HomeMy WebLinkAboutRes1981-033
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8/5/81
FA/r
CITY OF SEWARD
RESOLUTION 81-13
A RESOLUTION PROVIDING FOR THE SUBMISSION TO
THE QUALIFED ELECTORS OF THE CITY OF SEWARD,
ALASKA, FOR APPROVAL, THE DOCK PERMIT AGREE-
MENT BETWEEN THE CITY OF SEWARD AND VECO
OFFSHORE, INC., FOR THE OPERATION OF A PORTION
OF THE PUBLIC PORT FACILITY TO BE BUILT ON
RESURRECTION BAY IN THE VICINITY OF 4TH OF
JULY CREEK.
WHEREAS, the City of Seward has received appropriations from
the State of Alaska for the construction of a portion of the
Seward Marine Industrial Terminal in the vicinity of 4th of July
Creek on Resurrection Bay, and
WHEREAS, the construction and the future operation of the
Marine Industrial Terminal is of vital concern to the citizens of
the city of Seward in that the construction and operation of
terminal will provide employment, economic growth, and services
and facilities needed by the citizens of Seward and maritime
industries, and
WHEREAS, the City has agreed to lease to VECO Offshore,
Inc., a parcel of land near the public port facility to be used
by VECO Offshore, Inc., for marine industrial purposes and other
purposes, and
WHEREAS, the facilities contemplated to be constructed by
VECO Offshore, Inc., will interface and interconnect with a
portion of the facilities to be constructed by the City of Seward,
and in particular, the ship hydraulic lift system, and
WHEREAS, the maintenance of the ship lift, its supporting
facilities, is critical to the operation of VECO Offshore, Inc.,
and the general public, and
WHEREAS, the general public has a vital interest in being
assured that the operation of the proposed marine industrial
terminal will be by a reputable operator, and
WHEREAS, the City of Seward and VECO Offshore, Inc., have
reached agreement on a dock permit agreement whereby VECO Offshore,
Inc., is to operate a portion of the public port facilities to be
constructed by the City of Seward in return for payment by VECO
Offshore, Inc., of a percentage of the revenues generated thereby.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the
City of Seward, Alaska, that:
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City of Seward, Alaska
Resolution No. 81-33
Page Two
Section 1. It is hereby determined to be ~n the public
interest, convenience and necessity of the people of the city of
Seward, to permit the qualified electors to review the proposed
dock permit agreement between the City of Seward and VECO Offshore,
Inc., and all of the terms contained therein, in order to verify
or reject that agreement as being in the public interest.
Section 2. At the regular election to be held on
Tuesday, October 6, 1981, in the City of Seward, Alaska,
the following proposition is to be submitted to the qualified
electors of the City of Seward for approval or rejection.
A three-fifth majority of electors qualified and voting
in favor of the proposition is required for approval.
PROPOSITION NO.
~hall the City of Seward, Alaska, enter into a certain dock
permit agreement with VECO, Offshore, Inc., for the operation and
maintenance for a portion of the Public Port Facilities to be
constructed at the Seward Marine Industrial Terminal on Resurrec-
tion Bay, Alaska.
section 3. The foregoing proposition shall be printed on a
ballot which may set forth other propositions, and the proposition
set forth in Section 2 shall be printed in full and the following
words shall be added as appropriate and next to a square provided
for marking the ballot;
PROPOSITION NO.
Yes r:=J
No c=J
section 4. A person may vote at this election who possesses
the qualifications set forth in AS 15.05.010 and who has regis-
tered pursuant to Chapter 7 of Title 15 of the Alaska Statutes
(AS 15.07.010, et seq.). The election shall be conducted in
compliance with the procedures established in Chapter 8 of the
Code of Ordinances of the City of Seward.
section 5. Publication of this resolution shall be made by
posting a copy hereof on the City Hall Bulletin Board for a
period of ten (10) days following its passage and approval. In
addi tion, copies of the one-page summary, and copies of the
entire agreement shall be made available at the city Clerk's
office for at least thirty days preceding the date of the election.
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City of Seward, Alaska
Resolution No. 81-33
Page Three
PASSED AND APPROVED by the City Council of the city of
Seward, Alaska, this lOth day of August, 1981.
ayor
AYES:
NOES:
ABSENT:
CAMPBELL, CRIPPS, GILLESPIE, HUGLI, O'BRIEN AND SWARTZ
NONE
SORIANO
ATTEST:
APPROVED AS TO FORM:
HUGHES, THORSNESS, GANTZ,
POWELL & BRUNDIN, Attorneys
for the City of Seward
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(City Seal)
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HUGHES THORSNESS
GANTZPOWELLaBRUNDIN'
,..TTORNEYS "T LA.W
~O. WEST THIRD AVlNUl
ANCHORAGE. Ale 9950 I
19071274.7522
~
DOCK PERMIT
This agreement made this
day of
, 19B1, is
between the City of Seward, a municipal corporation of the state
of Alaska ("CITY"), and VECO OFFSHORE, INC., a Delaware corpora-
tion with head offices in Alaska ("VECO").
WHEREAS, CITY has leased to VECO property in the Seward
Marine Industrial Terminal for use by VECO as a shipbuilding and
repair facility, and for other purposes in accordance with that
certain Lease Agreement attached hereto as Exhibit A and incorpo-
rated herein by reference, and
WHEREAS, CITY plans to construct a major Public Port Facility
at the Seward Marine Industrial Terminal adj acent to the land
leased to VECO, and
WHEREAS ,c--Ci ty has agreed to grant to VECO the exclusive
right and privilege to occupy for a term of years and extensions
thereof and to use, in accordance with the provisions of this
agreement, a portion of the Public Port Facility for the CITY,
and
WHEREAS, this agreement has been determined to be in the
public interest by the City Council of the City of Seward in
Resolutions numbered B1-~ and B1-~,
NOW, THEREFORE, for and in consideration of the mutual
promises and covenants hereinafter contained, the parties agree
as follows:
1. Grant of Riqht
CITY does hereby grant to VECO the exclusive right and
privilege to occupy, for a term of years and extensions thereof,
in accordance with the provisions of this agreement a portion of
the Public Port Facility to be constructed by CITY and VECO does
hereby accept the responsibility for operating a portion of the
Public Port Facility according to the terms of this agreement.
