Loading...
Contract No. 1993-06 - National Bank of AlaskaBUSINESS LOAN AGREEMENT Borrower: KODIAK ISLAND BOROUGH 1915 Fast Rezanof Drive Kodiak, AK 99615 C ?S- o c Lender: NATIONAL BANK OF ALASKA Central Loan Servicing P.O. Box 100600 Anchorage, AK 99510-0600 THIS BUSINESS LOAN AGREEMENT between Kodiak Island Borough ("Borrower" or "Borough") and NATIONAL BANK OF ALASKA ("Lender") is made and executed on the following terms and conditions. Borrower has received prior loans from Lender or has applied to Lender for a loan or loans and other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement. All such loans and financial accommodations, together with all future loans and financial accommodations from Lender to Borrower, are referred to in this Agreement individually as the "Loan" and collectively as the "Loans." Borrower understands and agrees that: a. In granting, renewing, or extending any Loan, Lender is relying upon Borrower's representations, warranties, and agreements, as set forth in this Agreement. b. The granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender's sole judgment and discretion. c. All such Loans shall be and shall remain subject to the following terms and conditions of this Agreement. Agreement. The word "Agreement" means this Business Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time. Borrower. The word "Borrower" means Kodiak Island Borough. Purchaser. The word "Purchaser" means Obligor of notes assigned to Lender. Lender. The word "Lender" means NATIONAL BANK OF ALASKA, its successors and assigns. Event of Default. The words "Event of Default" mean and include any of the Events of default set forth below in the section titled "Events of Default." Related Documents. The words "Related Documents" mean and include without limitation all promissory notes, credit agreements, loan agreements, guaranties, security agreements, mortgages, deeds of trust, and all other instruments and documents, whether now or hereafter existing, executed in connection with the indebtedness. Security Agreement. The words "Security Agreement" mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or other agreement, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security interest. Security Interest. The words "Security Interest" mean and include without limitation any type of collateral security, whether in the form of a lien, charge, mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel trust, factors lien, equipment trust, conditional sales, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender as of the date of this Agreement and as of the date of each disbursement of Loan proceeds. Organization. Borrower is a corporation which is duly organized, validly existing, and in good standing under the laws of the state of Borrower's incorporation. Borrower has the full power and authority to own its properties and to transact the businesses in which it is presently engaged or presently proposes to engage. Borrower also is duly qualified as a foreign corporation and is in good standing in all states in which the failure to so qualify would have a material adverse effect on its businesses or financial condition. Authorization. The execution, delivery, and performance of this Agreement and all Related Document by Borrower, to the extent to the executed, delivered or performed by Borrower, have been duly authorized by all necessary action by Borrower; do not require the consent or approval of any other person, regulatory authority or governmental body; and do not conflict with, result in a violation of, or constitute a default under (a) any provision of its articles of incorporation or organization, or bylaws, soany agreement or other instrument ve governmental regulation, court decree, lorr other nding on Borrower or (b) any law, g applicable to Borrower. Financial Information. Each financial statement of Borrower supplied to Lender truly and completely disclosed Borrower's financial condition in all material respects as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the date of the most rececontingent obligations excepl statement t disclosed n sued to Lender. ch financwer ial statemas no nts. material Legal Effect. This Agreement constitutes, and any instrument or agreement required hereunder to be given by Borrower when delivered will constitute, legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms. Litigation and Claims. The outcome of any ongoing or potential litigation or claim (including those for unpaid taxes) against Borrower is not anticipated to adversely affect the Borrower's financial condition or properties and no other event has occurred which may materially adversely affect Borrower's financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing. Taxes. to the best of Borrower's knowledge, all tax returns and reports of Borrower that are or were required to be filed, have been filed, and all taxes, es ave tassessments and other hose presently being or tobecontested bernmental yBorroweb n g goeen od faith. except t Location of Borrower's Offices and Records. Each of the chief place of business of Borrower, and