vote by holders of debt securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Further Details Concerning Voting.
</FONT></I></B><FONT size="2">When taking a vote, we will use
the following rules to decide how much principal amount to
attribute to a debt security:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">for original issue discount securities, we will
    use the principal amount that would be due and payable on the
    voting date if the maturity of the debt securities were
    accelerated to that date because of a default; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">for debt securities whose principal amount is not
    known (for example, because it is based on an index), we will
    use a special rule for that debt security described in the
    prospectus supplement.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">25
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Debt securities will not be considered
outstanding, and therefore not eligible to vote, if we have
deposited or set aside in trust for you money for their payment
or redemption. Debt securities will also not be eligible to vote
if they have been fully defeased as described later under
&#147;Defeasance&nbsp;&#151; Full Defeasance.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will generally be entitled to set any day as a
record date for the purpose of determining the holders of
outstanding indenture securities that are entitled to vote or
take other action under the indentures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are not required to set a record date. If we
set a record date for a vote or other action to be taken by
holders of a particular series, that vote or action may be taken
only by persons who are holders of outstanding securities of
that series on the record date and must be taken within
180&nbsp;days following the record date or another period that
we may specify. We may shorten or lengthen this period from time
to time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">&#147;Street name&#148; and other indirect
holders should consult their banks or brokers for information on
how approval may be granted or denied if we seek to change the
indenture or the debt securities or request a
waiver.</FONT></I></B>

<P align="left">
<B><FONT size="2">SATISFACTION AND DISCHARGE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures will cease to be of further
effect, and we will be deemed to have satisfied and discharged
the indentures with respect to a particular series of debt
securities, when (1)&nbsp;all debt securities of that series
have been delivered to the trustee for cancellation or
(2)&nbsp;the following conditions have been satisfied:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">all debt securities of that series not previously
    delivered to the trustee for cancellation have become due and
    payable or will become due and payable at their stated maturity
    or on a redemption date within one year;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">we deposit with the trustee, in trust, funds
    sufficient to pay the entire indebtedness on the debt securities
    of that series that had not been previously delivered for
    cancellation, for the principal and interest to the date of the
    deposit (for debt securities that have become due and payable)
    or to the stated maturity or the redemption date, as the case
    may be (for debt securities that have not become due and
    payable);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">we have paid or caused to be paid all other sums
    payable under the indentures in respect of that series; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">we have delivered to the trustee an
    officer&#146;s certificate and opinion of counsel, each stating
    that all these conditions have been complied with.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will remain obligated to provide for
registration of transfer and exchange and to provide notices of
redemption.
</FONT>

<P align="left">
<B><FONT size="2">DEFEASANCE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following discussion of full defeasance and
covenant defeasance will be applicable to your series of debt
securities only if we choose to have them apply to that series.
If we choose to do so, we will state that in the applicable
prospectus supplement and describe any changes to these
provisions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Full
Defeasance.</FONT></I></B><FONT size="2"> If there is a change
in the federal tax law described below, we can legally release
ourselves from any payment or other obligations on the debt
securities, called U.S. &#147;full defeasance,&#148; if we put
in place the following arrangements for you to be repaid:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We must deposit in trust for your benefit and the
    benefit of all other registered holders of the debt securities a
    combination of money and U.S.&nbsp;government or
    U.S.&nbsp;government agency notes or bonds that will generate
    enough cash to make principal, interest and any other payments
    on the debt securities on their various due dates, including,
    possibly, their earliest redemption date.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Under current U.S.&nbsp;federal tax law, the
    deposit and our legal release from the debt securities would
    likely be treated as though you surrendered your debt securities
    in exchange for your share of the cash and notes or bonds
    deposited in trust. In that event, you could recognize income,
    gain or loss on the debt securities you surrendered. In order
    for us to effect a full defeasance we must deliver to the
    trustee a legal
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">26
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">opinion confirming that you will not recognize
    income, gain or loss for U.S.&nbsp;federal income tax purposes
    as a result of the defeasance and that you will not be taxed on
    the debt securities any differently than if we did not make the
    deposit and just repaid the debt securities ourselves.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We must comply with any additional provisions set
    forth in the prospectus supplement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we accomplish a full defeasance as described
above, you would have to rely solely on the trust deposit for
repayment on the debt securities. You could not look to us for
repayment in the unlikely event of any shortfall. Conversely,
the trust deposit would most likely be protected from claims of
our lenders and other creditors if we became bankrupt or
insolvent. You would also be released from any applicable
subordination provisions on the subordinated debt securities
described below under &#147;&#151;&nbsp;Subordination.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Covenant Defeasance.
</FONT></I></B><FONT size="2">Under current U.S.&nbsp;federal
tax law, we can make the same type of deposit described above
and be released from certain provisions and restrictive
covenants in the debt securities and indenture. This is called
&#147;covenant defeasance.&#148; In that event, you would lose
the protection of those restrictive covenants, but would gain
the protection of having money and securities set aside in trust
to repay the debt securities, and you would be released from any
applicable subordination provisions on the subordinated debt
securities described later under
&#147;&#151;&nbsp;Subordination.&#148; In order to achieve
covenant defeasance, we must:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">deposit in trust for your benefit and the benefit
    of all other registered holders of the debt securities a
    combination of money and U.S.&nbsp;government or
    U.S.&nbsp;government agency notes or bonds that will generate
    enough cash to make principal, interest, and any other payments
    on the debt securities on their various due dates;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">deliver to the trustee a legal opinion confirming
    that under current U.S.&nbsp;federal income tax law we may make
    the above deposit without causing you to be taxed on the debt
    securities any differently than if we did not make the deposit
    and just repaid the debt securities ourselves; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">comply with any additional provisions set forth
    in the prospectus supplement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we accomplish covenant defeasance, you can
still look to us for repayment of the debt securities if there
were a shortfall in the trust deposit. In fact, if one of the
remaining events of default occurs (such as our bankruptcy) and
the debt securities become immediately due and payable, there
may be such a shortfall. Depending on the event causing the
default, of course, you may not be able to obtain payment of the
shortfall.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order to exercise either full defeasance or
covenant defeasance, we must comply with certain conditions, and
no event or condition can exist that would prevent us from
making payments of principal or any premium or interest on the
senior debt securities or subordinated debt securities of such
series on the date the irrevocable deposit is made or at any
time during the period ending on the 91st day after the deposit
date.
</FONT>

