HomeMy WebLinkAboutRES2023-087 Jag Alaska Operations Agreement •
CITY OF SEWARD,ALASKA Sponsored by: Regis
RESOLUTION 2023-087
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE MAINTENANCE AND OPERATING
AGREEMENT WITH JAG ALASKA INC. FOR AN ADDITIONAL FIVE
YEAR PERIOD FOR THE SHIPLIFT AND DRY-DOCK AREA
WHEREAS,the City(Lessor)and Seward Ship's Dry Dock,Inc.(Lessee)entered into the current
ground lease and Maintenance and Operating agreement in 1995; and
WHEREAS, City Council authorized the amendment and assignment of the Ground Lease to Vigor
Alaska-Seward LLC with the passage of Resolution 2014-044 on May 12,2014; and
WHEREAS, City Council authorized the amendment and assignment of the M&O agreement to
Vigor Alaska-Seward LLC with the passage of Resolution 2014-050 on May 27,2014; and
WHEREAS, City Council authorized the assignment of the M&O agreement to JAG Alaska Inc.
with the passage of Resolution 2018-064 on July 23,2018; and
WHEREAS,the current M&O Agreement expires on July 23,2023;and
WHEREAS, the City requires the Assignor to enter into a Maintenance and Operating
agreement for the operation of the City's shiplift on the leased parcels; and
WHEREAS,the agreement is attached and will go into effect immediately upon approval
of this resolution.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF SEWARD,ALASKA that:
Section 1. The City Manager is authorized and directed to sign, on behalf of the City of
Seward, the Maintenance and Operating Agreement, in the form substantially presented at this
meeting, with Jag Alaska.
Section 2. This resolution shall take effect immediately after adoption.
PASSED AND APPROVED by the City Council of the City of Seward,Alaska,this 24th
day of July, 2023.
CITY OF SEWARD, ALASKA
RESOLUTION 2023-087
THE CITY OF SEWARD, ALASKA
Olteler CA-N.
Sue McClure, Mayor
AYES: Osenga, Calhoon, Wells, Barnwell, DeMoss, McClure
NOES: None
ABSENT: Finch
ABSTAIN: None
ATTEST:
Kris Peck
City Clerk
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City Council Agenda Statement
Meeting Date: July 24, 2023
To: City Council
Through: Norm Regis,Acting City Manager
Subject: Resolution 2023-087: Authorizing The Maintenance And Operating
Agreement With JAG Alaska Inc.For An Additional Five Year Period For
The Shiplift And Dry-Dock Area
Background and justification:
The City of Seward has leased land to and had a Maintenance and Operating Agreement with Seward
Ship's Drydock, Inc. since 1988. In 2014,both the ground lease and Maintenance and Operating
Agreement were amended and assigned to Vigor Alaska-Seward LLC through the passage of Resolution
2014-050. In 2018,both the ground lease and the Maintenance and Operating Agreement were assigned
to JAG Alaska Inc.through the passage of Resolution 2018-064.
In order for the lessee to continue operation of the Seward dry-dock the City of Seward requires JAG
Alaska,to enter into a new Maintenance and Operations Agreement every five (5)years. The
Maintenance and Operating agreement needs to be approved prior to July 23, 2023.
Attached is the Maintenance and Operating Agreement in substantial form to JAG Alaska.
Comprehensive and Strategic Plan Consistency Information
This legislation is consistent with(citation listed):
Comprehensive Plan:
Strategic Plan:
Other:
Certification of Funds
Total amount of funds listed in this legislation: S 0
This legislation(✓):
Creates revenue in the amount of: $
Creates expenditure in amount of: $
Creates a savings in the amount of: $
x Has no fiscal impact
Funds are (✓):
Budgeted Line item(s):
Not budgeted
x Not applicable
Fund Balance Information
Affected Fund(✓):
General 71 SMIC Electric Wastewater
155
Boat Harbor Parking water Healthcare
Motor Pool PI Other
Note:amounts are unaudited
Fund Balance/Net position restricted $
Fund Balance/Net position—unrestricted/unassigned $
Available Unrestricted Cash Balance: $
Finance Director Signature: No fiscal impact
Attorney Review
X Yes Attorney Signature:
Not applicable Comments: The Start date is from Council approval, end date would be 5
years from council approval
Administration Recommendation
✓ Approve Res.
Other: Approve the M&O Agreement with JAG Alaska,Inc for an additional five years
156
MAINTENANCE AND OPERATING AGREEMENT
between
CITY OF SEWARD, ALASKA
and
JAG ALASKA, INC.
