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2022-09-29 RM Minutes and PacketKodiak Fisheries Development Association September 9, 2021 AGENDA I. Call to Order If. Roll Call/Approval of Agenda III. Approval of Previous Minutes September 10, 2020 IV. Old Business Review 2020 Secretary/Treasurer Report V. New Business • Election of Officers: A. President B. Vice -President C. Secretary/Treasurer • Membership City Harvester Seat Vacancy • Review of 2021 — 2022 Proposals and Approval of IPQ lease(s) • Consider Investment Options By -Law Review VI. Public Comments VII. Director Comments Vill. Date of Next Meeting/Items of Discussion IX. Adjournment Kodiak Fisheries Development Association September 10, 2020 Minutes Call to Order The virtual annual meeting of the Kodiak Fisheries Development Association (KFDA) was called to order at 9:10 am. II. Roll Call/Approval of Agenda The following Board members attended virtually: Stosh Anderson, Jerry Bongen, Tuck Bonney, Linda Freed, Tyler Schmeil With no objection the agenda was approved. Ill. Approval of Previous Minutes It was moved by Schmeil and seconded by Anderson to approve the minutes of the September 12, 2019 meeting. With no objection the minutes were approved. IV. Old Business The Board reviewed and discussed responses to last year's RFP. V. New Business Election of Officers: A. President - Anderson nominated Schmeil B. Vice -President — Freed nominated Anderson C. Secretary/Treasurer— Bongen nominated Freed The officers were elected by a unanimous vote of the Board. • Membership City Harvester Seat Vacancy The Board members thanked Jeff Stephan for his years of service on the Board. The Board discussed possible candidates to fill the vacancy created by Stephan's resignation. Freed will e-mail a copy of the City of Kodiak's advisory board application form to Board members. Review of 2020 — 2021 Proposals and Approval of IPQ lease(s) The Board reviewed and discussed the proposals that were received. Anderson moved and Bonney seconded a motion to accept Trident Seafoods proposal to lease all four lots of KFDA's BBRKC IPQ Page 2 — September 10, 2020 Minutes Schmeil moved and Anderson seconded a motion to accept Royal Aleutian Seafoods proposal to lease all of KFDA's non-BBRKC IPQ. The motions were approved without objection. However, the Board was concerned about the low price offered by Trident Seafoods. The Board wants to see crab brought back to Kodiak for processing, but at what price. It was noted that there is little benefit to harvesters to bring crab back to Kodiak; it is a logistical problem. The Board has hopes that there will be more competitive proposals next year. One option is for KFDA to directly contract for custom processing, although this would involve much more work than leasing the IPQ. By -Law Review Freed commented that the KFDA by-laws should be reviewed with possible revisions recommended to the City Council and Borough Assembly for their concurrence. Freed will work on preparing a draft for the Board's consideration. VI. Public Comments There were no public persons in attendance. VII. Director Comments The Board members again thanked Jeff Stephan for his years of service to the organization. Board members also thanked Bongen for his years of service as the organization's president and Freed for serving as the organization's Secretary/Treasurer. Vill. Date of Next Meeting/items of Discussion If a draft of revised by-laws gets completed Freed will arrange for a working meeting prior to next year's annual meeting. IX. Adjournment Schmeil moved and Bonney seconded a motion to adjourn the meeting. With no objection the meeting was adjourned at 10:00 am. Kodiak Fisheries Development Association (KFDA) Annual Secretary/Treasurer Report September 2021 The financial assets of KFDA were transferred from the City of Kodiak to the KFDA and placed in a high yield savings account with checking privileges at Wells Fargo Bank on January 9, 2015. The starting balance was: $241,654.00. The signatories on the account need to be uodated. The Secretary/Treasurer has maintained this account since its inception. 2. The current balance in the checking account is: $385,998.98. Remaining expenses this calendar year are: advertising of the RFP and annual meeting, monthly (if applicable) legal fees for August — December, and the 2021 lease payment to Ocean Beauty, estimated to be $13,000. 3. Application was made for KFDA's 2021 - 2022 IPQ in April, well before the deadline. 4. The biennial report was filed with the State of Alaska. KFDA is in good standing until 7/2/2023. 5. A response was provided to the IRS about the filing status of the KFDA's FY20 tax return, including a copy of the filed return and proof of mailing. 6. The 2021 — 2022 RFP for lease of KFDA's IPQ was revised, issued and advertised. 7. The fiscal year 2021 tax return has been completed and filed. 