Document:

exv10w1

 

    Exhibit 10.1

 

    Mindspeed
    Technologies, Inc.

    2003
    Long-Term Incentives Plan,

    As
    Amended And Restated

    As Of
    January 24, 2011

 

 

 

 

 

    Section 1:
    Purpose

 

    The purpose of the Mindspeed Technologies, Inc. 2003 Long-Term
    Incentives Plan (as amended and restated, the “Plan”)
    is to provide incentive compensation to officers, executives and
    other employees, and prospective employees, contractors and
    consultants of the Company and its Subsidiaries; to attract and
    retain individuals of outstanding ability; and to align the
    interests of such persons with the interests of the
    Company’s shareholders.

 

    Section 2:
    Definitions

 

    The following terms, as used herein, shall have the meaning
    specified:

 

    “Award” means an award granted pursuant to
    Section 4.

 

    “Award Agreement” means a letter to a
    Participant, together with the terms and conditions applicable
    to an Award granted to the Participant, issued by the Company,
    as described in Section 6.

 

    “Board of Directors” means the Board of
    Directors of the Company as it may be comprised from time to
    time.

 

    “Code” means the Internal Revenue Code of 1986, and
    any successor statute, as it or they may be amended from time to
    time.

 

    “Committee” means the Compensation and
    Management Development Committee of the Board of Directors as it
    may be comprised from time to time or another committee of the
    Board of Directors designated by the Board of Directors to
    administer the Plan.

 

    “Company” means Mindspeed Technologies, Inc., a
    Delaware corporation, and any successor corporation.

 

    “Conexant” means Conexant Systems, Inc., a
    Delaware corporation, and any successor corporation.

 

    “Employee” means, subject to the exclusions set
    forth below, an individual who was hired (and advised that he or
    she was being hired) directly by the Company or a Subsidiary as
    a regular employee and who at the time of grant of an Award
    performs regular employment services directly for the Company or
    a Subsidiary, but shall not include (a) members of
    the Board of Directors who are not also employees of the Company
    or a Subsidiary or (b) any individuals who work, or who
    were hired to work, or who were advised that they work:
    (i) as independent contractors or employees of independent
    contractors; (ii) as temporary employees, regardless of the
    length of time that they work at the Company or a Subsidiary;
    (iii) through a temporary employment agency, job placement
    agency, or other third party; or (iv) as part of an
    employee leasing arrangement between the Company or a Subsidiary
    and any third party. For the purposes of the Plan, the
    exclusions described above shall remain in effect even if the
    described individual could otherwise be construed as an employee
    under any applicable common law.

 

    “ERISA” means the Employee Retirement Income
    Security Act of 1974, as amended.

 

    “Exchange Act” means the Securities Exchange
    Act of 1934, and any successor statute, as it may be amended
    from time to time.

    

    1
    

 

    “Executive Officer” means an Employee who is an
    executive officer of the Company as defined in
    Rule 3b-7
    under the Exchange Act (or any successor provision).

 

    “Fair Market Value” means the closing sale
    price of the Stock as reported on the Nasdaq Stock Market or
    such other national securities exchange or automated
    inter-dealer quotation system on which the Stock has been duly
    listed and approved for quotation and trading on the relevant
    date, or if no sale of the Stock is reported for such date, the
    next preceding day for which there is a reported sale.

 

    “Incentive Stock Option” means an option to
    purchase Stock that is granted pursuant to Section 4(b) or
    pursuant to any other plan of the Company or a Subsidiary that
    complies with Code Section 422.

 

    “Immediate Family” means a participant’s
    spouse and natural, adopted or step-children and grandchildren.

 

    “Mindspeed Distribution Date” means the date on
    which Conexant completes the pro rata distribution of all
    outstanding Stock to Conexant shareowners.

 

    “Non-Employee” means an individual who at the
    time of grant of an Award (a) has been extended an offer of
    employment with the Company or a Subsidiary but who has not yet
    accepted the offer and become an Employee, or (b) performs
    consulting, contracting or other services for the Company or a
    Subsidiary other than in a capacity as an Employee or who has
    been extended an offer to perform consulting, contracting or
    other services for the Company or a Subsidiary, but shall not
    include members of the Board of Directors.

 

    “Non-Qualified Stock Option” shall have the
    meaning set forth in Section 4(a).

 

    “Participant” means any Employee or
    Non-Employee who has been granted an Award pursuant to the Plan.

 

    “Restricted Stock” shall have the meaning set
    forth in Section 4(c).

 

    “Restricted Stock Units” shall have the meaning
    set forth in Section 4(f).

 

    “SARs” shall have the meaning set forth in
    Section 4(e).

 

    “Share Reserve” shall have the meaning set
    forth in Section 5(a).

 

    “Stock” means shares of common stock, par value
    $.01 per share, of the Company, or any security of the Company
    issued in substitution, exchange or lieu thereof.

 

    “Subsidiary” means any corporation or other
    entity in which the Company, directly or indirectly, controls
    50% or more of the total combined voting power of such
    corporation or other entity.

 

    “Ten-Percent Shareholder” means any person who
    owns, directly or indirectly, on the relevant date, securities
    having ten percent (10%) or more of the combined voting power of
    all classes of the Company’s securities or of its parent or
    subsidiaries. For purposes of applying the foregoing ten percent
    (10%) limitation, the rules of Code Section 424(d) shall
    apply.

 

    “Unrestricted Stock” shall have the meaning set
    forth in Section 4(d).

 

    Section 3:
    Eligibility

 

    Persons eligible for Awards shall consist of Employees and
    Non-Employees whose performance or potential contribution, in
    the judgment of the Committee, will benefit the future success
    of the Company
    and/or a
    Subsidiary. Notwithstanding the foregoing, only Employees will
    be eligible for Awards of Incentive Stock Options, Restricted

    

    2
    

 

    Stock, Restricted Stock Units
    and/or
    Unrestricted Stock under the Plan and only Employees who are
    foreign nationals or employed outside the United States will be
    eligible for Awards of SARs under the Plan.

