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AMENDED AND RESTATED
LOAN ORIGINATION AND PARTICIPATION AGREEMENT
THIS
AMENDED AND RESTATED LOAN ORIGINATION AND PARTICIPATION AGREEMENT
("Agreement") is made and entered into as of the 31 day of
October, 2006, by and among AgStar Financial Services, PCA, d/b/a
ProPartners Financial (hereafter referred to as "ProPartners"); CHS
Inc. (hereafter referred to as "CHS") and Cofina Financial, LLC
(hereafter referred to as "Cofina"). RECITALS:
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A.
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Cofina has organized an agricultural production and processing
financing program to provide financing to farmers and agricultural
producers for agricultural production or processing (the
"Program").
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B.
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The parties hereto wish to enter into a transaction whereby
Cofina will originate and participate to ProPartners certain loans
under the Program based on the terms and conditions of the Farm
Credit Act of 1971, as amended, the regulations of the Farm Credit
Administration, this Agreement, the Loan Underwriting Criteria and
the policies, requirements and procedures of ProPartners, all as
amended from time to time subject to the terms hereof (each, a
"Loan" and collectively, the "Loans").
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C.
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The Loans will be made in the name of Cofina and ProPartners
will purchase a 100%participation interest in the Loans as provided
herein.
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D.
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ProPartners, Cofina and CHS are parties to a Loan Origination
and Participation Agreement dated as of April 1, 2006 (the
"Prior Agreement").
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E.
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ProPartners previously purchased a 100% participation interest
in the loans referenced under the Prior Agreement (the "Existing
Loans").
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F.
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The parties agree that ProPartners’ participation interest
in the Existing Loans will be governed by the terms of this
Agreement and that this Agreement will amend and restate the Prior
Agreement in its entirety.
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G.
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To induce ProPartners to purchase participation interests in the
Loans, CHS and Cofina have agreed to provide ProPartners with
certain guarantees in accordance with the terns of this
Agreement.
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NOW,
THEREFORE, in consideration of the parties’ respective
undertakings and obligations and of the agreements hereinafter set
forth, ProPartners, CHS and Cofina agree as follows: I. DEFINITIONS
Unless otherwise defined herein, the capitalized terms used in this
Agreement shall have the following, meanings (whether in singular
or plural form):
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1.01
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"Borrower" means collectively with respect to a Participated
Luan, each and every. Person signing, making or co-making,
endorsing, guaranteeing or acting as surety on such Participated
Loan (other than CHS and Cofina).
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1.02
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"CHS 15% Recourse Loans" means, collectively, all of the
Existing Loans that were placed in the CHS 15% Recourse Pool under
the Prior Agreement and are subject to CHS’ guarantee
pursuant to Article V hereof, subject to the limitations
described in Section 5.01(b).
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1.03
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"CHS 15% Recourse Pool" has the meaning given in
Section 3.04.
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1.04
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"Commitment" means with respect to a Borrower, the aggregate
principal amount of any funds Cofina is committed to advance to any
Borrower under a Participated Loan (without prejudice to normal
conditions to any such advance), computed without reduction for any
advances theretofore made which are outstanding but which in fact
reduces the level of future borrowings thereunder. If there shall
be more than one Borrower with respect to a Participated Loan, for
purposes hereof Cofina shall be deemed to have made a Commitment to
each such Borrower with respect to 100% of the aggregate principal
amount of any funds with respect to which such Commitment
relates.
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1.05
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"Cooperative Guarantee" means the written agreement by a
cooperative affiliate of Cofina to guarantee the payment of certain
Participated Loans under such terms and documents that are approved
by ProPartners, including, without limitation, the terms and
documents governing the assignment of all rights and interests
under such Cooperative Guarantee from Cofina to ProPartners.
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1.06
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"Default" means with respect to any Participated Loan, any event
or circumstances which under its Loan Documents permits the
indebtedness evidenced thereby to be accelerated, collateral to be
foreclosed upon or other remedies taken.
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1.07
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"Defaulted Loan" has the meaning given in Section 2.02.
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1.08
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"Event of Default" shall have the meaning given in
Article VII hereof.
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1.09
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"Existing Loans" has the meaning given in the Recitals to this
Agreement.