8. The annual meeting date and location was established and advertised. The meeting packet was developed and distributed. From: Brett Reasor Brett.Reasor@unisea.mm 6 Subject: RE: Kodiak Fisheries Development Association —RFP Date: August 1 B, 2021 at 9:04 AM To: Duncan McIntosh dmcintash@mundtmac.mm, Garry (glonconl @hotmail.com) glonconl @hotmail.com, Tom Enlow tom.enlow@unisea.com Cc: Unda Freed freed@gci.mt, Tyler Schmeil tmschmeil@gmail.com Good morning Duncan, Please find attached the RAS proposal for the 2021/22 crab season. I'm not in the office this week to attach my signature, but I can do that when I return next week. I all is well with you. Thank you for the opportunity to submit a proposal. Brett From: Duncan McIntosh <dmcintosh@mundtmac.com> Sent: Wednesday, August 18, 20219:29 AM To: Garry (glonconl@hotmail.com) <glonconl@hotmail.com>; Brett Reasor <Brett.Reasor@unisea.com>; Tom Enlow <tom.enlow@unisea.com> Cc: Linda Freed <freed@gci.net>; Tyler Schmeil <tmschmeil@gmail.com> Subject: Kodiak Fisheries Development Association -- RFP Hi Garry, Brett, and Tom, On behalf of Kodiak Fisheries Development Association (KFDA), here is a Request for Proposals relating to the lease of KFDA's 2021- 2022 Bering Sea Individual Processing Quota (IPQ). Proposals should be submitted via email to dmcintosh@mundtmac.com and freed@gci.net by 3:30 pm Kodiak time on September 3, 2020. Thank you, Duncan Duncan R. McIntosh Mundt MacGregor L.L.P. 271 Wyatt Way NE, Suite 106 Bainbridge Island, Washington 98110 Direct: (206) 319-1105 Office: (206) 624-5950 Cell: (206) 948-2857 Fax: (206) 624-5469 This message contains confidential, privileged information that is intended only for the addressee. If this message has been sent to you in error, please call the sender at (206) 319-1105 and delete the message from your e-mail account. °3 Proposal to Lease ... 2.docx Proposal to Lease KFDA Crab Processing Quota Good morning Linda and Duncan, I would like to respectfully request that Royal Aleutian Seafoods, Inc. (RAS) be considered as a viable candidate to lease any and/or all of the Kodiak Fisheries Development Association's (KFDA) Bering Sea Crab Processing Quota, in any of the active fisheries for which quota is issued. RAS/UniSea has leased various IPQ from KFDA over several crab seasons, so I trust you are familiar with our services. We offer a 50/50 Margin Sharing agreement by which we provide the crab matching with the fleet, coordinate the landings — through our experienced fleet manager Al Mendoza in Dutch Harbor -, process the crab to current customer specs, and market the crab in pursuit of the highest margin available. We pro -rate all round pound deliveries against our total IPQ pool, so that no individual IPQ holder has to absorb a problematic delivery (such as unusually high deadloss) on its own. Anomalies are thus spread amongst all IPQ holders, insulating smaller IPQ holders from a major mishap on a single delivery. RAS has a long term contractual relationship with its majority owner UniSea, Inc. (UniSea), who owns and operates a processing plant in Dutch Harbor, Alaska. UniSea is not in the Kodiak Island Borough (KIB), but we could offer a viable alternative for your crab processing should there not be a plant available within the (KIB) to meet the association's processing needs. UniSea has all the permits and licenses, processing expertise, and capacity to take on this additional quota. UniSea has landed between 20-30% of the entire Bering Sea's Crab Rationalized (CR) fishery in each of the last five years, making it one of the top three or four facilities in Alaska. UniSea also markets the majority of that crab. With very few exceptions, since 2005, UniSea has managed to have harvesters land virtually 100% of our matched crab. If you're looking for a stable, experienced facility with whom you can trust your crab quota, and have the best chance of having it utilized, UniSea is the place. Since the crab fishery was rationalized in 2005, RAS has always paid an acceptable market price for its crab and has been amongst the fastest payers of all processors. We have always paid for all leased IPQ under our various agreements at the end of each season. Because of UniSea's large umbrella of stable crab customers, RAS has never failed to provide a positive margin to a leaseholder. RAS is prepared to submit a contract for the privilege of processing any of KFDA's parcels of crab quota for the 2020-2021 crab season, based on terms and conditions the same as in prior years; one that is centered on a 50/50 margin share approach. There is one change from last year. The Custom Processing rate increased from $0.91/lb. to $0.93/lb. in calendar year 2021. KFDA's recent bid solicitation requests a fixed price for some of the KFDA PO, which is not a business model that RAS is able to support. RAS's intent with this proposal is to continue with a contract that reflects our prior relationship, wherein we share in the risks and rewards of processing crab. We very much enjoy working with KFDA and hope to continue to do so in a similar capacity. We look forward to strengthening the trust by which we may expand our interactions well into the future. Sincerely, Brett Reasor— RAS Crab Manager September 3, 2021 Mr. Duncan McIntosh Ms. Linda Freed