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CITY OF SEWARD, ALASKA
RESOLUTION NO. 95-001
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, APPROVING THE LONG TERM LEASE
OF LOT 1, BLOCK 7, SEWARD MARINE INDUSTRIAL CENTER,
AND A SHIPLIIT MAINTENANCE AND OPERATING AGREEMENT
WITH SEWARD SHIP'S DRYDOCK
WHEREAS, at City Council's direction, the administration has negotiated two
agreements with Seward Ship's Drydock for maintenance and operation of the shiplift
facility and for the lease of adjacent city-owned upland property; and
WHEREAS, it is in the public interest to approve the agreements as attached and
incorporated herein by reference;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, that:
Section 1. The long term lease of Lot 1, Block 7, Seward Marine Industrial Center,
to Seward Ship's Drydock is hereby APPROVED. A copy of the lease agreement and the
personal guaranty provided by James T. Pruitt are attached and incorporated herein by
reference.
Section 2. The shiplift maintenance and operating agreement between the City
of Seward and Seward Ship's Drydock is hereby APPROVED. A copy of the agreement
is attached and incorporated herein by reference.
Section 3. This resolution shall take effect thirty days after passage and posting
as required by law.
PASSED AND APPROVED by the City Council of the city of Seward, Alaska, this
18th day of January, 1995.
THE CITY OF SEWARD, ALASKA
A9()JJf fAf. r~
Dave W. Crane, Mayor
CITY OF SEWARD, ALASKA
RESOLUTION NO. 95-001
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AYES:
NOES:
ABSENT:
ABSTAIN:
Anderson, Crane, Darling, Deeter, King, Sieminski
None
O'Brien
None
ATTEST:
APPROVED AS TO FORM
Wohlfarth, Argetsinger, Johnson and
Brecht, Attorneys for the City of Seward,
Alaska
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City Attorney
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I. Patricia J. Jones. Acting City Cler~ Of tho city of Seward,
Alaska, do hereby certify that this 's a Irue and correct
copy of the document as it appears of record In my offICe.
In witness whereof, I have hereunto set my hand and
affixed the s<lai of the city of Seward, Alaska .,
thiS~ay of J.. u...Jv....lL. ~ l <t. C{
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Patrlol, J, Jones, Acting City Clerk
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CITY OF SEWARD, ALASKA
as Lessor
to
SEWARD SHIP'S DRYDOCK, INC.
as Lessee
GROUND LEASE
Dated as of February 18, 1995
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TABLE OF CONTENTS
PAGE
ARTICLE 1
Definitions . . . . . . . . . . . . . . . . . . . . . . .. 2
ARTICLE 2
Lease of Premises . . . . . . . . . . . . . . . . . . . .. 5
Section 2.01 - Lease of Premises .............................. 5
Section 2.02 - Legal Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5
Section 2.03 - Lease Term ................................... 5
Section 2.04 - Extension of Lease Term. . . . . . . . . . . . . . . . . . . . . . . . .. 5
Section 2.05 - Covenant of Quiet Enjoyment ...................... 6
ARTICLE 3
Rent . . . . . . . . . . . . . . . . . . . . . . . . .. 6
Section 3.01 - Amount of Rent ................................ 6
Section 3.02 - Payment of Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6
Section 3.03 - Adjustment to Rent After Appraisal. . . . . . . . . . . . . . . . . .. 7
Section 3.04 - Periodic Adjustments to Rent ...................... 8
Section 3.05 - Rent Credits for Deferred Maintenance. . . . . . . . . . . . . . .. 9
ARTICLE 4
Use of Premises . . . . . . . . . . . . . . . . . . . . .. 9
Section 4.01 - Use of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 9
Section 4.02 - Specific Use Restrictions . . . . . . . . . . . . . . . . . . . . . . . . .. 10
Section 4.03 - Platting ...................................... 10
Section 4.04 - Land Use Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
Section 4.05 - Easements and Rights-of-Way. . . . . . . . . . . . . . . . . . . . .. 10
Section 4.06 - Environmental Matters ........................... 10
ARTI CLE 5
Construction bv Lessee . . . . . . . . . . . . . . . . . .. 13
Section 5.01 - Construction .................................. 13
Section 5.02 - Protection Against Liens ..... . . . . . . . . . . . . . . . . . . . .. 13
Section 5.03 - Fencing on Premises ............................ 14
City of Seward
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ARTICLE 6
SMIC and Public Port Facilities ................ 14
Section 6.01 - Adequacy of Port Facilities ........................ 14
Section 6.02 - Other Leasing by City . . . . . . . . . . . . . . . . . . . . . . . . . . ., 14
Section 6.03 - Operation by Lessee ............................ 14
Section 6.04 - Repairs on Shiplift Facility Platform .................. 15
Section 6.05 - Port and Harbor Tariff. . . . . . . . . . . . . . . . . . . . . . . . . . .. 15
ARTICLE 7
Termination or Expiration of Lease Term . . . . . . . . . . . ., 15
Section 7.01 - Lessee's Duty to Surrender. . . . . . . . . . . . . . . . . . . . . . ., 15
Section 7.02 - Holding Over. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 16
Section 7.03 - Disposition of Improvements. . . . . . . . . . . . . . . . . . . . . ., 16
Section 7.04 - Determination of Compensation. . . . . . . . . . . . . . . . . . . ., 16
Section 7.05 - Option to Terminate Lease ........................ 16
Section 7.06 - Option to Renew Operating Agreement ............... 16
ARTICLE 8
Sublease or Assiqnment . . . . . . . . . . . . . . . . . .. 17
Section 8.01 - Assignment of Lease or Subleasing. . . . . . . . . . . . . . . . ., 17
Section 8.02 - Subleasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 17
Section 8.03 - Assignment .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 18
Section 8.04 - Assignment of Lease for Security. . . . . . . . . . . . . . . . . . ., 18
ARTICLE 9
Indemnitv: Insurance . . . . . . . . . . . . . . . . . . ., 18
Section 9.01 - Lessee's Duty to Indemnify . . . . . . . . . . . . . . . . . . . . . . .. 18
Section 9.02 - Insurance Requirements . . . . . . . . . . . . . . . . . . . . . . . . ., 19
ARTICLE 10
Condemnation ...................... 20
ARTI CLE 11
Default: Remedies . . . . . . . . . . . . . . . . . . . .. 21
Section 11.01 - Events of Default .............................. 21
Section 11.02 - Remedies for Default by Lessee. . . . . . . . . . . . . . . . . . .. 22
Section 11.03 - No Waiver of Breach . . . . . . . . . . . . . . . . . . . . . . . . . . .. 23
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ARTICLE 12
Dispute Resolution . . . . . . . . . . . . . . . . . . . ., 23
Section 12.01 - Submission of Claims. . . . . . . . . . . . . . . . . . . . . . . . . .. 23
Section 12.02 - Arbitration ................................... 24
ARTICLE 13
Maintenance and Repairs of Premises . . . . . . . . . . . . .. 24
Section 13.01 - Normal Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . ., 24
Section 13.02 - Inspection of Premises .......................... 25
Section 13.03 - Taxes, Assessments and Other Charges ............. 25
Section 13.04 - Fire Protection ................................ 25
Section 13.05 - Parking ..................................... 25
ARTICLE 14
Miscellaneous ...................... 26
Section 14.01 - Time ....................................... 26
Section 14.02 - Entire Agreement ... . . . . . . . . . . . . . . . . . . . . . . . . . .. 26
Section 14.03 - Relationship of Parties. . . . . . . . . . . . . . . . . . . . . . . . . .. 26
Section 14.04 - Covenants .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 26
Section 14.05 - Estoppel Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . .. 26
Section 14.06 - Notices ..................................... 27
Section 14.07 - Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 27
Section 14.08 - Severability .................................. 27
Section 14.09 - Amendments ........ . . . . . . . . . . . . . . . . . . . . . . . .. 27
Section 14.10 - Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . .. 27
Section 14.11 - Applicable Law; Jurisdiction ...................... 27
Section 14.12 - Captions .................................... 27
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GROUND LEASE
This Ground Lease is made as of February 18, 1995 between the City of Seward,
Alaska, an Alaska municipal corporation ("City"), whose address is P.O. Box 167, Seward,
Alaska 99664, and Seward Ship's Drydock, Inc. ("Lessee"), whose address is P.O. Box
944, Seward, Alaska 99664.
WHEREAS, City and Lessee are Lessor and Lessee, respectively, under a lease
agreement effective as of September 22, 1988, as amended (the "Prior Lease"), a
memorandum of which was recorded at Book 53, Page 255, Seward Recording District,
Third Judicial District, State of Alaska, under which Lessee leased from City certain real
property located in the City of Seward, as described in the Prior Lease (the "Former
Premises"); and
WHEREAS, an arbitrators' decision and order dated January 4, 1993, set forth
certain rights of City and Lessee under the Prior Lease, including the determination that
City could not enforce any penalty against Lessee for a period of 24 months after the
date of the arbitrators' decision and order (or until January 9, 1995), with respect to
Lessee's failure to construct on the Former Premises a permanent covered repair
building capable of enclosing a vessel 300 feet in length (the "300-Foot Building"); and
WHEREAS, the City Council of City has declined to extend the time for
construction of the 300-Foot Building, and has proposed that in lieu of constructing the
300-Foot Building Lessee assume all expenses of maintaining and operating City's
Shiplift Facility described herein; and
WHEREAS, by entering into this Lease Lessee will be relieved of the obligation to
construct the 300-Foot Building, and by a separate maintenance and operating
agreement with City dated the date hereof (the "Operating Agreement") Lessee will
assume all expenses of operating and maintaining City's Shiplift Facility, and Lessee will
continue best efforts for the construction of a covered work station for vessel repair; and
WHEREAS, City and Lessee agree to share equally the burden of Shiplift Facility
deferred maintenance through direct expenditures by Lessee and by up to five years of
rent credits by City; and
WHEREAS, Lessee will repair and replace Shiplift Facility deferred maintenance
items according to a mutually agreeable schedule and list of tasks; and
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WHEREAS, the parties have determined that it is in their respective interests to
modify substantially their relationship under the Prior Lease, by terminating the Prior
Lease and entering into this Lease and the Operating Agreement to replace the Prior
Lease; and
WHEREAS, City has agreed to lease to Lessee the premises described herein,
which includes the Former Premises (the "Premises"), and Lessee has agreed to lease
the Premises from City under the terms and conditions set forth herein; and
WHEREAS, City has invested substantial public monies in the construction of
public port facilities adjacent to and on the Premises in order to provide opportunities for
the development of a vessel repair and construction industry in the City of Seward; and
WHEREAS, the City Council of the City of Seward has determined that a lease of
the Premises and construction and operation thereon of a vessel repair and construction
facility is in the public interest in that such a facility would be compatible with the public's
use of the public port facilities, provide employment for the residents of the City of
Seward, and promote the growth and stability of the economy of the City of
Seward; and
WHEREAS, Lessee has and will continue to offer comprehensive vessel repair and
construction services, including without limitation steel and other metal work, marine pipe
fitting, marine electrical repair, waste handling, sand blasting, painting and other marine
services, and Lessee has and will continue to be capable of handling vessels up to 300
feet in length, and provide employment for residents of the City of Seward;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
ARTICLE 1
Definitions
The following terms will have the meanings indicated below unless the context
clearly requires otherwise:
"Arbitration" means arbitration under the procedure set forth in Article 12.
"City" means the City of Seward, Alaska.
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"Claim" means a demand or assertion by either party to this Lease, seeking, as
a matter of right, adjustment or interpretation of Lease terms, payment of money,
extension of time or other relief with respect to the terms of this Lease, and also includes
other disputes and matters in question between City and Lessee arising out of or relating
to this Lease.
"Deferred Maintenance" means all repair and maintenance items for the Shiplift
Facility identified as such under the terms of the Operating Agreement.
"Environmental Laws" means all local, state and federal laws, ordinances,
regulations and orders related to environmental protection; the use, storage, generation,
production, treatment, emission, discharge, remediation, removal, disposal or transport
of any Hazardous Substance; or any other environmental matter, including without
limitation any of the following statutes:
(i) Federal Resource Conservation and Recovery Act of 1976, as amended, 42
U.S.C. Sections 6901-6991 K;
(ii) Federal Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. Sections 9601-9675;
(iii) Federal Clean Air Act, 42 U.S.C. Sections 7401-7642;
(iv) Federal Hazardous Material Transportation Control Act of 1970, as amended,
49 U.S.C. Sections 1801-1812;
(v) Federal Clean Water Act of 1977, as amended, 33 U.S.C. Sections 1251-1387;
(vi) Federal Insecticide, Fungicide and Rodenticide Act, as amended, 7 U.S.C.