 

    Section 4:
    Awards

 

    The Committee may grant any of the following types of Awards,
    either singly, in tandem or in combination with other types of
    Awards, as the Committee may in its sole discretion determine:

 

    a. Non-Qualified Stock Options. A
    “Non-Qualified Stock Option” is an Award to an
    Employee or Non-Employee in the form of an option to purchase a
    specific number of shares of Stock exercisable at such time or
    times, and during such specified time not to exceed ten
    (10) years, as the Committee may determine, at a price not
    less than 100% of the Fair Market Value of the Stock on the date
    the option is granted.

 

    (i) The purchase price of the Stock subject to the option
    may be paid in cash. At the discretion of the Committee, the
    purchase price may also be paid by the tender of Stock (the
    value of such Stock shall be its Fair Market Value on the date
    of exercise), or through a combination of Stock and cash, or
    through such other means as the Committee determines are
    consistent with the Plan’s purpose and applicable law. No
    fractional shares of Stock will be issued or accepted.

 

    (ii) Without limiting the foregoing, the Committee may
    permit Participants, either on a selective or aggregate basis,
    to simultaneously exercise options and sell the shares of Stock
    thereby acquired, pursuant to a brokerage or similar arrangement
    approved in advance by the Committee, and use the proceeds from
    such sale as payment of the purchase price of such Stock and any
    applicable withholding taxes.

 

    (iii) Dividends and dividend equivalents shall not be paid
    on Non-Qualified Stock Options.

 

    b. Incentive Stock Options. An Incentive Stock
    Option is an Award to an Employee in the form of an option to
    purchase a specified number of shares of Stock that complies
    with the requirements of Code Section 422, which option
    shall, subject to the following provisions, be exercisable at
    such time or times, and during such specified time, as the
    Committee may determine.

 

    (i) The aggregate Fair Market Value (determined at the time
    of the grant of the Award) of the shares of Stock subject to
    Incentive Stock Options which are exercisable by one person for
    the first time during a particular calendar year shall not
    exceed $100,000.

 

    (ii) No Incentive Stock Option may be granted under the
    Plan after June 27, 2013.

 

    (iii) No Incentive Stock Option may be exercisable more
    than:

 

    (A) in the case of an Employee who is not a Ten-Percent
    Shareholder on the date the option is granted, ten
    (10) years after the date the option is granted, and

 

    (B) in the case of an Employee who is a Ten-Percent
    Shareholder on the date the option is granted, five
    (5) years after the date the option is granted.

 

    (iv) The exercise price of any Incentive Stock Option shall
    not be less than:

 

    (A) in the case of an Employee who is not a Ten-Percent
    Shareholder on the date the option is granted, the Fair Market
    Value of the Stock subject to the option on such date; and

 

    (B) in the case of an Employee who is a Ten-Percent
    Shareholder on the date the option is granted, 110% of the Fair
    Market Value of the Stock subject to the option on such date.

 

    (v) The Committee may provide that the exercise price of an
    Incentive Stock Option may be paid by one or more of the methods
    available for paying the exercise price of a Non-Qualified Stock
    Option.

    

    3
    

 

    (vi) Dividends and dividend equivalents shall not be paid
    on Incentive Stock Options.

 

    c. Restricted Stock. Restricted Stock is an
    Award of Stock that is issued to an Employee subject to
    restrictions on transfer and such other restrictions on
    incidents of ownership as the Committee may determine. Subject
    to such restrictions, a Participant as owner of shares of
    Restricted Stock shall have the rights of a holder of shares of
    Stock, except that the Committee shall provide at the time of
    the Award that any dividends or other distributions paid on the
    Restricted Stock while subject to such restrictions shall be
    reinvested in Stock and held subject to the same restrictions as
    the Restricted Stock and such other terms and conditions as the
    Committee shall determine. Shares of Restricted Stock shall be
    registered in the name of the Participant and, at the
    Company’s sole discretion, (i) shall be held in
    book-entry form subject to the Company’s instructions until
    the restrictions relating thereto lapse, or (ii) shall be
    evidenced by a certificate, which shall bear an appropriate
    restrictive legend, shall be subject to appropriate
    stop-transfer orders and shall be held in custody by the Company
    until the restrictions relating thereto lapse, and the
    Participant shall deliver to the Company a stock power endorsed
    in blank relating to the Restricted Stock.

 

    d. Unrestricted Stock. Unrestricted Stock is an
    Award of Stock that is issued to an Employee without any
    restrictions, as the Committee in its sole discretion shall
    determine, including the issuance of Unrestricted Stock pursuant
    to awards conditioned upon the achievement of performance or
    other vesting requirements (as may be established by the
    Committee) prior to the delivery of such Unrestricted Stock. A
    Participant shall not be required to make any payment for
    Unrestricted Stock. Upon receipt of shares of Unrestricted
    Stock, the Participant as owner of such shares shall have the
    rights of a holder of shares of Stock, including the right to
    vote the Unrestricted Stock and to receive dividends and
    distributions thereon.

 

    e. Stock Appreciation Rights (SARs). A SAR is
    the right to receive a payment measured by the increase in the
    Fair Market Value of a specified number of shares of Stock from
    the date of grant of the SAR to the date on which the Employee
    exercises the SAR. The payment to which the Employee is entitled
    on exercise of a SAR may be in cash, in Stock valued at Fair
    Market Value on the date of exercise or partly in cash and
    partly in Stock, as the Committee may determine. Dividends and
    dividend equivalents shall not be paid on SARs. No SAR may be
    exercisable more than ten (10) years after the date the SAR is
    granted.

 

    f. Restricted Stock Units. A Restricted Stock
    Unit is an Award which may be earned in whole or in part upon
    the passage of time or the attainment of performance criteria
    established by the Committee and which may be settled for cash,
    Stock or other securities or a combination of cash, Stock or
    other securities as established by the Committee. Dividend
    equivalents declared prior to the settlement of Restricted Stock
    Units shall not be paid until the settlement of the underlying
    Restricted Stock Units.