Kodiak Fisheries Development Association Duncan and Linda; First, let me thank you for the opportunity to bid on Kodiak Fisheries Development Association's IPD this year. Peter Pan is looking forward to striking a long-term partnership with KFDA. As you know Peter Pan Seafood Company has been in business in Alaska for many years and has recently changed hands and is now owned and managed by a group with a storied background in Alaska and in fisheries. We bring a depth of knowledge and experience, with great assets and market penetration we are confident we will extract the highest and best use out of KFDA resources we are given the opportunity to utilize on the Associations behalf. We will follow up with all the names and numbers of who to coordinate with, this will start with me all my contact information is include below. The lease amounts are included in the proposal and will be paid upon completion of the season in order to complete the calculations on all delivered quota. jthorpe®ppsf.com INDIVIDUAL PROCESSING QUOTA LEASE PROPOSAL This Individual Processing Quota Lease Proposal ("IPQ Lease") is offered to the KODIAK FISHERIES DEVELOPMENT ASSOCIATION, an Alaskan nonprofit corporation ("KFDA") by Peter Pan Seafoods, LLC ("PPSF"), as of September 3, 2021, based on the following: a.) PPSF owns and operates a processing plant in King Cove, Alaska that is licensed and permitted with all state and federal requirements to process crab delivered under the accepted IPQ Lease. b.) The PPSF processing plant is located outside the Kodiak Island Borough. However, it is an eligible processing plant within the guidelines of the BSAI crab rationalization program. c.) The PPSF processing plant is fully capable of processing the leased IPQ in the most efficient, professional, commercially reasonable manner, to include timeliness and quality of finished goods. d.) Due to the closure of the 2021/22 BBRKC fishery, PPSF will not submit a bid in this proposal. e.) 1.) PPSF is offering a $.45 per pound lease fee for all BSS round pounds delivered on a proportional basis of all A share matched IPQ BSS crab delivered to PPSF in our King Cove, Alaska processing plant. 2.) PPSF is offering a $.55 per pound lease fee for all EBT/WBT round pounds delivered on a proportional basis of all A share matched IPQ BSS crab delivered to PPSF in our King Cove, Alaska processing plant. In compliance with the language in the 2021-2022 IPQ Lease RFP. f.) Item e. above is a flat rate IPQ lease fee, PPSF would also like to offer an escalator clause to beat out any other offer based on similar terms by $.02 for both items 1. and 2. in item e. above up to a maximum of $.53 on BSS and $.63 on EBT/WBT. KFDA in confidence would share the competing proposal that caused the escalator clause to trigger in order to document the final accepted offer. g.) This IPQ Lease assumes full responsibility for all IPQ use. The responsibilities assumed include, but are not limited to: IFQ/IPQ share matching; crab delivery arrangements and payments to crab fishermen; reimbursing KFDA for the applicable portion of the 2021- 2022 crab price arbitration fees; participation in crab price arbitration, if necessary; crab product processing, packaging, shipping, marketing and sales; and compliance with all applicable State and Federal regulations. h.) PPSF will reimburse KFDA for all allocated shares of KFDA's 2021-2022 arbitration related fees. In compliance with the language in the 2021-2022 IPQ Lease RFP. BYLAWS OF IiODI_AK FISHERIES DEVELOPMENT ASSOCIATION ARTICLE I - NAME The name of the organization shall be Kodiak Fisheries Development Association (the "Corporation"). ARTICLE II - PURPOSE The Corporation is organized exclusively to promote the social welfare of the City of Kodiak and the Kodiak Island Borough (together, the "Kodiak Community"), consistent with Section 501(c)(4) of the Internal Revenue Code of the United States (as the same may be amended, supplemented, or replaced from time to time, the "Internal Revenue Code"}. Subject to the foregoing, the specific purposes for which the Corporation is organized are as follows: A. To act as an Eligible Crab Community Entity ("F..CCE") on behalf of the Kodiak Community for purposes of exercising rights of first refusal in connection with proposed transfers of processor quota shares ("PQS") and individual processor quota ("IPQ"), pursuant to the .Bering Sea/ Aleutian Island ("BS/Al") crab rationalization program regulations set forth at 50 C.F.R. part 680. as the same may be amended from time to time ('the Regulations".). B. If the Council of the Cite of Kodiak (the "City Council") and the Kodiak Island Borough Assembly (the "Borough Assembly") authorize it to do so, to act as an Eligible Crab Community Organization ("ECCO") for the Kodiak Community for purposes of holding crab rationalization quota shares ("QS") on behalf of the Kodiak Community and making the resulting individual fishing quota ("IFQ") available to residents of the Kodiak Community: and C. In general, to exercise those powers set forth in AS 10.20.005, et seq., as