Form NOAA 88-14 NOAA 88-14 Capital Construction Fund Agreement

OMB No. 0648-0041 Expires: XX/XX/20XX

NOAA FORM 88-14

U.S. DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

Agreement No. CCF-

CAPITAL CONSTRUCTION FUND AGREEMENT

This Capital Construction Fund Agreement (the "Agreement"), made , by and between the Secretary of Commerce (the "Secretary") and (the "Party"), a citizen of the United States.

WITNESSETH:

WHEREAS:

1. The Party has applied to enter into a Capital Construction Fund (“the Fund) Agreement under section 607 of the Merchant Marine Act, 1936 (46 U.S.C. 53503), to acquire, construct, or reconstruct a vessel(s) to operate in the fisheries of the United States;

2. The Secretary after appropriate findings and determinations, agrees to enter into this Agreement with the Party upon the terms and conditions set forth below, subject to the provisions of the Merchant Marine Act, 1936, as amended from time to time (the "Act"), and to such rules and regulations as the Secretary of Commerce or his delegate shall from time to time prescribe, either alone or jointly with the Secretary of the Treasury, as necessary to carry out the powers, duties, and functions vested in them by the Act (the "Rules and Regulations").

NOW, THEREFORE, it is hereby agreed:

1. Establishment of Fund. A Fund is hereby established for the purposes set forth in Article III. During the term of this Agreement deposits into and withdrawals from the Fund shall be made only in accordance with the provisions, conditions, and requirements of the Act, this Agreement, and the Rules and Regulations.

2. Term of the Agreement. This Agreement shall terminate:

1. By mutual consent.

B. At the option of the Secretary, upon a determination pursuant to subsection (f)(2)of section 607 of the Act that the Party has failed to fulfill a substantial obligation under this Agreement, or if the Party has made any material misrepresentation in connection with this Agreement.

If the Agreement is terminated due to events described in sections (A) and (B) above, the Party will refer to the relevant provisions of the Internal Revenue Code to determine the appropriate tax implications.

3. Purposes of the Fund. The Fund established by this Agreement shall provide for the qualified withdrawals of deposits during the term of this Agreement to (1) acquire, construct, or reconstruct qualified vessels in accordance with the general objectives contained in Schedule B of this Agreement; and/or (2) provide for the payment of the principal on indebtedness incurred in connection with the acquisition, construction, or reconstruction of a qualified vessel. For the purpose of item (2) in the preceding sentence, an eligible vessel may also be a qualified vessel.

4. Approved Depositories. All assets of the Fund shall be maintained in the following depositories:

(Insert the name of the depositories)

5. Fund Deposits.

A. In order to carry out the purposes of section 607 of the Act as more specifically set forth in Schedule B of this Agreement, for each of the taxable years covered by this Agreement;

1. The Party shall deposit, in any order, all amounts received from the following:

a. Receipts (earnings) from the investment and reinvestment of amounts held in the Fund; and

b. Except as shall be specifically exempted from deposit by the Secretary, net proceeds (i) the

sale or other disposition (including any mortgage) of any agreement vessel, and/or (ii) any

insurance or indemnity attributable to any agreement vessel resulting from total loss whether

such loss was determined by compromise, constructively, or by agreement.

2. In addition to the deposits required by section (A) of this Article V, the party may make deposit in any order and amount, but not in excess of the sum of:

a. One hundred percent of the taxable income attributable to the operation of the agreement

vessels in the fisheries of the United States;

b. The amount allowable as a deduction under section 167 of the Internal Revenue Code

for such year in respect to the agreement vessels; and/or

c. Net proceeds not required to be deposited under section (A) (1) (b) of this Article V from (i)

the sale or other disposition (including any mortgage) of any agreement vessel, and/or (ii) any

insurance or indemnity attributable to any agreement vessel.

In no event may the deposits of taxable income from agreement vessels for any taxable year

exceed one hundred percent of the taxable income of the Party for such year. Deposits may be

made to the ordinary income, capital gain, and capital accounts from any moneys or funds of the

Party, however, the Federal income tax treatment of any deposit shall be that specified under section 607 of the Act.

2. Deposits which are determined by subsequent audit to exceed the limitations stated in section (A)

of this Article V may be applied as deposits applicable to a subsequent taxable year under

this Agreement. In the event that upon subsequent audit it is determined that amounts deposited

in the Fund for any taxable year fall below the maximum limitations stated in section (A) of this

Article V, additional deposits may be made applicable to such taxable year.

