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HomeMy WebLinkAbout1976-04-05 176 AD RESOLVE176 AD Introduced by Councilor Hallou, April 5, 1976 CITY OF BANGOR (TITLE.) PW* ...... !.uthorieation to ExecuteetY Lteof Ineenc RESUKARM WHEREAS, it Is Imperative that the City of Bangor acquire jointly with Exxon Corporation all fixed bass operation assets (except for aircraft utilized in the fixed Lose operationflight school), and interests of Trane - East Air, Inc., and its Ttmtee, Emerge W. Kurt, Esquire, free and clear of all liens (except certain interests of Exxon Corporation); end WHEREAS, -it is imperative that the city settle and compromise all past, present, aha potential claims and causes of action between and among the Trustee, Depositors Treat, Company, Exxon Corporation, and the City of Bangor; and wFSACA8, it Is Imperative that as a part of such acquisition, settle- ment, and cemprcmiae, a Letter of Intent by and between Exxon Corporation and the City of Bangor in substantially the form of a Letter of Intent, a copy of which is attached to this Resolve and made a part hereof, be executed on behalf of the City Immediately; and WHEREAS,. in the opinion of the Council these facts render Che immediate passage of this Resolve necessary far the preservation of the public peace, health, and safety, and constitutes an emergency within the meaning and provision of Article EII, Section 1 of the Charter of the City of Bangor, and the provisions of the Constitution of the State of (pine; NOW THEREFORE BE IT RESOLVED BY THE CTTY COUNCIL OF THE CITY OF MEWS TEAT: The City Manager be and he hereby is authorised to execute on behalf of the City, the Letter of Intent by and between the City of Bangor and Exxon Corporation in substantially the form attached hereto and made a part hereof. AM BE TT FORMS RESOLVED THAT: This Resolve, in light of the emergency set forth herein, shall became effective upon passage. TA CITY COO IL 176 no April 3,. 1976 - Passed ty the Following yea and no vote! councilors voting yes: N E S L Y E 'B ll0u, Bigney/Biwnt ; Finnigan, 1 � Helderson, Mooney, Soucy and B ules. � ( _ Councilor voting n0. Gass. _ //6i�a .l ned ��ntborination to IXecute IettoY Intent. ' CSTY CLE x U l ra orporation II LETTER OF INTENT This Letter is intended to set forth the terms and conditions under i which Exxon�`end the City of Hanger have agreed to the continued operation of II. Bangor International Airport should the court approve settlement negotiations I first proposed by the Trustee, Ne exploration of which bas been sete�mptetl by and between Exxon and the City in furtherance of the court's desires. It is the Intent of the parties to this Letter of Intent to enter into formol agreements i .li dandling the points set forth below which agreements shall be subject to the duly �I .authorised approval of the paz[iee heron a52d [heir respective counsel. In the furtherance of the settlement effort referred W above, Exxon and Ne City of Bangor agree: 1. The City has offered $650,000 to be submitted to the Trustee I� I as its payment toward settlement of ell claims and obligations arising out of i agreements entered into by it win Trans -East and the other parties to the } litigation titled "In the Matter of Trans -East, Inc., Debtor, etc." and reconveyance of all agreements between the City and debtor to City and Exxon jointly. I $125,000 of the above stated amoum is to De'taken from Maine National Bank escrow -account in accordance win the terms of Me settlement agreement betwee an the parties hereto, Depositors Trust Company and George W. Sure. Sr., Esq., I Chapter % Trustee of Trans -East Air. Inc: At such time as no new documents �. which this Letter oP Intent contemplates am executed and delivered between Me partes hereto, Me existing documents which are to he reronveyed pursuant to this agreement will be canceled and superseded by such new documents. 2. Exxon hos alleed'to the tender of $650,000 to Me Trustee in furtherance of the Yattlement of the litigation referred to above, and reeonvryance li I i. 1 I! of all agreements between Exxon and debtor to Exxon and City jointly. At such 'i if= as the new documents which this Letter of Intent contemplates are the existing documents which . j' executed and delivered between the parties hereto, g , are to lieaeconveyedpursuant to this agreement will be canceled and superseded ,I by such new documents. - 3. The payments referred to in paragraphs 1 and 2 above are also J conditioned upon the exchanges of mutual releases satisfactory to all parties by all parties to the said litigation, and the approval of the settlement by the court i which approval shell be indicated by the issuance of such an order as will resolve r and put to rest with prejudice all phases of the litigation titled "In the Matter of Trana-Hest. Inc. , Debtor, etc." and enjoining all parties reachable by the court from bringing any action, claim, demand, suit or other proceedings against my ii of far parties signatory to such releases. � - 4. Up. the termination of the above mentioned litigation, and the issuance of the aforesaid court order, the City and Exxon will enter into a lease of the fueling facilities at Danger International Airport es delineated on a plan which will be unexcited to the net Storage and Dandling Facilities Agreement d which ma b 1 sad between the City and Exxon except those facilities leasem time [o t�meo [file Ij wilim" to permit its performance of its mission. which Exxon lease shall be for ji a primary term expiring on December 31. 