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HUGHES THOR$NESS
SANTZPOWELLaBRUNDIN'
"'TTORNEVS AT LAW
50.WESTTHIRO,"VENIJE
ANCHORAGE, AI( 99501
'9071 274.7!;'i22
The portion of the Public Port Facility to be operated by
VECO (hereafter referred to as "VECO Portion") is outlined in red
on the attached Exhibit B which is incorporated herein by refer-
ence and the VECO Portion of the Public Port Facility consists of
two sub-portions, that outlined in green (hereafter referred to
as "ship lift"), and that outlined in blue (hereafter referred to
as "general dock").
VECO shall .service all members of the public seeking the
services offered on the VECO Portion of the Public Port Facility
pursuant to any adopted tariff; that is, where a party is willing
to pay for a service offered by VECO to members of the public on
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the VECO Portion of the Public Port Facility in accordance with
any adopted tariff, VECO shall perform any work pursuant to such
tariff for any member of the public seeking the services offered
provided the party seeking the services complies with any then
applicable tariff provisions.
2. Construction of Public Port Facility
Prior to the time VECO is to begin operation of the VECO
:! Portion of the Public Port Facility, electrical, sewer and water
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utilities sufficient in size or volume to support VECO's opera-
tion of the VECO Portion of the Public Port Facility will be made
available to VECO by CITY.
CITY shall promptly and subject only to
availabili ty and
receipt of public funds from the state of Alaska or the united
states
construct
the
Public Port Facility such that the VECO
Portion of the Public Port Facility is ready for use by the
public and operation by VECO.
CITY shall provide VECO with monthly progress reports con-
cerning the design and construction of the Public Port Facility
commencing on the first of the month following the date hereof
and continuing throughout the construction period.
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HUGHES THORSNESS ::
GANTZPOWELLaBRUNDIN:
ATTOI'INE:VS AT LAW
50. WlST llllRD.o.VUlUE
ANCHORAGE. AK 99501
(9011274-7522
3. Force Majeure
Any other provisions of this agreement to the contrary
notwithstanding, in the event CITY is delayed from beginning or
completing construction of the Public Port Facility, or if VECO
is prevented from operation of the VECO Portion of the Public
Port Facility or otherwise delayed in performing any of the
obligations under this agreement, due to acts of God, strikes, or
other concerted acts of workmen, unavailability of labor or
materials, fires, floods, explosions, war, an unreasonably fore-
seeable delay in the issuance of any approvals or permits from
local, state or federal agencies, or other causes beyond CITY or
VECO'S reasonable control, the time period wherein such construc-
tion or operation is to occur shall be extended by that amount of
time necessary to compensate for the delay.
Any extension of
time to City pursuant to the provisions of this paragraph shall
be deemed, ipso facto, to constitute a "Force Majeure" under
paragraph 6.1(g) of the Lease Agreement and VECO shall receive a
sufficient extension of time to compensate for the delay.
4. Compatibility of Facilities
CITY intends to build a public dock and ship lift capable of
efficiently docking, loading and transferring vessels at the
Public Port Facility. When such facility is designed, CITY will
make available to VECO engineering specifications and will co-
ordinate to the extent possible the interface or use of such
facili ties by VECO and the connection of such facilities to
facilities constructed by VECO on land leased from CITY adjacent
to the VECO Portion of the Public Port Facility.
5. Defini tions
As used in this agreement, the following terms or variations
thereof, shall, unless otherwise provided, have the following
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HUGHES THORSNESS I
GAr;TZPOWELlaBRUNOIN :'
ATTORNEYS AT LAW I
~Ot WUTTHIRDAV[NllE
ANCHORAGE. AK 99501
(9071 274.752Z
respecti ve meanings.
Certain other additional terms as de fined
in other paragraphs of this agreement shall have the respective
meanings therein attributed to them.
(a) "Public Port Facility" means the dock and related
port facilities to be constructed at the 4th of July Creek
on Resurrection Bay.
(b) "Product" means any and all goods, equipment and
materials transported across the Public Port Facility into
the hold or hull of a ship.
(c) "Selling price" means the commodity purchase
price, shipping costs, storage, treatment, or other costs
associated wi th any commodity or product prior to loading
into a vessel, and also the costs of loading into a vessel,
wi thout reduction for federal and state income taxes. The
selling price shall exclude all costs incurred after loading
into the hold or hull of a ship at the Public Port Facility,
such as transportation by sea and subsequent processing or
preparation for ultimate use:
(d) "Sale" means the transfer of title or custody of
products at dockside Seward.
(e) "Service" means charges made by VECO for port
and/or dock services performed on the VECO Portion of the
Public Port Facility and shall include, but not be limited
to, charges for crane, forklift, handling of products,
stevedoring, storage of products and boats, lift and dry
dock and vessel repair work.
(f) "Wharfage" means a charge on any cargo placed in
transit sheds, storage areas, at shipside or on the wharf,
passing over or under the facilities or transferred between
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HUGHES THORSNESS ;:
GANTZPOWELllllBRUNOIN '
ATTORNEYS AT LAW :j
5o'WUTnllRDAYE~IJE
ANCHORAGE. AK 99501
(907)274.7522
vessels. Wharfages may be due even if cargo is not handled
to or from a vessel, and whether or not the wharf is used.
Wharfage does not include charges for any other services.
(g) "Wharf or wharves" means any wharf, pier, bulkhead,
or other waterfront structure, mooring dolphins, or bank.
6.