Sections 2601-2671;
(vii) Federal Toxic Substances Control Act, 15 U.S.C. Sections 2601-2671;
(viii) Federal Safe Drinking Water Act, 42 U.S.C. Sections 3001-300;-26; and
(ix) Title 46 of the Alaska Statutes.
"Event of Default" means any of the events described in Section 11.01.
"Fiscal Year" means the calendar year.
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"Force Majeure" means, without limitation, the following: acts of God; strikes,
lockouts or other industrial disturbances; acts of public enemies; orders or restraints of
any kind of the government of the United States or of the State of Alaska or any of their
departments, agencies, subdivisions or officials, or any civil or military authority;
insurrection; riots; landslides; icebergs; typhoons; tornadoes; adverse weather
conditions; tidal waves; earthquakes; fires; storms; droughts; floods; explosions;
breakage, malfunction or accident to facilities, machinery, transmission pipes or canals;
or any other cause or event not reasonably within the control of the Lessee.
"Hazardous Substances" means any substance or material defined or designated
as hazardous or toxic waste, hazardous or toxic material, a hazardous, toxic or
radioactive substance, or other similar term, by any Environmental Laws, and shall
include any such substance or material as may hereafter become defined or designated
as hazardous or toxic material by any Environmental Laws.
"Lease" means this Lease, as amended from time to time.
"Lease Term" means the duration of the Lease of the Premises to Lessee as set
forth in Section 2.03.
"Lessee" means Seward Ship's Drydock, Inc., an Alaska corporation, its
successors and assigns.
"Operating Agreement" means the Maintenance and Operating Agreement
between City and Lessee dated February 18, 1995.
"Port Facilities" means all public port facilities owned or operated by City from time
to time, including without limitation the Shiplift Facility.
"Premises" means the land plus any improvements described in Section 2.02,
exclusive of any other improvements now or hereafter located on the land, notwithstand-
ing that any such improvements may be determined to be affixed to, and constitute part
of, the real property, and regardless of whether City or Lessee owns the improvements.
"Prior Lease" means the Lease Agreement effective as of September 22, 1988, as
amended, between City and Lessee, a memorandum of which was recorded at Book 53,
Page 255, Seward Recording District, Third Judicial District, State of Alaska.
"Rent" means an amount equal to $66,052 per year, adjusted as provided in Article
III.
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"Rent Adjustment Date" means January 1, 2000 and January 1 of every fifth year
thereafter.
"SMIC" means the Seward Marine Industrial Center, consisting of the area shown
on the site map in Exhibit A hereto.
"Shiplift Facility" means the NEI Syncrolift Shiplift System in the SMIC, including
the mechanical shiplift and all associated equipment, all upland rails not located on the
Premises or other leased property, the side transfer cradle assembly, the shiplift dock
and 33 connected cofferdam cells comprising the south breakwater.
ARTICLE 2
Lease of Premises
Section 2.01 - Lease of Premises. City leases the Premises to Lessee, and Lessee
hires the Premises from Lessor, in accordance with this Lease for the Lease Term.
Section 2.02 - Leaal Descriotion. The legal description of the Premises is included
in Exhibit B hereto. Notwithstanding any contrary provision in the Prior Lease, any
improvements constructed by Lessee or its predecessor on the Premises under the Prior
Lease and existing at the commencement of this Lease shall remain Lessee's property
subject to the other terms of this Lease. City shall receive no compensation for the
improvements other than the performance of Lessee's covenants expressed in this
Lease.
Section 2.03 - Lease Term. The Lease Term commences February 18, 1995, and
ends at midnight on June 30, 2009, unless sooner terminated as provided herein. The
Lease Term is subject to extension at the option of Lessee as provided in Section 2.04.
Section 2.04 - Extension of Lease Term. Lessee may, at its option, extend the
Lease Term for one or more additional periods which shall not, in total, exceed 20 years.
Notwithstanding any other provision of this Lease, no extension of the Lease Term shall
cause the Lease Term to expire later than midnight on June 30, 2029. Lessee shall
exercise the option granted by this section in the manner, and subject to all of the
conditions, set forth in this section.
(a) The exercise of an option to extend the Lease Term under this section shall
be subject to the following conditions:
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(1) Lessee shall notify Lessor of the exercising of the option in the
manner specified in (b) of this section.
(2) Before exercising the option, Lessee shall submit to City plans for
improvements to the Premises or the Shiplift Facility, an engineer's or architect's
estimate of the cost of the improvements, and a schedule for acquiring, construct-
ing and installing the improvements, and City shall have given Lessee its written
approval of the proposed improvements.
(3) Lessee shall designate the portion of the proposed improvements
that it intends to finance with borrowed funds, and shall provide City with a written
commitment from a financial institution to lend the designated amount to Lessee.
(4) Lessee shall submit to City a written estimate prepared by the
financial institution that has committed to lend funds for the improvements of the
number of years required to amortize the borrowed amount, with interest, in
payments totalling not less than $100,000 per year.
(5) The exercise of the option shall not extend the expiration date of the
Lease Term to a date later than five years after the date the borrowed amount,
with interest, will be amortized under the estimate provided under (a)(4) of this
section.
(b) Lessee shall give City written notice of the exercise of an option to extend
the Lease Term under this section, with the documents required under (a) of this section,
not later than 180 days before the date of expiration of the Lease Term, as previously
extended.
(c) An extension of the Lease Term under this section shall become effective
on the date of the closing of the financing of the improvements described in the
documents Lessee submits to City to exercise the option.
Section 2.05 - Covenant of Quiet Eniovment. Subject only to the provisions of this
Lease, Lessee shall have the quiet enjoyment and possession of the Premises for the
uses authorized hereunder for the full Lease Term. City owns the Premises free and
clear of all encumbrances and is fully empowered to enter into this Lease.
ARTICLE 3
Rent
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Section 3.01 - Amount of Rent. Lessee shall pay to City without abatement,
deduction or offset (except as provided in Section 3.05) annual rent in an amount equal
to the Rent.
Section 3.02 - Payment of Rent.
(a) Rent shall be payable in advance in four equal quarterly installments on
January 1, April 1, July 1 and October 1 of each year; provided that the first rent
payment shall be due on the first day of the Lease Term, and the first and last rent
payments shall be prorated based upon the number of days in the period for which the
rent is due.
(b) Upon the determination of the adjustment to Rent under Section 3.03,
Lessee shall pay to City the amount, if any, by which the adjusted Rent exceeds Rent
previously paid, and City shall pay the Lessee the amount, if any, by which Rent
previously paid exceeds the adjusted Rent.
Section 3.03 - Adiustment to Rent After Appraisal. The Rent shall be adjusted to
the fair market rental value as of the commencement of the Lease Term, of the Premises
as a vessel construction and repair facility, exclusive of improvements placed thereon by
Lessee or its predecessor under this Lease or the Prior Lease, but including all
improvements made by City before or after the commencement of the Lease Term. Not
later than 180 days after the commencement of the Lease Term, City shall provide
Lessee with a copy of the report of an independent MAl appraiser engaged at City's
expense stating the appraiser's determination of the fair market rental value of the
Premises under this section as of the commencement of the Lease Term. The appraiser
shall be instructed to take into account in determining the fair market rental value of the
Premises (i) the value of the shiplift transfer rails on the Premises, and (ii) the Premises's
proximity and access to the Shiplift Facility. Unless Lessee objects to City's appraisal
as provided below, the Rent shall be adjusted to the fair market rental value determined
in the appraiser's report as of the commencement of the Lease Term.
The fair market rental value determined under the preceding paragraph shall be
final unless Lessee (i) notifies City in writing that it objects thereto within 30 days
following City's delivery or mailing of its appraiser's report; and (ii) at its own expense
engages a second independent MAl certified appraiser to determine the fair market rental
value of the Premises, and provides City with a copy of the appraiser's report not less
than 60 days after its receipt of the report of City's appraiser. Lessee's appraiser shall
be instructed to take into account in determining the fair market rental value of the
Premises (i) the value of the shiplift transfer rails on the Premises, and (ii) the Premises's
proximity and access to the Shiplift Facility.
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If the fair market rental value determined by Lessee's appraisal varies from the fair
market rental value determined by City's appraisal by no more than 15 per cent, the Rent
as of the commencement of the Lease Term shall be the average of the fair market
values determined under the two appraisals. If the fair market rental value determined
by Lessee's appraisal varies from the fair market rental value determined by City's
appraisal by more than 15 per cent, the Rent as of the commencement of the Lease
Term shall be the average of the fair market values determined under the two appraisals,
unless either party notifies the other in writing within 15 days of City's receipt of Lessee's
appraiser's report that the fair market rental value shall be determined by a third
appraisal.
Upon wirtten notice that fair market rental value shall be determined by a third
appraisal, each party shall instruct its appraiser to select with the other party's appraiser
a third MAl certified appraiser. The third appraiser shall determine the fair market rental
value of the Premises as of the commencement of the Lease Term in accordance with
this section, based upon a review of the two previous appraisers' reports and any
additional investigation the third appraiser deems necessary. The Rent shall be adjusted
to the fair market rental value determined in the third appraiser's report as of the
commencement of the Lease Term. Each party shall bear half the cost of the third
appraisal.
Section 3.04 - Periodic Adiustments to Rent. On each Rent Adjustment Date, the
Rent shall be adjusted to the fair market rental value as of the Rent Adjustment Date, of
the Premises as a vessel construction and repair facility, exclusive of improvements
placed thereon by Lessee or its predecessor under this Lease or the Prior Lease, but
including all improvements made by City before or after the commencement of the Lease
Term. Not later than 90 days before the Rent Adjustment Date, City shall provide Lessee
with a copy of the report of an independent MAl appraiser engaged at City's expense
stating the appraiser's determination of the fair market rental value of the Premises under
this section as of the Rent Adjustment Date. The appraiser shall be instructed to take
into account in determining the fair market rental value of the Premises (i) the value of
the shiplift transfer rails on the Premises, and (ii) the Premises's proximity and access to
the Shiplift Facility. Unless Lessee objects to City's appraisal as provided below, the
Rent shall be adjusted to the fair market rental value determined in the appraiser's report
as of the Rent Adjustment Date.
The fair market rental value determined under the preceding paragraph shall be
final unless Lessee (i) notifies City in writing that it objects thereto within 30 days
following City's delivery or mailing of its appraiser's report; and (ii) at its own expense
engages a second independent MAl certified appraiser to determine the fair market rental
value of the Premises, and provides City with a copy of the appraiser's report not less
than 60 days after its receipt of the report of City's appraiser. Lessee's appraiser shall
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be instructed to take into account in determining the fair market rental value of the
Premises (i) the value of the shiplift transfer rails on the Premises, and (ii) the Premises's
proximity and access to the Shiplift Facility.
If the fair market rental value determined by Lessee's appraisal varies from the fair
market rental value determined by City's appraisal by no more than 15 per cent, the
adjusted Rent as of the Rent Adjustment Date shall be the average of the fair market
values determined under the two appraisals. If the fair market rental value determined
by Lessee's appraisal varies from the fair market rental value determined by City's
appraisal by more than 15 per cent, the adjusted Rent as of the Rent Adjustment Date
shall be the average of the fair market values determined under the two appraisals,
unless either party notifies the other in writing within 15 days of City's receipt of Lessee's
appraiser's report that the fair market rental value shall be determined by a third
appraisal.
Upon wirtten notice that fair market rental value shall be determined by a third
appraisal, each party shall instruct its appraiser to select with the other party's appraiser
a third MAl certified appraiser. The third appraiser shall determine the fair market rental
value of the Premises as of the Rent Adjustment Date in accordance with this section,
based upon a review of the two previous appraisers' reports and any additional
investigation the third appraiser deems necessary. The Rent shall be adjusted to the fair
market rental value determined in the third appraiser's report as of the Rent Adjustment
Date. Each party shall bear half the cost of the third appraisal.
Section 3.05 - Rent Credits for Deferred Maintenance. Lessee shall be allowed as
a credit not exceeding the amount of Rent due from the commencement of the Lease
Term through February 18, 2000, for the amount actually expended by Lessee through
February 18, 2000 for Deterred Maintenance or replacement of shiplift cables. Lessee
shall receive this credit as follows:
(a) Lessee may deduct from any Rent payment due for the period ending on
or before Februrary 18, 2000, the amount by which (i) the amount actually expended
before the earlier of the Rent due date and February 18, 2000 by Lessee for Deferred
Maintenance or replacement of shiplift cables, exceeds (ii) Rent for which Lessee already
has received a credit under this section.
(b) At the end of each Fiscal Year ending before January 1, 2001, City shall
refund to Lessee from Rent due and paid on or before the end of that Fiscal Year the
amount by which (i) the amount actually expended before the earlier of the end of the
Fiscal Year and February 18, 2000 by Lessee for Deferred Maintenance or replacement
of shiplift cables, exceeds (ii) Rent for which Lessee already has received a credit under
this section.