 

    Section 5:
    Shares of Stock Available Under Plan

 

    a.   Subject to the provisions set forth in
    Section 9, the maximum aggregate number of shares of Stock
    which may be issued pursuant to all Awards (including Incentive
    Stock Options) shall be 9,694,284 shares of Stock (the
    “Share Reserve”). Notwithstanding the foregoing, any
    Awards other than options (whether Non-Qualified Stock Options
    or Incentive Stock Options) and SARs granted after the 2011
    annual meeting of the Company’s shareholders shall count
    against the Share Reserve set forth herein as one and
    twenty-eight one hundredths (1.28) shares of Stock for every one
    (1) share of Stock subject to such Award. Any shares of
    Stock that pursuant to Section 5(b) again become available
    for grant upon the forfeiture, repurchase, cancellation or
    expiration of an Award that originally counted as one and
    twenty-eight one hundredths (1.28) shares of Stock upon grant
    shall be added back to the Share Reserve as one and twenty-eight
    one hundredths (1.28) shares of Stock for every one
    (1) share of Stock forfeited, repurchased, cancelled or
    expired or deemed not to have been issued from the Plan pursuant
    to Section 5(b). Options (whether Non-Qualified Stock
    Options or Incentive Stock Options) and SARs shall be counted
    against the Share Reserve as one (1) share of Stock for
    every one (1) share of Stock subject to such Award (and
    shall be added back to the Share Reserve as one (1) share
    of Stock for every one (1) share of Stock subject to such
    Awards that is forfeited, repurchased, cancelled or expired or
    deemed not to have been issued from the Plan pursuant to
    Section 5(b). The shares of Stock to be issued pursuant to
    Awards may be authorized, but

    

    4
    

 

    unissued, or reacquired Stock. No single Participant shall
    receive, in any one calendar year, Awards (whether Non-Qualified
    Stock Options, Incentive Stock Options, Restricted Stock,
    Restricted Stock Units (to the extent settled in Stock), SARs
    (to the extent settled in Stock) or Unrestricted Stock) with
    underlying shares of Stock exceeding three hundred thousand
    (300,000) shares of Stock, subject to adjustment as set forth in
    Section 9.

 

    b.   Any shares of Stock covered by an Award (or
    portion of an Award) which is forfeited, canceled or expires
    shall be deemed not to have been issued for purposes of
    determining the Share Reserve. Shares of Stock that actually
    have been issued under the Plan pursuant to an Award shall not
    be returned to the Plan and shall not become available for
    future issuance under the Plan, except that if unvested shares
    of Stock are forfeited, or repurchased by the Company at the
    lower of their original purchase price or their Fair Market
    Value at the time of repurchase, such shares of Stock shall
    become available for future grant under the Plan.
    Notwithstanding anything to the contrary contained herein:
    (i) shares of Stock tendered or withheld in payment of an
    option exercise price shall not be returned to the Plan and
    shall not become available for future issuance under the Plan;
    (ii) shares of Stock withheld by the Company to satisfy any
    tax withholding obligation shall not be returned to the Plan and
    shall not become available for future issuance under the Plan;
    and (iii) all shares of Stock covered by the portion of a
    SAR that is exercised (whether or not shares of Stock are
    actually issued to the Participant upon exercise of the SAR)
    shall be considered issued pursuant to the Plan.

 

    Section 6:
    Award Agreements.

 

    Each Award under the Plan shall be evidenced by an Award
    Agreement. Each Award Agreement shall set forth the number of
    shares of Stock subject to the Award and shall include the terms
    set forth below and such other terms and conditions applicable
    to the Award, as determined by the Committee, not inconsistent
    with the terms of the Plan. Notwithstanding the foregoing, the
    provisions of subsection (b) below may be modified to the
    extent deemed advisable by the Committee in Award Agreements
    pertaining to Non-Employees providing consulting, contracting or
    other services to the Company or a Subsidiary. In the event of
    any conflict between an Award Agreement and the Plan, the terms
    of the Plan shall govern.

 

    a. Transferability. A provision stating that an
    Award may not be transferred or assigned other than (i) by
    will or by the laws of descent and distribution; or (ii) by
    gift to members of the Participant’s Immediate Family or to
    a trust established for the benefit of one or more members of
    the Participant’s Immediate Family.

 

    b. Termination of Employment.

 

    (i) A provision describing the treatment of an Award in the
    event of the Retirement, Disability, death or other termination
    of a Participant’s employment with the Company or a
    Subsidiary, including, but not limited to, the definitions of
    Retirement and Disability and terms relating to the vesting,
    time for exercise, forfeiture or cancellation of an Award in
    such circumstances. Participants who terminate employment due to
    Retirement, Disability or death prior to the satisfaction of
    applicable conditions and restrictions associated with their
    Awards may be entitled to prorated Awards as and to the extent
    determined by the Committee.

 

    (ii) A provision describing the treatment of an Award in
    the event of (A) a transfer of an Employee from the Company
    to a Subsidiary or an affiliate of the Company, whether or not
    incorporated, or vice versa, or from one Subsidiary or affiliate
    of the Company to another or (B) a leave of absence, duly
    authorized in writing by the Company.

 

    (iii) A provision stating that in the event the
    Participant’s employment is terminated for Cause (as
    defined in the Award Agreement), anything else in the Plan or
    Award Agreement to the contrary notwithstanding, all Awards
    granted to the Participant shall immediately terminate and be
    forfeited.

 

    c. Rights as a Shareholder. A provision stating
    that a Participant shall have no rights as a shareholder with
    respect to any Stock covered by an Award until the date the
    Participant becomes the holder of record thereof. Except

    

    5
    

 

    as provided in Section 9, no adjustment shall be made for
    dividends or other rights, unless the Award Agreement
    specifically requires such adjustment.

 

    d. Withholding. A provision requiring the
    withholding of applicable taxes required by law from all amounts
    paid in satisfaction of an Award. A Participant may satisfy the
    withholding obligation by paying the amount of any taxes in cash
    or, with the approval of the Committee, shares of Stock may be
    delivered to the Company or deducted from the payment or, in
    accordance with Section 4(a)(ii), sold to satisfy the
    obligation in full or in part. If such tax withholding
    obligation is paid in shares of Stock, tax amounts shall be
    limited to the statutory minimum as required by law.

 

    e. Treatment of Options. Each Award of an
    option shall state whether it will or will not be treated as an
    Incentive Stock Option.