Monthly Payments
The monthly payments to be made by VECO to CITY with respect
to the VECO Portion of the Public Port Facility shall be as set
forth below:
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(a) Sales
CITY shall receive two percent (2%) of the selling
price received by VECO for any products of VECO or any
affiliated entity where the products are sold on or from the
ship lift area of the VECO Portion of the Public Port Facil-
ity as outlined in green on the attached Exhibit B. CITY
shall receive five percent (5%) of the price for such products
sold on or from the general dock area of the VECO Portion of
the Public Port Facility as outlined in blue on Exhibit B.
(b) Services
CITY shall receive two percent (2%) of the monies
collected by VECO for services rendered on or from the ship
lift area of the VECO Portion of the Public Port Facility as
outlined in green on the attached Exhibit B.
(c) Wharfaqe
CITY shall receive twenty percent (20%) of the gross
wharfage charges received by VECO related to use of the ship
lift area of the VECO Portion of the Public Port Facility as
outlined in green on the attached Exhibit B.
CITY shall
receive eighty percent (BO%) of the gross wharfage charges
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HUGHES THORSNESS ,
GANTZ POWELLaBRUNDIN
ATTORNI!YS AT LAW
509 WlSl1HIROAYlNUl
ANCHORAGE. Ale 99501
1907) %74-7522
received by VECO related to use of the general dock area of
the VECO Portion of the public dock as outlined in blue on
the attached Exhibit B.
(d) Dockaqe
CITY shall receive twenty percent (20%) of the gross
dockage charges received by VECO related to use of the ship
lift of the VECO Portion of the Public Port Facility as
outlined in green on the attached Exhibit B.
CITY shall
receive eighty percent (BO%) of the gross dockage charges
received by VECO related to use of the general dock area of
the VECO Portion of the Public Port Facility as outlined In
blue on the attached Exhibit B.
(e) No products, whether owned by VECO or any affil-
iated entity or any other party except the CITY will be
voluntarily moved across the VECO Portion of the Public Port
Facility or stored thereon free of the charges of subpara-
graph (a) through (e).
VECO and the CITY shall prepare a
port tariff in accordance with the provisions of paragraph 7
hereof and shall submit it to the Federal Maritime commission
if required not later than six (6) months after VECO com-
mences construction of the VECO Service Facility as defined
in paragraph 2.2 of the Lease Agreement between the parties.
In the event that a product of VECO or any other entity is
subject to a tariff or charge which is less than eighty
percent (BO%) of the published tariff of the Port of Anchor-
age, VECO shall pay the CITY an amount equal to the amount
which CITY would have received if the tariff had been equal
to eighty percent (BO%) of the applicable published tariff
of the Port of Anchorage whether or not VECO collects a
tariff or charge.
In the event the said Port of Anchorage
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tariff does not include published charges for such item, the
term "published tariff of the Port of Anchorage" as used in
this paragraph shall be replaced by the term "the median of
the most current published charges or tariffs on such product
at the three geographically nearest ports in existence as of
the creation of this permit which have a published charge or
tariff on such product."
(f) VECO shall give CITY a monthly report of all
service and sales activities on the VECO Portion of the
Public Port Facility sufficient to allow CITY to determine
VECO'S monthly payment for each particular month of the term
of this agreement. The report for a particular month shall
be delivered to the City Manager's office not later than ten
(10) days after the close of the particular month. The
monthly payment for a particular month shall accompany the
report for that particular month.
7. Tariffs and Audit
VECO and the City Manager or his staff shall jointly prepare
a Tariff of rates and charges to be collected from, and conditions
to be imposed upon and observed by, users of the VECO Portion of
the Public Port Facility ("Tariff").
The Tariff so prepared
shall be submitted, with the City Manager's recommendation for
its approval, to the city Council of the City of Seward. If the
City Manager and VECO cannot agree upon a Tarriff and jointly
recommend its adoption to the City council, the last proposals of
the City Manager and VECO shall be submitted to the City Council.
In reviewing either a jointly-submitted Tariff, or the last
proposals for such a Tariff, the City Council may accept, reject
HUGHES THORSNESS i' or modify any such proposals.
GANTZ POWELLllBRUN01N
ATTOIlNE<VS AT LAW
U9WU1THlROAVEN1.IE
ANCHORAGE. AIC 9950\
1907)214.7$22
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HUGHES THORSNESS
GA:az: POWELlABRUNDIN
ATTOllNE'fS ",r lAW
50tWUTTHllltlA,VHlUf
ANCHORAGE. All: 99501
(901)214.7522
If VECO disputes whether a Tariff adopted by or approved by
the city Council is reasonable, it may submit the issue of the
reasonableness of the specific portions of the Tariff to which it
objects to arbitration in accordance with the rules of the Ameri-
can Arbitration Association. The Arbitration Panel shall consist
of three members, two of which shall have experience and expertise
wi th respect to the operation, tariff structures, and financial
affairs of public port facilities.
The Tariff shall remain in effect until such time as any
portions challenged by VECO are determined to be unreasonable by
the Arbitration Panel.
The Arbitration Panel's authority shall
be limited to determining that a particular provision challenged
by VECO is unreasonable and its substitution therefore, effective
no earlier than the date of its decision, of a substitute provi-
sion. The Arbitration Panel (or the American Arbitration Associ-
ation, where appropriate) may, in its discretion, award costs,
attorneys' fees and compensation to the arbitrators (based on
their expertise) to either party.
Nothing contained herein is intended to deprive the City
Council of the City of Seward of responsibility for protecting
the public interest by setting reasonable tariffs, nor to deprive
the Federal Maritime commission of any jurisdiction it might have
over the establishment of tariffs and the operation of the Public
Port Facility.