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ARTICLE 4
Use of Premises
Section 4.01 - Use of Premises. The parties agree that the Premises is one of few
parcels within the SMIC suitable for vessel repair and construction and that City has
made a substantial investment in public facilities adjacent or in proximity to the Premises
with the objective of providing opportunities for businesses such as Lessee's to operate.
Lessee shall use the Premises only for vessel repair and construction, and purposes
incidental thereto. Lessee shall operate a vessel repair and construction facility on the
Premises continuously during the Lease Term. Lessee is not operating a vessel repair
and construction facility continuously on the Premises if, during any period of 60
consecutive days, Lessee performs no vessel repair or construction work on any vessel
on the Premises.
Section 4.02 - Specific Use Restrictions. Lessee shall not commit any waste of
the Premises or the improvements thereon. Lessee shall use, operate and maintain the
Premises and the improvements thereon in accordance with all laws and regulations
governing such use, operation and maintenance. Lessee will not use the Premises in
any manner or construct any improvements thereon which would constitute a public
nuisance or which would interfere with the use of other land in the SMIC.
Section 4.03 - PlattinQ. Lessee caused the Premises to be surveyed at its expense
under the Prior Lease. City shall at its expense prepare and submit to the Kenai
Peninsula Borough for approval and recording a final plat including and identifying the
Premises as a separate parcel, based upon the survey performed by Lessee.
Section 4.04 - Land Use Approvals. Lessee at its sole expense may prepare and
submit any application for rezoning, conditional use approval, subdivision or other land
use permit approval that it deems necessary or appropriate for the uses of the Premises
permitted under this Lease. City shall from time to time upon request of Lessee execute
such documents as be necessary to apply for any such approval. Nothing in this section
shall require City to incur any expense, or to take any action as a land use regulator.
Section 4.05 - Easements and Riahts-of-Wav. Either party to this Lease shall from
time to time upon request of the other party execute and deliver such documents as may
be necessary to grant street, water, drainage, gas, power line and other easements and
rights-of-way as are necessary to provide for orderly development of the SMIC including
the publicly owned facilities therein. The costs of relocating any public easements or
restrictions of record including any relocation of public road, utility, or other easements,
shall be at the sole cost and expense of the party requesting the relocation. City shall
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not refuse reasonable requests for such relocations provided those requests do not
interfere with or inhibit the overall development of the SMIC. Any easements or rights
of access granted to Lessee by City need not be exclusive to Lessee. Any and all
easements, rights of access or rights-of-way which City may choose to grant at some
future date shall not unreasonably interfere with the permitted uses of the Premises by
Lessee.
Section 4.06 - Environmental Matters. Lessee covenants and agrees as follows:
(a) Lessee will not cause or permit the Premises to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose, transfer, produce or process
any Hazardous Substance, except in compliance with all applicable Environmental Laws,
nor shall Lessee cause or permit, as a result of any intentional or unintentional act or
omission on the part of the Lessee or any other user or occupant of the Premises, the
release of any Hazardous Substance onto the Premises.
(b) Lessee will at all times in all respects use its best efforts to comply, and will
use its best efforts to cause all other users or occupants of the Premises to comply, with
all Environmental Laws, including without limitation undertaking the following specific
actions: (i) Lessee will, at its own expense, procure, maintain in effect and comply with
all conditions of any and all permits, licenses and other governmental and regulatory
approvals required by all Environmental Laws, including without limitation permits
required for discharge of (appropriately treated) Hazardous Substances into the ambient
air or any sanitary sewers servicing the Premises; and (ii) except as discharged into the
ambient air or a sanitary sewer in strict compliance with all applicable Environmental
Laws, any and all Hazardous Substances to be treated and/or disposed of by the Lessee
will be removed and transported solely by duly licensed transporters to a duly licensed
treatment and/or disposal facility for final treatment and/or disposal (except when
applicable Environmental Laws permit on-site treatment or disposal in a sanitary landfill).
(c) If the presence, release, threat of release, placement on the Premises, or
the generation, transportation, storage, treatment or disposal at the Premises of any
Hazardous Substance (i) gives rise to liability (including without limitation a response
action, remedial action or removal action) under any Environmental Law, (ii) causes a
significant public health effect, or (Hi) pollutes or threatens to pollute the environment,
Lessee shall, at its sole expense, promptly take any and all remedial and removal action
necessary to clean-up the Premises and mitigate exposure to liability arising from the
Hazardous Substance, whether or not required by law.
(d) Lessee shall maintain a complete file, which may be inspected at any
reasonable time by City containing copies of all correspondence, permits or other
material between Lessee and any federal, state or other governmental authority.
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(e) Lessee shall give City within 24 hours (i) written notice and a copy of any
notice or correspondence it receives from any federal, state or other governmental
authority regarding Hazardous Substances on the Premises or which affect or will affect
the Premises, or expenses or losses incurred or expected to be incurred by Lessee or
any government agency to study, assess, contain or remove any Hazardous Substances
on or near the Premises, and (ii) written notice of any knowledge or information Lessee
obtains regarding the release or discovery of Hazardous Substances on the Premises.
(f) Lessee agrees to indemnify, hold harmless and defend City, and the
officers, employees and agents of City, from and against any and all claims, demands,
damages, losses, liens, liabilities, penalties, fines, lawsuits and other proceedings and
costs and expenses (including attorneys' fees), arising directly or indirectly from or out
of, or in any way connected with:
(i) The failure of Lessee to comply with its covenants and agreements
contained in this section;
(ii) Any activities on the Premises which directly or indirectly result in the
Project becoming contaminated with Hazardous Substances;
(Hi) The discovery of Hazardous Substances on the Premises; and
(iv) The clean-up of Hazardous Substances from the Premises without
regard to (1) the nature of the activities producing the Hazardous Substances, (2)
the identity of the person conducting such activities, and (3) the time such
activities took place (whether prior or subsequent to Lessee's acquisition of the
Premises).
(g) The provisions of this section, including the obligation to indemnify, shall
survive the termination or expiration of the Lease Term.
(h) Nothing in this section shall prejudice or impair the rights or claims of
Lessee against any person or entity other than City with respect to the presence of
Hazardous Substances as set forth above.
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ARTICLE 5
Construction bv Lessee
Section 5.01 - Construction. Lessee may erect, maintain, alter, remodel,
reconstruct, rebuild, build and replace improvements on the Premises, subject to the
following conditions:
(a) Lessee shall not be in default under this Lease;
(b) Lessee at its sole expense shall obtain all approvals required for the work
from governmental agencies having jurisdiction;
(c) Lessee shall bear the entire cost of the work;
(d) In accordance with Section 5.02, the Premises shall at all times be kept free
of mechanics and materialmen's liens.
(e) Lessee shall supply City with a copy of all building plans and specifications
and a site plan or plans for the improvements.
(f) Lessee shall (i) cause the work to be constructed in a workmanlike manner
and in accordance with all applicable regulatory requirements, and (ii) cause the work
to be prosecuted with diligence to completion. As between Lessee and City, Lessee
shall bear the entire cost of correcting deficient or incomplete work. Nothing in this
section shall prejudice or impair the rights or claims of Lessee against any person or
entity other than City with respect to deficient or incomplete work.
(g) All such work shall be directly related to and necessary to the operation or
maintenance of a vessel repair and construction facility on the Premises.
Section 5.02 - Protection Aqainst Liens. (a) Lessee shall not permit to be
enforced against the Premises or any part of it any mechanic's or materialman's lien
arising from any work of improvement, however it may arise. However, Lessee may in
good faith and at Lessee's own expense contest the validity of any such asserted lien,
claim or demand, provided Lessee has furnished the bond required in AS 34.35.072 (or
any comparable statute hereafter enacted for providing a bond freeing the Premises from
the effect of such a lien claim). Lessee shall defend and indemnify City against all
liability and loss of any type arising out of work performed on the Premises by Lessee,
together with reasonable attorneys' fees and all costs and expenses incurred by City in
negotiating, settling, defending, or otherwise protecting against such claims.
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(b) If Lessee does not cause to be recorded the bond described in AS
34.35.072 or otherwise protect the property under any alternative or successor statute,
and a final judgment has been rendered against Lessee by a court of competent
jurisdiction for the foreclosure of a mechanic's or materialman's lien claim, and if Lessee
fails to stay the execution of the judgment by lawful means or to pay the judgment, City
shall have the right, but not the duty, to payor otherwise discharge, stay, or prevent the
execution of any such judgment or lien or both. Lessee shall reimburse City for all sums
paid by City under this paragraph, together with all City's reasonable attorneys' fees and
costs, plus interest on those sums, fees, and costs at the rate of 10.5 percent per year
from the date of payment until the date of reimbursement.
(c) City may give notice of non-responsibility for any work performed by Lessee
on the Premises.
(d) On completion of any substantial work of improvement during the Lease
Term, Lessee shall file or cause to be filed a notice of completion. Lessee hereby
appoints City as Lessee's attorney-in-fact to file the notice of completion on Lessee's
failure to do so after the work of improvement has been substantially completed.
Section 5.03 - Fencinq on Premises. Lessee, at its own expense, shall construct
a fence around the perimeter of the Premises as specified in Exhibit C. Lessee shall
complete construction of the fence not later than July 30, 1995.
ARTICLE 6
SMIC and Public Port Facilities
Section 6.01 - Adequacv of Port Facilities. Lessee has reviewed the plans,
specifications and actual improvements made to City's Port Facilities, and has
independently determined that they are sufficient for Lessee's intended uses of the
Premises. City makes no representations or warranties as to the fitness of any particular
part or the whole of City's Port Facilities for the uses of the Premises intended by Lessee.
Section 6.02 - Other Leasinq bv City. Nothing in this Lease shall preclude City
from leasing real property, including without limitation real property at the SMIC, to other
parties who may compete with Lessee, or from seeking other tenants who might be
interested in leasing the Premises upon termination or expiration of the Lease Term.
Section 6.03 - Operation bv Lessee. Lessee shall move all vessels from the
Shiplift Facility to the Premises by means of a suitable rail-mounted ship cradle towing
system. The cradle and towing system and rails on the Premises must be certified as
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meeting acceptable engineering standards for synchrolift/rail loading and must meet
annual Lloyd's registry class rating (Section 4, Lloyd's Register of Shipping, 1981-
mechanical lift docks) by an independent surveyor acceptable to Lloyd's prior to any use
on the Shiplift Facility. The cradle system (and the towing device, to the extent required
by classification or inspection societies) must be inspected and re-certified in accordance
with the requirements of Lloyd's Classification Society as a condition precedent to
continued use of the Premises by Lessee.
Section 6.04 - Repairs on Shiplift Facility Platform. Lessee may not perform any
vessel repair or construction work on the Shiplift Facility platform, except for propeller
changes, shaft changes, surveys, zinc replacements, light steel work, and repairs or
replacements of transducers or rope guards. All work performed by Lessee on the
Shiplift Facility platform shall comply with all requirements of the State Department of
Environmental Conservation concerning intrusion into the water. Under no circumstances
will Lessee perform any sandblasting or heavy steel work on the Shiplift Facility platform.
Section 6.05 - Port and Harbor Tariff. Subject to any applicable provisions of the
Operating Agreement, City may amend the regulations and fees for use of its Port
Facilities from time to time, provided no such amendment may impose any greater
burden or higher rate upon Lessee than upon any other similar user of the City's Port
Facilities.
ARTICLE 7
Termination or Expiration of Lease Term
Section 7.01 - Lessee's Duty to Surrender. At the expiration or earlier termination
of the Lease Term, Lessee shall surrender to City the possession of the Premises.
Surrender or removal of improvements, fixtures and trade fixtures shall be as directed in
Section 7.03. Lessee shall leave the surrendered Premises and any other property in
good and broom-clean condition except as provided to the contrary in provisions of this
Lease on maintenance and repair of improvements. All property that Lessee is required
to surrender shall become City's property at the expiration or earlier termination of the
Lease Term. All property that Lessee is not required to surrender but that Lessee does
abandon shall, at City's election, become City's property at the expiration or early
termination of the Lease Term.
If Lessee fails to surrender the Premises at the expiration or earlier termination of
the Lease Term, Lessee shall defend and indemnify City from all liability and expense
resulting from the delay or failure to surrender, including, without limitation, claims made
by any succeeding tenant founded on or resulting from Lessee's failure to surrender.
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Section 7.02 - Holdinq Over. This Lease shall terminate without further notice at
expiration of the Lease Term. Any holding over by Lessee after expiration shall not
constitute a renewal or extension or give Lessee any rights in or to the Premises except
as otherwise expressly provided in this Lease.