 

    f. Performance Conditions. The Committee may
    condition, or provide for the acceleration of, the
    exercisability or vesting of any Award upon such prerequisites
    as it, in its sole discretion, deems appropriate, including, but
    not limited to, achievement of specific objectives, whether
    absolute or relative to a peer group or index designated by the
    Committee, with respect to one or more measures of the
    performance of the Company
    and/or one
    or more Subsidiaries, including, but not limited to, earnings
    per share, revenue, net income, net operating income, earnings
    before interest, taxes, depreciation and amortization (EBITDA),
    stock price, total shareholder return, operating margin, gross
    margin, return on equity, return on assets, return on
    investment, operating income, pre-tax profit, cash flow,
    expenses, earnings before interest, taxes and depreciation,
    economic value added and market share. At the time it sets the
    performance measures, the Committee may determine to include or
    exclude extraordinary, unusual, nonrecurring or other items.
    Such performance objectives shall be determined in accordance
    with the Company’s audited financial statements, to the
    extent applicable, and so that a third party having knowledge of
    the relevant facts could determine whether such performance
    objectives are met.

 

    Section 7:
    Amendment and Termination

 

    The Board of Directors may at any time amend, suspend or
    discontinue the Plan, in whole or in part, provided,
    however, that no such action shall be effective without
    the approval of the shareholders of the Company to the extent
    that such approval is necessary to comply with any tax or
    regulatory requirement applicable to the Plan; and
    provided, further, that subject to Section 9,
    no such action shall impair the rights of any holder of an Award
    without the holder’s consent. The Committee may at any time
    alter or amend any or all Awards and Award Agreements under the
    Plan to the extent permitted by law, except that, subject to the
    provisions of Section 9, no such alteration or amendment
    shall impair the rights of any holder of an Award without the
    holder’s consent. Notwithstanding the foregoing and subject
    to Section 10(n), no such action may, without approval of
    the shareholders of the Company, increase the number of shares
    of Stock with respect to which Awards may be granted or reduce
    the exercise price of any Option or SAR below Fair Market Value
    on the date of grant.

 

    Section 8:
    Administration

 

    a. The Plan and all Awards shall be administered by the
    Committee. The members of the Committee shall be designated by
    the Board of Directors from among its members who are not
    eligible for Awards under the Plan.

 

    b. Any member of the Committee who, at the time of any
    proposed grant of one or more Awards, is not a
    “Non-Employee Director” as defined in
    Rule 16b-3(b)(3)(i)
    under the Exchange Act (or any successor provision) shall
    abstain from and take no part in the Committee’s action on
    the proposed grant.

 

    c. The Committee and others to whom the Committee has
    delegated such duties shall keep a record of all their
    proceedings and actions and shall maintain all such books of
    account, records and other data as shall be necessary for the
    proper administration of the Plan.

    

    6
    

 

    d. The Company shall pay all reasonable expenses of
    administering the Plan, including, but not limited to, the
    payment of professional fees.

 

    e. The Committee may appoint such accountants, counsel and
    other experts as it deems necessary or desirable in connection
    with the administration of the Plan. Subject to the express
    provisions of the Plan, the Committee may delegate to the
    officers or employees of the Company and its Subsidiaries the
    authority to execute and deliver such instruments and documents,
    to do all such acts and things, and to take all such other steps
    deemed necessary, advisable or convenient for the effective
    administration of the Plan in accordance with its terms and
    purpose.

 

    f. The Committee may adopt such procedures and
    sub-plans as
    are necessary or appropriate to permit participation in the Plan
    by employees who are foreign nationals or employed outside the
    U.S. Without limiting the foregoing, the Committee may
    authorize supplementary plans applicable to Employees subject to
    the tax laws of one or more countries other than the United
    States in order to provide for the grant of Non-Qualified Stock
    Options, Restricted Stock, Restricted Stock Units, Unrestricted
    Stock or SARs to such Employees on terms and conditions,
    consistent with the Plan, determined by the Committee which may
    differ from the terms and conditions of other Awards in those
    forms pursuant to the Plan for the purpose of complying with the
    conditions for qualification of Awards for favorable treatment
    under foreign tax laws.

 

    g. Subject to the express provisions of the Plan, the
    Committee shall have the power (i) to implement (including
    the power to delegate such implementation to appropriate
    officers of the Company), interpret and construe the Plan and
    Awards and Award Agreements or other documents defining the
    rights and obligations of the Company and Participants hereunder
    and thereunder, (ii) to determine all questions arising
    hereunder and thereunder, and (iii) to adopt and amend such
    rules and regulations for the administration hereof and thereof
    as it may deem desirable. The interpretation and construction by
    the Committee of any provisions of the Plan or of any Award or
    Award Agreement shall be conclusive and binding. Any action
    taken by, or inaction of, the Committee relating to the Plan or
    any Award or Award Agreement shall be within the discretion of
    the Committee and shall be conclusive and binding upon all
    persons. Subject only to compliance with the express provisions
    hereof, the Committee may act in its discretion in matters
    related to the Plan and any and all Awards and Award Agreements.
    The Committee’s determinations under the Plan need not be
    uniform and may be made by it selectively among Employees and
    Non-Employees who receive, or who are eligible to receive,
    Awards under the Plan, whether or not such persons are similarly
    situated.

 

    h. It is the intent of the Company that the Plan and Awards
    hereunder satisfy, and be interpreted in a manner that satisfy,
    in the case of Participants who are or may be Executive
    Officers, the applicable requirements of
    Rule 16b-3
    under the Exchange Act, so that such persons will be entitled to
    the benefits of
    Rule 16b-3,
    or other exemptive rules under Section 16 of the Exchange
    Act, and will not be subjected to avoidable liability under
    Section 16(b) of the Exchange Act.

 

    i. The Committee may delegate, and revoke the delegation
    of, all or any portion of its authority and powers under the
    Plan to the Chief Executive Officer of the Company, except that
    the Committee may not delegate any discretionary authority with
    respect to substantive decisions or functions regarding the Plan
    or Awards to the extent (i) related to Awards granted to
    Executive Officers, (ii) inconsistent with the intent
    expressed in Section 8(h) or (iii) prohibited by
    applicable law.

 

    Section 9:
    Adjustment Provisions

 

    a. In the event of any change in or affecting the
    outstanding shares of Stock by reason of a stock dividend or
    split, recapitalization, reclassification, merger or
    consolidation (whether or not the Company is a surviving
    corporation), reorganization, combination or exchange of shares
    or other similar corporate changes or an extraordinary dividend
    in cash, securities or other property, the Board of Directors
    shall make or take such amendments to the Plan and outstanding
    Awards and Award Agreements and such adjustments and actions
    hereunder and thereunder as it deems appropriate, in its sole
    discretion, under the circumstances, and its determination in
    that respect shall be final and binding. Such amendments,
    adjustments and actions may include, but are not limited to,
    changes in the number of

    

    7
    

 

    shares of Stock (or other securities) then remaining subject to
    the Plan, and the maximum number of shares that may be delivered
    to any single Participant pursuant to the Plan, including those
    that are then covered by outstanding Awards, or accelerating the
    vesting of outstanding Awards. No fractional interests will be
    issued under the Plan resulting from any adjustments.

