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:
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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;
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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.
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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
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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