Section 7.03 - Disposition of Improvements. At the expiration or sooner
termination of the Lease Term:
(a) City may, at its option, demand that Lessee remove from the Premises any
or all improvements, fixtures, inventory and equipment. A demand to take effect at the
normal expiration of the Lease Term shall be effected by notice given at any time not less
than 60 nor more than 180 days before the expiration date. A demand to take effect on
any other termination of the Lease Term shall be effected by notice given in or
concurrently with notice of such termination or within 30 days after such termination.
(b) City may, at its option, retain as its property any improvements constructed
by Lessee on the Premises; provided that if Lessee is not then in default City shall pay
Lessee compensation therefor as provided in Section 7.04. Notice of City's exercise of
this option shall be given at the time prescribed for a notice under (a) of this section.
(c) Provided Lessee is not then in default, Lessee shall have the right to
remove from the Premises at its expense (i) any or all improvements that City has not
elected to retain under (b) of this section, and (ii) any fixtures, inventory and equipment,
provided all resulting injuries to the Premises and remaining improvements are
completely remedied.
Section 7.04 - Determination of Compensation. If Lessee is entitled to compensa-
tion for any improvements retained by City under Section 7.03(b), City shall pay Lessee
an amount equal to the documented cost of acquiring, constructing and installing the
improvements, less accumulated depreciation of the improvements as reported on
Lessee's federal income tax returns.
Section 7.05 - Option to Terminate Lease. Upon the expiration or sooner
termination of the Operating Agreement for any reason permitted under the terms of the
Operating Agreement, City shall have the option, in its sole discretion, to terminate this
Lease upon 30 days' notice to Lessee. City may exercise this option by sending the
required notice to Lessee at any time within one year after the expiration or sooner
termination of the Operating Agreement.
Section 7.06 - Option to Renew Operatinq Agreement. At the end of the initial
term and each renewal term of the Operating Agreement, Lessee shall have the option
to renew the Operating Agreement for a renewal term ending on the earlier of (i) the date
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five years after the expiration of the current term or renewal term of the Operating
Agreement, and (ii) the date of expiration of the Lease Term.
(a) The exercise of an option to renew the Operating Agreement under this
section shall be subject to the following conditions:
(1) The Lease Term shall not have expired before the date the renewal
term of the Operating Agreement would commence.
(2) Lessee shall not be in default under this Lease at the time the option
is exercised.
(b) Lessee shall give City written notice of the exercise of an option to renew
the Operating Agreement under this section not later than 180 days before the date of
expiration of the current term of the Operating Agreement.
ARTICLE 8
Sublease or Assianment
Section 8.01 - Assianment of Lease or Subleasina. The parties recognize that a
material reason for the finding by the City Council of Seward that it is in the public
interest to lease the Premises to Lessee is Lessee's experience and history as a Seward
owned and operated business and prior participation in development of vessel repair and
construction facilities in the City of Seward. Except as provided in Section 8.02 through
8.04, any assignment of this Lease or sublease under this Lease by Lessee shall be void,
and any attempt by Lessee to assign this Lease or sublet under this Lease gives City the
right immediately to terminate this Lease.
Section 8.02 - Subleasina. Nothwithstanding Section 8.01, Lessee may sublet
portions of the Premises for operations related to vessel repair and construction,
provided that:
(a)
by City;
The sublessee and the terms of the sublease shall be subject to approval
(b) Lessee shall remain responsible for compliance with all the provisions of
this Lease with respect to the subleased portion of the Premises; and
(c) City shall participate in any sublease rentals exceeding the rent payable
hereunder that is attributable to the subleased portion of the Premises.
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Section 8.03 - Assianment. Notwithstanding Section 8.01, Lessee may assign its
entire interest under this Lease to a person to whom Lessee sells its vessel repair and
construction business, provided that the assignee and the terms of the assignment shall
be subject to approval by City.
Section 8.04 - Assignment of Lease for Security. Notwithstanding Section 8.01,
Lessee may assign, encumber or mortgage the leasehold or improvements on the
Premises, by deed of trust or other security instrument, to an institutional lender to
finance the cost of improvements to be constructed on the Premises, subject to the
following conditions:
(a) The deed of trust shall provide that all notices under the note and deed of
trust must be sent to City and that City shall have the right to cure any default if Lessee
fails to do so. City shall have 30 days to cure any default after the time for Lessee to
cure it has expired. Neither City's right to cure any default nor any exercise of that right
shall constitute an assumption of liability under the note or deed of trust.
(b) The deed of trust beneficiary shall not be liable to perform Lessee's
obligations under this Lease until the beneficiary acquires Lessee's rights by foreclosure
or assignment in lieu of foreclosure. After thus acquiring Lessee's rights, the deed of
trust beneficiary shall be liable to perform Lessee's obligations only until beneficiary
assigns or transfers the leasehold as permitted by this Lease.
(c) No assignment or deed of trust permitted under this section may cover any
interest in any real property other than Lessee's leasehold in the Premises and the
improvements thereon. No assignment or deed of trust permitted under this section shall
secure any indebtedness other than an indebtedness of Lessee to finance improvements
to be constructed or installed on the Premises.
(d) After acquiring the leasehold by foreclosure or assignment in lieu of
foreclosure, the deed of trust beneficiary may further assign, transfer or dispose of its
interest; provided that any subsequent assignee, purchaser or transferee shall be bound
by each and every term of this Lease.
ARTICLE 9
Indemnitv: Insurance
Section 9.01 - Lessee's Dutv to Indemnitv. In addition to any other duty to
indemnify or defend City, Lessee shall defend, indemnify and hold harmless City from
any and all claims, actions and demands for death or injury to persons or damage to
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property, arising from the use of the Premises during the Lease Term by Lessee,
Lessee's contractors, agents, officers, employees and invitees, or the general public.
Section 9.02 - Insurance Requirements. During the Lease Term, Lessee shall
procure and maintain at its expense the insurance described in this section subject to
the terms and conditions set forth in this section.
(a) Lessee shall procure and maintain the following insurance under this Lease:
(1) Commercial general liability and automobile insurance, with limits of
liability of $5,000,000 for all injuries, deaths or property damage resulting to anyone
person and $5,000,000 limit from anyone occurrence. Coverage under such insurance
shall also include explosion, collapse and underground property damage hazards. Such
insurance shall include a blanket contractual liability endorsement. For non-owned
watercraft of Lessee or its customers any "watercraft exclusion" in the commercial liability
insurance policy shall be eliminated. Protection and indemnity insurance shall be
provided with the same limits as the commercial liability insurance for the use of Lessee-
owned watercraft.
(2) All risk physical damage insurance for any buildings, equipment,
machinery or any other property stored or being worked on by Lessee upon the
premises at replacement value rather than original cost.
(3) Workers Compensation Insurance and insurance under the Harbor
Workers and Longshoremen's Compensation Act.
(4) Coverage for vessels in the care, custody or control of Lessee (ship
repairer's liability) with limit of liability of $5,000,000.
(5) Environmental impairment liability or pollution legal liability insurance
for all off-Premises bodily injury and property damage to parties other than Lessee
caused by pollution emanating from the Premises, with limit of liability of $1,000,000.
(6) Marine Liability Insurance and any other insurance required under
any permit or tariff of City.
(b) The minimum amounts and types of insurance required under this Section
shall be subject to revision in accordance with standard insurance practices, in order to
provide continuously throughout the Lease Term a level of protection consonant with
good business practice and accepted standards in the industry. Such factors as
increases in the cost of living shall be utilized in assessing whether the minimum
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insurance requirements should be increased. City shall notify Lessee of any required
increase in insurance coverage.
(c) All insurance policies shall provide for 30 days' notice to City of cancellation
and/or material change in policy terms. All such policies shall be written by insurance
companies legally authorized or licensed to do business in the State of Alaska, and
acceptable to City. Lessee shall furnish City, on forms supplied by City, certificates
evidencing that it has procured the insurance required herein prior to the occupancy of
the leased land or operation by Lessee. Nothing herein contained shall prevent Lessee
or City from placing and maintaining at City's or Lessee's own individual cost and
expense, additional or other insurance as may be desired.
(d) Commencing on January 1, 1996, and annually thereafter throughout the
Lease Term, Lessee shall procure and submit to City a written report from a reputable
insurance broker acceptable to City that the broker has reviewed the types and amounts
of coverage of insurance obtained by Lessee and the operations of Lessee and in the
opinion of the broker the coverage complies with Lessee's obligations under this Lease.
(e) All of the insurance policies required above as well as any other insurance
carried by Lessee or City shall provide that the insurers waive their rights of subrogation
against City and Lessee and their respective officers, servants, agents or employees.
Lessee 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 with respect to damage to equipment including
the loss of use thereof, whether insured or not. Lessee shall also name City as an
additional insured on the general liability insurance policy maintained by Lessee as'
required above, excluding coverage for claims resulting from City's sole negligence.
Lessee shall promptly and without request by City supply City copies of all insurance
binders and policies.
ARTICLE 10
Condemnation
If all or any part of the Premises is condemned for a public use by any
government agency or other duly authorized entity, City and Lessee shall each make a
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 Lessee nor City 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
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loss of Lessee's leasehold interest, City shall transmit to Lessee the amount of such
specific damages so found, if any.
If part, but not all of the Premises is condemned for public use, Lessee shall make
a good faith determination as to whether or not the taking of the part of the Premises
designated for condemnation will prevent it from continuing to operate on the Premises.
If Lessee determines in good faith that the condemning of such part of the Premises will
prevent it from continuing to operate on the Premises, Lessee may notify City in writing
to this effect, and this Lease shall then be terminated for all purposes effective 15 days
from the date Lessee sends such notice to City, or at such other later date as Lessee
shall specify in its notice, and such termination shall be treated in the same manner as
a termination at the expiration of the Lease Term. Lessee shall, as a condition precedent
to such termination, remove all encumbrances, debts and liens to which the Premises
is subject. If at the time of such partial taking for public use, Lessee determines that such
partial taking will not prevent it from continuing to operate, then Lessee and City shall
negotiate an equitable and partial abatement of the rent to be effective on the actual date
when Lessee is effectively prevented from utilizing the condemned land.
ARTICLE 11
Default: Remedies
Section 11.01 - Events of Default. Each of the following shall be an act of default
under this Lease and the terms "acts of default" and "default" shall mean, whenever they
are used in this Lease, anyone or more of the following events:
(a) Failure by Lessee to pay promptly when due the rent required to be paid
under this Lease.
(b) Failure by Lessee to observe, fulfill or perform any covenants, conditions
or agreements on its part to be observed or performed under this Lease for a period of
30 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 Lessee by City; provided, however,
that if said default is such that it cannot be corrected within the applicable period, it shall
not constitute an act of default if corrective action is instituted by Lessee within the
applicable period and diligently pursued until the default is corrected.
(c) The making by Lessee of an assignment for the benefit of creditors, the
filing of a petition in bankruptcy by Lessee, the adjudication of Lessee as insolvent or
bankrupt, the petition or application by Lessee to any tribunal for any receiver or any
trustee for itself or for any substantial part of its property; or the commencement of any
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proceeding relating to Lessee under any bankruptcy, insolvency, reorganization,
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 months from the date of commencement thereof.
The foregoing provisions of this section are subject to the following limitations: if
by reason of Force Majeure, Lessee is unable in whole or in part to carry out any of its
agreements on its part herein contained, other than any obligation of Lessee to pay
money, it shall not be deemed an Event of Default during the continuance of such
inability. Lessee agrees, however, to use all reasonable efforts to remedy with all
reasonable dispatch the cause or causes of its failure to carry out its obligations under
this Lease; provided, that the settlement of strikes, lockouts and other industrial
disturbances shall be entirely within the discretion of Lessee and Lessee shall not be
required to make settlement of strikes, lockouts or other industrial disturbances by
acceding to demands of opposing parties when such course is in the judgment of the
Lessee unfavorable to Lessee.
Section 11.02 - Remedies for Default bv Lessee. Whenever an act of default by
Lessee shall have occurred, and any applicable period for giving notice and any
opportunity to cure shall have expired, City shall have the 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) City may distrain for rent due any of Lessee's personal property which
comes into City's possession. This remedy shall include the right of City to dispose of
personal property distrained in any commercially reasonable manner. It shall be
conclusively presumed that compliance with the procedures set forth in the Alaska
Uniform Commercial Code (A.S. 45.09.504) with respect to sale of property shall be a
commercially reasonable disposal.
(b) City may re-enter the Premises and take possession thereof and, except for
any personal property of Lessee which City has waived its right to distrain under sub-part
(a) above, remove all personal property of Lessee from the Premises. Such personal
property may be stored in place or may be removed and stored in a public warehouse
or elsewhere at the cost of Lessee all without service of notice or resort to legal process,
all of which Lessee expressly waives.
(c) Declare this Lease terminated.