 

    b. The Committee shall make any further adjustments as it
    deems necessary to ensure equitable treatment of any holder of
    an Award as the result of any transaction affecting the
    securities subject to the Plan not described in (a), or as is
    required or authorized under the terms of any applicable Award
    Agreement.

 

    c. The existence of the Plan and the Awards granted
    hereunder shall not affect or restrict in any way the right or
    power of the Board of Directors or the shareholders of the
    Company to make or authorize any adjustment, recapitalization,
    reorganization or other change in its capital structure or its
    business, any merger or consolidation of the Company, any issue
    of bonds, debentures, preferred or prior preference stock or
    other securities ahead of or affecting the Stock or the rights
    thereof, the dissolution or liquidation of the Company or any
    sale or transfer of all or any part of its assets or business,
    or any other corporate act or proceeding.

 

    Section 10:
    Miscellaneous

 

    a. Other Payments or Awards. Nothing contained
    in the Plan shall be deemed in any way to limit or restrict the
    Company or a Subsidiary from making any award or payment to any
    person under any other plan, arrangement or understanding,
    whether now existing or hereafter in effect.

 

    b. Payments to Other Persons. If payments are
    legally required to be made to any person other than the person
    to whom any amount is made available under the Plan, payments
    shall be made accordingly. Any such payment shall be a complete
    discharge of the liability hereunder.

 

    c. Unfunded Plan. The Plan shall be unfunded.
    No provision of the Plan or any Award or Award Agreement shall
    require the Company or a Subsidiary, for the purpose of
    satisfying any obligations under the Plan, to purchase assets or
    place any assets in a trust or other entity to which
    contributions are made or otherwise to segregate any assets, nor
    shall the Company or a Subsidiary maintain separate bank
    accounts, books, records or other evidence of the existence of a
    segregated or separately maintained or administered fund for
    such purposes. Participants shall have no rights under the Plan
    other than as unsecured general creditors of the Company or a
    Subsidiary, except that insofar as they may have become entitled
    to payment of additional compensation by performance of
    services, they shall have the same rights as other employees or
    consultants, as applicable, under generally applicable law.

 

    d. Limits of Liability. Any liability of the
    Company or a Subsidiary to any Participant with respect to an
    Award shall be based solely upon contractual obligations created
    by the Plan and the Award Agreement. Neither the Company or its
    Subsidiaries, nor any member of the Board of Directors or of the
    Committee, nor any other person participating in any
    determination of any question under the Plan, or in the
    interpretation, administration or application of the Plan, shall
    have any liability to any party for any action taken, or not
    taken, in good faith under the Plan.

 

    e. Rights of Employees and
    Non-Employees. Status as an eligible Employee or
    Non-Employee shall not be construed as a commitment that any
    Award shall be made under the Plan to such eligible Employee or
    Non-Employee or to eligible Employees or Non-Employees
    generally. Nothing contained in the Plan or in any Award
    Agreement shall confer upon any Employee or Non-Employee any
    right to continue in the employ or other service of or, in the
    case of prospective employees, contractors or consultants,
    become employed by or render service to the Company or a
    Subsidiary or constitute any contract or limit in any way the
    right of the Company or a Subsidiary to change such
    person’s compensation or other benefits or, in the case of
    prospective employees, contractors or consultants, prospective
    compensation or benefits or to terminate the employment or other
    service or, in the case of prospective employees, contractors or
    consultants, withdraw an offer of employment or offer to retain
    such person with or without cause.

    

    8
    

 

    f. Section Headings. The section headings
    contained herein are for the purpose of convenience only, and in
    the event of any conflict, the text of the Plan, rather than the
    section headings, shall control.

 

    g. Gender, Etc. In interpreting the Plan, the
    masculine gender shall include the feminine, the neuter gender
    shall include the masculine or feminine, and the singular shall
    include the plural unless the context clearly indicates
    otherwise.

 

    h. Invalidity. If any term or provision
    contained herein or in any Award Agreement shall to any extent
    be invalid or unenforceable, such term or provision, to the
    extent practicable, will be reformed so that it is valid and as
    consistent as possible with the original provisions hereof, and
    such invalidity or unenforceability shall not affect any other
    provision or part thereof.

 

    i. Applicable Law. The Plan, the Award
    Agreements and all actions taken hereunder or thereunder shall
    be governed by, and construed in accordance with, the laws of
    the State of Delaware without regard to the conflict of law
    principles thereof.

 

    j. Compliance with Laws. Notwithstanding
    anything contained herein or in any Award Agreement to the
    contrary, the Company shall not be required to sell or deliver
    shares of Stock or other securities hereunder or thereunder if
    the sale or delivery thereof would constitute a violation by the
    Participant or the Company of any provisions of any law or
    regulation of any governmental authority or any national
    securities exchange or interdealer quotation system, and as a
    condition of any sale or delivery the Company may require such
    agreements or undertakings, if any, as the Company may deem
    necessary or advisable in its discretion to assure compliance
    with any such law or regulation.

 

    k. Effective Date and Term. The Plan was
    adopted by the Board of Directors of the Company and approved by
    the sole shareholder of the Company to be effective as of the
    Mindspeed Distribution Date. The Plan shall remain in effect
    until all Awards granted under the Plan have been exercised or
    terminated under the terms of the Plan and applicable Award
    Agreements, provided that Awards under the Plan may only be
    granted within ten (10) years from the effective date of
    the Plan.

 

    l. Awards for Compensation Purposes Only. The
    Plan is not intended to constitute an “employee benefit
    plan” within the meaning of Section 3(3) of ERISA.