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1.10
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"15% Recourse Loans" means, collectively, all of the
Participated Loans that are placed in the 15% Recourse Pool and are
subject to Cofina’s guarantee pursuant to Article V
hereof, subject to the limitations described in
Section 5.02(c).
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1.11
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"15% Recourse Pool" has the meaning given in
Section 3.04.
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1.12
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"50%, Recourse Loans" means, collectively, all of the
Participated Loans that are placed in the 50% Recourse Pool and are
subject to CHS’ guarantee pursuant to Article V hereof,
subject to the limitations described in Section 5.01(b).
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1.13
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"50% Recourse Pool" has the meaning given in
Section 3.04.
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1.14
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"5% Recourse Loans" means, collectively, all of the Participated
Loans that are placed in the 5% Recourse Pool and are subject to
Cofina’s guarantee pursuant to Article V hereof, subject
to the limitations described in Section 5.02(a).
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1.15
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"5% Recourse Pool" has the meaning given in
Section 3.04.
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1.16
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"Full Recourse Loans" mean, collectively, all of the
Participated Loans that are placed in the Full Recourse Pool and
are subject to CHS’ guarantee pursuant to Article V
hereof.
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1.17
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"Full Recourse Pool" has the meaning given in
Section 3.04.
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1.18
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"GAAP" means generally accepted accounting principles in the
United States in effect from time to time, consistently
applied.
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1.19
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"Jumbo Loan" means with respect to each Loan, a Loan which if it
became a Participated Loan would, alone or in combination with any
other Participated Loan(s) of the same type under which Commitments
then exist in favor of the same Borrower, evidence an aggregate
total Commitment in relation to all such Participated Loans in
excess of $250,000. Borrowers with common management and/or
ownership shall be considered a single Borrower for purposes of
determining whether one or more Participated Loans collectively
evidence a Jumbo Loan.
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1.20
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"Loan" has the meaning given in the Recitals to this
Agreement.
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1.21
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"Loan Approval" shall have the meaning given in
Section 2.01.
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1.22
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"Loan Documents" include, but are not limited to, a promissory
note, all related loan agreements, amendments to such promissory
note or loan agreements, financing statements, security agreements,
mortgages, trust deeds, guaranties or other security documents
which evidence any Borrower’s obligations to Cofina in
relation to a Participated Loan or Commitment to such Borrower.
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1.23
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"Loan Underwriting Criteria" means the Underwriting Standards
set forth on the attached Exhibit A , as amended from
time to time upon the mutual agreement of ProPartners and
Cofina.
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1.24
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"Near Default" means with respect to any Participated Loan any
event or circumstances which with the passage of time, the giving
of notice or both would be a Default.
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1.25
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"Net Realizable Value" means, with respect to any collateral
securing a Participated Loan, the fair market value of such
collateral less, as applicable, any (i) prior liens.
(ii) reasonable foreclosure or liquidation expenses and
(iii) distressed sale discounts.
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1.26
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"Participants" shall have the meaning given in
Section 10.02.
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1.27
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"Participated Loan(s)" shall have the meaning given in
Section 2.01.
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1.28
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"Participation Interest" shall have the meaning given in
Section 2.01.
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1.29
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"Payments" shall mean, with respect to any Participated loan,
all funds received under such Participated Loan, including, without
limitation, principal and interest payments, prepayments received
from a Borrower or proceeds received from the disposition of
collateral securing such Participated Loan.
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1.30
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"Person" shall mean an individual, corporation, partnership,
association, joint venture, limited liability company, government
(or any agency or political subdivision thereof), unincorporated
organization, trust or other entity, including, without limitation,
an employee pension, profit sharing or other benefit plan or
trust.
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1.31
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"Prime Rate" means, as of the date of determination, the rate of
interest per annum most recently published in the Midwest Edition
of The Wall Street Journal as the "prime" rate.
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1.32
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"Program" has the meaning given in the Recitals to this
Agreement.
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1.33
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"Repurchase Option" shall have the meaning given in
Section 3.07.
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1.34
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"10% Recourse Loans" means, collectively, all of the
Participated Loans that are placed in the 10% Recourse Pool and are
subject to Cofina’s guarantee pursuant to Article V
hereof, subject to the limitations described in
Section 5.02(b).