the office or offices where Borrower keeps its records concerning any of the Collateral, is located at 710 Mill Bay Road, Kodiak, Alaska 99615. Information. All information heretofore or contemporaneously herewith furnished by Borrower to Lender for the purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all information hereafter furnished by or on behalf of Borrower to Lender will be, true and accurate in every material respect on the date as of which such information is dated or certified; and none of such information is or will be incomplete by omitting to state or any material fact necessary to make such information not misleading. Survival of Representation and Warranties. Borrower understands and agrees that Lender is relying upon the above representations and warranties in extending Loan Advances to Borrower. Borrower further agrees that the foregoing representations and warranties shall be continuing in nature and shall remain in full force and effect until such time as Borrower's Loan and Note shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur. AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while this Agreement is in effect, Borrower will: 2 Litigation. Promptly inform Lender in writing of (a) all material adverse changes in Borrower's financial condition, and (b) all litigation and claims and all threatened litigation and claims affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor. Financial Records. Maintain its books in accordance with Generally Accepted Accounting Principals, applied on a consistent basis, and permit Lender to examine and audit Borrower's books and records at all reasonable times. Additional Information. Furnish such additional information and statements, lists of assets and liabilities, agings or receivables and payables, inventory schedules, budgets, forecasts, tax returns, and other reports with respect to Borrower's financial condition and business operations as Lender may request from time to time. Loan Proceeds. Use of all Loan proceeds solely for the following specific purposes: Patient Account Note Program. Performance. Perform and comply with all terms, conditions, and provisions set forth in this Agreement and in all other instruments and agreements between Borrower and Lender in a timely manner, and promptly notify Lender if Borrower learns of the occurrence of any event which constitutes an Event of Default under this Agreement. Operations. Conduct its business affairs in a reasonable and prudent manner and in compliance with all applicable federal, state and municipal laws, ordinances, rules and regulations respecting its properties, charters, businesses and operations, including compliance with all minimum funding standards and other requirements of the Employee Retirement Income Security Act of 1974, as amended, and other laws applicable to Borrower's employee benefit plans. Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all collateral for the Loan or Loans and Borrower's other properties and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of Borrower's books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower's expense. NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender: Continuity of Operations. (a) Engage in any business activities substantially different than those in which Borrower is presently engaged, (b) cease operations, liquidate, or (c) alter or amend Borrower's capital structure. Loans, Acquisitions and Guaranties. (a) Loan money or assets, (b) purchase or acquire any interest in any other enterprise or entity, or (c) incur any obligation as surety or guarantor other than in the ordinary course of business. CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: a. Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or Guarantor has with Lender; b. Borrower becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; 3 c. there occurs a material adverse change in Borrower's financial condition, in the financial condition of any Guarantor, or in the value of any Collateral security any Loan; d. any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any other loan with Lender; or e. Lender in good faith deems itself insecure even though no Event of Default shall have occurred. REVOLVING LOAN. Subject to the terms of this agreement, the Bank will, so long as it in its sole discretion deems advisable to do so, lend to the Borrower and the Borrower may borrow and re -borrow at any time prior to May 30, 1994, up to a maximum at any one time outstanding of ONE MILLION DOLLARS AND NO CENTS ($1,000,000.00). Each loan will be evidenced by a note or notes or other instruments of indebtedness in forms satisfactory to the bank, dated as of the date such loans are made. This Agreement also governs Bank's purchase from Borough of Contracts for consumer services. Obligors on the Contracts are herein referred to as "Purchasers." The parties agree as follows: PURCHASE OF CONTRACTS. The Bank shall have the right in its sole discretion to purchase or reject any Contract tendered by Borrower for purchase. 2. PRICE. The purchase price of each Contract is the Amount Financed as stated in each Contract. 