now enacted or as may hereafter be amended, and to exercise such other powers that now are or hereafter may be conferred by law upon a corporation organized for the purposes set forth herein or that arc necessary or incidental to the powers so conferred, subject only to such limitations that are or may be prescribed by state or federal law, any resolution of the City Council or the Borough Assembly, these Articles of Incorporation, and the Corporation's uylaws, including without limitation the limitations placed on organizations sempt from taxation under Section 501(c)(4) of the Internal Revenue Code. ARTICLE III -MEMBERSHIP The Corporation shall have no members. ARTICLE IV - BOARD OF DIRECTORS °ection 1. Functions and Powers. The initial Board of Directors (the "Initial Board") shall have the authority to adopt the Corporation's initial Bylaws. elect its initial officers, take whatever steps may be appropriate to qualify it as w ECCE with the National Marine Fisheries Service ("NMFS") pursuant to the Regulations, execute right of first refusal contracts between the Corporation and PQS holders as required under the regulations, and file affidavits of execution with NMFS. All other authority to act as a board of directors for the Corporation shall be reserved to the Board of Directors appointed pursuantto Article IV, Section 3, below (the "Board of Directors" or the "Board"), provided that the authority of the Board of Directors to manage the affairs of the Corporation; determine its policies within the limits of the Articles of Incorporation and these Bylaws; collect, administer, and disburse the Corporation's funds; approve projects; and otherwise actively pursue and promote the purposes of the Corporation, shall in all cases be subject to such limits as may be jointly imposed from time to time by the City Council and the Borough Assembly. I he salaries, if any, of all employees of the Corporation shall be determined by or under the direction of the City Council and the Borough Assembly. The budget and funding of the Corporation shall be as jointly approved by the City Council and Borough Assembly from time totime. Section 2. Number, The number of directors serving on the Initial Board shall be three (3). The number of Directors serving on the Board of Director, shall be seven (7). The Initial Directors shall be named by the incorporators and shall remain in office until their successors are designated and qualified in accordance with Article IV, Section 3, below. Section 3. Composition and Voting Rights The Board of Directors of the Corporation shall be appointed by the City Council and the Borough Assembl}. as follow,. A. Two (2) directors shall be appointed by the City Council; B. Two (2) directors shall be appointed by the Borough \sscmblV; and C. Three (3) directors shall be jointly appointed by the City Council and the Borough Assembly. At least two (2) directors shall represent the interests of Kodiak Community BS/Al crab harvesters, and at least two (2) directors shall represent the interests of Kodiak Community BS/AI crab processors. Except as otherwise provided in the Corporation's Articles of Incorporation or these Bylaws, approval by a four - sevenths (4 / 7) vote of all directors is required for all Board action Section 4. Appointment and Terms of Office. Directors shall be appointed by 'oi int resolution of the City Council and the Borough Assembly. Appointments shall be made annually, at July meetings of the City Council and Borough Assembly. Directors shall have staggered three (3) year terms of office, assigned by a random selection method at the first Board meeting, such that as close as possible to one third (1/3) of the Board is up for appointment each year. Directors shall serve until their successors arc appointed and qualified. Section 5. Meetings. Meetings of the Corporation's Board of Directors shall be held at times and places designated by the Board. Special meetings of the Board may be called by a majority of the Board or by the President. Participation in a Board meeting by means of a telecommunications device that allows all parties to hear each other at the same time shall be the equivalent of presence in person at a meeting. Section 6. Public Particioation at Meetings Members of the public shall be permitted to attend and shall begiven an opportunity to be heard at all meetings of the Corporation's Board of Directors; provided that the Board may from time to time enter closed executive session as permissible under Alaska statutes. Section 7. Notice of Meetings. Notice of each meeting describing the matters to come before the Board at that meeting shall be given in writing to each director by mail, facsimile, or electronic mail transmission, not less than three (3) days prior to the meeting. In addition, reasonable public notice of any meeting of the Corporation's directors, which notice shall include the meeting's date, time, and place, shall be given at least three (3) days in advance of the meeting; in accordance. with A.S. 44.62.310(e). Section 8. Waiver of Notice. A director may waive