(d) Collect any and all rents due or to become due from sub-tenants or other
occupants of the Premises.
City of Seward
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(e) Recover, whether this Lease be terminated or not, damages incurred by
City by reason of the breach or default by Lessee.
(f) Recover an amount to be due immediately on breach equal to the rent
reserved under this Lease discounted to the date of such breach at the rate of eight
percent (8%) per year. If the Premises or any part thereof be re-Iet by City for the
unexpired Lease Term, City shall reimburse to Lessee upon receipt an amount not to
exceed the amount received by City under this paragraph.
(g) If Lessee does not immediately surrender possession of the Premises after
termination by City and upon demand by City, City may forthwith enter into and upon
and repossess the Premises and expel Lessee 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.
(h) No expiration or termination of this Lease shall expire or terminate any
liability or obligation to perform of Lessee's which arose prior to the termination or
expiration except insofar as otherwise agreed in this Lease.
(i) Each right and remedy of City provided for in this Lease shall be cumulative
and shall be in addition to every other right or remedy provided for in this Lease or now
or hereafter existing at law or in equity or by statute or otherwise, and the exercise or
beginning of the exercise by City of anyone or more of the rights and remedies provided
for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise
shall not preclude the simultaneous or later exercise by City of any or all other rights or
remedies provided for in this Lease or now or thereafter existing at law, or in equity or
by statute or otherwise.
Section 11.03 - No Waiver of Breach. No failure by City to insist upon the strict
performance by Lessee of any term, covenant or condition of this Lease or to exercise
any right or remedy consequent upon a breach thereof, shall constitute a waiver of any
such breach or of such terms, covenants or conditions. No waiver of any breach shall
affect or alter this Lease, but each and every term, covenant and condition of this Lease
shall continue in full force and effect with respect to any other then existing or
subsequent breach.
ARTICLE 12
Dispute Resolution
City of Seward
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Section 12.01 - Submission of Claims. All Claims by a party shall be submitted
to the other party by written notice. The responsibility to substantiate a Claim shall rest
with the party making the Claim. A Claim by either party must be made within 30 days
of the event giving rise to the Claim, or the date the claimant first recognizes the
condition giving rise to the claim, whichever occurs later. If a Claim is not resolved within
60 days of its submission under this section, the claimant may submit the claim to
Arbitration under Section 12.02. Unless the parties agree otherwise in writing, a claim
is waived if not submitted to Arbitration under Section 12.01 within 90 days of the giving
of the initial written notice of the Claim under this section.
Section 12.02 - Arbitration. (a) All Claims shall be decided by Arbitration, in
accordance with this section. A Claim may not be submitted to Arbitration unless it was
the subject of a timely notice under Section 12.01.
(b) Consent Panel. The party desiring Arbitration of a dispute shall give written
notice to that effect to the other party specifying in such notice the name and address
of a person to serve as an arbitrator on its behalf. Within 15 days after receipt of such
notice the other party shall give written notice to the first party specifying the name and
address of a person designated to serve as an arbitrator on its behalf.
If neither party has objected to the other's designation within fifteen (15) days of
the notice by the second party of its representative of an arbitrator, then the two chosen
arbitrators (called the "consent panel") shall select a third person agreeable to both to
become the third member of the consent panel. The consent panel may utilize informal
techniques and hold informal hearings without reference or adherence to the rules or
procedures of the American Arbitration Association. Promptly and within thirty (30) days
of concluding any proceeding the consent panel shall render its written decision. It is the
intent of this subsection to provide for a speedy and inexpensive resolution of disputes
provided the parties agree to such a procedure.
(c) Formal Arbitration. If either party objects, within fifteen (15) days of the
second party's designation of an arbitrator to the others choice of an arbitrator pursuant
to paragraph (b) above, or the first party initially decides not to use the consent panel
procedure, then the matter shall be promptly referred to the American Arbitration
Association in accordance with the then existing rules of the American Arbitration
Association.
(d) Arbitration Awards. Any award by either a consent panel or as a result or
proceedings before a panel pursuant to the rules of the American Arbitration Association
shall be enforceable in accordance with Alaska Statutes. Any award shall include an
award of costs, interest and attorney fees.
City of Seward
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ARTICLE 13
Maintenance and Repairs of Premises
Section 13.01 - Normal Maintenance. During the entire Lease Term, Lessee shall,
at Lessee's sole cost, risk and expense, maintain the Premises, including any improve-
ments placed thereon by Lessee, in as good condition as received or constructed by
Lessee, ordinary wear and tear excepted. Lessee shall maintain in first class condition
at all times all fire, pollution and other protective equipment.
Section 13.02 - Inspection of Premises. City may periodically inspect the Premises
and facilities constructed thereon in order to ascertain the condition of the Premises but
the exercise of this right shall not imply any obligation to do so nor any obligation to do
so in any particular way.
Section 13.03 - Taxes. Assessments and Other Charaes. Lessee shall pay all real
and personal property taxes, sales taxes, special assessments, and other charges of
every description levied on or assessed against the Premises, improvements on the
Premises, personal property located on the Premises, the Leasehold estate, or Lessee's
business operations located on the Premises, to the full extent of installments falling due
during the Lease Term. Lessee shall make all such payments before delinquency and
before any fine, interest, or penalty shall become due or be imposed by operation of law
for their nonpayment; provided that Lessee may pay any such payment in installments
where permitted by law, but shall pay any installment with interest before delinquency.
Lessee may contest the legal validity or amount of any tax, assessment or charge for
which Lessee is responsible under this Lease. If Lessee contests any such tax,
assessment or charge, Lessee may withhold or defer payment or pay under protest but
shall protect City and the Premises from any lien by surety bond or other appropriate
security.
Section 13.04 - Fire Protection. Lessee shall at its sole cost, risk and expense
provide fire protection to its operations on the Premises and fire prevention to industry
standards for risks to adjacent port facilities such that those risks are minimized. Lessee
shall continue to provide and maintain industry accepted standards of fire protection
such that the City of Seward's ISO rating is not degraded by reason of Lessee's
operation. The parties agree that with the rapid expansion of technology in the field of
fire prevention and control Lessee's obligations hereunder may vary during the term of
this Lease and City may submit Lessee's compliance with its obligation hereunder to
Arbitration not more frequently than once each five years.
Section 13.05 - Parkina. Lessee, at its own expense, shall establish one or more
parking areas on the Premises and will encourage Lessee's employees to use same.
City of Seward
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The parking area or areas shall provide sufficient parking spaces to accommodate (i) all
of Lessee's employees who are employed on the Premises; and (ii) all customers and
other visitors to the business conducted by Lessee on the Premises; provided that the
minimum number of parking spaces that Lessee shall provide on the Premises shall not
be less than the minimum number of spaces required for an industrial processing,
manufacturing and assembling use under City's zoning ordinance as amended from time
to time.
ARTICLE 14
Miscellaneous
Section 14.01 - Time. Time is of the essence of each provision of this Lease. The
time in which any act is to be performed under this Lease 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.
Section 14.02 - Entire Aareement. This Lease contains the entire agreement of
the parties with respect to the matters covered by this Lease, and no other agreement,
statement or promise made by any party which is not contained in this Lease shall be
binding or valid.
Section 14.03 - Relationship of Parties. Nothing in this Lease, and no performance
of either party hereunder shall cause the relationship of the parties to be that of principal
and agent, partners or joint venturers, or cause the parties to be associated in any
manner other than as lessor and lessee.
Section 14.04 - Covenants. All the provisions of this Lease shall be deemed as
running with the land.
Section 14.05 - Estoppel Certificates. Either party shall at any time and from time
to time upon not less than 10 days' prior written request by the other party, execute,
acknowledge, and deliver to such party, or to its designee, a statement in writing
certifying that this Lease is unamended and in full force and effect (or, if there has been
any amendment thereof, that the same is in full force and effect as amended and stating
the amendment or amendments), that there are no defaults existing (or, if there is any
claimed default, stating the nature and extent thereof); and stating the dates to which the
rent and other charges have been paid in advance.
City of Seward
Ground Lease
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Page 26
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Section 14.06 - Notices. All notices required or authorized to be given by either
party under this Lease shall be in writing and shall be served personally or sent by
registered mail as follows:
City of Seward
P.O. Box 167
Seward, Alaska 99664
Attention: City Manager
Seward Ship's Drydock, Inc.
P.O. Box 944
Seward, Alaska 99664
Attention: President
Notice by mail shall be deemed to have been given at the time of mailing. Each
of the above addressees may, by written notice to the other, designate any further or
different addresses to which subsequent notices shall be sent. In addition, the parties
hereto may agree to any other means by which subsequent notices may be sent.
Section 14.07 - Bindina Effect. This Lease shall inure to the benefit of and shall
be binding upon City and Lessee and their respective successors and assigns.
Section 14.08 - Severabilitv. In the event any provision of this Lease shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provisions hereof.
Section 14.09 - Amendments. This Lease may be amended only by a writing
signed by City and Lessee.
Section 14.10 - Execution in Counterparts. This Lease may be simultaneously
executed in several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 14.11 - Applicable Law: Jurisdiction. This Lease shall be governed by and
construed in accordance with the laws of the State of Alaska. Any civil action brought
by any party under this Agreement shall be commenced and maintained in the Superior
Court, Third Judicial District, State of Alaska, at Anchorage.
Section 14.12 - Captions. The captions or headings in this Lease are for
convenience only and no way define, limit or describe the scope or intent of any
provisions or sections of this Lease.
City of Seward
Ground Lease
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Page 27
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
City:
CITY OF SEWARD
Tyler Jones
City Manager
ATTEST:
Linda S. Murphy, CMC/AAE
City Clerk
Lessee:
SEWARD SHIP'S DRYDOCK, INC.
APPROVED AS TO FORM:
WOHLFORTH, ARGETSINGER,
JOHNSON & BRECHT
Attorneys for the
City of Seward
Thomas F. Klinkner
City of Seward
Ground Lease
AMMOOIB2
Page 28
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STATE OF ALASKA
)
) ss.
)
THIRD JUDICIAL DISTRICT
The foregoing instrument was acknowledged before me this _ day of
January 1995, by Tyler Jones, City Manager of the City of Seward, Alaska, on behalf of
the City.
Notary for the State of Alaska
My Commission Expires:
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this day of
January 1995, by James T. Pruitt, President of Seward Ship's Drydock, Inc., an Alaska
corporation, on behalf of the corporation.
Notary for the State of Alaska
My Commission Expires:
City of Seward
Ground Lease
AMMOOIB2
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EXHIBIT A - DESCRIPTION OF SMIC
SEWARD MARINE INDUSTRIAL CENTER
CITY OF SEWARD, ALASKA
LEASE SITES
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Exhibit B - Legal Description of Premises
Commencing at the northeast comer of United States Survey No. 4827 from a 5/8" x 30" rebar wIth
an aluminum cap located, thence along the easterly line of said USS 4827, South 00D34'IJ" East
1,458.02 feet; thence leaving said easterly line at a right angle thereto, South 89025'50" West 850.XU
feet to the TRUE POINT OF BEGINNING: thence South 89025'50" West 425.00 feet: thence South
00034'13" East 605.00 feet thence North 89025'50" East 425.00 feet thence North 00034' 13" West
605.00 feet to the TRUE POINT OF BEGINNING. containing an area of 257,125 square feet more
or less. Said property is located at 3306 Sorrel Road within the Sevvard Marine Industrial Center.
at Fourth of July Creek and is also described as Lot L Block 7. Seward Marine Industrial Center.
Fourth of July Creek Subdivision (preliminary plat). all within the Seward Recording District Third
Judicial District. State of Alaska.
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Exhibit C - Fencinq Specifications
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MAINTENANCE AND OPERATING AGREEMENT
between
CITY OF SEWARD, ALASKA
and
SEWARD SHIP'S DRYDOCK, INC.