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1.35
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"10% Recourse Pool" has the meaning given in
Section 3.04.
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1.36
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"Term" has the meaning given in Section 11.01.
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1.37
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"Total Capital" means, at any date, the amount of Cofina’s
"total capital" as determined in accordance with GAAP and including
the carrying value of Cofina’s equity ownership in Cofina
Funding, LLC.
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1.38
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"Trademark" means the Cofina Country Business Partners Program
(whether or not registered).
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1.39
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"Underwriting Fee" has the meaning given in
Section 2.11.
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II. LOAN ADMINISTRATION
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2.01
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Cofina shall originate the Loans to Borrowers in accordance with
the Loan Underwriting Criteria, the proceeds of which will be used
to finance the Borrowers’ agricultural production or
processing activities in accordance with the terms designated by
ProPartners in the applicable Loan Approval ("Loan Approval").
ProPartners shall use commercially reasonable efforts to promptly
notify Cofina in writing of its approval or declination of a Loan;
provided, however, that any approval pertaining to a Jumbo Loan
shall require the written consent of Cofina. ProPartners shall
purchase a 100% participation interest from Cofina (a
"Participation Interest"), as provided in Section 3.01, in each
Loan made by Cofina in accordance with the terms of the applicable
Loan Approval (including the Existing Loans, each, a "Participated
Loan" and collectively, the "Participated Loans").
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2.02
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Until such time that a Participated Loan has been subject to a
Default for 30 consecutive days (a "Defaulted Loan"), ProPartners
shall be responsible for all servicing activities associated with
the Participated Loans, including the exclusive right to pursue
servicing or collection activities with regard to the Participated
Loans; provided that Cofina shall work with the agricultural
producers and processors who are Borrowers to provide substantial
information gathering, initial loan analysis and on-going loan
servicing. In the case of each Defaulted Loan, unless Cofina
exercises its Repurchase Option, as described in Section 3.07,
with respect to such Defaulted Loan, ProPartners shall work with
Cofina to take such actions as they agree are appropriate with
respect to such Defaulted Loan, including acceleration of the
indebtedness evidenced thereby, refusing to make additional
advances, foreclosing upon collateral, initiating litigation and
agreeing to settlements and taking all other remedial actions, and
Cofina hereby agrees to pay to ProPartners the costs of such
specialized collection activities involving such Defaulted Loan
pursuant to a fee schedule provided by ProPartners to Cofina from
time to time; provided, however, that if ProPartners and Cofina do
not agree on a plan of action with respect to a Defaulted Loan,
then ProPartners shall take such actions as it determines are
appropriate, subject to Cofina’s right to exercise its
Repurchase Option.
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2.03
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The Loan Documents required by ProPartners with respect to each
Participated Loan shall be prepared by ProPartners and delivered to
the applicable cooperative affiliate for execution by the Borrower.
Each Loan shall be made in the name of Cofina. ProPartners shall
maintain possession of all originals of the Loan Documents and any
related materials.
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2.04
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At ProPartners’ direction, Cofina shall use commercially
reasonable efforts to cause Cofina’s cooperative affiliates
to perform such tasks as are reasonably requested by ProPartners in
connection with its servicing of the Loans, including, but not
limited to, periodically visiting a Borrower’s place of
business to inspect the collateral and records.
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2.05
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ProPartners shall receive directly from the Borrower at an
address and/or account designated by ProPartners all Payments
related to the Participated Loans. All Payments received by Cofina
from Borrowers in connection with the Participated Loans shall be
held in trust for ProPartners until paid over to ProPartners.
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2.06
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Cofina hereby grants to ProPartners a terminable, nonexclusive,
nontransferable license to use the Trademark in connection with its
relationship to the Program, including its loan servicing
activities associated with the Participated Loans, e.g., servicing
or collection activities with regard to the Participated Loans, and
in the event a Default exists under a Participated Loan, taking
such action as it determines appropriate by reason thereof, all in
accordance with the terms and provisions of this Agreement and
consistent with Cofina’s standards, rules, and procedures
communicated to ProPartners in writing from time to time.