any notice required to be given by signing a written waiver either before or after the meeting. A director may not waive the failure to give public notice per A.S. 44.62.310(c). section 9. Presumption of Assent: A director who is present at a meeting Of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless: A. The director objects at the beginning of the meeting, or promptly upon the director's arrival, to holding the meeting or transacting business at the meeting, B. The director's dissent or abstention from the action taken is entered in the minutes of the meeting; or C. The director files a written dissent or abstention with the presiding officer of the meeting before its adjournment or with the Corporation within a reasonable time after adjournment of the meeting. The right of dissent or abstention is not available to a director who votes in favor of the action taken. Section 10. Ouorum. Presence of five -sevenths (5/7) of the directors shall constitute a nuorum for the transaction of business at all meetings_ Section 11. Action Without a Meeting. The Corporation's Board of Directors may not take action without a meeting. Section 12. Removal. A director may be removed from the Board of Directors at the discretion of the entity or entities that appointed such director. A director may also be removed by the Board if he or she is absent from three (3 consecutive Board meetings without being excused by a majority of the other directors. Section 13. Remuneration. No salary or other remuneration shall be paid to directors unless approved in advance by joint resolution of the City Council and the Borough Assembly. ARTICLE V - COMMITTEES Section 1. Designation. The Board of Directors may appoint committees to assist and advise the Board with those functions, powers. duties, and tenure as the Board deems appropriate. Each committee shall consist of a: least two (2) directors and such other persons as the Board may designate who need not be members of the Board of Directors. Section ? Limitation of Committee Powers Committees shall exercise advisory authority only, and any committee recommendation shall require subsequent action by the Board of Directors before binding the Corporation. ARTICLE VI - OFFICERS AND EXECUTIVE DIRECTOR Section 1. Number and Title. The officers of the Corporation shall be a President. a Vice President, a Secretary, and a Treasurer, all of whom shall be elected by the Board of Directors. The Secretary and the Treasurer may be, but need not be, members of the Board. Section Z. Election. Officers shall be elected annually, at the first meeting following appointment of the Board. The Initial Directors may elect interim officers, who shall hold office only until the Board of Directors is appointed. Section 3. Term. Officers other than those elected by the Initial Board shall hold office for one (1) year terms, and all officers shall serve until their respective successors arc elected and qualified. Section 4. Resignation, Any officer of the Corporation may resign at any time by giving written notice to the Board of Directors, or to any other officer of the Corporation. Any such resignation is effective when the notice is delivered, unless the notice specifics a later date, and shall be without prcjudice to the contract rights, if any of such officer. Section 5. Removal. The Board of Directors may remove any officer elected by it. with or without cause. The removal shall be without prejudice to the contract rights, if any, of the person so removed. Section 6. Vacancies. If the office of any officer becomes vacant be any reason, the directors may appoint a successor who shall hold office for the unexpired term. Section 7. Remuneration. No salary or other remuneration shall be paid to an officer or employee of the Corporation unless approved in advance by the City Council and the Borough Assembly. Section S. Executive Director, The City Council and Borough Assembly may authorize the Corporation to retain an Executive Director, who shall be responsible for the administration and management of the Corporation. If the City Council and Borough Assembly authorize an Executive Director, the Executive Director shall be appointed and may be removed as the City Council and Homl Iah Assembly direct ARTTCLE VII - DUTIES OF OFFICERS Section 1. President, The President shall preside at all meetings of the Board of Directors. Section 2. Vice President. The Vice President shall, in the absence or disability of the President, perform the duties of the President. Section 3. Secretary. The Secretary shall supervise the keeping of the minutes of all meetings of the Board of Directors of the Corporation. The secretary shall have charge of such books and papers as the Board of Directors may direct, including, without limitation those records specified in Article VIII, below, which shall, at all reasonable times, be open to the examination of any director upon reasonable notice to the Secretary. The Secretary shall arrange to provide proper notice of all meetings of the Board of Directors. Section 4. Treasurer, The Treasurer