Dated as of February 18, 1995
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TABLE OF CONTENTS
PAGE
ARTICLE 1
Definitions . . . . . . . . . . . . . . . . . . . . . . .. 2
ARTICLE 2
General Provisions . . . . . . . . . . . . . . . . . . . .. 4
Section 2.01 - Agreement Term ............................... 4
Section 2.02 - Specific Use Restrictions . . . . . . . . . . . . . . . . . . . . . . . . .. 5
Section 2.03 - Environmental Matters ........................... 5
Section 2.04 - Protection Against Liens . . . . . . . . . . . . . . . . . . . . . . . . .. 7
Section 2.05 - No Preferential Rights to Use Port Facilities ............ 7
Section 2.06 - Security for Shiplift Premises . . . . . . . . . . . . . . . . . . . . . .. 8
Section 2.07 - Leasing and Use of Managed Parcel ................. 8
Section 2.08 - Inspection by City .............................. 8
ARTICLE 3
Operation and Maintenance of Shiplift Facilitv ........... 9
Section 3.01 - Revenue ..................................... 9
Section 3.02 - Annual Facility Costs ............................ 9
Section 3.03 - Deferred Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . .. 9
Section 3.04 - Operation of Shiplift Facility . . . . . . . . . . . . . . . . . . . . . . .. 9
Section 3.05 - Maintenance of Accounts; Statements; Payment to City. . .. 11
Section 3.06 - Operating Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11
Section 3.07 - Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11
Section 3.08 - Rates and Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11
ARTICLE 4
Indemnitv: Insurance . . . . . . . . . . . . . . . . . . .. 12
Section 4.01 - Operator's Duty to Indemnify. . . . . . . . . . . . . . . . . . . . . .. 12
Section 4.02 - Insurance Requirements . . . . . . . . . . . . . . . . . . . . . . . . .. 12
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ARTICLE 5
Assianment ....................... 13
Section 5.01 - Assignment of Agreement. . . . . . . . . . . . . . . . . . . . . . . .. 14
Section 5.02 - Assignment ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 14
ARTICLE 6
Default: Remedies. . . . . . . . . . . . . . . . . . . .. 14
Section 6.01 - Events of Default ............................... 14
Section 6.02 - Remedies for Default by Operator ................... 14
Section 6.03 - No Waiver of Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 15
Section 6.04 - Cure by City. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 15
ARTICLE 7
15
Section 7.01 - Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 15
Section 7.02 - Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 16
Section 7.03 - Relationship of Parties ........................... 16
Section 7.04 - Notices ...................................... 16
Section 7.05 - Binding Effect ................................. 16
Section 7.06 - Severability ................................... 16
Section 7.07 - Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 16
Section 7.08 - Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . .. 17
Section 7.09 - Applicable Law; Jurisdiction ....................... 17
Section 7.10 - Captions ..................................... 17
Miscellaneous
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MAINTENANCE AND OPERATING AGREEMENT
This Maintenance and Operating Agreement is made as of February 18, 1995
between the City of Seward, Alaska, an Alaska municipal corporation ("City"), whose
address is P.O. Box 167, Seward, Alaska 99664, and Seward Ship's Drydock, Inc.
("Operator"), whose address is P.O. Box 944, Seward, Alaska 99664.
WHEREAS, since 1980 City has provided for the development of the Seward
Marine Industrial Center (the "SMIC"), and City expended over $40 million in construction
of improvements to the area, including a NEI Syncrolift Shiplift System, Ship Transfer
System and related rail systems (the "Ship lift Facility"); and
WHEREAS, City and Operator are Lessor and Lessee, respectively, under a lease
agreement effective as of September 22, 1988, as amended (the "Prior Lease"), a
memorandum of which was recorded at Book 53, Page 255, Seward Recording District,
Third Judicial District, State of Alaska, under which Operator leased from City certain real
property located in the SMIC, as described in the Prior Lease (the "Premises") to operate
a vessel repair and construction facility; and
WHEREAS, the continued maintenance and operation of the Shiplift Facility is
important to the profitable operation of Operator's vessel repair and construction
business on the Premises, but the current tariff charges for public use of the Shiplift
Facility do not cover City's costs of maintaining and operating the Shiplift Facility; and
WHEREAS, the voters of the City of Seward in 1992 rejected two specific
proposals for the sale or lease of the Shiplift Facility to Operator, and the City desires to
transfer to Operator maintenance and operating responsibility for the Shiplift Facility
without a sale or lease of the Shiplift Facility, in accordance with the voters' preference;
and
WHEREAS, an arbitrators' decision and order dated January 8, 1993, set forth
certain rights of City and Operator under the Prior Lease, including the determination that
City could not enforce any penalty against Operator for a period of 24 months after the
date of the arbitrators' decision and order (or until January 9, 1995), with respect to
Operator's failure to construct on the Premises a permanent covered repair building
capable of enclosing a vessel 300 feet in length (the "300-Foot Building"); and
WHEREAS, the City Council of City has declined to extend the time for
construction of the 300-foot building, requesting that in lieu of constructing the 300-Foot
Building Operator assume all expenses of operating and maintaining the Shiplift Facility;
and
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WHEREAS, by entering into a new lease of the Premises (the "Lease") Operator
will be relieved of the obligation to construct the 300-Foot Building, and by entering into
this Agreement Operator will assume the expense of maintaining and operating the
Shiplift Facility; and
WHEREAS, the parties have determined that it is in their respective interests to
modify substantially their relationship under the Prior Lease, by terminating the Prior
Lease and entering into this Agreement, and the Lease to replace the Prior Lease;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
ARTICLE 1
Definitions
The following terms will have the meanings indicated below unless the context
clearly requires otherwise:
"Agreement" means this Maintenance and Operating Agreement, as amended from
time to time.
"Agreement Term" means the duration of this Agreement as set forth in Section
2.01.
"Annual Facility Costs" means annual costs of the Shiplift Facility as described in
Section 3.02.
"Auditor" means an independent certified public accountant or firm of certified
public accountants engaged by the City.
"City" means the City of Seward, Alaska.
"Deferred Maintenance" means all of the outstanding repair and maintenance items
for the Shiplift Facility identified as of December 30, 1994 by NEI Syncrolift Incorporated,
L10yds Register of Shipping, Norton Corrosion, City and Operator, which shall be
itemized in Exhibit A hereto.
"Environmental Laws" means all local, state and federal laws, ordinances,
regulations and orders related to environmental protection; the use, storage, generation,
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production, treatment, emission, discharge, remediation, removal, disposal or transport
of any Hazardous Substance; or any other environmental matter, including without
limitation any of the following statutes:
(i) Federal Resource Conservation and Recovery Act of 1976, as amended, 42
U.S.C. Sections 6901-6991K;
(ii) Federal Comprehensive Environmental Response Compensation, and Liability
Act of 1980, as amended, 42 U.S.C. Sections 9601-9675;
(iii) Federal Clean Air Act, 42 U.S.C. Sections 7401-7642;
(iv) Federal Hazardous Material Transportation Control Act of 1970, as amended,
49 U.S.C. Sections 1801-1812;
(v) Federal Clean Water Act of 1977, as amended, 33 U.S.C. Sections 1251-1387;
(vi) Federal Insecticide, Fungicide, and Rodenticide Act, as amended, 7 U.S.C.
Sections 2601-2671;
(vii) Federal Toxic Substances Control Act, 15 U.S.C. Sections 2601-2671;
(viii) Federal Safe Drinking Water Act, 42 U.S.C. Sections 300f-300i-26; and
(ix) Title 46 of the Alaska Statutes.
"Event of Default" means any of the events described in Section 12.01.
"Fiscal Year" means the calendar year.
"Hazardous Substances" means any substance or material defined or designated
as hazardous or toxic waste, hazardous or toxic material, a hazardous, toxic or
radioactive substance, or other similar term, by any Environmental Laws, and shall
include any such substance or material as may hereafter become defined or designated
as hazardous or toxic material by any Environmental Laws.
"Lease" means the Ground Lease of the Premises between City and Operator,
dated as of February 1 e, 1995, as amended from time to time.
"Maintenance and Operation Costs" means the actual and necessary costs of
maintaining and operating the Shiplift Facility, including without limitation the reasonable
expenses of management, repair and other expenses necessary to maintain the Shiplift
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Facility in good repair and working order, reasonable amounts for administration,
overhead, insurance, utilities, consulting and technical services, employer costs
(including pension costs), taxes (but not payments in lieu of taxes), charges payable
pursuant to any licenses, permits or other authorizations of any agency or regulatory
body having lawful jurisdiction, and other similar costs, but excluding depreciation (or
reserves therefor), amortization of intangibles or other bookkeeping entries of a similar
nature, and the costs of capital additions, replacements, betterments, extensions or
improvements to the Shiplift Facility.
"Managed Parcel" means the area within the SMIC designated as such on Exhibit
C hereto, which is south of the fence to be constructed by Operator under Section 2.06,
and which is not part of the Premises or the Shiplift Facility.
"Operator" means Seward Ship's Drydock, Inc., an Alaska corporation, its
successors and assigns.
"Port Facilities" means all public port facilities owned or operated by City from time
to time, including without limitation the Shiplift Facility.
"Premises" means the land plus any improvements described as such in the
Lease.
"Revenue" means all of the following fees or charges for use of the Shiplift Facility:
lift fees; receipts for labor to operate the NEI syncrolift facility in raising or lowering a
vessel; uplands day lay charges; and moorage and wharfage on the Shiplift Facility dock.
"SMIC" means the Seward Marine Industrial Center, consisting of the area shown
on the site map in Exhibit B hereto.
"Shiplift Facility" means the NEI Syncrolift Shiplift System in the SMIC, including
the mechanical shiplift and all associated equipment, all upland rails not located on the
Premises or other leased property, the side transfer cradle assembly, the shiplift dock,
and 33 connected cofferdam cells comprising the south breakwater.
"Shiplift Premises" means the Shiplift Facility and the Managed Parcel.
ARTICLE 2
General Provisions
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Section 2.01 - Aareement Term. The Agreement Term commences February 18,
1995, and unless sooner terminated as provided herein ends at the earlier of (i) date of
expiration or termination of the Lease Term, and (ii) December 31, 1999.
Section 2.02 - Specific Use Restrictions. Operator shall not commit any waste of
the Shiplift Premises. Operator shall use, operate and maintain the Shiplift Facility in
accordance with all laws and regulations governing such use, operation and
maintenance. Operator will not use the Shiplift Premises in any manner which would
constitute a public nuisance.
Section 2.03 - Environmental Matters. Operator covenants and agrees as follows:
(a) Operator will not cause or permit the Shiplift Premises to be used to
generate, manufacture, refine, transport, treat, store, handle, dispose, transfer, produce
or process any Hazardous Substance, except in compliance with all applicable
Environmental Laws, nor shall Operator cause or permit, as a result of any intentional or
unintentional act or omission on the part of the Operator or any other user or occupant
of the Shiplift Premises, the release of any Hazardous Substance onto the Shiplift
Premises.
(b) Operator will at all times in all respects use its best efforts to comply, and
will use its best efforts to cause all other users of the Shiplift Premises to comply, with
all Environmental Laws, including without limitation undertaking the following specific
actions: (i) Operator will, at its own expense, procure, maintain in effect and comply with
all conditions of any and all permits, licenses and other governmental and regulatory
approvals required by all Environmental Laws, including without limitation permits
required for discharge of (appropriately treated) Hazardous Substances into the ambient
air or any sanitary sewers servicing the Shiplift Premises; and (ii) except as discharged
into the ambient air or a sanitary sewer in strict compliance with all applicable Environ-
mental Laws, any and all Hazardous Substances to be treated and/or disposed of by the
Operator will be removed and transported solely by duly licensed transporters to a duly
licensed treatment and/or disposal facility for final treatment and/or disposal (except
when applicable Environmental Laws permit on-site treatment or disposal in a sanitary
landfill) .
(c) If the presence, release, threat of release, placement on the Shiplift
Premises, or the generation, transportation, storage, treatment or disposal at the Shiplift
Premises of any Hazardous Substance (i) gives rise to liability (including without limitation
a response action, remedial action or removal action) under any Environmental Law, (ii)
causes a significant public health effect, or (iii) pollutes or threatens to pollute the
environment, Operator shall, at its sole expense, promptly take any and all remedial and
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removal action necessary to clean-up the Shiplift Premises and mitigate exposure to
liability arising from the Hazardous Substance, whether or not required by law.
(d) Lessee shall maintain a complete file, which may be inspected at any
reasonable time by City containing copies of all correspondence, permits or other
material between Lessee and any federal, state or other governmental authority related
to Hazardous Substances at the Shiplift Premises.
(e) Operator shall give City within 24 hours (i) written notice and a copy of any
notice or correspondence it receives from any federal, state or other governmental
authority regarding Hazardous Substances on the Shiplift Premises or which affect or will
affect the Shiplift Premises, or expenses or losses incurred or expected to be incurred
by Operator or any government agency to study, assess, contain or remove any
Hazardous Substances on or near the Shiplift Premises, and (ii) written notice of any
knowledge or information Operator obtains regarding the release or discovery of
Hazardous Substances on the Shiplift Premises.
(f) Operator agrees to indemnify, hold harmless and defend City, and the
officers, employees and agents of City, from and against any and all claims, demands,
damages, losses, liens, liabilities, penalties, fines, lawsuits and other proceedings and
costs and expenses (including attorneys' fees), arising directly or indirectly from or out
of, or in any way connected with:
(i) The failure of Operator to comply with its covenants and agreements
contained in this section;
(ii) Any activities on the Shiplift Premises which directly or indirectly
result in the Shiplift Premises becoming contaminated with Hazardous
Substances;
(iii) The discovery of Hazardous Substances on the Shiplift Premises;
and
(iv) The clean-up of Hazardous Substances from the Shiplift Premises
without regard to (1) the nature of the activities producing the Hazardous
Substances, and (2) the identity of the person conducting such activities.