<P align="left">
<B><FONT size="2">RANKING</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless provided otherwise in the applicable
prospectus supplement, the debt securities are not secured by
any of our property or assets. Accordingly, your ownership of
debt securities means you are one of our unsecured creditors.
The senior debt securities are not subordinated to any of our
other debt obligations and, therefore, rank equally with all our
other unsecured and unsubordinated indebtedness. The
subordinated debt securities are subordinated to some of our
existing and future debt and other liabilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See &#147;&#151;&nbsp;Subordination&#148; for
additional information on how subordination limits your ability
to receive payment or pursue other rights if we default or have
certain other financial difficulties.
</FONT>

<P align="left">
<B><FONT size="2">SUBORDINATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless the prospectus supplement provides
otherwise, the following provisions will apply to the
subordinated debt securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The payment of principal, any premium and
interest on the subordinated debt securities is subordinated in
right of payment to the prior payment in full of all of our
Senior Indebtedness. This means that in certain circumstances
where we may not be making payments on all of our debt
obligations as they become due, the
</FONT>

<P align="center"><FONT size="2">27
</FONT>

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<DIV align="left">
<FONT size="2">holders of all of our Senior Indebtedness will be
entitled to receive payment in full of all amounts that are due
or will become due on the Senior Indebtedness before holders of
subordinated debt securities will be entitled to receive any
payment or distribution (other than in the form of subordinated
securities) on the subordinated debt securities. These
circumstances may include the following:
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We make a payment or distribute assets to
    creditors upon any liquidation, dissolution, winding up or
    reorganization of Teekay, or as part of an assignment or
    marshalling of our assets for the benefit of our creditors.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We file for bankruptcy or certain other events in
    bankruptcy, insolvency or similar proceedings occur.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The maturity of the subordinated debt securities
    is accelerated. For example, the entire principal amount of a
    series of subordinated debt securities may be declared to be due
    and payable and immediately payable or may be automatically
    accelerated due to an event of default as described under
    &#147;&#151;&nbsp;Events of Default.&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, we will not be permitted to make
payments of principal or any premium or interest on the
subordinated debt securities if:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">we default in our obligation to make payments on
    our Senior Indebtedness and do not cure such default; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">an event of default (other than a payment
    default) that permits the holders of Senior Indebtedness to
    accelerate the maturity of the Senior Indebtedness occurs and we
    and the trustee have received a notice of such event of default.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">However, unless repayment of the Senior
Indebtedness has been accelerated because of an event of
default, the period for which we will not be permitted to make
payments on the subordinated debt securities will be limited in
duration.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These subordination provisions mean that if we
are insolvent, a holder of Senior Indebtedness is likely to
receive more out of our assets than a holder of the same amount
of our subordinated debt securities, and a creditor of Teekay
that is owed a specific amount but who owns neither our Senior
Indebtedness nor our subordinated debt securities may ultimately
receive less than a holder of the same amount of Senior
Indebtedness and more than a holder of subordinated debt
securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The subordinated debt indenture does not limit
the amount of Senior Indebtedness we are permitted to have, and
we may in the future incur additional Senior Indebtedness.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If this prospectus is being delivered in
connection with a series of subordinated securities, the
accompanying prospectus supplement or the information
incorporated by reference will set forth the approximate amount
of Senior Indebtedness outstanding as of a recent date.
</FONT>