shall supervise the keeping of full and accurate accounts of receipts and disbursements in books belonging to the Corporation. Section 5. Contract Ri-hts. The appointment of an officer does not of itself create any contract rights in favor of the officer. ARTICLE VIII - BOOKS AND RECORDS Section 1. Books of Accounts and Minutes. The Corporation A. Shall keep as permanent records minutes of all meetings of its Board of Directors and a record of all recommendations of any committee(s) of the Board of Directors; B. Shall maintain appropriate accounting records. C. Shall keep a copy of the following records at its principal office: I . The Articles or Restated Articles ofIncorporation and all amendments to them currently in effect; 2. The Bylaws or Restated Bylaws and all amendments to them currently in effect. Its financial statements for the past three (3) years, including balance sheets showing in reasonable detail the financial condition of the Corporation as of the close of each fiscal year, and an income statement showing the results of its operations during each fiscal year prepared on the basis of generally accepted clecounting principles or, if not, prepared on a basis explained therein; 4. A list of the names and business addresses of its current directors and officers; 5. Its most recent biennial report delivered to the State of Alaska; 6. Its Application to become an ECCE, and all supporting documents, including but not limited to all right of first refusal contracts with PQS and/orIPQ: 7. Records related to every right of first refusal offered to the Corporation, its response to the same, and all related documents. and 8. All reports the Corporation may submit to the National Marine Fisheries Service or the State of Alaska. Section 2. Copies of Resolutions Any person dealing with the Corporation may rely upon a copy of any of the records of the proceedings, resolutions, or votes of the Board of Directors or shareholders. when certified bN the President orSecretarv. ARTICLE IX- MISCELLANEOUS PROVISIONS Section 1. Checks and Notes. All financial instruments of the Corporation shall be signed by the officer or officers designated by the Board of Directors. Section 2. Fiscal Year. The fiscal year of the Corporation shall be from January 1 through December 31. Section 3. Deposits, All funds of the Corporation not otherwise employed shall be deposited in interest -bearing accounts selected by the Treasurer and approved by a majority of the directors. Section 4. Acceptance of Gifts. Donations. etc. No gift, donation, bequest, or subscription to the Corporation shall be deemed to have been accepted until acted upon affirmatively by the Board of Directors. Section 5. Conflict of Interest. A director may be present during and participate in discussion and action regarding any Corporation transaction with respect to which a director has a direct or indirect material financial interest if and only if: (a) the director discloses the material facts of his or her financial interest; (b) the Board authorizes the conflicting interest transaction by a vote sufficient to meet the Board action requirements of these Bylaws, without counting any interested director's vote: and (c) the Board can demonstrate by clear and compelling evidence that the transaction is reasonable and fair to the Corporation at the time it is authorized, approved, or ratified. If any of the foregoing conditions are not satisfied with respect to any transaction involving the Corporation in connection with which a director has a direct or indirect material financial interest. such director may not be present during and may not participate in any discussion or action with respect to such transaction. ARTICLE X-PARLIAMENTARY PROCEDURE The most recent edition of Robert's Rules of Order shall govern questions of parliamentary procedure at all meetings of the Board of Directors, the Executive Committee or any- other committee of the Corporation. ARTICLE XI - AMENDMENTS These Bylaws may be amended or replaced only by a joint resolution of the City Council and Borough Assembly. ARTICLE XII - In"'DEMNIFICATION, INSURANCE, AKD BO:\DINC Section 1. Officers and Directors The Corporation shall indemnify and defend all present and former directors, officers, employees, and agents of the Corporation against any expenses of any proceeding (including by or in the right of the Corporation) to which they are parties because they are or were directors, officers, employees , or agents of the Corporation, all as defined and to the fullest extent permitted by law. Section 2. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan against any liability asserted against such person and incurred by such person in any such capacity or arising out of such person's status as such, -whether or not the Corporation would have the power to indemnify such person against such 91 liability under the provisions of this Article Section 3. Bonding, The Board may require that any person authorized to sign checks for the Corporation shall furnish, at the expense of the Corporation, a fidelity bond in such sum as the Board shall prescribe. ADOPTED by the initial Board of Directors on September 13, 2005. Jerry Bongen, President Laine O'Brien, Secretary LOCAL FISH FUND LOAN PROGRAM OVERVIEW 2019 PROGRAM OVERVIEW Local Fish Fund is a program of Alaska Sustainable Fisheries Trust (ASFT), a non-profit corporation based in Sitka, Alaska. The mission of the Trust is to protect and support local fishing businesses, promote sustainable fishing practices, and revitalize fishing communities in Alaska. The Local Fish Fund (LFF) program aims to incentivize ocean conservation practices and strengthen fishery leadership in Alaska communities by structuring loan products that will support Alaska residents in purchasing quota and retaining fishery access opportunities. LFF extends loans with competitive interest rates to new entrants and community -based vessel owners seeking to finance quota share purchases. Borrowers must be willing to participate in fishery conservation programs as part of the loan requirements. LFF loans provide borrowers with reduced down payment options and a variable repayment structure that is based on the ex - vessel value of the catch. This repayment structure allows borrowers to build equity and a credit history over a 5 to 6 year period to levels that should enhance their ability to qualify for refinancing with a traditional lender. The quota shares financed by LFF loans will serve as sole collateral for the loan, and the borrower will share with LFF any gains associated with increased value realized upon refinancing. 2019 Terms and Conditions Use of Proceeds: Purchase of sablefish or halibut IFQ. Eligibility: Alaska residents who own less than 5,000 lbs. of IFQ. Loan amount: Most loans will be between $50,000 and $250,000. Borrowers can request pre - qualification for maximum amount which will be valid for a 60-day period. Loan term: 5-6 years with balloon payment at end. Pre -payment of full amount not allowed. Down Payment: 10% minimum. Repayment: Variable, based on fixed percent (50% to 60%) of ex vessel revenue generated by IFQ. Payment Due Date: On or before October 1 each vear. Rate of Interest: 6.75% fixed rate. After the first scheduled payment is made, the interest rate in following years may be reduced by 1.00% — to 5.75% —following satisfactory evidence of compliance with the Conservation Incentive Program and maintenance of Alaskan residency for the annual fishing period If at any time borrower fails to meet the Conservation Incentive Program and residency requirements, the interest rate will revert to 6.75% in the subsequent anmial period. Page I 4pv FlSy�G LOCAL FISH FUND \ ` LOAN PROGRAM OVERVIEW Collateral: Security Interest on the financed Quota shares. No additional collateral required. Fees: $150 application fee at time of application. 1 % Origination Fee and $350 document fee at time of closing (if approved). Origination and Document fee can be paid as part of loan. Equity Sharing: Any upside gains in the value of the QS at the time of refinancing are shared equally between the borrower and LFF. Other. Borrowers must agree to a "Right of First Offer" (ROFO) if QS financed by LFF is placed on market for sale. This ROFO gives LFF the right to purchase the QS at fair market value. LFF APPLICATION AND LOAN APPROVAL PROCESS Step 1 Impact Committee Review: Individuals interested in a LFF loan must first fill out an Impact Committee Application form. The LFF Impact Committee is a group of three to five experienced fishermen who will conduct an initial review of your fishing credentials and capacity to successfully participate in the Conservation Incentive Program. Applications will be considered on a first -come, first - served basis with Impact Committee meetings scheduled on a monthly basis. Step 2 Craft3 Review: Applicants that receive a positive recommendation from the Impact Committee will be referred to Craft3, a non-profit corporation based in Washington, for further assessment, including a determination of creditworthiness. Though LFF, not Craft3, will serve as the lender for all LFF loans under this program, LFF has contracted with Craft3 to assist LFF with this and other steps related to the origination of the LFF loans. Step 3 Loan Approval and Closing: After Craft3 has completed its assessment, LFF will make a final determination on whether or not to approve your loan application. If LFF approves making a loan to you, Craft3 will coordinate with you on the completion of loan documents and then manage the ongoing servicing of your loan on behalf of LFF (e.g., receiving your scheduled loan repayments to LFF). CONTACT INFORMATION Please contact LFF for more information at localfishfund(a 2mail.com or call 907-747-3400 (ask for Tracy) with any questions. LocalFishFund.org Page 2 LOCAL FISH FUND LOAN PROGRAM OVERVIEW APPENDIX A LFF Conservation Incentive Program Overview LFF loans will integrate conservation practices into Alaska fishermen's harvesting activities by incorporating specific, binding loan terms to generate environmental benefits and improve the viability of