3. BOROUGH'S SHARE OF FINANCE CHARGE. Bank will inform Borough annually of the minimum annual percentage rate acceptable to Bank on Contracts tendered to Bank for purchase. That minimum annual percentage rate is hereafter called the "Buy Rate." A Contract's annual percentage rate is hereafter called the "Sell Rate" (see paragraph 6 for details). OBLIGATIONS OF BORROWER. Borrower warrants with respect to each Contract assigned to the Bank, that: a. The Purchaser's name is bona fide, the Purchaser's signature is genuine, the Purchaser has legal capacity to enter the Contract, and the Purchaser's social security number is correct to the best of Borough's knowledge. b. No agreement has been or will be made by Borough with the Purchaser affecting Bank's rights other than as stated in documents furnished to the Bank. c. The Contract will be accompanied by the Purchaser's credit application which will not, to the Borough's knowledge, contain any incorrect or misleading statements. d. The Contract complies with applicable federal, state, and local laws and regulations including Alaska Retail Installment Sales Act (ARISA). APPLICATIONS APPROVED WITHOUT RECOURSE. Requirements for applications approved without recourse are as follows: 1. The non recourse approvals would be approved subject to the Bank's direct lending policy at the time of application. 2. Any secured loan requests would be referred to the Kodiak Branch for processing. 3. All loan requests can be faxed directly to the Consumer Banking Center or dropped off at the Kodiak Branch for forwarding. APPLICATIONS APPROVED WITH RECOURSE FROM THE KODIAK ISLAND BOROUGH. The recourse line of credit would be subject to the following: 1. A 100° full recourse from the Kodiak Island Borough. Mandatory contract repurchase at 60 days past due. 4 2. A $1,000,000 maximum line amount subject to annual renewals and examination. The first maturity would be May 30, 1994, at which point updated financial statements would be requested. 3. The Bank will work with the past due contracts for 60 days from payment due date following our normal collection procedures for in-house NBA credits as long as account delinquencies stay within an acceptable range. This will decrease to 30 days if the line delinquency rate accelerates. Please see #4 below for parameters. If the credit is not brought current within the appropriate time frame the Borough will be contacted for immediate repurchase to include the amount of the then existing payoff (principal balance, plus accrued interest to date, plus all other costs and fees owing under the contract.) a. 7 days past due a computer generated notice is sent. b. 15 days past due a collector will either call or send a personalized letter depending upon the situation. c. From this point forward regular contact is made dependent upon consumer promises and response until the appropriate payment is made or the credit becomes 60 days past due. The collector will not wait for key dates such as 30 or 45 days to act. d. The Borough will be furnished with a monthly detailed computer report for all accounts that are seven days past due or greater. 4. In the event that the line delinquency rate for accounts 30 days or more past due increases to 10°x6 of either the number of accounts or the total principal balances outstanding, further advances will not be allowed until this rate falls to 5% or less. The Bank reserves the right to adjust rates at this time for all newly accepted credits. If the delinquency rate increases to 15% the required repurchase period will decrease to 30 days past due until overall delinquencies are below 5°x6. The bank would collect as follows: a. 7 days past due a computer generated notice is sent. b. 15 days past due a collector will either call or send a personalized letter. c. Normal follow-up is maintained until the credit becomes 30 -day past due and recourse is exercised. 5. The approved individual recourse loans would be subject to the following: a. Loan minimum of $500.00. b. Interest rate maximum of 13% fixed for the loan term. c. Loan terms 12 months per thousand to a maximum of 60 months. d. All loans must fully amortize to maturity with equal monthly payments. No balloon payments allowed. e. No collateral will be accepted. f. Consumer debt ratio may not exceed 40% based on monthly gross income. Self-employed individuals or seasonal worker approvals will be based on the two most recent tax returns, year-to-date financials, and the bank industry knowledge. g. No net worth minimum requirements. h. Credit report may contain some derogatory information but not an overabundance. An overall poor credit rating will not be acceptable. 