3. Deposits may be made in the form of mortgages and evidences of indebtedness received in

connection with transactions referred to in section (A) of this Article V.

4. With respect to any leased vessel covered by this Agreement, the maximum amount which may

be deposited by the Party for any taxable year may be increased by the amount allowable to the

owner as a deduction under section 167 of the Internal Revenue Code that the owner

does not deposit under an Agreement for that year. Such deposits by the Party shall be added to

the amount in the capital account as a deposit of depreciation.

6. Withdrawals from the Fund.

1. Prior to making a withdrawal, or a related series of withdrawals, the Party must obtain the

consent of the Secretary, and, if required by the Secretary, must amend and supplement Schedule B. A withdrawal made for the purposes specified in Schedule B of the Agreement, as so amended and supplemented, shall be treated as a "qualified withdrawal" within the meaning of subsection 607(f) of the Act except as otherwise provided in section (B) of this Article VI. Any withdrawal which is not a qualified withdrawal shall be treated as a nonqualified withdrawal or a withdrawal pursuant to subsection 607(h), as the case may be.

2. The Secretary may from time to time determine that the addition of a significant degree of fishing

effort to the existing fleet in any specific segment or segments of the fisheries will be inconsistent with the wise use of the fisheries resource involved, and inconsistent with the development, advancement, management, conservation, or protection of that resource (the "Closed Fishery"). As a result of this determination, the Party affected thereby may:

1. Make a qualified withdrawal in accordance with section (A) of this Article VI: Provided, that a

degree of fishing effort substantially equivalent to any additional degree of fishing effort to be

introduced into any Closed Fishery as a result of such qualified withdrawal is permanently

removed by such Party from all fishing effort in that Closed Fishery; or

2. Amend Schedule B with the Secretary's consent; or

3. Make a nonqualified withdrawal in accordance with section (A) of this Article VI in such

manner as the Secretary determines to be equitable to the Party by allowing the Party to withdraw

all of the assets in the Fund, or specified portions thereof, over a period of time; or

4. Continue the Fund, and all or a portion of the assets in it: Provided that it appears to the Secretary that a qualified withdrawal may at some later time be reasonably expected to occur.

In the case of nonqualified withdrawal in accordance with this Article VI, the provisions of the Internal Revenue Code shall apply with respect to the funds withdrawn.

7. Investment of the Fund. Investments shall be made in accordance with the following requirements and such additional requirements as the Secretary may by Rules and Regulations prescribe from time to time.

A. The assets of the Fund may be invested in obligations of the United States Government or of any

agency or instrumentality thereof, bankers acceptances and negotiable certificates of deposit

which are readily marketable and which are issued by members of the Federal Deposit Insurance

Corporation and the Federal Reserve System, and commercial paper which is readily marketable

and of one of the two highest grades as rated by Standard and Poor's Corporation. All of the

foregoing investments shall mature not later than one year from the date of their purchase.

B. No person shall buy on margin or effect the short sale of any security when acting for the account of the Fund.

C. Assets of the Fund may not be invested in securities of any of the following:

1. The Party;

2. A subsidiary of the Party;

3. A related company of the Party; or

4. Any issuer under common control with the Party, or owning or controlling more than ten percent of the Party's voting securities.

8. Pledges and Assignments Prohibited. The Party covenants and agrees that, without the prior written consent of the Secretary, neither the Party nor a trustee nor any other person shall pledge or assign all or any portion of this Agreement, the Fund, or any assets in the Fund.

9. Related Companies. Where affiliates, subsidiaries, holding companies, or other persons related to the Party, directly or indirectly, are involved in the financing, acquisition, construction, or reconstruction of a qualified vessel, the Party shall make written application to the Secretary for approval of the transaction not fewer than thirty (30) days prior to the execution thereof. Withdrawals with respect to such transactions before such approval is granted shall be treated as nonqualified withdrawals unless otherwise approved by the Secretary.

10. Records and Reports.

A. The Party and every affiliate, domestic agent, subsidiary, or holding company connected with, or

directly or indirectly controlling or controlled by, the Party (1) shall keep its books, records, and

accounts relating to the property and to the maintenance, operation, and servicing of the vessel(s)

and service(s) covered by this Agreement in such form and under such conditions as may be

prescribed by the Secretary, but the Secretary shall not require the duplication of books, records,

and accounts required to be kept in some other form by the Secretary of the Treasury so long as

such information is made available to the Secretary, and (2) shall file, upon notice from the

Secretary, balance facts and transactions, as in the opinion of the Secretary reveal the financial

results in the performance of, or transactions or operations under, this Agreement. The Secretary reserves the right to require that all or any such statements, reports, and memoranda shall be certified by independent certified public accountants acceptable to the Secretary. The Party shall from time to time establish and maintain such checks upon or systems of control of expenditures or revenues in connection with the operation of the agreement vessel(s) as the Secretary may require.