(g) The provisions of this section, including the obligation to indemnify, shall
survive the termination or expiration of the Agreement Term.
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(h) Nothing in this section shall prejudice or impair the rights or claims of
Operator against any person or entity other than City with respect to the presence of
Hazardous Substances as set forth above.
(i) Operator may, at its own expense, conduct an environmental audit of the
Shiplift Premises, and provide a copy of the audit report to City, within 60 days of the
date the Agreement Term commences. If the audit report identifies Hazardous
Substances at the Shiplift Premises, either (i) within 120 days after the date the
Agreement Term commences the parties shall agree in writing on the extent to which
each party is responsible for such Hazardous Substances, or (ii) this Agreement shall
terminate at the end of such 120-day period.
Section 2.04 - Protection Aaainst Liens. (a) Operator shall not permit to be
enforced against the Shiplift Facility or any part of it any mechanic's or materialman's lien
arising from any work of improvement, however it may arise. However, Operator may
in good faith and at Operator's own expense contest the validity of any such asserted
lien, claim or demand, provided Operator has furnished the bond required in AS
34.35.072 (or any comparable statute hereafter enacted for providing a bond freeing the
Shiplift Facility from the effect of such a lien claim). Operator shall defend and indemnify
City against all liability and loss of any type arising out of work performed on the Shiplift
Facility by Operator, together with reasonable attorneys' fees and all costs and expenses
incurred by Lessor in negotiation, settling, defending, or otherwise protecting against
such claims.
(b) If Operator does not cause to be recorded the bond described in AS
34.35.072 or otherwise protect the property under any alternative or successor statute,
and a final judgment has been rendered against Operator by a court of competent
jurisdiction for the foreclosure of a mechanic's or materialman's lien claim, and if
Operator fails to stay the execution of the judgment by lawful means or to pay the
judgment, City shall have the right, but not the duty, to payor otherwise discharge, stay,
or prevent the execution of any such judgment or lien or both. Operator shall reimburse
City for all sums paid by City under this paragraph, together with all Lessor's reasonable
attorneys' fees and costs, plus interest on those sums, fees, and costs at the rate of 10.5
percent per year from the date of payment until the date of reimbursement.
(c) City may give notice of non-responsibility for any work performed by
Operator on the Shiplift Facility.
(d) On completion of any substantial work of improvement during the Lease
Term, Operator shall file or cause to be filed a notice of completion. Operator hereby
appoints Lessor as Operator's attorney-in-fact to file the notice of completion on
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Operator's failure to do so after the work of improvement has been substantially
completed.
Section 2.05 - No Preferential Riahts to Use Port Facilities. This Agreement does
not grant any exclusive or preferential right to use any of City's Port Facilities, except that
Operator shall have a preferential right to use the Shiplift Facility. Operator's use of
City's Port Facilities shall be subject to the applicable tariffs, procedures, rules and
regulations of City in effect from time to time.
Section 2.06 - Securitv for Shiplift Premises. Operator shall limit access to the
Shiplift Premises by constructing and maintaining at Operator's expense a fence in
accordance with the specifications, and at the location designated, in Exhibit C hereto.
City may, at its sole discretion and expense, modify those portions of the fence not on
the Premises. The part of the fence that is adjacent to the Shiplift Premises shall bear
signs in the form described in Exhibit D hereto at intervals of 20 feet. Operator shall
provide City and its lessees with 24 hour access to the Managed Parcel.
Section 2.07 - Leasina and Use of Manaaed Parcel.
(a) City reserves the right from time to time to lease all or any part of the
Managed Parcel, to use all or any part of the Managed Parcel for any purpose, and to
permit others to use all or any part of the Managed Parcel, provided that:
(1) Nothwithstanding Seeton 2.03, Operator shall not be responsible for
any Hazardous Substances on the Managed Parcel resulting from the leasing or use of
the Managed Parcel under this subsection, and any lease of the Managed Parcel by City
shall incorporate obligations of the lessee in the terms of Section 2.03 for the benefit of
City and Operator. Upon the termination of any such lease or use of the Managed
Parcel, City at its own expense, shall conduct an environmental audit of the area subject
to the lease or use, and provide a copy of the audit report to Operator. As between City
and Operator, City shall be responsible for any Hazardous Substance revealed by the
report that was not reported to be present at the commencement of the lease or use.
(2) Notwithstanding Article IV, Operator shall not be responsible for
indemnity or insurance with respect to the leasing or use of the Managed Parcel under
this subsection, and any lease of the Managed Parcel by City shall incorporate
obligations of the lessee in the terms of Article IV for the benefit of City and Operator.
(b) Operator may use all or any part of Managed Parcel for the temporary
storage of vessels at the current day lay charge stated in City's harbor tariff. This
permission for use by Operator may be revoked by City at any time. Unless City and
Operator agree otherwise, any other use by Operator of the Managed Parcel shall be
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subject to rental charge per square foot equal to double the per square foot rent
represented by the currently effective Rent under the Lease.
Section 2.08 - Inspection bv City. City may at any time enter the Shiplift Premises,
for the purpose of inspection to determine Operator's compliance with the terms of this
Agreement. Such inspection may include the taking of samples of soil or water, and the
reviewing and copying of any records relating to the operation of the Shiplift Facility.
ARTICLE 3
Operation and Maintenance of Shiplift Facilitv
Section 3.01 - Revenue. Operator shall have the right to collect and retain all
Revenue received from the Shiplift Facility, and Operator shall account separately for all
Revenue received by Operator.
Section 3.02 - Annual Facilitv Costs. Operator shall pay the Annual Facility Costs
for each Fiscal Year. Annual Facility Costs consist of the following, properly incurred or
paid during each Fiscal Year:
(a) Maintenance and Operation Costs of the Shiplift Facility;
(b) Amounts required to be paid for Deferred Maintenance under Section
3.03; and
(c) Amounts which may be required to pay the costs of major renewals
or replacements of the Shiplift Facility, to the extent that such costs are not covered by
insurance.
Section 3.03 - Deferred Maintenance. Exhibit A hereto contains a list of all items
of Deferred Maintenance, a schedule for performing each Deferred Maintenance item,
and the estimated cost of each Deferred Maintenance item. Operator shall have the
following obligations with respect to Deferred Maintenance.
(a) Operator shall cause Deferred Maintenance to be performed in
accordance with the schedule in Exhibit A.
(b) Operator shall perform deferred maintenance work either with its own
employees or with a contractor or contractors approved by City, which approval shall not
be unreasonably refused.
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(c) Amounts considered to have been expended for Deferred
Maintenance by Operator for purposes of this Agreement and the Lease shall include
only Operator's direct costs for performing Deferred Maintenance, without any allowance
for markup or profit. Such amounts may include an allowance for administrative
overhead which shall not exceed 10%; provided that the allowance may be increased to
a maximum of 13.5% if Operator documents the basis for the increased allowance to
City's satisfaction.
Section 3.04 - Operation of Shiplift Facilitv.
(a) Operator shall at all times maintain, preserve and keep, or cause to be
maintained, preserved and kept, the Shiplift Facility and all additions and betterments
thereto and extensions thereof and every part and parcel thereof in good repair, working
order and condition and will from time to time make or cause to be made all necessary
and proper repairs, renewals and replacements thereto and may from time to time make
or cause to be made extensions and betterments thereto, and Operator will at all times
operate or cause to be operated the Shiplift Facility in a safe and efficient manner in
accordance with the manufacturer's instructions for operation, and at a reasonable cost.
Operator will comply with all terms and conditions of all licenses and permits which are
of material importance to the operation of the Shiplift Facility.
(b) Operator shall at a minimum perform maintenance of the Shiplift
Facility in accordance with a maintenance schedule prepared by City and Operator and
attached as Exhibit E hereto. This schedule will provide for maintenance in accordance
with the recommendations of NEI Syncrolift, Incorporated and its successors, and shall
be kept in conformance with the maintenance recommendations of NEI Syncrolift
Incorporated. This schedule will also provide for major renewals and replacements to
the Shiplift Facility, which shall be modified from time to time in accordance with the
recommendations of Lloyd's Registry of Shipping.
(c) Operator shall permit the Shiplift Facility to be operated only by
persons that Operator determines to be qualified, competent and otherwise fit to perform
their assigned duties in the operation of the Shiplift Facility. Operator shall maintain on
file with City a current list of all persons that it has assigned to operate the Shiplift
Facility, including the duties with respect to such operation that it has assigned to each
such person. City from time to time shall provide training as outlined in Exhibit F hereto
for persons that Operator designates to operate the Shiplift Facility.
(d) Operator shall provide to City each week a schedule of Shiplift
Facility operations during the following week. City may contact Operator by telephone
for a list of any changes to a weekly schedule. Agents of City may enter the Shiplift
Facility at any time to inspect the Shiplift Facility or observe its operation. If City
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observes the Shiplift Facility being operated in an unsafe manner or in a manner that
does not conform to the manufacturer's instructions for operation, City may order
Operator to cease operating the Shiplift Facility until the problem has been corrected.
(e) Operator shall, at its own expense, schedule annual inspections of
the Shiplift Facility by NEI Syncrolift Incorporated, Lloyd's Register of Shipping and such
specialty consultants as may be required by NEI Syncrolift Incorporated or Lloyd's
Register of Shipping, and promptly provide to City a copy of the report of each such
inspection.
(f) Operator shall maintain hours of Shiplift Facility operation, and
procedures for Shiplift Facility operation, that in the judgment of the City reasonably
accommodate all members of the public desiring to use the services of the Shiplift
Facility. In operating the Shiplift Facility, Operator shall not discriminate against any
member of the public desiring to use the Shiplift Facility with respect to hours of
operation, services offered, scheduling of operations, or any other aspect of Shiplift
Facility operation.
Section 3.05 - Maintenance of Accounts: Statements: Pavment to Citv. Operator
shall keep proper books of account for the Shiplift Facility which shall be kept in
accordance with Generally Accepted Accounting Principles. Operator shall cause such
books of account to be reviewed and certified as reflecting actual costs and revenues
annually by independent certified public accountants. Operator shall prepare, and
submit to City, statements showing in reasonable detail income and expenses of the
Shiplift Facility for each Fiscal Year, including Revenues, amounts expended for Deferred
Maintenance and amounts expended for maintenance, renewals and replacements of
and capital additions to the Shiplift Facility. Such statements shall be filed with City
within 120 days of the close of each Fiscal Year. With such statements, Operator shall
remit to City a sum equal to the amount, if any, by which income of the Shiplift Facility
for the Fiscal Year exceeded expenses of the Shiplift Facility for the Fiscal Year
(excluding any expenses which were offset by rent credits under the Lease).
Section 3.06 - Operatinq Plan. Prior to the beginning of each Fiscal Year,
Operator shall prepare and file with City an operating plan for the ensuing Fiscal Year.
The operating plan shall include an estimate of revenues and expenses and a schedule
for repairs and maintenance and Deferred Maintenance to be performed during the Fiscal
Year.
Section 3.07 - Inventorv. At the commencement of the Agreement Term, City shall
transfer to Operator the inventory of spare parts for the operation and maintenance of
the Shiplift Facility described in Exhibit G hereto. Operator shall use this inventory of
spare parts only for the operation and maintenance of the Shiplift Facility. Operator shall
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maintain on hand an inventory of spare parts for the operation and maintenance of the
Shiplift Facility equal in cost to the inventory transferred to Operator at the commence-
ment of the Agreement Term, and Operator shall transfer that inventory to City upon the
expiration or earlier termination of the Agreement Term.
Section 3.08 - Rates and Charqes. Operator may propose rates and charges for
the use of the Shiplift Facility no more frequently than annually. Such rates and charges
shall not discriminate among users of a class of service or among different classes of
service. Rates and charges do not discriminate among classes of service if they are
reasonably related to the cost of providing each class of service, allocated according to
Generally Accepted Accounting Principles. City may in its discretion consider and act
upon rates and charges proposed by Operator that conform to the standards in this
section.
ARTICLE 4
Indemnity: Insurance
Section 4.01 - Operator's Duty to Indemnify. In addition to any other duty to
indemnify or defend City, Operator shall defend, indemnify and hold harmless City from
any and all claims, actions and demands for death or injury to persons or damage to
property, arising from the use of the Shiplift Facility during the Agreement Term by
Operator, Operator's contractors, agents, officers, employees and invitees, or the general
public.
Section 4.02 - Insurance Requirements. During the Agreement Term, Operator
shall procure and maintain at its expense the insurance described in this section subject
to the terms and conditions set forth in this section.