<P align="left">
<B><FONT size="2">THE TRUSTEE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The initial trustee under each indenture will be
The Bank of New York. The Bank of New York will also be the
initial paying agent and securities registrar for the debt
securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each indenture provides that, except during the
continuance of an event of default under the indenture, the
trustee under the indenture will perform only such duties as are
specifically set forth in the indenture. Under the indenture,
the holders of a majority in outstanding principal amount of the
debt securities will have the right to direct the time, method
and place of conducting any proceeding or exercising any remedy
available to the trustee under the indenture, subject to certain
exceptions. If an event of default has occurred and is
continuing, the trustee under the indenture will exercise such
rights and powers vested in it under the indenture and use the
same degree of care and skill in its exercise as a prudent
person would exercise under the circumstances in the conduct of
such person&#146;s own affairs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each indenture and provisions of the Trust
Indenture Act incorporated by reference in the indenture contain
limitations on the rights of the trustee under such indenture,
should it become a creditor of Teekay, to obtain
</FONT>

<P align="center"><FONT size="2">28
</FONT>

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<DIV align="left">
<FONT size="2">payment of claims in certain cases or to realize
on certain property received by it in respect of any such
claims, as security or otherwise. The trustee under the
indenture is permitted to engage in other transactions. However,
if the trustee under the indenture acquires any prohibited
conflicting interest, it must eliminate the conflict or resign.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each trustee may resign or be removed with
respect to one or more series of securities and a successor
trustee may be appointed to act with respect to such series. In
the event that two or more persons are acting as trustee with
respect to different series of securities under one of the
indentures, each such trustee shall be a trustee of a trust
separate and apart from the trust administered by any other such
trustee and any action described herein to be taken by the
&#147;trustee&#148; may then be taken by each such trustee with
respect to, and only with respect to, the one or more series of
securities for which it is trustee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event that an entity is the trustee under
both the senior debt indenture and the subordinated debt
indenture, and a conflict of interest arises as a result, the
trustee must resign as trustee under either of the indentures
or, if this does not eliminate the conflict of interest, both
the indentures.
</FONT>

<P align="left">
<B><FONT size="2">GOVERNING LAW</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures and the debt securities will be
governed by, and construed in accordance with, the laws of the
State of New York.
</FONT>

<P align="center"><FONT size="2">29
</FONT>

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<P align="center">
<B><FONT size="2">PLAN OF DISTRIBUTION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may sell common stock, preferred stock,
warrants, stock purchase contracts, stock purchase units or debt
securities to or through underwriters, through agents, directly
to other purchasers, or through a combination of these methods.
We may distribute securities from time to time in one or more
transactions at:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">a fixed price or prices, which may be changed;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">market prices prevailing at the time of sale;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">prices related to the prevailing market prices at
    the time of sale; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">negotiated prices.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The applicable prospectus supplement will
describe the specific terms of the offering of the securities,
including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the name or names of any underwriters, and, if
    required, any dealers or agents;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the purchase price of the securities and the
    proceeds we will receive from the sale;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">any underwriting discounts and commissions and
    other items constituting underwriters&#146; compensation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">any discounts or concessions allowed or reallowed
    or paid to dealers; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">any securities exchange or market on which the
    securities may be listed.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any discounts or concessions allowed or reallowed
or paid to dealers may be changed from time to time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If underwriters are used in a sale, the
securities will be acquired by the underwriters for their own
account and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the
time of sale. 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 firms acting as
underwriters. The applicable prospectus supplement will set
forth the underwriter or underwriters with respect to a
particular underwritten offering of securities and, if an
underwriting syndicate is used, the managing underwriter or
underwriters will be stated on the cover of the prospectus
supplement. Unless otherwise set forth in the applicable
prospectus supplement, the obligations of the underwriters to
purchase the offered securities will be subject to certain
conditions precedent, and the underwriters will be obligated to
purchase all the offered securities if any are purchased.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a dealer is used in the sale of any of the
securities, we or an underwriter will sell the securities to the
dealer, as principal. The dealer may then resell the securities
to the public at varying prices to be determined by the dealer
at the time of resale. To the extent required, we will set forth
in the prospectus supplement the name of the dealer and the
terms of any such transactions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Agents may from time to time solicit offers to
purchase the securities. If required, we will name in the
applicable prospectus supplement any agent involved in the offer
or sale of the securities and set forth the terms of any such
transactions. Unless otherwise indicated in the prospectus
supplement, any agent will be acting on a best efforts basis for
the period of its appointment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may directly solicit offers to purchase the
securities and we may make sales of securities directly to
institutional investors or others. To the extent required, the
prospectus supplement will describe the terms of any such sales,
including the terms of any bidding or auction process used.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the sale of the securities,
underwriters, dealers or agents may receive compensation from us
or from purchasers of the securities for whom they act as agents
in the form of discounts, concessions or commissions.
Underwriters may sell the securities to or through dealers, and
those dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters or commissions
from the purchasers for whom they may act as agents.
Underwriters, dealers and agents that participate in the
distribution of the securities, and any institutional investors
or others that purchase securities directly and then resell the
securities, may be deemed to be underwriters, and any discounts
or commissions received by them from
</FONT>

