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NON-RECOURSE LOAN PARTICIPATION AGREEMENT

Participation Agreement

NON-RECOURSE LOAN PARTICIPATION AGREEMENT | Document Parties: UTG INC | First Southern National Bank | Originating Bank | Universal Guaranty Life Insurance Company You are currently viewing:
This Participation Agreement involves

UTG INC | First Southern National Bank | Originating Bank | Universal Guaranty Life Insurance Company

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Title: NON-RECOURSE LOAN PARTICIPATION AGREEMENT
Date: 1/27/2011
Industry: Insurance (Life)     Sector: Financial

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Exhibit 10.17

NON-RECOURSE

LOAN PARTICIPATION AGREEMENT

 

Originating Bank

Participant

First Southern National Bank

Universal Guaranty Life Insurance Company

 

BORROWER

 

 

Interest

Rate

Principal Amount/Credit Limit

Funding/

Agreement

Date

Maturity

 Date

Customer Number

Loan

 Number

 

 

 

 

 

 

 

TERMS AND CONDITIONS

 

1.

Sale of Loan Participation   Interest:       Originating   Bank   hereby   sells,   assigns,   transfers  and  delivers  to  the  Participant, a $___________________________ interest in the Originating Bank's ownership rights in and to the indebtedness, promissory note or notes, collateral security and all documents relating to the loan or loans described above (hereinafter, one or more, referred to as the 'Loan").

 

 

2.

Ownership of Loan Participation Interest: The parties hereto agree that the Participant shall be considered for all purposes as the legal and equitable owner of the   above interest in the indebtedness, promissory note or notes, collateral security and all documents relating to the Loan, together with all of the rights, privileges and remedies applicable thereto.

 

THIS LOAN PARTICIPATION CONSTITUTES A SALE OF A PERCENTAGE OWNERSHIP INTEREST IN THE ABOVE REFERENCED INDEBTEDNESS, NOTE OR NOTES, COLLATERAL SECURITY AND OTHER LOAN DOCUMENTS AND SHALL IN NO WAY BE CONSTRUED AS AN EXTENSION OF CREDIT BY THE PARTICIPANT TO THE ORIGINATING BANK.

 

3.

Agent for Collection and Servicing:

 

 

(a)

The Originating Bank shall act as the disclosed agent of the Participant in connection with receipt and collection of the Participant's ownership interest in the   Loan and in payments to be made thereunder.  The Originating Bank shall additionally act as the disclosed agent of the Participant in connection with   the continued servicing of the Loan.

 

(b)

The Originating Bank shall exercise the same degree of care and discretion in continuing to service the Loan and in collecting payments thereunder, as the Originating Bank would ordinarily take in servicing the Loan and in collecting payments thereunder solely for its own account.

 

(c)

The Originating Bank may not, however, without the prior consent and concurrence of the Participant; (i) make or consent to any amendments in the terms and conditions of the Loan, or the terms of the note or notes evidencing the Loan, or in any security agreement or instrument securing the Loan; (ii) waive or release any claim against any Borrower and/or against any co-maker, guarantor or endorser under the   Loan; (iii) make or consent to any release, substitution or exchange of collateral; (iv) accelerate payment under the Loan and/or under any note or notes evidencing the Loan; (v) commence any type of collection proceeding against the Borrower and/or against any co-maker, guarantor or endorser under the Loan; and/or (vi) seize, sell, transfer, assign, foreclose or attempt to exercise against any collateral securing the Loan.

 

(d)

The Participant may terminate the   agency status of the Originating Bank as provided in Section 4 of this Agreement.

 

 

 

4.

Termination of Agency Status:

 

 

(a)

The Originating Bank's agency status under Section 3 above shall terminate at the election of the Participant upon: (i) the insolvency, closing or liquidation of the Originating Bank; (ii) if, within the opinion of the Participant, the Originating Bank should fail to comply with its fiduciary and/or other obligations as provided under this Agreement; or (iii) if the Originating Bank and the Participant are unable to mutually agree as to a course of action to be taken with regard to collection of the Loan following the Borrower's default or as to any matter listed in Section 3(C) of this Agreement.

 

(b)

Upon termination of the   Originating Bank's agency status, the Participant shall have the right to immediately notify the Borrower, directing the   Borrower to forward principal and interest payments under the Loan directly to the Participant, in sufficient amounts to satisfy the Participant's then percentage ownership interest in the Loan.  The Originating Bank shall join in this notice to the Borrower upon request by the Participant.

 

(c)

Unless otherwise provided herein, the remaining terms and conditions of this Agreement shall survive the termination of the Originating Bank agency status.  Such remaining terms and conditions of this Agreement shall continue to apply until such time as the Loan is paid in full or the Participant's ownership interest in the Loan is repurchased by the Originating Bank as provided in Section 11 below.

 

 

 

5.

Representations and Warranties by Originating Bank:

 

 

(a)

The Originating Bank makes the following representations and warranties to the Participant: (i) the Originating Bank has provided the Participant with copies of all relevant credit and other information currently in the possession of the Originating Bank, that were used by the Originating Bank as a basis of and for its decision to make the Loan to the Borrower; (ii) the Originating Bank has additionally provided the Participant with copies of the Loan documents that were executed (and/or are to be executed) by the Borrower as well as by other co-makers, guarantors and endorsers under the Loan; (iii) where the Loan is presently in existence, there are no events of default under the Loan and/or under the Loan documents, the Loan has not been classified on the books of the Originating Bank, the Loan is presently on accrual status; and the terms of the Loan have not previously been renegotiated as a result of a prior deterioration in the Borrower's financial condition.

 

(b)

The Originating Bank makes no representation or warranties, whether expressed or implied, to the Participant, as to the collectibility of the Loan, the continued solvency of the Borrower, or as to the existence, sufficiency or value of the   collateral securing the Loan.

 

(c)

The Originating Bank makes no representations or warranties, whether expressed or implied, to the   Participant, as to the validity and enforceability of the Loan documents, other than that: (i) the Loan documents were validly executed by the Borrower, as well as, to the degree applicable, by the   co-makers, guarantors and/or endorsers under the Loan; (ii) to the extent required under applicable law, the security agreements under the Loan were (and/or will be) properly recorded in order to result in the valid perfection of a security interest on the collateral subject to such agreements; and (iii) to the extent required under applicable law, the Originating Bank has taken (and/or will continue to take) whatever additional actions may be necessary and proper to validly perfect and maintain a security interest on the collateral securing the Loan.

 

 

 

6.

Representations and Warranties by Participant: The Participant represents and warrants to the Originating Bank that the Participant based its decision to purchase a participation ownership interest in the Loan solely upon the Participant's own


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