If this arbitration provision is declared by a court of
competent jurisdiction to be an illegal divestiture by the City
of its authority to establish tariffs for the Public Port Facil-
ity (subject to any requirements of the Federal Maritime Commis-
sion) or to control the operation of the Public Port Facility,
then the remainder of this agreement shall remain in effect and
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the City Council shall have ultimate authority and responsibility
to set tariffs in the public interest.
CITY shall at all times during the term hereof and for a
period of two (2) years after the termination hereof, have the
right to have the business records of VECO audited by a certified
public accounting firm, at the sole expense of CITY, and to the
extent necessary to determine the accuracy and validity of the
records and accounting for payments.
B. Term
The term of this agreement shall be for a primary term of
ten (10) years commmencing on the date determined in accordance
with paragraph 6.1(f) of the Lease Agreement between the parties
and, at VECO'S option, for up to two additional five (5) year
terms upon the same terms and conditions as are contained in this
agreement. The option to renew an expiring term for an additional
term shall be considered exercised by VECO and binding on VECO
and CITY unless VECO gives CITY, within a period of not less than
one hundred and-eighty (lBO) days prior to the date that the then
existing term is to expire, written notice sent by registered
mail, that VECO is not exercising its option to renew the agree-
ment for an additional term.
unless prohibited by law or the
charter of City, VECO shall have the option to renew this agree-
ment for eight (B) additional five (5) year terms, to be exercised
in the same manner as set forth above.
9. Acts of Default
The following shall be "acts of default" under this agreement
and the terms "act of default" and "default" shall mean, whenever
they are used in this permit, anyone or more of the following
HUGHES THORSNESS events:
GAHTZPOWELLaBRUNDIN I'
ATTOR"lrrYS AT LAW
5lltwESTlfllROAVlt!I,IE
ANCHORAGE. AI( 99501
(907) 214-7522
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HUGHES THORSNESS
GANTZPO'....ELLaB~UNOIN
ATTORNF.YS AT LAW
50. WEST fHrRDAVENUE
ANCHOPAGE. AI< 99501
(9011274_7522
(a) Failure by VECO to pay when due the payments
required to be paid under paragraph 7 hereof, and the contin-
ued failure for a period of more than thirty (30) days after
written notice of such failure has been given to VECO by the
CITY.
(b) Failure by VECO to observe and perform any cove-
nant, condition or agreement on its part to be observed or
performed under this agreement, other than as referred to in
Section (a) above, for a period of sixty (60) days after
written notice specifying such failure, requesting that it
be remedied, and stating that it is a notice of default, has
been given to VECO by the CITY; provided, however, if said
defaul t is such that it cannot be corrected wi thin the
applicable period, it shall not constitute an act of default
if corrective action is instituted by VECO within the appli-
cable period and diligently pursued until the default is
corrected.
(c) The making by VECO of an assignment for the benefit
of creditors, the filing of a petition in bankruptcy by
VECO, the adjudication of VECO as insolvent or bankrupt, the
peti tion or application by VECO to any tribunal for any
receiver of or any trustee for itself or for any substantial
part of its property; or the commencement of any proceeding
relating to VECO under any bankruptcy, insolvency, reorgani-
zation, arrangement or readjustment of debt law or statute
or similar law or statute of any jurisdiction, whether now
or hereafter in effect which shall remain undismissed for a
period of six (6) months from the date of the commencement
thereof.
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HUGHES THORSNESS
GANnPowELLaBRUNDIN
ATTORNEYS AT LAW
,C.WUlllUROAVUIUI
A"CHORAGE.Ak 99501
(907)274.7522
(d) Violation by VECO of any law of the United states
or the state of Alaska with respect to the operation of the
VECO Portion of the Public port Facility for a period of
sixty (60) days after written notice of such violation has
been given to VECO by the agency charged with the enforcement
of such laws; provided, however, if said violation be such
that it cannot be corrected within the applicable period, it
shall not constitute an act of default if corrective action
is instituted by VECO within the applicable period and dili-
gently pursued until the violation is ended. Furthermore,
if VECO shall contest such alleged violation through appro-
priate judicial or administrative channels, the time period
specified herein shall not commence until such proceedings
are finally determined; provided, however, that such exten-
sion due to appeal of agency or judicial decisions shall not
be effective if the effect of the interim administrative or
judicial action is to cause a stoppage of any of the activi-
ties for which the new service facility or related Seward
port facility were constructed including cargo loading and
offloading, cargo storage, vessel berthing and docking,
vessel servicing, vessel construction, vessel repair, metal
fabrication and any activity which is an integral support
function of any of these named activities; provided further,
that if such a stoppage occurs it shall not be deemed a
default if VECO promptly pays the City for any loss suffered
directly or by reason of such stoppage.
(e) Violation by VECO of any conditions of any permits
issued by agencies of the State of Alaska or of the United
States government pursuant to the regulations of such agen-
cies for a period of sixty (60) days after written notice
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tlUGHE5 THORSNESS
:;ANTZ PO,'/I::LL5 BRUr~OlN
ATTORNE:YS AT LAW
50a WIST THIIlD ,.VtllUr
ANCHOflAGE. AK 9950\
(907) 274.7522
specifying such violation has been given by such agency to
VECO; provided, however, if such violation be such that it
cannot be corrected wi thin the applicable period, it shall
not constitute an act of default if corrective action is
insti tuted by VECO wi thin the applicable period and dili-
gently pursued until the violation is corrected.
Further-
more, if VECO shall contest such alleged violation through
appropriate judicial or administrative channels, the time
period specified herein shall not commence until such pro-
ceedings are finally determined; provided, however, that
such extension due to appeal of agency or judicia~ decisions
shall not be effective if the effect of the interim admini-
strative or judicial action is to cause a stoppage of any of
the activities for which the new service facility or related
Seward port facility were constructed including cargo loading
and offloading, cargo storage, vessel berthing and docking,
vessel servicing, vessel construction, vessel repair, metal
fabrication and any acti vi ty which is an integral support
function of any of these named activities; provided further,
that if such a stoppage occurs it shall not he deemed a
default if VECO promptly pays the City for any loss suffered
directly or by reason of such stoppage.