B. The Secretary is hereby authorized to examine and audit the books, records, and accounts of all

persons referred to in section (A) of this Article X whenever he/she may deem it necessary or

desirable.

11. Warranties and Representations by the Party. The Party hereby warrants, represents, and agrees as follows:

A. That the Party is, and at all times during the period of this Agreement, will continue to be a

citizen of the United States within the meaning of subsection 905(c) of the Act;

B. That the Party owns or leases the eligible vessels, as that term is defined in subsection 607(k) of the Act, set out in Schedule A of this Agreement;

C. That the vessels referred to in Schedule B of this Agreement:

1. Were, or will be, constructed or reconstructed in the United States;

2. Were, or will be, documented under the laws of the United States for operation in the fisheries

of the United States; and

3. Are, or will be, operated in the fisheries of the United States and the areas of operation

specified in Schedule B.

D. That the Party will during the term of this Agreement comply with the provisions of this

Agreement, of the Act, and of the Rules and Regulations.

12. Effective Dates. This Agreement is binding upon execution and shall be effective for purposes of withdrawals from the Fund in accordance with Rules and Regulations issued by the Secretary and for purposes of deposits the effective date(s) shall be prescribed in joint Rules and Regulations issued by the Secretary and the Secretary of the Treasury.

13. Modification, Amendment, and Extension. This Agreement may be modified, amended, or extended by mutual consent.

14. Miscellaneous Provisions.

A. The use of headnotes at the beginning of the Articles in this Agreement is for the purpose of

description only and shall not be construed as limiting or in any other manner affecting the

substance of the Articles themselves.

B. The "Secretary" shall mean the Secretary of Commerce or any official or body from time to time

duly authorized to perform the duties and functions of the Secretary of Commerce under the Act (including the Administrator, National Oceanic and Atmospheric Administration, or his/her authorized delegate).

IN WITNESS WHEREOF, the Secretary and the Party have executed this Agreement in duplicate, effective as of the date hereinbefore first mentioned.

UNITED STATES OF AMERICA

SECRETARY OF COMMERCE

National Oceanic and Atmospheric Administrator

By

Financial Assistance Specialist

Financial Services Division

National Marine Fisheries Service

ATTEST: (By corporate secretary), or PARTY_______________________________

Witness: (others)

TIN__________________________________

By By

Title Title

Public Burden Statement

A Federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to a penalty for failure to comply with an information collection subject to the requirements of the Paperwork Reduction Act of 1995 unless the information collection has a currently valid OMB Control Number. The approved OMB Control Number for this information collection is 0648-0041. Without this approval, we could not conduct this information collection. Public reporting for this information collection is estimated to be approximately 2 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the information collection. All responses to this information collection are required to obtain benefits. Send comments regarding this burden estimate or any other aspect of this information collection, including suggestions for reducing this burden to the NOAA Fisheries, F/MB5, 1315 East West Hwy., Silver Spring, MD 20910, Attn: Richard VanGorder, and [email protected] if desired.

Privacy Act Statement

Authority: The collection of this information is authorized by Title 45 U.S.C 1177 and 50 CFR Part 259. The data will primarily be used for the evaluation of eligibility in connection with application to establish a Capital Construction Fund Account. Establishment of the account will not be considered unless all requested information is furnished.

Purpose: In order to determine qualification for, and to administer, the Capital Construction Fund, the NOAA National Marine Fisheries Service (NMFS) requires financial information, vessel owner contact information, date of birth, Tax Identifying Number and vessel descriptive information.

Routine Uses: The Department will use this information to determine qualification for a Capital Construction Fund Agreement. Disclosure of this information is permitted under the Privacy Act of 1974 (5 U.S.C. Section 552a), to be shared within the Financial Services Division, in order to coordinate monitoring of the Agreements. Disclosure of this information is also subject to all of the published routine uses as identified in Commerce/NOAA-21, Financial Services Division.

Disclosure: Furnishing this information is voluntary; however, failure to provide complete and accurate information will prevent the determination of qualification for the program, and continued participation.