ProPartners acknowledges and agrees that Cofina is the sole and
exclusive owner of the Trademark and will not do anything
inconsistent with such ownership or directly or indirectly
challenge or impair the validity thereof ProPartners shall only use
the Trademark in connection with the Program. ProPartners agrees
that it will not attack the title of Cofina to the Trademark, or
the validity of any application for registration thereof, in any
jurisdiction. ProPartners may use the Trademark provided such use
strictly abides
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by the terns of this Agreement and is subject to the quality
control of Cofina, and shall comply at all times with the current
standards of use provided to ProPartners by Cofina in writing. Any
violation of this Section 2.06 by ProPartners shall constitute
an Event of Default under this Agreement if ProPartners receives
written notice of such violation and such violation is not cured
within 30 days of such written notice.
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2.07
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ProPartners shall perform and maintain all the accounting and
reporting tasks associated with the Borrowers and the Participated
Loan activities noted within this Agreement. ProPartners will
maintain accounting information in accordance with GAAP and provide
financial reports for specified periods, both noted and agreed to
under Exhibit B of this Agreement. In addition,
ProPartners shall maintain and monitor accounting systems and
internal controls sufficient to adequately provide accurate and
timely information and safeguard the assets and information related
to the activities within this Agreement. As partial response to
ProPartners monitoring of their internal control system,
ProPartners will provide to Cofina any available SAS 70 Type II
reports or other reports used to evaluate and test their internal
control systems contracted for by ProPartners or their assigned
servicing agent(s). ProPartners shall account for the Participated
Loan pool placement and related accrual interest, shall apply all
funds received to the appropriate purchase pools and shall provide
notice to Cofina of all such actions in accordance with the terms
of this Agreement. Cofina shall have the right, at its own expense
and upon prior written notice to ProPartners, to audit
ProPartners’ accounting and associated documents in
connection with the Participated Loans and may audit or review any
associated services or activities performed by ProPartners,
provided that such audit is performed during reasonable business
hours and in a manner that is not significantly disruptive of
ProPartners’ business.
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2.08
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Cofina and ProPartners agree that there shall be timely and
thorough communication of pertinent general and credit information
between the parties and cooperation between each party’s
personnel with respect to the terms of this Agreement. This
includes, without limitation, furnishing and exchanging pertinent
correspondence, memoranda, quarterly Borrower status reports and
loan servicing documentation (such as periodic balance sheets,
operating statements, audit reports (if available) and collateral
position reports) relating to a Borrower.
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2.09
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This Agreement shall not be deemed to appoint either Cofina or
ProPartners as agent of the other, except as ProPartners may be
deemed the agent of Cofina for administering, servicing and
collecting under the Participated Loans. This Agreement shall not
be construed to create a partnership, joint venture or any like
arrangement between Cofina and ProPartners.
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2.10
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In consideration for the origination and servicing activities
performed by ProPartners tinder the terms of this Agreement, at all
times during the Term, Cofina shall pay to ProPartners a monthly
underwriting fee equal to the sum of $25,000 plus $45 for each
Participated Loan that is outstanding as of the last day of the
previous month ("Underwriting Fee"). All Underwriting Fees shall be
payable no later than close of business on the tenth day following
the end of each month. The parties agree to review the terns of the
Underwriting Fee after one year.
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2.11
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All of Cofina’s agricultural producer, processor, and
other customer data, and any other agricultural producer,
processor, and other customer data obtained pursuant to this
Agreement shall be owned by Cofina and shall not be used by
ProPartners for any purpose other than fulfilling the requirements
of this Agreement.