10. Remedies for Default
Whenever any event of default referred to above shall have
occurred, and the applicable period for giving notice and an
opportunity to cure shall have expired, CITY shall have the
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GANtZ POWELl&BRUNDIN
ATTORNf:VS AT U\.W
,09WUTtrll/fDAVtl1U!
ANCHORAGE. Ale 99501
(9011 274.752.l
following rights and remedies all in addition to any rights and
remedies that may be given to CITY by statute, common law or
otherwise:
(a) Distraint for Payments. This remedy shall include
the right of CITY to dispose of property distrained in any
commercially reasonable manner.
It shall be conclusively
presumed that compliance with provisions of the Alaska
Uniform Commercial Code (AS 45.05.7BB) with respect to sale
of property shall be a conunercially reasonable disposal.
(b) Take possession of the VECO Portion of the Public
Port Facility and remove all personal property of VECO
therefrom. Such personal property may be removed and stored
in a public warehouse or elsewhere at the cost of VECO all
without service of notice or resort to legal process, all of
which VECO expressly waives, and without CITY becoming
liable for any loss or damage which may be occasioned to
VECO thereby.
(c) Declare the term of this agreement terminated.
(d) Enter into an agreement with another operator for
all or part of the VECO Portion of the Public Port Facility
for a period equal to or greater or less than the remainder
of the term of this agreement, for any sum which CITY may
deem reasonable.
(e) Collect any payments due or to become due from
users, shippers, other occupants of the VECO Portion of the
Public Port Facility.
(f) Declare an amount equal to all amounts then due
and payable to be immediately due and payable under this
agreement whereupon the same shall become immediately due
and payable.
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HUGHES TlIOR$NESS
GMJTZ POWELLa-BRUNDI(;
ATTOPNl':YS AT L.:I\W
~~, \NESt ,'<11>.0 "VCh'.\\
A"lCHORAGE. AK 99')01
(9071214.7522
(g) Recover from VECO, whether this agreement be
terminated or not, reasonable attorney's fees and all other
expenses incurred by CITY by reason of the breach or default
by VECO.
(h) Recover an amount to be due immediately on breach
equal to the difference between the amounts set forth in
this agreement and the fair and reasonable monthly payments
for the remainder of' the agreement.
In the computation of
such damages, the difference between the installments of
monthly payments due and the fair and reasonable value of
the monthly payments for the privileges granted hereunder
for the period of which such installments is payable shall
be discounted to the date of such breach at the rate of
eight percent (B%) per year.
If any portion of the privi-
leges under this agreement are assigned by CITY for the
unexpired term of this agreement, or any part thereof,
before presentation of proof of damages, the amount of
payments r'eserved upon such assignment, in the absence of
evidence'to the contrary, shall be deemed to be the fair and
reasonable payments.
(i) If VECO does not immediately surrender possession
of the VECO Portion of the Public Port Facility upon demand
by CITY, CITY may forthwith enter into and upon the VECO
Portion of the Public Port Facility, expel VECO or those
claiming under VECO without being deemed guilty in any
manner of trespass and without prejudice to any remedies
which might otherwise be used for arrears of rent or breach
of covenant.
(j) No expiration or termination of this agreement
shall relieve VECO of its liability and obligations under
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GANTZ POWEll! BRUNOlN
ATTOFlNEY'" AT LAW
SOtWESTTHIRDAVENU.
ANCHORAGE. At( 99501
(907lZ74.7522
this agreement, and such liability and obligations shall
survive any such expiration or termination.
(k) The remedies conferred on or reserved to CITY in
Section 10 hereof are intended to be cumulative and exclusive
of any other remedy or remedies for acts of defaults; pro-
vided, however, that the limitations and remedies for de-
faul ts or acts of default shall not preclude CITY from
bringing any action to seek remedy by reason of any misrepre-
sentation arising out of this agreement.
The foregoing
rights of CITY in the event of default are in lieu of and
preclude any claims against VECO for specific performance.
No delay or omission to exercise any right or power accruing
under any default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such
right and power may be exercised from time to time and as
often as may be deemed expedient.
If ei ther party hereto shall deem the other to be in
default under any terms or conditions hereof and shall incur
legal expenses or other costs in the successful enforcement
of such right or rights, the defaulting party shall pay
reasonable legal expenses and costs.
In the event the party
alleged to have been in default is found not to have been in
defaul t, the party making the allegation shall pay any
reasonable costs incurred in the successful defense of such
claim.
II. Transfer of Facility
Improvements constructed by VECO which become permanently
affixed to the land such as concrete foundations, buildings,
steel warehouses, ditches, sewer lines, water lines, dikes I or
berms, and similar improvements, shall become the property of
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GANTZ POW(Ll&8RUNDIN
ATTORNEYS AT LAW
50'1 W~ST lH\RO "'V.~lJ!:
AiICHORAGE. AK 99501
(907)274.7522
CITY at the termination of this agreement for any reason except
purchase of the VECO Portion of the Public Port Facility by VECO.
All fixtures, machinery, and equipment including without limita-
tions, storage tanks, compressors, radio towers, radio equipment,
cranes, winches, conveyor belts, engines and machines constructed
by VECO shall be deemed to be personal property and the property
of VECO even though affixed to the land or to a building and VECO
shall have the right to move the same at any time during the
period of this agreement is in effect or wi thin a period of
ninety (90) days following the termination of this agreement.
Upon removal of any item or items, VECO shall have no obligation
to remove any concrete foundations, pilings or similar improve-
ments, except those which are deemed hazardous by the CITY. Any
item not removed by VECO during the period this agreement is in
effect or wi thin the period of ninety (90) days following the
termination of this agreement, shall become the property of CITY.