6. Borough's share of finance charge: The minimum annual percentage rate acceptable to Bank on contracts tendered to Bank for purchase is 11.0°x6 (the Buy Rate). The contract's annual percentage rate is hereafter called the "Sell Rate" and will carry a maximum of 13.0%. Bank will share a Contract's finance charge with Borough only if the Contract's finance charge based on the Sell Rate is higher than the Contract's finance charge based on the Buy Rate. The borough's share ("Reserve") of the finance charge will be 50% of the difference, if any, between the Contract's finance charge based on the sell rate and the Contract's finance charge based on the buy rate applicable to the contract at the time the purchaser signs the contract. Bank will pay reserve when bank funds the contract. In the event that purchaser pays the contract in full within ninety (90) days from the date the purchaser signs the contract, Borough shall repay the Borough's share of reserve in cash within ten (10) days of the date of request. If the date the purchaser signs the Contract is moved forward for any reason, the new date is the Contract date. APPLICATIONS NOT APPROVED UNDER ANY CIRCUMSTANCES. Applications will not be approved for the following reasons: Unsatisfactory credit history. 2. Unstable employment. 3. Excessive obligations to income. 4. Pending litigation. MISCELLANEOUS. a. The terms and conditions of this Agreement may be altered by subsequent agreements between Bank and Borrower only if in writing. b. This Agreement's enumeration of remedies does not prevent the Bank from exercising any other remedies it may have under applicable law. c. This Agreement may be terminated by either party upon written notice to the other party. Termination shall not affect the responsibilities of Bank and Borrower as to any contract purchased prior to receipt of any notice of termination. d. This Agreement is binding on the successors and assignees of Bank and Borrower. e. Waiver by either party of strict performance of any provision of this Agreement shall not be a waiver of or prejudice the party's right to require strict performance of the Agreement's provisions. f. If suit or action is instituted that relates in any way to this Agreement, the prevailing party is entitled to reasonable attorneys' fees and costs. g. The following individuals are authorized to assign contracts from Borrower to Bank under this Agreement: APPLICATIONS Name 2. ee&&' Name Title 3. /id% Name rTitle 71, R. l�lwwaiay Ff� s 1 C 1 Such authorization is valid unless changed by written notification to Bank. Corporate titles may be used in place of individual names. RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security interest in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender all Borrower's right, title and interest in and to, Borrower's accounts with Lender (whether checking, savings, or some other account), including without limitation all accounts held jointly with someone else and all accounts Borrower may open in the future, excluding however all IRA, Keogh, and trust accounts. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts. EVENTS OF DEFAULT. Each of the following shall constitute an event of default ("Event of Default") under this Agreement: Default on Indebtedness. Failure of Borrower to make any payment when due on the Loans. Other Defaults. Failure of Borrower to comply with or to perform when due any other term, obligation, covenant or condition contained in this Agreement. M Default in Favor of Third Parties. Should Borrower default under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect Borrower's ability to repay the Loans or perform Borrower's obligations under this Agreement or any related document. False Statements. Any warranty, representation, or statement made or furnished to Lender by or on behalf of Borrower is false or misleading in any material respect, either now or at the time made or furnished. Insolvency. The dissolution or termination of Borrower's existence as a going business, insolvency, appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower, any creditor of any grantor of collateral for the Loan, this includes a garnishment, attachment, or levy on or of any of Borrower's deposit accounts with Lender. EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, all commitments and obligations of Lender under this Agreement immediately will terminate (including any obligation to make Loan Advances or disbursements), and, at Lender's option, all Loans immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the "Insolvency" subsection above, such acceleration shall be automatic and not optional. BORROWER HAS READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT, AND BO ROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF ��) -7 A 1) KODIAK ISLAND BOROUGH 1 LENDER: NATIONAL BANK OF ALASKA W, ��W1 . Officer Kodiak Island Borough AGENDA STATEMENT Meeting of: April 1, 1993 ITEM NO. 12.D.1 Contract No. 93-06 CONTRACT FOR HOSPITAL ACCOUNTS RECEIVABLE FINANCING TO NATIONAL BANK OF ALASKA Recently, the Borough issued a request for proposal for hospital accounts receivable financing for the hospital. The intent is to allow patients to secure financing for their hospital debt from a financial institution rather than the hospital. This should help the cash flow situation at the hospital considerably. National Bank of Alaska was the only bank to submit a proposal for this service. Both hospital and borough staff are satisfied with the NBA proposal. NBA will issue loans up to $1 