Dated as of April 1, 2023
159
TABLE OF CONTENTS
PAGE
ARTICLE 1 Definitions.......................................................................2
ARTICLE 2 General Provisions .........................................................6
Section 2.01 - Agreement Term ...................................................................6
Section 2.02 - Specific Use Restrictions.......................................................6
Section 2.03 - Environmental Matters ..........................................................6
Section 2.04 - Protection Against Liens........................................................8
Section 2.05 - No Preferential Rights to Use Port Facilities..........................9
Section 2.06 - Security for Shiplift Premises.................................................9
Section 2.07 - Leasing and Use of Managed Parcel ....................................9
Section 2.08 - Inspection by City..................................................................9
ARTICLE 3 Operation and Maintenance of Shiplift Facility..............10
Section 3.01 - Revenue..............................................................................10
Section 3.02 - Annual Facility Costs...........................................................10
Section 3.03 - Operation of Shiplift Facility.................................................10
Section 3.04 - Maintenance of Accounts; Statements; ...............................11
Section 3.05 - Operating Plan ....................................................................11
Section 3.06 - Inventory .............................................................................11
Section 3.07 - Rates and Charges .............................................................11
ARTICLE 4 Indemnity; Insurance ....................................................12
Section 4.01 - Operator's Duty to Indemnify...............................................12
Section 4.02 - Insurance Requirements .....................................................12
ARTICLE 5 Assignment ment...................................................................14
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.......................................15
Section 6.03 - No Waiver of Breach ...........................................................15
Section 6.04 - Cure by City ........................................................................15
ARTICLE 7 Miscellaneous .............................................................15
Section7.01 - Time ....................................................................................16
Section 7.02 - Entire Agreement ................................................................16
City of Seward and JAG Alaska, Inc. i
Maintenance and Operating Agreement
160
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
Exhibit A - Description of SMIC
Exhibit B - Maintenance Tasks
City of Seward and JAG Alaska, Inc. II
Maintenance and Operating Agreement
161
AMENDED AND RESTATED MAINTENANCE AND OPERATING AGREEMENT
This Maintenance and Operating Agreement (this "Agreement") is made as of
April 1, 2023 between the City of Seward, Alaska, an Alaska municipal corporation
("City"), whose address is P.O. Box 167, Seward, Alaska 99664, and JAG Alaska, Inc.
("Operator"), whose address is P.O. Box 969, 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 Syncrolift Shiplift System, Ship
Transfer System and related rail systems (the "Shiplift Facility"); and
WHEREAS, City and Operator's predecessor in interest Seward Ship's Drydock,
Inc ("SSD") were 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 SSD leased from City certain real property located in the SMIC,
as described in the Prior Lease 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; and
WHEREAS, City and SSD entered into that certain Maintenance and Operating
Agreement dated April 25, 1995 ("Initial Agreement") to assume the expense of
maintaining and operating the Shiplift Facility; and
WHEREAS, following expiration of the Initial Agreement the parties entered into a
Maintenance and Operating Agreement dated March 30, 2000, ("M&O Agreement")
which was amended and extended nine times; and
WHEREAS, on June 11, 2014 the M&O agreement was amended and assigned
to Vigor Alaska Seward LLC through resolution 2014-050; and
WHEREAS, on July 23, 2018 the M&O agreement was amended and assigned to
JAG Alaska, Inc. through Resolution 2018-064; and
WHEREAS, the term of the M&O Agreement expires in July of 2023; and
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WHEREAS, the parties have determined that it is in their respective interests to
continue their relationship for the maintenance and operation of the Shiplift Facility by
entering into this Agreement, and the Operator agrees to assume the continued expense
of maintaining and operating the Shiplift Facility;
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.
"Baseline Audit' shall mean the Phase II investigations attached as ANNEX B
to the 2018 M&O agreement. The Baseline Audits establishes the baseline
conditions of the Shiplift Premises for purposes of determining environmental
liabilities addressed in this agreement.
"City" means the City of Seward, Alaska.
"Cleanup" shall mean any planning, investigation, remediation, removal,
response actions, or disposal, as those terms are defined in the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
§ 9601, et. seq. ("CERCLA"), AS Title 46, and analogous state statutes, associated
with including land, groundwater soil vapor, marine sediments or any other
environmental medium or place where Hazardous Substances may come to be
located.
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"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
300f-300i-26; and
(ix) Title 46 of the Alaska Statutes.
"Event of Default" means any of the events described in Section 6.01 .
"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.
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"Lease" means the ground lease of the Premises between City and SSD, dated
as of April 25, 1995, as amended and assigned 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
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
A hereto, which is south of the fence on the northern boundary of the Premises
"Maintenance" means all of the repair, maintenance and replacement of parts and
equipment for the Shiplift Facility as further described in Article 3 and Exhibit D.
"Operator" means JAG Alaska 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.