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III. SALE AND PURCHASE OF PARTICIPATION INTERESTS
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3.01
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ProPartners shall purchase a participation interest in all of
the Loans equal to 100% of the indebtedness under each Loan as
approved and issued in accordance herewith; provided, however, that
the aggregate principal amount of all such Participated Loans shall
not exceed $120,000,000, of which the aggregate principal amount of
the Participated Loans contained in the 50% Recourse Pool and the
Full Recourse Pool cannot exceed $60,000,000. ProPartners’
obligation to purchase a Participation Interest in a Loan is
conditioned upon such Loan meeting the following requirements:
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(a)
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Such Loan is subject to the guarantee of CHS or Cofina pursuant
to Article V hereof or to a Cooperative Guarantee, as
designated by ProPartners in the applicable Loan Approval;
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(b)
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In the case of a Loan designated by ProPartners in the
applicable Loan Approval for placement in the Full Recourse Pool or
the 50% Recourse Pool, CHS has provided its written consent to such
placement; and
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(c)
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In the case of a Loan designated by ProPartners in the
applicable Loan Approval to be subject to a Cooperative Guarantee,
such cooperative affiliate of Cofina has executed such
documentation as requested by ProPartners evidencing the
Cooperative Guarantee.
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ProPartners shall be deemed to have purchased a Participation
Interest in a Loan only after such Loan has been approved by
ProPartners in accordance with Section 2.01 and made under
such terms and conditions as ProPartners has specified in the
applicable Loan Approval. ProPartners shall have no obligation to
purchase a Loan if the documentation for such Loan was not prepared
and administered by ProPartners pursuant to this Agreement. After
ProPartners’ purchase of a Participation Interest in a Loan
hereunder, ProPartners shall fund all advances under such
Participated Loan in accordance with the terms and provisions of
such Participated Loan and the related Loan Documents.
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3.02
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Subject to the terms and provisions of this Agreement, Cofina
hereby grants to ProPartners a power of attorney to exercise in
accordance kith the terms of this Agreement, to the exclusion of
Cofina, all of the rights of Cofina under each Participated Loan,
including, but not limited to, the right (1) to perform all
loan origination, servicing, administration and collection actions
with respect to the Participated Loans, including, without
limitation, those actions specified in Article 11.
(ii) to exercise any power or authority granted to Cofina
pursuant to the Loan Documents, (iii) to endorse and cash
checks and other instruments made payable to Cot-ma with respect to
Payments under the Participated Loans. (iv) to execute all
Loan Documents related to the Participated Loans
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on behalf of, Cofina, and (v) to otherwise exercise all
rights of Cofina established pursuant to each such Participated
Loan; provided, however, that Cofina shall have the right to work
with the agricultural producers and processors who are Borrowers
for information gathering, initial loan analysis and on-going loan
servicing purposes. The powers of attorney granted by Cofina to
ProPartners hereunder are irrevocable and coupled with an
interest.
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3.03
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Each Participated Loan will be placed into one of six purchase
pools in accordance with the Loan Underwriting Criteria and the
terms of this Agreement. The six purchase pools shall be grouped as
follows: (i) 5% Recourse Loans (the "5% Recourse Pool"); (ii)
10% Recourse Loans (the "10% Recourse Pool"); (iii) 15%
Recourse Loans (the "15% Recourse Pool"); (iv) 50% Recourse
Loans (the "50% Recourse Pool"); (v) Full Recourse Loans (the
"Full Recourse Pool") and (vi) CHS 15% Recourse Loans (the
"CHS 15% Recourse Pool"). ProPartners and Cofina may also agree
that certain Participated Loans that are not placed in one of the
six above-referenced pools be instead subject to a Cooperative
Guarantee. All of the Existing Loans will be placed in either the
15% Recourse Pool or the CHS 15% Recourse Pool unless (a) CHS
has consented in writing to the placement of an Existing Loan in
the Full Recourse Pool, (b) CHS and ProPartners have consented
in writing to the placement of an Existing Loan in the 50% Recourse
Pool or (c) ProPartners has consented in writing that an
Existing Loan be subject to a Cooperative Guarantee. All
Participated Loans originated after the date of this Agreement will
be placed in either the 5% Recourse Pool, the 10% Recourse Pool or
the 15% Recourse Pool unless (y) CHS has consented in writing to
the placement of a Participated Loan in the 50% Recourse Pool or
the Full Recourse Pool or (z) the Loan Approval for such
Participated Loan provides that the Participated Loan will be
subject to a Cooperative Guarantee. Each Existing Loan contained in
the CHS 15% Recourse Pool that is renewed or extended past such
Existing Loan’s current maturity date will be transferred
from the CHS 15% Recourse Pool to another pool or become subject to
a Cooperative Guarantee, in accordance with the applicable Loan
Approval.