 

    m. Plan History. The Plan was amended and
    restated effective July 1, 2008 to adjust (in accordance
    with Section 9 of the Plan) the number of shares of Stock
    available under the Plan, the limits on the number of shares of
    Stock that may be granted as certain Awards and the annual
    limits of Awards that may be granted to Participants (as set
    forth in Section 5(a) of the Plan) after giving effect to a
    1-for-5
    reverse stock split of the Company’s Stock, which became
    effective at 11:59 p.m. EDT on June 30, 2008. Such
    amendment and restatement was not subject to the approval of the
    Company’s shareholders.

 

    n. Repricings. Except in connection with a
    corporate transaction (including, without limitation, any stock
    dividend, stock split, extraordinary cash dividend,
    recapitalization, reorganization, merger, consolidation,
    split-up,
    spin-off, combination or exchange of shares), the terms of
    outstanding Awards may not be amended to reduce the exercise
    price of outstanding Incentive Stock Options, Non-Qualified
    Stock Options or SARs or cancel outstanding Incentive Stock
    Options, Non-Qualified Stock Options or SARs in exchange for
    cash, other Awards or Incentive Stock Options, Non-Qualified
    Stock Options or SARs with an exercise price that is less than
    the exercise price of the original Incentive Stock Options,
    Non-Qualified Stock Options or SARs without shareholder approval.

    

    9exv10w3

Exhibit 10.3

LOAN ORIGINATION AND PARTICIPATION AGREEMENT

     THIS LOAN ORIGINATION AND PARTICIPATION AGREEMENT (“Agreement”) is made and entered
into effective as of the 31st day of December, 2010, by and among AgStar Financial Services, PCA,
d/b/a ProPartners Financial (hereafter referred to as “ProPartners”), Cofina Financial, LLC
(hereafter referred to as “Cofina”) and Cofina ProFund LLC (hereafter referred to as
“CPL”).

RECITALS:

	A.	 	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”).

	B.	 	The parties hereto wish to enter into a transaction whereby Cofina or CPL will originate,
except in the case of loans to Borrowers located in North Dakota when a Third Party Originator
will originate, and in both cases participate to ProPartners certain loans in accordance with
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 and in the case of Cooperative/Commercial Loans, certain loans
outside of the Program in accordance with the terms and conditions of this Agreement and the
Loan Underwriting Criteria (each, a “Loan” and collectively, the “Loans”).

	C.	 	The Loans will be made in the name of Cofina or CPL (except in the case of the North Dakota
Loans, which will be made in the name of a Third Party Originator) and ProPartners will
purchase up to a 100% participation interest in the Loans (or in the case of
Cooperative/Commercial Loans, in the portion thereof offered to ProPartners) as provided
herein.

	D.	 	ProPartners, Cofina and CHS Inc. (“CHS”) are parties to an Amended and Restated Loan
Origination and Participation Agreement dated as of October 31, 2006, as amended by letter
agreements among the parties dated December 11, 2006 and December 12, 2007 (the “CHS
Guaranty Agreement”) whereby ProPartners purchased a participation interest in certain
loans and Cofina and CHS provided certain guarantees with respect to such loans (the
“Existing Loans”).

	E.	 	The parties agree that all Existing Loans will, effective upon the execution of this
Agreement, become Participated Loans under this Agreement and will be placed into one of the
three purchase pools in accordance with the Loan Underwriting Criteria and Section 3.04 of
this Agreement and that the CHS Guaranty Agreement will be replaced in its entirety by this
Agreement.

	F.	 	To induce ProPartners to purchase participation interests in the Loans, Cofina has agreed to
provide ProPartners with certain guarantees in accordance with the terms of this Agreement.

 

 

          NOW, THEREFORE, in consideration of the parties’ respective undertakings and obligations and
of the agreements hereinafter set forth, ProPartners, Cofina and CPL 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):

	1.01	 	“Application Package” has the meaning given in Section 2.01.

	1.02	 	“Borrower” means collectively with respect to a Participated Loan, each and every
Person signing, making or co-making, endorsing, guaranteeing or acting as surety on such
Participated Loan (other than Cofina).

	1.03	 	“Commitment” means with respect to a Borrower, the aggregate principal amount of any
funds Cofina or CPL, as applicable, 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 or CPL, as applicable, 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.

	1.04	 	“Cooperative/Commercial Loans” means (i) Loans made to Borrowers who are cooperatives
and (ii) other commercial loans.

	1.05	 	“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.

	1.06	 	“Defaulted Loan” has the meaning given in Section 2.02.

	1.07	 	“Eligible Loans” are Loans or Existing Loans that (i) meet the Loan Underwriting
Criteria, (ii) are for a principal amount that does not exceed $250,000 to a single Borrower
(Borrowers with common management and/or ownership will be considered a single Borrower for
the purposes of determining the aggregate total indebtedness to a Borrower) and (iii) are
classified as “AA”, “A” or “B with no dealer recourse” in accordance with the classification
standards set forth on Exhibit A.

	1.08	 	“Event of Default” shall have the meaning given in Section 7.01 hereof.

	1.09	 	“Existing Loans” has the meaning given in the Recitals to this Agreement.

	1.10	 	“50% Recourse Loans” means, collectively, all of the Participated Loans that are
placed in the 50% Recourse Pool and are subject to Cofina’s guarantee pursuant to Article V
hereof, subject to the limitations described in Section 5.01(b).

2

 

	1.11	 	“50% Recourse Pool” has the meaning given in Section 3.04.

	1.12	 	“Full Recourse Loans” mean, collectively, all of the Participated Loans that are
placed in the Full Recourse Pool and are subject to Cofina’s guarantee pursuant to Article V
hereof.

	1.13	 	“Full Recourse Pool” has the meaning given in Section 3.04.

	1.14	 	“GAAP” means generally accepted accounting principles in the United States in effect
from time to time, consistently applied.

	1.15	 	“Loan” has the meaning given in the Recitals to this Agreement and includes, without
limitation, Cooperative/Commercial Loans and North Dakota Loans.

	1.16	 	“Loan Approval” shall have the meaning given in Section 2.01.

	1.17	 	“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 or CPL, as applicable, or in the case of North
Dakota Loans, to the Third Party Originator, in relation to a Participated Loan or Commitment
to such Borrower.

	1.18	 	“Loan Underwriting Criteria” means the Underwriting Standards set forth on the
attached Exhibit B, as amended from time to time upon the mutual agreement of
ProPartners and Cofina.

	1.19	 	“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.