All costs for repair and maintenance on any improvements con-
structed by VECO on the VECO Portion of the Public Port Facility
shall be paid by VECO and CITY shall have no obligation to pay
any repair or maintenance costs with respect to the VECO Portion
of the Public Port Facility.
12. Transfer by VECO
VECO shall have no right to assign its rights under this
agreement unless the Seward City Council, in its sole discretion,
agrees to such assignment or transfer. Any transferee shall be
bound by all of the terms and conditions of this agreement. Not-
wi thstanding the foregoing, VECO may transfer or assign this
agreement to VECO Maritime, Inc., an affiliated corporation
provided that VECO Offshore, Inc., shall guarantee each and every
obligation of VECO Maritime, Inc., under this agreement and VECO
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GAt. TZ POWELL~DRUNOIN
ATTe.'H'-1E:YS ,\T LAW
50~ ,H5T HURD _VENe[
ANCHORAGE. AI: 99501
(901)274.7522
Maritime, Inc., shall guarantee each and every obligation of VECO
Offshore, Inc., under the terms of the Lease Agreement.
VECO
Maritime, Inc., and VECO Offshore, Inc., agree to execute written
guarantees in the event of any transfer of this agreement by VECO
Offshore, Inc., to VECO Maritime, Inc.
13.
Indemnification
VECO agrees to hold CITY harmless and defend CITY from all
claims for personal injuries and property damage of every kind
and character relating to the VECO Portion of the Public Port
Facili ty or VECO' S use of the Public Port Facility by VECO' S
sublessees, agents or contractors or the public.
VECO shall procure and maintain, at VECO'S sole cost and
expense, comprehensive general liability insurance, with limit of
liability of not less than Five Million Dollars ($5,000,000.00),
for all injuries and/or deaths resulting to anyone person or
from anyone occurrence.
The limit of liability for property
damage
Five
Dollars
Million
shall
be
less
than
not
($5,000,000.00) for each occurrence and aggregate.
Coverage
under such insurance shall also include insurance of any explo-
sion, collapse and underground property damage hazards.
Such
insurance shall include a broad-form contractual endorsement.
Any "watercraft exclusion" in the comprehensive liability insur-
ance policy shall be eliminated or protected and indemnity insur-
ance shall be provided with the same limits as the comprehensive
liability insurance for the use of watercraft.
VECO agrees to provide, at its sole cost and expense, ade-
quate types and amounts of insurance to completely cover any
potential liability of the CITY arising out of this agreement or
the use or operation of the Public Port Facility by VECO, or
VECO'S operations which are not on the VECO Portion of the Public
Port Facility. The parties recognize that VECO'S use or operation
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GANTZPOWHLaBRUND1N
ATTORNFYS A.T LAW
~O. WEST HllRO "'VENUE
""CHOllAGE. AK 99!:Ol
19011274.7522.
hereunder may change during this agreement. The minimum amounts
and types of insurance provided by VECO shall be subject to
revision in accordance with standard insurance practices, in
order to provide continuously throughout the term of this agree-
ment and any extensions hereof, a level of protection consonant
with good business practice and accepted standards in the industry.
Such factors as increases in the cost of living, inflationary
pressures, and other considerations shall be utilized in assessing
whether the minimum insurance requirements should be increased.
CITY shall notify VECO of any requested increase in insurance
coverages at least sixty (60) days prior to the effective date of
such increases.
If VECO and CITY disagree as to whether the
increased coverages are reasonable, the increases shall be effec-
tive but VECO may submit the issue of the reasonableness of the
increases to binding arbitration under the Rules of American
Arbitration Association.
All insurance policies shall provide for thirty (30) days'
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notice of cancellation and/or material change to be sent to CITY
at the address designated in paragraph 17 of this agreement. All
such policies shall be written by insurance companies legally
authorized and licensed to do business in the State of Alaska,
and acceptable to CITY (Best's Rating Triple A or better). VECO
shall furnish CITY, on forms supplied by CITY, certificates
evidencing that it has procured the insurance required herein
prior to the operation by VECO. Nothing herein contained shall
prevent VECO or CITY from placing and maintaining at VECO' S or
CITY'S own individual cost and expense, additional or other
lnsurance as may be desired.
At least annually throughout the term of this agreement VECO
shall procure and submit to CITY a written report from a reputable
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....TTORNEYS AT LAW
S09W[STHIIRPAV[tIlJ[
ANCHORAGE. All. 99501
(907) 274.75ZZ
lnsurance Broker that the Broker has reviewed the types and
amounts of coverage of insurance obtained by VECO and the opera-
tions of VECO and has determined that insurance coverage is
adequate and complete.
All of the insurance policies required above as well as any
insurance carried by VECO, or those holding under or through
VECO, for the protection of its or their property on or about the
public dock, or their operations, shall provide that the insurers
waive their rights of subrogation against CITY and VECO and their
respective officers, servants, agents or employees. VECO further
agrees to waive and agrees to have its insurers waive any rights
of subrogation (whether by loan receipts, equitable assignment or
otherwise), with respect to deductibles under such policies and
wi th respect to damage to equipment including the loss of use
thereof, whether insured or not. VECO shall also name CITY as a
named insured on each insurance policy.
14. Condemnation
If all or any part of the VECO Portion of the Public Port
Facility are condemned for a public use by any government agency
or other duly authorized entity, CITY and VECO shall each make
claim against the condemning or taking authority for the amount
of any damage incurred by or done to them respectively as a
result of the taking.
Neither CITY nor VECO shall have any
rights in or to any award made to the other by the condemning
authority; provided, that in the event of a single award to CITY
which includes specific damages for loss of VECO'S interest, CITY
shall transmit to VECO the amount of such specific damages so
found, if any.