1933 and renewable for four successive 6 -year ear additional periods beyond the expirion of the base lease unless Exxon .i shall have given the City at least six months prior written notice of its election fast to renew at the expiration of the fb�asse�period or renewal period then in affect. Exxon will pay the City pyapgfptTR�i}JZA$'�4 cent per gallon for - ii solation fuel taken from inventory at Bangor International Airport and Exxon !I! agrees not to pass on more than 9110 of a cent per gailon to its fueling agent or to the fixed base operator. The City agrees to assume all major maintenance f: -2- with Exxon to accept such part of the fueling facilityin its then existing condition. p of sold fueling facilities and Exxon will assume responsibibty of all the minor maintenance of said fueling facilities at Bangor International Airport as defined i. in the Fuel Storage and Handling Facilities Agreement between the City and Exxon. s presently constructed'. If the military gives up any part of the posting facitit�ewhieh it may be using from a time to time, and since such part of the facility constitutes an integral part of the present fueling facility at Bangor International Airport, the City and Exxon agree Mat such part of the fueling facility shall became a part of the demised premise^. li S. The City agrees to purchase certain non -fueling mobile equipment '{ from Exxon when it recovers such equipment from the Trustee for the purchase j price of $42,000 to be paid within one year out of operating income. - 6. The City shall have and retain the right to operate as genera I: aviation fixed base operator or shall have the right to appoint a general aviation fixed base operator to perform such operation subject, however, to said operator's ability to enter into a satisfactory Contractual arrangements with Exxon:9` 7. The City shell have and retain the right to operate as Exxon's ` and fueling agenKQ provide the services required of Exxon in making fuel available to Exxon's contract customers or shall have the right to appoint another fueling agent subject, however, to such agenCs ability to enter into satisfactory ii contractual arrangements with Exxon I B. huamuch as the military, including the Maine Air National Guard, operation at Surge appears to be changing the City and Exxon agree Mat if any fuel storage or bundling facilities which the military now have or _ may acquire as necessary for the furtherance of its mission shall no longer be is used by the military, such facilities shall be acquired or reacquired by Exxon as provided in Paragraph 4 above. As to any facilities Exxon presently has available for its use which may be needed by the military, Exxon will negotiate ' with the City in the interests of satisfying such need of the military to fulfill its -3- j It is understood and agreed, however, that the City shall have the right to assign to said operator its contract with Exxon upon said operator meeting the requirements of paragraph 9 hereof, and that upon any such assignment the City shall be relieved of all rights,. liabilities, and obligations to Exxon and anyotherperson under such contracts.. mission, subject to the same option to reacquire. 9. Should the City under Paragraphs 6 and 7 above appoint or designate as general aviation fixed based operator or fueling agent on organisation or entity other than. the City, Exxon shell have the right to require financial assurances in the form of an acceptable guarantee, certificate of deposit, or performance bond Coinsure payment to Exxon of any debts to it arising out of the operations at Bangor International Airport or liabilities accruing against Exxon. because of performance or non-performance by the operator or agent. 10. Exxon will net be obligated to provide mobile fueling equipment _ to the general aviation fixed base operator. It will provide such mobile fueling - equipment as in its judgment is required by the fueling agent based upon opera- tional studies of the needs of the airport.' 11. T e commitments of Exxon and the City under this Letter of Intent an enter into formal agreements, make payments toward settlement of the litigation involving Trans -East, exchange releases, or otherwise to implement the Indentions of ibis Letter, shall not become effective unless and until the order, judgment, or decree of the court referred to in Paragraph 9 above shell have became final and an longer subject to appeal or overturn. In addition, it shall be a precondition to the effectiveness of the undertaking described in the Immediate preceding sentence that counsel for the City and Exxon respectively shell have given to their clients and to each other formal legal opinion that proper authorization has been obtained in the form of board resolutions, resolves, -. concurrences or adoptions of any releases, acceptances, concurrences or commit- menta of any party or non-party to the above referenced litigation so as to completely formally and finally terminate and put to rest ad claims. demands or obligations involved Chemin. 