"Pre-existing Contamination" shall mean the following: Any Hazardous
Substances on or in the Shiplift Premises (including land, groundwater soil vapor,
marine sediments or any other environmental medium or place where Hazardous
Substances may come to be located) which is disclosed in, arising out of or related
to contamination revealed in the Baseline Audit; or Any Hazardous Substances
arising from or related to operations at the Shiplift Premises prior to the effective date
of that certain Assignment, Assumption and Amendment of Agreement, dated as of
June 10, 2014, by and among Seward Ship's Drydock, Inc., an Alaska corporation,
Vigor Alaska - Seward LLC, an Alaska limited liability company, and the City of
Seward, Alaska, an Alaska municipal corporation (the "Assignment").
"Premises" means the land plus any improvements described as such in the
Lease.
"Required by Law' shall mean any actions or obligations associated with the
Shiplift Premises or prior operations at the Shiplift Premises which are (i) required by
any regulatory agency under any and all applicable federal, state or local statutes,
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regulations or ordinances, now or hereinafter in effect, relating to pollution or
environmental protection; or (ii) required by any final and non-appealable court order
in an action brought by a third party for enforcement of such laws; or (iii) required
pursuant to a Cleanup plan agreed to by City or Operator to carry out Cleanup
obligations imposed under such laws.
"Revenue" means all of the following fees or charges for use of the Shiplift
Facility: lift fees; receipts for labor to operate the 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 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.
"Subsequent Contamination" shall mean any Hazardous Substances on or in the
Shiplift Premises that are not Pre-existing Contamination, unless otherwise
demonstrated by Operator. Operator may demonstrate that Hazardous Substances on
or in the Premises not disclosed in the Baseline Audit are not Subsequent
Contamination by submitting to City credible and mutually acceptable evidence
through laboratory data, operational records, historical documents such as aerial
photographs or other material proof, that such contamination existed prior to the date
of the Baseline Audit. Within thirty (30) days of the delivery of such evidence to City,
City shall deliver written notice (a "Dispute Notice") to Operator indicating its
disagreement with such findings. The failure to timely deliver a Dispute Notice shall
constitute an acceptance by City of Operator's findings. Following the delivery of a
Dispute Notice, the following process shall be utilized to resolve such dispute:
a. Within thirty (30) days of the delivery of the Dispute Notice, City and Operator
shall select a mutually agreeable third-party environmental consulting or
engineering firm (the "Referee") to evaluate the Hazardous Substances so in
dispute (it being understood that in making such evaluation, the Referee shall be
functioning as an expert and not as an arbitrator). The Referee shall determine
whether the Hazardous Substances so discovered constitute Pre-existing
Contamination or Subsequent Contamination. If City or Operator disagrees with
the determination of the Referee, then it shall so notify the other party in writing
within five (5) days of the receipt of the Referee's final report. The failure to timely
deliver such notice shall constitute an acceptance by such party of the Referee's
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findings. In the event either party timely submits such notice, the provisions of
Article 12 of the Lease shall apply to the resolution of such dispute.
ARTICLE 2
General Provisions
Section 2.01 - Agreement Term. The Agreement Term commences , and unless
sooner terminated as provided herein ends at the earlier of (i) date of expiration or
termination of the Lease term, or (ii) June 10, 2028.
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 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 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) Reserved.
(d) Operator shall maintain a complete file, which may be inspected at any
reasonable time by City containing copies of all correspondence, permits or other
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material between Operator 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) Indemnification. 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;
Responsibility and Indemnity for Environmental Liability.
(A) General Allocation of Responsibilities. Except as otherwise specifically
set forth in this Section, City shall be responsible for liability for any
Cleanup Required by Law of Pre-existing Contamination and Operator
shall be responsible for liability for Cleanup Required by Law of
Subsequent Contamination.
(B) Operator Indemnification of City for Subsequent Contamination.
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 Subsequent Contamination that involves:
a. The failure of Operator to comply with its covenants and
agreements contained in Section 2 that result in liability relating to
Subsequent Contamination;
b. Any activities on the Shiplift Premises which directly or indirectly
result in the Shiplift Premises becoming contaminated with Hazardous
Substances that are Subsequent Contamination;
c. The discovery of Hazardous Substances on the Shiplift Premises
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determined not to be Pre-existing Contamination in accordance with the
provisions of this Section 2.03(f) .
d. The clean-up of Subsequent Contamination from the Shiplift
Premises.
(g) The provisions of this section, including the obligation to indemnify, shall
survive the termination or expiration of the Agreement Term.
(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.
Section 2.04 - Protection Against 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 City 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 pay or 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 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
Operator on the Shiplift Facility.
(d) On completion of any substantial work of improvement during the
Agreement Term, Operator shall file or cause to be filed a notice of completion.
Operator hereby appoints City as Operator's attorney-in-fact to file the notice of
completion on Operator's failure to do so after the work of improvement has been
substantially completed.