If part, but not all of the VECO Portion of the Public Port
Facility is condemned for public use, VECO shall make a good
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GANTZ POWELL.! BRU N DIN
ATTORNEYS AT l.JoW
50' WfST TtllIlOA"E"UE
A:l:CHORAGE. AIt 99501
(901) 274.752Z
faith determination as to whether or not the taking of the part
of the VECO Portion of the Public Port Facility designated for
condemnation will prevent it from continuing to operate on the
remainder of the VECO Portion of the Public Port Facility. If
VECO determines in good faith that ,the condemning of such part
will prevent it from continuing to operate, then VECO shall
notify CITY in writing to this effect, and this agreement shall
then terminate for all purposes effective fifteen (15) days from
the date VECO sends such notice to CITY and such termination
shall be treated in the same manner as a termination at the
expiration of one of the terms provided for in paragraph B hereof.
15. Sale of Public Port Facility
CITY shall not sell, assign or transfer all or any part of
the VECO Portion of the Public Port Facility during the term of
this agreement unless such sale, assignment or transfer is express-
ly made subject to all of ,the terms of this agreement.
If CITY
desires to sell, assign or transfer the VECO Portion of the
Public Port Facility in whole or 'in part, CITY shall be required
to notify VECO of the proposed purchase price, terms and condi-
tions at which CITY proposes to sell.
VECO shall have ninety
(90) days after receiving the notice of such proposal to decide
whether VECO wishes to purchase upon such price, terms and condi-
tions.
If VECO elects to purchase the property upon such price,
terms and conditions, it shall notify CITY of this election, and
CITY shall thereupon promptly enter into a contract of sale with
VECO for sale of such property upon such price, terms and condi-
tions.
If VECO does not notify CITY that VECO wishes to purchase
upon such price, terms and conditions, then CITY shall have the
right to sell to the purchaser named in the Notice of Proposal to
Sell which was sent to VECO upon the same price, terms and condi-
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:;ANTZ POWELL&: BRU ~ DIN
",TTOffNEYS AT LAW
50. WESTlIlIRll ~VENUE
ANCHORAGE. AK 9950'
(907) 2.74.1522
tions contained in such notice at any time wi thin ninety (90)
days after the ninety (90) day notice period to VECO has expired.
After the expiration of such one hundred eighty (lBO) day period,
CITY shall not be entitled to sell to any party unless it again
notifies VECO of the name of the purchaser and the proposed
price, terms and conditions of sale, and VECO shall again have
the right to meet such price, terms and conditions within ninety
(90) days after receiving such notice as provided above.
In the event VECO elects to purchase pursuant hereto it
shall not be required to compensate the CITY for the improvements
constructed by VECO.
16. Maintenance and Inspection
(a) With respect to the ship lift, its adjacent docks
and the ship transfer system, all of which are outlined in
green on the attached Exhibit B, VECO shall have the follow-
ing responsibilities:
(1) VECO shall maintain the premises in a neat
and orderly manner and except as otherwise herein
provided VECO shall not permit any waste, destruction,
defacement, or other injury to the ship lift other than
normal wear and tear and CITY shall have the right to
inspect the property from time to time;
(2) VECO shall maintain the highest housekeeping
standards, and maintain the premises in clean and
sanitary condition.
VECO shall promptly and continu-
ously remove dunnage, debris and waste material from
railroad tracks, dock aprons, open storage areas and
other areas included wi thin the ship lift sub-portion
of the VECO Portion of the Public Port Facility;
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(3) VECO shall assume the expense of general
repainting of the facility, repair or replacement of
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dock timbers, general masonry repairs, general dock
repairs, and lift repairs;
(4) VECO shall assume the responsibility of snow
removal;
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platform, or other facilities, VECO specifically
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agrees to supervise operation of mechanized equipment,
lift trucks and the like to minimize damage, and to
assure the preservation of the facilities;
(6) All maintenance and repair work required to
be done by VECO under the provisions of this section
shall be performed by VECO to the satisfaction of CITY.
If VECO shall fail to make repairs which are its obli-
gation under this subsection after ten (10) days'
notice from City such repairs shall be performed by
persons approved or designated by the CITY, and the
cost of such repairs shall be collectable from VECO;
(7) In the event that the CITY shall retain or
employ outside contractors or parties to accomplish
maintenance or repair services under this section, VECO
agrees to reimburse the CITY for the actual cost of
such outside repair or maintenance service, plus twenty
percent (20%) as overhead charge;
(B) It is further specifically understood and
agreed that VECO shall submit to the CITY for approval,
any special equipment or installations,
including
ATTO><I>:ICVS AT LAW
509 InSTTHIRO ~V[MI[
ANCllORAGE. AK 99501
(9071274.7522
arrangements for storage and servicing of mechanical
equipment and facilities for personnel other than those
.
HUGHES THORSNESS
GA~,TZ POWElL&B1l:U~.DIN
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HUGHES THORSNESS
GANTZ POWElLa BRU N DIN
ATTOqNEYS AT LAW
50' WIn TlIIRDAVtNUl
ANCHORAGE. AK 99501
(9071274.7522
provided by CITY.
VECO agrees to maintain the highest
standards of safety and to conform to the requirements
of CITY and of the State government with respect to
storage and servicing of mechanical equipment;
(9) VECO agrees not to make any maj or al tera-
tions, additions or improvements to or upon the ship
lift without the written consent of the CITY first
having been obtained;
(10) Any improvements which may be made by VECO,
except the installation of removable partitions, coun-
ters, shelving, machinery or other trade fixtures, or
other readily removable equipment, shall become the
property of the CITY upon the termination of this
agreement unless otherwise agreed in writing;
(11) The docks are designed to sustain a weight of
five hundred pounds per square foot. The CITY does not
guarantee that the general dock facilities will sustain
specific weights per square foot in excess of the
designed load, and VECO shall indemnify and save harm-
less the CITY from any damage which the CITY may sus-
tain by reason of overloading of the general dock
faci li ties.