	1.20	 	“North Dakota Loans” means Loans made to Borrowers located in North Dakota, as
originated by a Third Party Originator.

	1.21	 	“Participants” shall have the meaning given in Section 10.02.
	 
	1.22	 	“Participated Loan(s)” shall have the meaning given in Section 2.01.
	 
	1.23	 	“Participation Interest” shall have the meaning given in Section 2.01.

	1.24	 	“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.

	1.25	 	“Person” shall mean an individual, corporation, partnership, association, joint
venture, limited liability company, government (or any agency or political subdivision
thereof),

3

 

	 	 	unincorporated organization, trust or other entity, including, without limitation, an
employee pension, profit sharing or other benefit plan or trust.
	 
	1.26	 	“Prior Approval Loans” are Loans or Existing Loans that meet the Loan Underwriting
Criteria and either (i) are for a principal amount equal to or greater than $250,000 to a
single Borrower (Borrowers with common management and/or ownership will be considered a single
Borrower for the purposes of determining the aggregate total indebtedness to a Borrower) or
(ii) are classified as “B with recourse”, “C” or “D” in accordance with the classification
standards set forth on Exhibit A.
	 
	1.27	 	“Program” has the meaning given in the Recitals to this Agreement.
	 
	1.28	 	“Repurchase Obligation” shall have the meaning given in Section 3.08.
	 
	1.29	 	“20% Recourse Loans” means, collectively, all of the Participated Loans that are
placed in the 20% Recourse Pool and are subject to Cofina’s guarantee pursuant to Article V
hereof, subject to the limitations described in Section 5.01(b).
	 
	1.30	 	“20% Recourse Pool” has the meaning given in Section 3.04.
	 
	1.31	 	“Term” has the meaning given in Section 11.01.
	 
	1.32	 	“Third Party Originator” means a financial institution or organization designated by
ProPartners that may originate Loans to Borrowers located in North Dakota on behalf of Cofina
or CPL, as applicable.
	 
	1.33	 	“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.
	 
	1.34	 	“Trademark” means the Cofina Country Business Partners Program (whether or not
registered).

	1.35	 	“Underwriting Fee” has the meaning given in Section 2.10.

II. LOAN ADMINISTRATION

	2.01	 	ProPartners shall supply Cofina with Loan application materials for use under the Program.
Cofina shall deliver all such loan application materials submitted by applicants to
ProPartners (the “Application Package”) for origination by ProPartners. Upon its
receipt of an Application Package, ProPartners will evaluate such Application Package in
accordance with the Loan Underwriting Criteria. ProPartners shall have the authority to
approve all Loans that constitute Eligible Loans, which if so approved by ProPartners, shall
be made under the terms designated by ProPartners in its approval of such Loan (“Loan
Approval”). Prior Approval Loans shall be reviewed and processed by ProPartners and
Cofina in accordance with the procedures set forth on Exhibit C. Upon Cofina’s
written approval of a Prior Approval Loan, such Loan shall be made under the terms designated
in the applicable Loan Approval and accepted in writing by ProPartners

4

 

	 	 	(in order to insure such Prior Approval Loan meets the Loan Underwriting Criteria and has
been placed in the proper purchase pool). ProPartners shall purchase up to a 100%
participation interest from Cofina or CPL, as applicable (a “Participation
Interest”), as provided in Section 3.01, in each Eligible Loan and in each Prior
Approval Loan approved in writing by each of Cofina and ProPartners, or in the case of
Cooperative/Commercial Loans, such portion of such Cooperative/Commercial Loan offered to
ProPartners (each, a “Participated Loan” and collectively, the “Participated
Loans”). All Participation Interests purchased by ProPartners under the CHS Guaranty
Agreement shall, upon the execution of this Agreement, be deemed Participation Interests
under this Agreement and all Existing Loans shall, upon the execution of this Agreement, be
deemed Participated Loans under this Agreement. Except in the case of
Cooperative/Commercial Loans, the proceeds of all Participated Loans 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.
	 
	2.02	 	Until such time that a Participated Loan has been subject to a Default for 30 consecutive
days (a “Defaulted Loan”), all Participated Loans shall be serviced in accordance with
the procedures set forth on Exhibit C. In the case of each Defaulted Loan that Cofina
is not obligated to repurchase pursuant to a Repurchase Obligation, 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.

	2.03	 	The Loan Documents required by ProPartners with respect to the applicable Loan Approval for
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 or CPL, as applicable, or in the case of North Dakota Loans, in the name of a Third
Party Originator. ProPartners shall maintain possession of all originals of the Loan
Documents and any related materials.

	2.04	 	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.

	2.05	 	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 or CPL from Borrowers in connection with the Participated Loans shall be held in trust
for ProPartners until paid over to ProPartners.

5

 

	2.06	 	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 by the
terms 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.

	2.07	 	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 D 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.

	2.08	 	Cofina, CPL 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.

6

 

	2.09	 	This Agreement shall not be deemed to appoint either Cofina, CPL or ProPartners as agent of
the other, except as ProPartners may be deemed the agent of Cofina or CPL 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, CPL and
ProPartners.

	2.10	 	In consideration for the origination and servicing activities performed by ProPartners under
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 $20,000 plus 23 basis points of the aggregate
outstanding principal balance of 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 terms of the Underwriting Fee after one year.

	2.11	 	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. ProPartners, upon reasonable request, shall
provide Cofina with access to loan accounting data related to Participated Loans for record
retention purposes and will, upon request, provide reasonable assistance to Cofina in
transitioning to Cofina such loan accounting data and other loan underwriting documentation.

III. SALE AND PURCHASE OF PARTICIPATION INTERESTS

	3.01	 	ProPartners shall purchase a participation interest in all of the Eligible Loans and Prior
Approval Loans approved in writing by Cofina and ProPartners equal to up to 100% of the
indebtedness under each such Loan, or in the case of Cooperative/Commercial Loans, 100% of the
portion of the indebtedness offered to ProPartners, in each case, as approved and issued in
accordance herewith; provided, however, that the aggregate principal amount of all such
Participated Loans shall not exceed $200,000,000. ProPartners’ obligation to purchase a
Participation Interest in a Loan is conditioned upon such Loan being subject to the guarantee
of Cofina pursuant to Article V hereof, as designated by ProPartners in the applicable Loan
Approval.