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Section 2.05 - No Preferential Rights 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 - Security for Shiplift Premises. Operator shall limit access to the
Shiplift Premises by maintaining at Operator's expense the existing fence along the
northerly edge of the Managed Parcel. Operator shall provide City and its lessees with
24 hour access to the Managed Parcel.
Section 2.07 - Leasing and Use of Managed 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) Notwithstanding Section 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
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 by 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.
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ARTICLE 3
Operation and Maintenance of Shiplift Facility
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 Facility 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; and
(b) 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 - Operation of Shiplift Facility.
(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 Operator shall maintain a
Certificate of Class and maintain a fully functioning cathodic protection system.
(b) Operator shall perform Maintenance of the Shiplift Facility in accordance
with the maintenance schedule prepared by City and Operator and attached as Exhibit D
hereto. This schedule provides for maintenance in accordance with the
recommendations of Norton Corrosion and Pearlson Shiplift Corporation and their
successors, and shall be kept in conformance with the maintenance recommendations of
Pearlson Shiplift Corporation. This schedule provides 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. Formal training is the
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responsibility of Operator and can be obtained from Pearlson Shiplift Corporation or
others.
(d) Agents of City may enter the Shiplift Facility at all times to inspect the
Shiplift Facility or observe its operation. If City 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 Norton Corrosion, Pearlson Shiplift Corporation, Lloyd's Register of
Shipping and such specialty consultants as may be required by Pearlson Shiplift
Corporation or Lloyd's Register of Shipping, and promptly provide to City a copy of the
report of each such inspection.
(f) Operator shall maintain reasonable hours of Shiplift Facility operation, and
reasonable procedures for Shiplift Facility operation, that 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 to Shiplift Facility operation.
Section 3.04 - Maintenance of Accounts and Statements; . Operator shall keep
proper books of account for the Shiplift Facility which shall be kept in accordance with
Generally Accepted Accounting Principles. 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 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.
Section 3.05 - Operating 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 Annual Facility Costs and
a schedule for repairs and maintenance to be performed during the Fiscal Year.
Section 3.06 - Inventory. Operator shall maintain on hand the inventory of spare
parts for the operation and maintenance of the Shiplift Facility as shown in Exhibit E, and
Operator shall sell that inventory to City upon the expiration or earlier termination of the
Agreement Term.
Section 3.07 - Rates and Charges. With each annual operating plan submitted to
City, Operator shall propose rates and charges for the use of the Shiplift Facility. 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
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service if they are reasonably related to the cost of providing each class of service,
allocated according to Generally Accepted Accounting Principles.
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 any one
person and $5,000,000 limit from any one 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.
(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
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any permit or tariff of City.
(b) Operator shall have the right to meet the liability insurance requirements of
Section 4.02(a) with the purchase of umbrella or bumbershoot insurance
policies. In all instances, the combination of primary and umbrella liability
coverage must equal or exceed the minimum liability insurance limits stated
in Section 4.02(a).
(c) 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.
(d) 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 approved by City, certificates
evidencing that it has procured the insurance required herein prior to the operation of the
Shiplift Facility by Operator. Operator shall be liable for all deductibles under any
insurance policy obtained by Operator under this Agreement. 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.
(e) On October 1, 2023, 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 Operator and in the
opinion of the broker the coverage complies with Operator's obligations under this
Agreement.
(f) 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. Operator 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 negligence.
Operator shall promptly and without request by City supply City copies of all insurance
binders and policies.
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ARTICLE 5
Assignment
Section 5.01 - Assignment of Agreement. 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 - Assignment. 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, or (b) any entity that
directly, or indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, Operator, without consent or 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, any one 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
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.
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(c) Any event of default under the Lease.
Section 6.02 - Remedies for Default by 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 Agreement 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 any one 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.
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 by City. 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.
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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 Agreement. 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
JAG Alaska, Inc.
P.O. Box 969
Seward, Alaska 99664
Attention: Tim Jagielski
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 - Binding 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 - Severability. 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.
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Maintenance and Operating Agreement Page 16
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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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
C ity:
CITY OF SEWARD
Norm Regis
Acting City Manager
ATTEST:
Kris Peck City
Clerk
Operator:
JAG Alaska Inc.
Tim Jagielski
Executive Vice President
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Maintenance and Operating Agreement Page 17
178
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City of Seward and JAG Alaska Inc.
Maintenance and Operating Agreement Page 18
179
Exhibit B - Maintenance Tasks and Schedule
In addition to other obligations in this Agreement, all maintenance of the Shiplift Facility shall
accomplish and conform with the guidelines in the operation and maintenance manuals, S-2787 and S-
2751, as published by NEI Syncrolift and current standards set by Pearlson Shiplift Corporation
Maintenance Records P022— Seward Ships Drydock Company, Norton Corrosion, and Lloyds of London.
City of Seward and JAG Alaska Inc.
Maintenance and Operating Agreement Page 19
180