small-scale fisheries. Incentives for conservation practices will ensure future fishermen have a solid foundation in resource stewardship and policy engagement. The LFF Steering Committee will annually approve a list of programs and practices available to prospective borrowers to choose from when submitting an application to the Impact Committee. The pre - approved list of programs and practices will be available via the Alaska Longline Fishermen's Association Fishery Conservation Network, or the applicant may propose a custom program in consultation with the Impact Committee that would be approved on an ad hoc basis by the Steering Committee. Loans issued by LFF will incorporate terms requiring borrowers to annually.participate in an approved activity in order to be eligible for a reduced interest rate. LFF will track specific metrics associated with borrower performance and participation in conservation incentive programs to measure impact. The pre -approved list of programs and practices is focused on increasing local stewardship, cooperative research, or leadership development (see Table 1). Table 1. LFFPre Annroved Conservation Incentive Programs. Rockfish Borrower agrees to participate in rockfish ASFT/ Alaska After each fishing trip, borrower will submit an bycatch bycatch information -sharing and Longline Alaska Department of Fish and Game (ADFG) fish information avoidance program to identify Fishermen's ticket to ALFA to verify catch / bycatch amounts, sharing and geographical areas that regularly or Association and will submit a copy of a bycatch logbook hotspot consistently result in rockfish bycatch (ALFA) (including lat/long of set start and end points, set mapping rates in exceedance of directed fishing depth, catch/bycatch rates by set quadrant, and standards. estimated number or poundage ofcatch/byeatch by set). These documents can be paper copies of original documents or a digital image of the document of sufficient quality to provide the data needed. Bathymetric Borrower agrees to install and operate ALFA Borrower coordinates with ALFA FCN mapping hardware and software required to collect coordinator to transfer and submit collected program seafioor bathymetric data using Nobletec bathymelric data annually. Borrower adheres to or other compatible programs on all data confidentiality and data sharing protocols of longline trips to enhance seatloor the program. visualization, improve fishing efficiency, reduce impacts to sensitive habitat, control bycatch, and minimize the take of non - marketable species. Marine Borrower agrees to participate in marine ALFA Borrower collects information on whale mammal mammal (i.e. Sperm whale) avoidance presence/absence during longline fishing trips and. avoidance network intended to reduce problematic shares information daily with ALFA FCN network interactions with marine mammals and coordinator for distribution to the whale avoidance support improved fishery outcomes. network according to set communication protocols. Page 3 LOCAL FISH FUND LOAN PROGRAM OVERVIEW Collaborative Borrower agrees to participate in ALFA ALFA submits to ASFT Impact committee a list of fisheries collaborative fisheries research program ongoing cooperative research for pre -approval. research managed by ALFA to increase fleet Borrower submits (and updates as appropriate) program participation in research into new solutions information about his/her vessel, port, and fishery for protecting ocean health and achieving plan information to ALFA. Prior to fishing LFF and maintaining sustainable fisheries. financed QS, borrower identifies a research project ASFT's Impact Committee will approve for participation in collaboration with ALFA. specific projects on an annual basis. Borrower participates as agreed. ALFA documents participation and sends a letter of compliance/non-compliance to ASFT. Policy Borrower agrees to participate in policy ALFA Borrower participates in ALFA lrainings or leadership advocacy/ leadership trainings and apprenticeship programs and provides ALFA with engagement decision -making forums to promote copies of public comment letters submitted, and sustainable fisheries management at local, testimonies delivered to fishery managers/decision young state, federal or national level, and to makers, or apprentices hosted. fishermen encourage stewardship. Impact Committee initiatives annually approves list of qualifying policy issues. Reporting: LFF borrower will be responsible for obtaining a compliance letter from the program implementing partner sponsoring the approved activity (e.g. ALFA) on an annual basis and submitting this letter to ASFT by November I" each year. The LFF Impact Committee will review the compliance documents and report to the loan servicing agent (Craft3) by December 31 st. Borrowers found by the Impact Committee to be compliant with the Conservation incentive Program and the Alaska residency requirements during the annual fishing period will be eligible for a 1% reduced interest rate, relative to the original interest rate, in the subsequent annual period. Page 4