million. FISCAL NOTES [X] N/A Expenditure Required None APPROVAL FOR AGENDA: IJi Amount Budgeted None RECOMMENDED ACTION: Move to award contract for hospital accounts receivable financing to National Bank of Alaska. Bannal ks lea KoCiak Blanch P.O. Box 7067 Kotliak, Alaska 99615-1067 (907)4&-3126 October 23, 1992 Mr. Karieton G. Short Finance Director Kodiak Island Borough 710 Mill Bay Rd Kodiak, AK. 99615 Re: Hospital Accounts Receivable Financing Dear Mr. Short, Afttember 30, Request for the Nationough al Banexamination of (Alaska declines to bid forhe outlined services undeProposal the stated conditions - The National Bank of Alaska is please to resubmit the following proposal regarding the above referenced service in response to the September 5, 1991 correspondence to Mr. Jim Brenner. The original proposal was submitted to Mr. Scott Allen at the Kodiak Island Hospital December 17, 1991. The following proposal duplicates our September 5, 1991 proposal with the exception of the line amount which has been increased to one million dollars. Further, I have enclosed the following: 1) December 31, 1991 audited financial reports 2) June 30, 1992 quarterly financial report 3) June 30, 1992 Uniform Bank Performance Report 4) Dealer outstanding report sample for monthly loan information. 5) Aged Delinquency report sample Consumer loan requests submitted by the Kodiak Island Hospital for the purpose of medical expenses would be divided into three categories: 1) Applications approved without recourse 2) Applications approved with recourse from the Kodiak Island Borough 3) Applications not approved under any circumstances. The nonrecourse approvals would be approved subject to the Bank's direct lending policy at the time of application. Any secured loan requests would be referred to the Kodiak Branch for processing. All loan requests can be faxed directly to the Consumer Banking Center or dropped off at the Kodiak Branch for forwarding. Alaska's Most Convenient Bank The recourse line of credit would be subject to the following: 1) 100% full recourse from the Kodiak Island Borough 2) $1,000,000 maximum line amount subject to annual renewals and examination with updated financial information furnished. 3) The Bank will work the past due contracts for 60 days from payment due date following our normal collection procedures for In-house NBA credits as long as account delinquencies stay within an acceptable range. This will decrease to 30 days If the line delinquency rate accelerates. Please see #4 below for parameters. If the credit Is not brought current within the appropriate time frame the Hospital will be contacted for Immediate repurchase. Following Is the collection procedure under an acceptable delinquency rate scenario: a. 7 days past due a computer generated notice is sent. b. 15 days past due a collector will either call or send a personalized letter depending upon the situation. c. From this point forward regular contact is made dependent upon consumer promises and response until the appropriate payment is made or the credit becomes 60 days past due. The collector will not watt for key dates such as 30 or 45 days to act. d. The Hospital will be furnished with a weekly detailed computer report for all accounts that are seven days past due or greater. 4) In the event that the line delinquency rate for accounts 30 days or more past due Increases to 10% of either number of accounts or principal balances outstanding, further advances will not be allowed until this falls to 5% or less. The Bank would reserve the right to adjust the line interest rates at this time for all newly incepted credits. If the delinquency rate Increases to 15% the required buy back period from the Hospital will decrease to 30 days past due until overall delinquencies are below 5%. The Bank would collect as follows: a. 7 days past due a computer generated notice is sent. b. 15 days past due a collector will either call or send a personalize letter. c. Normal follow up is maintained until the credit becomes 30 days past due and recourse Is exercised. 5) The approved Individual recourse loans would be subject to the following: a. Loan minimum of $1,000.00 b. Interest rate of 13% fixed from the loan term. c. Sixty month maximum loan term. d. All loans must fully amortize to maturity with equal monthly payments. No balloon payments allowed. e. No collateral will be accepted. f. Consumer debt ratio may not exceed 40% based on monthly gross income. Self employed individuals or seasonal worker approvals will be based on the two most recent tax returns, year to date financials, and Bank industry knowledge. g. No net worth minimum requirements. h. Credit report may contain some derogatory information but not an overabundance. An overall poor credit rating will not be acceptable. if you should find the above agreement acceptable please contact me. Upon notification of your acceptance the formal documentation will be prepared. Thank you very much for your interest in the Bank's consumer credit products. I sincerely hope you will find this agreement acceptable. Sincerely, ames L. Brenner Vice President