(a) Operator shall procure and maintain the following insurance under this
Agreement:
(1) Commercial general liability and automobile insurance, with limits of
liability of $5,000,000 for all injuries, deaths or property damage resulting to anyone
person and $5,000,000 limit from anyone occurrence. Coverage under such insurance
shall also include explosion, collapse and underground property damage hazards. Such
insurance shall include a blanket contractual liability endorsement. For non-owned
watercraft of Operator or its customers any "watercraft exclusion" in the commercial
liability insurance policy shall be eliminated. Protection and indemnity insurance shall be
provided with the same limits as the commercial liability insurance for the use of
Operator-owned watercraft.
City of Seward
Operating Agreement
AMM001B2
Page 12
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(2) All risk physical damage insurance for any buildings, equipment,
machinery any other property upon the Shiplift Facility at replacement value rather than
original cost.
(3) Workers Compensation Insurance and insurance under the Harbor
Workers and Longshoremen's Compensation Act.
(4) Coverage for vessels in the care, custody or control of Operator (ship
repairer's liability) with limit of liability of $5,000,000.
(5) Environmental impairment liability or pollution legal liability insurance
for all bodily injury and property damage to parties other than Operator caused by
pollution emanating from the Premises, with limit of liability of $1,000,000.
(6) Marine Liability Insurance and any other insurance required under
any permit or tariff of City.
(b) The minimum amounts and types of insurance required under this Section
shall be subject to revision in accordance with standard insurance practices, in order to
provide continuously throughout the Agreement Term a level of protection consonant
with good business practice and accepted standards in the industry. Such factors as
increases in the cost of living shall be utilized in assessing whether the minimum
insurance requirements should be increased. City shall notify Operator of any required
increase in insurance coverage.
(c) All insurance policies shall provide for 30 days' notice to City of cancellation
and/or material change in policy terms. All such policies shall be written by insurance
companies legally authorized or licensed to do business in the State of Alaska, and
acceptable to City. Operator shall furnish City, on forms supplied by City, certificates
evidencing that it has procured the insurance required herein prior to the operation of the
Shiplift Facility by Lessee. Nothing herein contained shall prevent Operator or City from
placing and maintaining at City's or Operator's own individual cost and expense,
additional or other insurance as may be desired.
(d) Commencing on January 1, 1996, and annually thereafter throughout the
Agreement Term, Operator shall procure and submit to City a written report from a
reputable insurance broker acceptable to City that the broker has reviewed the types and
amounts of coverage of insurance obtained by Operator and the operations of Lessee
and in the opinion of the broker the coverage complies with Operator's obligations under
this Agreement.
City of Seward
Operating Agreement
AMMOO1B2
Page 13
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(e) All of the insurance policies required above as well as any other insurance
carried by Operator or City shall provide that the insurers waive their rights of
subrogation against City and Operator and their respective officers, servants, agents or
employees. Lessee 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 with respect to damage to equipment
including the loss of use thereof, whether insured or not. Operator shall also name City
as an additional insured on the general liability insurance policy maintained by Operator
as required above, excluding coverage for claims resulting from City's sole negligence.
Operator shall promptly and without request by City supply City copies of all insurance
binders and policies.
ARTICLE 5
Assianment
Section 5.01 - Assianment of Aareement. The parties recognize that a material
reason for the finding by the City Council of Seward that it is in the public interest to
enter into this Agreement with Operator is Operator's experience in operating vessel
repair and construction facilities on the Premises. Except as provided in Section 5.02,
any assignment of this Agreement by Operator shall be void, and any attempt by
Operator to assign this Agreement gives City the right immediately to terminate this
Agreement.
Section 5.02 - Assianment. Notwithstanding Section 5.01, Operator may assign
its entire interest under this Agreement to a person to whom Operator sells its vessel
repair and construction business, provided that the assignee and the terms of the
assignment shall be subject to approval by City.
ARTICLE 6
Default: Remedies
Section 6.01 - Events of Default. Each of the following shall be an act of default
under this Agreement and the terms "acts of default" and "default" shall mean, whenever
they are used in this Agreement, anyone or more of the following events:
(a) Failure by Operator to observe, fulfill or perform any covenants, conditions
or agreements on its part to be observed or performed under this Agreement for a period
of 30 days after written notice specifying such failure, requesting that it be remedied, and
City of Seward
Operating Agreement
AMM001B2
Page 14
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stating that it is a notice of default, has been given to Operator by City; provided,
however, that if said default is such that it cannot be corrected within the applicable
period, it shall not constitute an act of default if corrective action is instituted by Operator
within the applicable period and diligently pursued until the default is corrected.
(b) The making by Operator of an assignment for the benefit of creditors, the
filing of a petition in bankruptcy by Operator, the adjudication of Operator as insolvent
or bankrupt, the petition or application by Operator to any tribunal for any receiver or any
trustee for itself or for any substantial part of its property; or the commencement of any
proceeding relating to Operator under any bankruptcy, insolvency, reorganization,
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 months from the date of commencement thereof.
(c) Any event of default under the Lease.
Section 6.02 - Remedies for Default bv Operator. Whenever an act of default by
Operator shall have occurred, and any applicable period for giving notice and any
opportunity to cure shall have expired, City shall have the 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) City may terminate this Agreement and re-enter the Shiplift Facility and take
possession thereof.
(b) Recover, whether this Agreement be terminated or not, damages incurred
by City by reason of the breach or default by Operator.
(c) No expiration or termination of this Agreement shall expire or terminate any
liability or obligation to perform of Operator's which arose prior to the termination or
expiration except insofar as otherwise agreed in this Agreement.
(d) Each right and remedy of City provided for in this Lease shall be cumulative
and shall be in addition to every other right or remedy provided for in this Agreement or
now or hereafter existing at law or in equity or by statute or otherwise, and the exercise
or beginning of the exercise by City of anyone or more of the rights and remedies
provided for in this Agreement or now or hereafter existing at law or in equity or by
statute or otherwise shall not preclude the simultaneous or later exercise by City of any
or all other rights or remedies provided for in this Agreement or now or thereafter existing
at law, or in equity or by statute or otherwise.
City of Seward
Operating Agreement
AMMOOIB2
Page 15
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Section 6.03 - No Waiver of Breach. No failure by City to insist upon the strict
performance by Operator of any term, covenant or condition of this Agreement or to
exercise any right or remedy consequent upon a breach thereof, shall constitute a waiver
of any such breach or of such terms, covenants or conditions. No waiver of any breach
shall affect or alter this Agreement, but each and every term, covenant and condition of
this Agreement shall continue in full force and effect with respect to any other then
existing or subsequent breach.
Section 6.04 - Cure bv Citv. City shall have the right, but not the obligation, to
cure any default of Operator under this Agreement if Operator fails to cure the default
within the time allowed under Section 6.01. Any cost incurred by City in effecting such
a cure shall be payable by Operator upon demand, and shall bear interest at a rate of
15% per annum until paid.
ARTICLE 7
Miscellaneous
Section 7.01 - Time. Time is of the essence of each provision of this Agreement.
The time in which any act is to be performed under this Agreement 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.
Section 7.02 - Entire Aareement. This Agreement contains the entire agreement
of the parties with respect to the matters covered by 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.
Section 7.03 - Relationship of Parties. Nothing in this Agreement, and no
performance of either party hereunder shall cause the relationship of the parties to be
that of principal and agent, partners or joint venturers, or cause the parties to be
associated in any manner other than as owner and independent contractor.
Section 7.04 - Notices. All notices required or authorized to be given by either
party under this Agreement shall be in writing and shall be served personally or sent by
registered mail as follows:
City of Seward
P.O. Box 167
Seward, Alaska 99664
Attention: City Manager
City of Seward
Operating Agreement
AMM001B2
Page 16
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Seward Ship's Drydock, Inc.
P.O. Box 944
Seward, Alaska 99664
Attention: President
Notice by mail shall be deemed to have been given at the time of mailing. Each
of the above addressees may, by written notice to the other, designate any further or
different addresses to which subsequent notices shall be sent. In addition, the parties
hereto may agree to any other means by which subsequent notices may be sent.
Section 7.05 - Bindina Effect. This Agreement shall inure to the benefit of and
shall be binding upon City and Operator and their respective successors and assigns.
Section 7.06 - Severabilitv. In the event any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such holding shall
not invalidate or render unenforceable any other provisions hereof.
Section 7.07 - Amendments. This Agreement may be amended only by a writing
signed by City and Operator.
Section 7.08 - Execution in Counterparts. This Agreement may be simultaneously
executed in several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 7.09 - Applicable Law: Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Alaska. Any civil action
brought by any party under this Agreement shall be commenced and maintained in the
Superior Court, Third Judicial District, State of Alaska, at Anchorage.
Section 7.10 - Captions. The captions or headings in this Agreement are for
convenience only and no way define, limit or describe the scope or intent of any
provisions or sections of this Agreement.
City of Seward
Operating Agreement
AMMOOIB2
Page 17
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
City:
CITY OF SEWARD
Tyler Jones
City Manager
ATTEST:
Linda S. Murphy, CMC/AAE
City Clerk
Operator:
SEWARD SHIP'S DRYDOCK, INC.
~ l\ii?~
Ja es T. Pruitt
P esident
APPROVED AS TO FORM:
WOHLFORTH, ARGETSINGER,
JOHNSON & BRECHT
Attorneys for the
City of Seward
By
Thomas F. Klinkner
City of Seward
Operating Agreement
AMMOOIB2
Page 18
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EXHIBIT A - DEFERRED MAINTENANCE
DEFERRED MAINTENANCE PROGRAM
The term of the deferred maintenance program will be for a maximum period of five
years. SSD must develop an acceptable plan for City approval to complete the task
identified. Priority number 3(a) and 3(b) (listed below) must be included in the first
two years of the deferred maintenance program.
1.
Scope of work is identified in Lloyd's Register's letter dated September 2,1 994,
pending documents from Norton Corrosion Limited, Syncrolift inspection report dated
September 16, 1994, and documented existing maintenance requirements by the City
for the breakwater.
2.
3.
Estimated minimum costs for the identified deferred maintenance:
a) Lloyd's inspection requirements for platform and component parts:
Backfill transfer pit
Renew oil in winch gear box
Motor reseal 11
Brake reseal
Batter pile repair
Coat fasteners
Rail alignment
Motor dip{bake 7 ea.
Line amplifiers
Paint gear box
Paint structural steel on platform
Cleaning and tightening electrical
connections
Repair of wooden decking on platform
Estimate
b)
Cathodic protection system
c) Coating pipe pile in splash zone
utilizing existing material
Coating of 33 cofferdam cells
d)
Cables $12,000 x 28
(Purchase of cable constitutes
full credit for replacement.)
$ 22,000
30,000
600
700
2,200
600
2,400
4,200
1,200
1,000
14,200
1,300
2.200
$ 82,600
Low
High
$ 90,000 $ 140,000
$ 240,000
$ 472,000
$ 215,600 $ 336,000
~ _ DESCRIPtION Of SMlL
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Exhibit C - Fencinq SpecificatIOns
/
Exhibit D - Form of Sian for Fence
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LAND FOR LEASE
PARCELS FOR LEASE
ARE AVAILABLE NOW.
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KEY: iii LEASED
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For information, call or write:
CITY OF SEWARD
PO BOX 167
SEWARD, AK 99664
(907) 224-3331/3138
. IfAPORlAN1 NO/~: FII'JAL- <;;/0rJ 1/E'7/bJ-J MiJ~
CON FCRrv\ IV APn<OVEP
l..EN7E- '7rl~ [)I ME.NCJ ION7.
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EXHIBIT E - MAINTENANCE SCHEDULE
All maintenance of the Syncrolift will conform with the guidelines in the operation
and maintenance manuals, S-2787 and S-2751, as published by NEI Syncrolift.
Maintenance schedules will not vary from the operation and maintenance manuals
without written approval and instructions from NEI Syncrolift and Lloyd's Register of
Shipping.
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.
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EXHIBIT F - TRAINING FOR OPERATORS
The City will offer up to twenty-four hours of hands-on instruction on the Syncrolift systems.
Additionally, the City will provide an operator for three lifting operations to avoid delays in
service to vessel owners. Compensation for this service will be at the rate of $39.32 per
manhour straight time as published in the harbor tariff. The process is a familiarization
process only. It should not be considered as training for the dock master. Formal
training is the responsibility of SSD and can be obtained from published manuals S-2728 and
5-2751 as written by NEI Syncrolift Inc. (a copy of each will be supplied by the City) and/or
training from Syncrolift personnel.
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EXHIBIT G - INVENTORY
A complete inventory list will be generated jointly and certified as accurate by SSD
and the City of Seward at the time of transfer of parts currently warehoused at the SMIC for
the Syncrolift.