<P align="center"><FONT size="2">30
</FONT>

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<DIV align="left">
<FONT size="2">us and any profit on the resale of the securities
by them may be deemed to be underwriting discounts and
commissions under the Securities Act of&nbsp;1933.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may provide indemnification to underwriters,
dealers, agents and others who participate in the distribution
of the securities with respect to some liabilities, including
liabilities arising under the Securities Act, and provide
contribution with respect to payments that they may be required
to make in connection with such liabilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If indicated in the applicable prospectus
supplement, we may authorize underwriters or agents to solicit
offers by specific institutions to purchase the securities from
us pursuant to contracts providing for payment and delivery on a
future date. Institutions with which these contracts may be made
include, among others:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">commercial and savings banks;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">insurance companies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">pension funds;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">investment companies; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">educational and charitable institutions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In all cases, we must approve the contracting
institutions. The obligations of any purchaser under any payment
and delivery contract will be subject to the condition that the
purchase of the securities is not, at the time of delivery,
prohibited by applicable law.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise indicated in the applicable
prospectus supplement, we do not intend to apply for the listing
of the preferred stock, warrants or any series of debt
securities on a national securities exchange. If any of the
securities of any series are sold to or through underwriters,
the underwriters may make a market in those securities, as
permitted by applicable laws and regulations. No underwriter is
obligated, however, to make a market in those securities, and
any market-making that is done may be discontinued at any time
at the sole discretion of the underwriters. No assurance can be
given as to the liquidity of, or trading markets for, any of the
securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Some of the underwriters, dealers or agents, or
their affiliates, may engage in transactions with or perform
services for us in the ordinary course of business.
</FONT>

<P align="center"><FONT size="2">31
</FONT>

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<P align="center">
<B><FONT size="2">EXPENSES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following are the estimated expenses of the
issuance and distribution of the securities being registered
under the registration statement of which this prospectus forms
a part, all of which will be paid by us.
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="84%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">SEC registration fee
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Blue Sky fees and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Rating agency fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Printing and engraving expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Legal fees and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounting fees and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Indenture Trustee&#146;s fees and expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Miscellaneous
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*</FONT></TD>
    <TD align="left">
    <FONT size="2">To be provided by amendment or as an exhibit to a
    Report on Form&nbsp;6-K that is incorporated by reference into
    this prospectus.
    </FONT></TD>
</TR>

</TABLE>

<!-- link1 "LEGAL MATTERS" -->
<DIV align="left"><A NAME="039"></A></DIV>

<P align="center">
<B><FONT size="2">LEGAL MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise stated in the applicable
prospectus supplement, the validity of the securities under
Marshall Islands law will be passed upon by our Marshall Islands
counsel, Watson, Farley &#38; Williams, New York, New York, and
the validity of the debt securities under New York law will be
passed upon for us by our United States counsel, Perkins Coie
LLP, Portland, Oregon. Perkins Coie LLP may rely on the opinions
of Watson, Farley&nbsp;&#38; Williams for all matters of
Marshall Islands law. If this prospectus is delivered in
connection with an underwritten offering, certain matters in
connection with such offering will be passed upon for the
underwriters by Shearman&nbsp;&#38; Sterling, Menlo Park,
California, United States counsel for the underwriters.
</FONT>