(b) With respect to the general dock, all of which is
outlined in blue on the attached Exhibit B, VECO shall have
the following maintenance responsibilities:
(I) To avoid waste, destruction, defacement or
other injury to the wharf. To bear all expense related
to repairs to the wharf where injury was caused by VECO
or any of its agents. To pursue and collect from other
parties responsible for damage to the wharf;
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Go\NTZ PownL/l;B~UNDlN.
ATTORNEY:; '<'T LAW
SO, WESfT.,lItD AV~I;:J(
ANCHORAGE, AK 9950\
(907) 274.7522
(2 )
To keep the premises in a clean and sanitary
condition.
VECO shall promptly and continuously remove
dunnage, debris and waste wherever located on the
premises;
(3) All other maintenance shall be the responsi-
bili ty of CITY.
17. Notices
All notices under this agreement shall be sent by registered
mail, postage prepaid, as follows:
If to VECO:
VECO Offshore, Inc.
5151 Fairbanks street
Anchorage, Alaska 99503
Attention: Rod Christ
-and if to CITY:
City of Seward
P.O. Box 167
Seward, Alaska 99664
Attention: City Manager
lB. computation of Time
The time in which any act provided by this agreement is to
be done by shall be computed by excluding the first day and
including the last, unless the last day is a Saturday, Sunday or
a holiday, and then it is also excluded.
19. Successors in Interest
Each and all of the terms, covenants and conditions in this
agreement shall inure to the benefit of and shall be binding upon
the successors in interest of CITY and VECO.
20. Entire Agreement
This agreement and the exhibits hereto contain the entire
agreement of the parties with respect to the matters covered by
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; Q~ WEST THIPO AVE/;U.
A',ClIOP.AGE. AI< 99501
(907)274.7522
this agreement, and no other agreement, statement or promise made
by any party which is not contained in this agreement shall be
binding or valid.
21. Governing Law
This agreement shall be governed by, construed and enforced
in accordance with the laws of the State of Alaska.
22. Partial Invalidity
It lS the purpose and intention of the parties to this
agreement to provide for the lawful operation by VECO of the VECO
Portion of the Public Port Faclli ty,
This agreement shall be
construed so as to uphold the existence of a legally enforceable
contract between the parties, even though such construction shall
make it necessary for a court to supplant or modify certain
provisions, substitute additional provisions, provide for regula-
tion not provided for herein or deem the rights granted herein to
constitute a franchise. Nevertheless, it is the express purpose
and intention of the parties to cause this agreement, insofar as
it is lawfully possible, to be enforced as written and in accord-
ance wi th its terms.
In case any provision of this agreement
sh~ll be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby unless such construction is
manifestly unreasonable.
If a court shall find that this agree-
ment provides for a term greater than that permitted by law or
the Charter of the CITY, then, in such event, the term shall be
deemed to be the longest term permitted by law or the Charter of
the CITY.
23. Interpretation
The language in all parts of this agreement shall in all
cases be simply construed according to its fair meaning and not
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ANCHORAGE. AI( 9~SOI
(907) 274.7522
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for or against CITY or VECO as both CITY and VECO have had the
assistance of attorneys in drafting and reviewing this agreement.
24. Number and Gender
In this agreement, the neuter gender includes the masculine
and the feminine, and the singular number includes the plural;
the word "person" includes corporation, partnership, firm or
association wherever the context so requires.
25. Mandatory and Permissive
"Shall", IIwill" and II agrees II are mandatory; IImay" is permis-
Slve.
26. Captions
Captions of the paragraphs and subparagraphs and the title
of this agreement are for convenience and reference only, and the
words contained therein shall in no way be held to explain,
modify, amplify or aid in the interpretation, construction or
meaning of the provisions of this agreement.
27. Amendment
This agreement is not subject to amendment except in writing
executed by both parties thereto.
IN WITNESS WHEREOF the parties hereto have caused this
agreement to be executed by their duly authorized representatives
in duplicate, each copy of which shall be deemed to be an original
for all purposes.
MADE AND EXECUTED on the date hereinabove set forth.
CITY OF SEWARD
VECO OFFSHORE, INC.
By:
By:
C.E. Johnson
City Manager
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ATTO,~NEYS AT LAW
50. WEST 1>111;0 AV[NUl
ANCHORAGE. AI< 99501
(907) Z7~.752 2
APPROVED AS TO FORM:
HUGHES, THORSNESS, GANTZ,
POWELL & BRUNDIN
By:
By:
Joanne E. Shanley
ci t.y Clerk
Fred B. Arvidson
City Attorney
STATE OF ALASKA
ss.
THIRD JUDICIAL DISTRICT
THIS IS TO CERTIFY that on this day of
19B1, before me, the undersigned, a Notary Public in and for the
State of Alaska, personally appeared
known to me and to me known to be the
of VECO OFFSHORE, INC., and known to me to be the individual
named in and who executed the foregoing document and he acknow-
ledged to me, that he was authorized to execute the foregoing
document by authority granted them in the Bylaws or by resolution
of the Board of Directors of said corporation for the uses and
purposes therein set forth.
WITNESS my hand and notarial seal the day and year
first hereinabove written.
Notary Publlc in and for Alaska
My Commission Expires:
STATE OF ALASKA
ss.
THIRD JUDICIAL DISTRICT
Before me, the undersigned, a Notary Public in and for the
State of Alaska, on this day personally appeared C.E. JOHNSON and
JOANNE E. SHANLEY, known to me to be the ci ty Manager, and the
City Clerk, respectively, of Seward, Alaska, whose names are
subscribed to the foregoing instrument and, being duly sworn,
acknowledged to me that the same was the act of the said City of
Seward, and that they executed the same, each for himself and not
one for the other, as the act of the City of Seward, for the
purposes and consideration therein expressed, and in the capacity
therein stated.
SUBSCRIBED AND SWORN to before me this
19B1.
day of
Notary Public in and for Alaska
My Commission Expires:
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