12. By signing on behalf of the City and Exxon respectively in the pieces provided below, the City and Exxon covenant, warrant and ofd am to I i i mission, subject to the mono option to reacquire. 9. Should the City under Paragraphs 6 and 7 above appoint or designate as general aviation fixed based operator or fueling agent an organization or entity other than. the City, Exxon shall have the right to require financial assurances in the form of an acceptable guarantee, certificate of deposit, or performance bond to insure payment to Exxon of any debts to it arising out of the operations at Bangor international Airport or liabilities accruing against Exxon because of performance or non-performance by the operatororagent. 10. Exxon will not be obligated to provide mobile fueling equipment r to the general aviation fixed base operator. It will provide such mobile fueling equipment as in Its judgment is required by the fueling agent based upon opera- +. named studies of the needs of the airport. U. The commitments of Exxon and the City under this Letter of - Intent to enter into formal agreements, make payments toward settlement of the fifigation involving Trans -Leet, exchange releases, or otherwise to implement - Me intentions of this Letter, shall not become effective unless and until the order, Judgment. or decree of the court referred to he Paragraph 3 above shall have become final and no longer subject to appeal or overturn. In addition, it shall +. be a precondition to the effectiveness of the undertaking described in the jmmedate preceding sentence that counsel for Ne City and Exxon respectively shell have given to their clients and to each other formal legal opinion that proper authorization has been obtained in Ne form of board resolutions, resolves, concurrences or adoptions of any releases. acceptances, concurrences or commit- ments of any party or non-party to Ne above referenced litigation so as to completely formally and finally terminate and put to rest all claims. demands or obligations involved therein. 12. By signing on behalf of the City and Exxon respectively in the places provided below, the City and Exxon covenant, warrant and affirm to `i each other for the purpose of inducing each other to join in the execution of this i,elter of intent and the agreements anticipated hereby that the signatures thereto affixed are that of an agent with power to bind his principal having duly been i authorized so to do.' Executed on behalf of the City this day of ;1946 and on behalf of Exxon. Corporation this - day of , 1946.. CITY OF BANGOR EXXON CORPORATION By ] By i i I Mr. Merle Gaff " City Manager City Hall Bangor, Maine 04401 Re: Trans -East Air, Inc. -- Settlement Agreement Bear Merle: Please find enclosed herewith the following items: 1. Letter addressed to the City Council outlining the Settlement Agreement in lay terms. 2. Memorandum to you from myself outlining the participation Of Exxon Corporation in the Settlement; and 3. A new page 21 to be substituted in the Settlement Agreement in lieu of the present page 21. 1 also include herewith sufficient numbersof the above listed items for forwarding to the City Councilors. The new page . 21 should be inserted in the draft of the Settlement Agreement attached to the proposed vote of the Council for action on Monday evening, April 5, 1976. The reason for the new page 21 to the Settlement Agreement is to make the City Manager, rather than the attorneys for the City, signatory to the Settlement Agreement on behalf of the City which is consistent with the Proposed Council vote. Very truly yours, �� 207 �v Thomas M. Brown Enclosures - TMB:cl EATON. PEABODY. BRADFORD 6 VGGUE COUNSu.LOAS AT LAW SIX STATE STREET ANGOR. MAI N E 09901 " April 2, 1976 Mr. Merle Gaff " City Manager City Hall Bangor, Maine 04401 Re: Trans -East Air, Inc. -- Settlement Agreement Bear Merle: Please find enclosed herewith the following items: 1. Letter addressed to the City Council outlining the Settlement Agreement in lay terms. 2. Memorandum to you from myself outlining the participation Of Exxon Corporation in the Settlement; and 3. A new page 21 to be substituted in the Settlement Agreement in lieu of the present page 21. 1 also include herewith sufficient numbersof the above listed items for forwarding to the City Councilors. The new page . 21 should be inserted in the draft of the Settlement Agreement attached to the proposed vote of the Council for action on Monday evening, April 5, 1976. The reason for the new page 21 to the Settlement Agreement is to make the City Manager, rather than the attorneys for the City, signatory to the Settlement Agreement on behalf of the City which is consistent with the Proposed Council vote. Very truly yours, �� 207 �v Thomas M. Brown Enclosures - TMB:cl M E M O R A N D U M To: 'Merle Goff From: Tom Brown Date: April 2, 1976 - Re: TRANS -EAST MATTER The purpose of this Memorandum is to summarize the reasons why it hasbeen recommended to the City Council that they extend the fuel facilities lease and general relations with Exxon Corporation at the airport for an additional 25 years. Basically, it is my understanding that the City adminis- tration recognizes that the present and hoped for volumes of fuel sales at the airport will, as a practical and economic matter, only support one fuel supplier. As far as the fuel suppliers in the United States are concerned, Bangor, Maine is at the end of the distribution system.