<!-- link1 "EXPERTS" -->
<DIV align="left"><A NAME="040"></A></DIV>

<P align="center">
<B><FONT size="2">EXPERTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated financial statements and
schedule of Teekay and its subsidiaries appearing in
Teekay&#146;s Annual Report on Form&nbsp;20-F filed with the SEC
on March&nbsp;29, 2002, as of December&nbsp;31, 2001 and 2000,
and for the fiscal years ended December&nbsp;31, 2001 and 2000,
and the nine months ended December&nbsp;31, 1999, have been
audited by Ernst&nbsp;&#38; Young LLP, independent chartered
accountants, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With respect to the unaudited consolidated
interim financial information and schedule for each of the
three-month periods ended March&nbsp;31, 2002, June&nbsp;30,
2002 and September&nbsp;30, 2002 incorporated by reference in
this prospectus, Ernst&nbsp;&#38; Young&nbsp;LLP have reported
that they have applied limited procedures in accordance with
professional standards for a review of such information.
However, their separate reports, included in Teekay&#146;s
Report on Form&nbsp;6-K for each of the quarterly periods listed
above and incorporated herein by reference, state that they did
not audit and they do not express an opinion on the unaudited
consolidated interim financial information and schedule.
Accordingly, the degree of reliance on their reports on such
information should be restricted considering the limited nature
of the review procedures applied. Ernst&nbsp;&#38;
Young&nbsp;LLP are not subject to the liability provisions of
Section&nbsp;11 of the Securities Act of 1933 for their reports
on the unaudited consolidated interim financial information and
schedule because the reports are not a &#147;report&#148; or a
&#147;part&#148; of the registration statement prepared or
certified by the auditors within the meaning of Sections&nbsp;7
and&nbsp;11 of the Securities Act of&nbsp;1933.
</FONT>

<P align="center"><FONT size="2">32
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should rely
only on the information contained or incorporated by reference
into this prospectus or a prospectus supplement. We have not
authorized any other person to provide you with different
information. If anyone provides you with different or
inconsistent information, you should not rely on it. 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. You
should assume that the information appearing in this prospectus
or any prospectus supplement, as well as information we have
filed with the SEC and incorporated by reference, is accurate as
of the date on the front of those documents only. Our business,
financial condition, results of operations and prospects may
have changed since those dates.</FONT></B>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<P align="center">
<FONT size="2">TABLE OF CONTENTS
</FONT>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="89%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">About this Prospectus
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Where You Can Find More Information
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Special Note Regarding Forward-Looking Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Risk Factors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Service of Process and Enforcement
    of&nbsp;Liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Teekay Shipping Corporation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Recent Developments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Use of Proceeds
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Consolidated Ratio of Earnings to
    Fixed&nbsp;Charges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capitalization and Indebtedness
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Securities We May Issue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of Capital Stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of Warrants
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of Stock Purchase Contracts and Stock
    Purchase&nbsp;Units
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of Debt Securities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Plan of Distribution
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Legal Matters
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Experts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="100%" align="left" noshade>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="center">
<B><FONT size="4">$500,000,000</FONT></B>

<P align="center">
<B><FONT size="6">Teekay Shipping Corporation</FONT></B>

<P align="center">
<B>Common Stock</B>

<DIV align="center">
<B>Preferred Stock</B>
</DIV>

<DIV align="center">
<B>Warrants</B>
</DIV>

<DIV align="center">
<B>Stock Purchase Contracts</B>
</DIV>

<DIV align="center">
<B>Stock Purchase Units</B>
</DIV>

<DIV align="center">
<B>Debt Securities</B>
</DIV>

<P align="center">
<HR size="1" width="37%" align="center" noshade>

<P align="center">
<IMG src="o08807teekay1.gif" alt="Teekay Logo">

<P align="center">
<HR size="1" width="37%" align="center" noshade>

<P align="center">
<HR size="1" width="33%" align="center" noshade>

<P align="center">
<B>PROSPECTUS</B>

<DIV align="center">
<HR size="1" width="33%" align="center" noshade>
</DIV>

<P align="center">
<B><FONT size="2">January&nbsp;17, 2003</FONT></B>

<P align="left">
<HR size="1" width="100%" align="left" noshade>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;


<P align="center">
<IMG src="o08807teekay1.gif" alt="Teekay Logo">

<P align="center">
<B><FONT size="6">Teekay Shipping Corporation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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`
end

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