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3.04
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ProPartners’ portion of the interest collected with
respect to each Participated Loan shall be equal to the following:
(i) the Prime Rate less 185 basis points for each Participated Loan
placed in the 5% Recourse Pool; (ii) the Prime Rate less 165
basis points for each Participated Loan placed in the 10% Recourse
Pool; (iii) the Prime Rate less 115 basis points for each
Participated Loan placed in the 15% Recourse Pool or the CHS 15%
Recourse Pool; (iv) the Prime Rate less 165 basis points for
each Participated Loan placed in the 50% Recourse Pool or the Full
Recourse Pool; and (v) the Prime Rate less 165 basis points
for each Participated Loan that is subject to a Cooperative
Guarantee (the "Retained Interest"); provided, however, that any
Participated Loan that is a fixed-rate loan shall bear interest at
such fixed rate of interest and at such Retained Interest as agreed
by the parties on a case by case basis. Cofina shall not reduce or
lower the interest rate or interest rate parameters on a
Participated Loan without the prior written consent of ProPartners.
All interest collected in each [month], less the Retained Interest,
shall be paid to Cofina by ProPartners no later than the tenth day
following the end of each [month].
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3.05
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The Participated Loans III ay he Secured by it perfected III-St
priority’ Security interest in acceptable collateral with Net
Realizable Value sufficient to repay the obligations under such
Participated Loans. As security for the payment and performance of
all the Participated Loans, Cofina hereby assigns to ProPartners
any and all security interests and other liens obtained by Cofina
as collateral securing the Participated Loans, and as and when
requested in writing by ProPartners, shall promptly file such UCC-3
financing statements or other forms as ProPartners shall request
evidencing such assignment.
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3.06
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If ProPartners at any time holds a Participation Interest in a
Participated Loan of a Borrower and Cofina extends additional
credit to the same Borrower, Cofina agrees to offer ProPartners the
opportunity to purchase a Participation Interest in such Loan in
accordance with the terms of this Agreement. Borrowers with common
management and/or ownership shall be considered a single Borrower
for purposes of the foregoing.
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3.07
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Cofina shall have the option to repurchase ProPartners’
Participation Interest in a Participated Loan if (i) such
Participated Loan is a Defaulted Loan or (ii) ProPartners
determines that it will not consent to the renewal or extension of
such Participated Loan for a subsequent term or that ProPartners
will only consent to the renewal or extension of such Participated
Loan hereunder at a lower classification or under less favorable
economic terms (in each case, a "Repurchase Option"); provided,
however, that Cofina’s exercise of a Repurchase Option shall
not he considered a payment under the guarantee obligations of
either CHS or Cofina pursuant to Article V. The Repurchase
Option shall be exercisable with respect to (i) above, during
the 30-day period following notification by ProPartners to Cofina
that a Participated Loan has become a Defaulted Loan, and with
respect to (ii) above, during the 30-day period following
notification by ProPartners to Cofina of ProPartners’
determination not to consent to the renewal or extension of a
Participated Loan or to consent to such renewal or extension of a
Participated Loan only at a lower classification or under less
favorable economic terms. In addition to the above, in cases
involving Participated Loans that are subject to the guarantee of
CHS, if such a Participated Loan is subject to a Default or a Near
Default and the parties agree, for a period of up to 60 days,
to comply with a collection plan regarding the collection of and
remedies under such Participated Loan (subject to
ProPartners’ right to discontinue such collection efforts and
demand payment of CHS’ guaranty prior to the end of such
60-day period if the parties mutually agree or if ProPartners
determines in good faith that a delay is likely to have a material
adverse effect on ProPartners), CHS shall have the right to
purchase ProPartners’ Participation Interest in such
Participated Loan at any time prior to the end of such 60-day
period (also a "Repurchase Option"). With respect to each
Repurchase Option exercised by Cofina or CHS, Cofina or CHS, as the
case may he, will pay to ProPartners a repurchase price equal to
the suns of all outstanding principal, interest and fees then
existing under such Participated Loan, plus any other reasonable
third party attorney fees or other collection costs incurred by
ProPartners with respect to such Participated Loan. Upon
ProPartners’ receipt of payment in
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