- Exxon may well be the only potential supplier that has the storage capacity at Bucksport orelsewhere to meet the demands of its customers at the airport. Similarly, we understand that other major suppliers even have problems meeting the fuel requirements of airports more centrally located, such as Texaco at Bradley Airport in Connecticut. In addition to this, it is recognized that with regard ,to any major fuel supplier, Bangor will only be one of many airports which are involved in contractual agreements between the fuel supplier and its supplemental air carrier customers, and therefore, the carriers and fuel suppliers in part lock upon BIA as only a segment of a network of "service stations" that are integrated into one contract between the carrier and the fuel supplier.. Therefore, in order to be a truly attractive airport to the carriers, the City should have a fuel supplier that has extensive locations throughout the United States and Europe and extensive contractual relationships with numerous carriers. As a practical matter, it is the fuel supplier who carries a substantial portion of, the promotional efforts with regard to BIA. From .all this we think it is both fair and reasonable to conclude that Exxon, as probably the world's largest and moat substantial petroleum company, is in the best position to: 1. Attract and keep customers at BIA. 2, provide and maintain substantial supply offuel over the long term. 3. Maintain the beat overall financial stability of any oil producer in the world. In addition to this, it should be realized. that Exxon is paying a very substantial am, $650,000, to among other things, obtain this renewal. -Apart from the fact that this money is needed to further any resolution of the overall litigation and - problems confronting the airport, it should be realized that this substantial commitment by Exxon will, most. probably, have the effect of causing Exxon to more intensively promote the airport in order to recapture its investment. In .addition, the agreements will provide for Exxon to pay substantial fees to the Airport Department for. the use of the fuel storage and distribution system, which fees will be used to support the overall operation of the. airport. It also should be recognized that the City is not the only party who has-rights'in the overall situation. Exxon, for example, has two more years on its present lease of portions of the fuel distribution system and it is, therefore, not possible to put the lease of the system up for bid or auction. It can be fairly anticipated that if Exxon believes that it may .not continue to be the fuel supplier after 1978, it will cease to promote BIA and thus business could be adversely affected over the next two years. In addition, the prospect of continuing litigation would also adversely impact upon the marketing and promotional effect at BIA. It should be also realized that if the litigation is not settled within the framework as presently negotiated, Exxon's offer of $650,000 will be withdrawn. Therefore, it is anticipated that, without Exxon's participation, the litigation and all of the claims and counterclaims involved therein (including a claim for accounting against the City in excess of $500,000) will remain unresolved. The litigation would thereby continue for several more years. The effects of continuinglitigation include: 1. Continuing uncertainty.with regard to the airport which retards efforts to, promote and develop the airport. 2. Continuing to consomme an inordinate amount of the time and energies of the City Council and City Administration, thereby detracting it from consideration of other matters of concern to the City:' "- 3. Extensive costs of litigation . 4. The possible termination of the fixed -base operation by the City Council, andresultingincursion of costs for the Airport Department without fixed -base operation support. In summary then, the participation of Exxon Corporation in the resolution of the foregoing matters is se critical that no significant aspect of the litigation can be resolved without its participation. I personally am of the opinion that Exxon has acted fairly and with an even hand in this situation and, that at this point in time Exxon is the beat partner that the City could have in continuing to --develop the airport. There can be no doubt that Exxon will seek to make money at Bangor and the structure of the situation is that, as Exxon generates revenues from its operation at the airport, the City of Bangor likewise will generate revenues. The City cannot obtain its objectives without the substantial participation of a fuel supplier and Exxon appears to be the best partner on the horizon.