	3.02	 	ProPartners shall be deemed to have purchased a Participation Interest in (i) an Eligible
Loan only after such Eligible Loan has been approved by ProPartners in accordance with Section
2.01 and made under such terms and conditions as ProPartners specified in the applicable Loan
Approval and (ii) a Prior Approval Loan only after such Prior Approval Loan has been approved
in writing by both ProPartners and Cofina in accordance with Section 2.01 and made under such
terms and conditions 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.

7

 

	3.03	 	Subject to the terms and provisions of this Agreement, each of Cofina and CPL hereby grants
to ProPartners a power of attorney to exercise in accordance with the terms of this Agreement,
to the exclusion of Cofina and CPL, all of the rights of Cofina and CPL, as applicable, under
each Participated Loan, including, but not limited to, the right (i) to perform all loan
origination, servicing, administration and collection actions with respect to the Participated
Loans, including, without limitation, those actions specified in Article II, (ii) to exercise
any power or authority granted to Cofina or CPL, as applicable, pursuant to the Loan
Documents, (iii) to endorse and cash checks and other instruments made payable to Cofina or
CPL with respect to Payments under the Participated Loans, (iv) to execute all Loan Documents
related to the Participated Loans on behalf of Cofina or CPL, as applicable, and (v) to
otherwise exercise all rights of Cofina and CPL 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 and CPL to
ProPartners hereunder are irrevocable and coupled with an interest. Notwithstanding the
forgoing, Cofina shall maintain responsibility for all loan servicing and customer service
activities for Purchased Loans that are Cooperative/Commercial Loans.

	3.04	 	Each Eligible Loan that becomes a Participated Loan, and effective upon the execution of this
Agreement each Existing Loan that constitutes an Eligible Loan, will be placed into one of
three purchase pools in accordance with the Loan Underwriting Criteria. Each Prior Approval
Loan that becomes a Participated Loan, and effective upon the execution of this Agreement each
Existing Loan that constitutes a Prior Approval Loan, will be placed into one of three
purchase pools in accordance with the Loan Underwriting Criteria and the corresponding Loan
Approval; provided, however, that such placement shall not be final until confirmed in writing
by ProPartners. The three purchase pools shall be grouped as follows: (i) 20% Recourse Loans
(the “20% Recourse Pool”); (ii) 50% Recourse Loans (the “50% Recourse Pool”);
and (iii) Full Recourse Loans (the “Full Recourse Pool”).

	3.05	 	ProPartners’ portion of the interest collected with respect to each Participated Loan shall
be equal to the variable rate of 160 basis points plus the cost of funds of ProPartners and/or
the Participants as determined and communicated to Cofina on a monthly basis (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. Neither Cofina nor CPL shall
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 and the Underwriting Fee, shall be paid to Cofina by ProPartners no later
than the tenth day following the end of each month.

	3.06	 	The Participated Loans may be secured by a perfected first 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, each of Cofina and CPL hereby assigns to ProPartners any and all security interests and
other liens obtained by Cofina or CPL as collateral securing the

8

 

	 	 	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.
	 
	3.07	 	If ProPartners at any time holds a Participation Interest in a Participated Loan of a
Borrower and Cofina or CPL extends additional credit to the same Borrower, each of Cofina and
CPL 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.

	3.08	 	In addition to its guarantee obligations under this Agreement, with respect to Purchased
Loans that are Cooperative/Commercial Loans, Cofina shall have the obligation to repurchase
ProPartners’ participation interest in any such Purchased Loan that becomes a Defaulted Loan
or is otherwise classified by ProPartners as less than “acceptable” (the “Repurchase
Obligation”). With respect to each Repurchase Obligation, Cofina will pay to ProPartners
a repurchase price equal to the sum of all outstanding principal, interest and fees then
existing under ProPartners’ Participation Interest in 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 full with regard
to a Repurchase Obligation, ProPartners shall (a) forward to Cofina all Loan Documents
pertaining to such Participated Loan in ProPartners’ possession, (b) assign to Cofina all of
its right, title and interest in such Participated Loan and the related Loan Documents, (c)
cease and be discharged from all activities and responsibilities regarding such Participated
Loan and (d) prepare documentation to assign applicable collateral to Cofina, and, if
applicable, file UCC-3 financing statements.

	3.09	 	ProPartners’ purchase of Participation Interests in the Participated Loans pursuant to
Section 3.01 hereof shall constitute a sale of all of the beneficial ownership interest in
such Participated Loans, and the collateral securing the Participated Loan’s indebtedness, and
shall not be construed as an extension of credit by ProPartners to Cofina or CPL. In the
event that the transactions contemplated by this Agreement are nevertheless characterized as
extensions of credit, each of Cofina and CPL hereby grants ProPartners a security interest in
all of the Participated Loans and in all of the Loan Documents related thereto, whether now in
existence or hereafter created. The security interest granted hereby shall secure payment of
all extensions of credit by ProPartners to Cofina or CPL and the performance of all
obligations of Cofina or CPL to ProPartners of every type and description for such extensions
of credit, whether now existing or hereafter arising. Upon an Event of Default by Cofina or
CPL and anytime thereafter, ProPartners may declare any obligations outstanding between Cofina
and CPL and ProPartners to be immediately due and payable and may exercise any and all rights
of a secured party in the enforcement of its security interest under the Uniform Commercial
Code or any other applicable law.

IV. REPRESENTATIONS, WARRANTIES AND COVENANTS

	4.01	 	Each of Cofina and CPL represents, warrants and covenants that it has all requisite power and
authority to execute and deliver this Agreement and the other documents required

9

 

	 	 	and to perform all of the obligations under this Agreement, and the existence of the
arrangement contemplated by this Agreement and such party’s participation in such
arrangement and the execution, delivery and performance under this Agreement by such party
does not violate any applicable law in any material respect. Each of Cofina and CPL further
represents, warrants and covenants that there are no creditors of such party who have a
security interest in any of the Participated Loans and such party will not grant a security
interest in any of the Participated Loans to any creditor during the term of this Agreement.
	 
	4.02	 	ProPartners represents and warrants that it has all requisite power and authority to execute
and deliver this Agreement and other documents required and to perform all of the obligations
under this Agreement, and such execution, delivery and performance does not violate any
applicable law in any material respect.

V. GUARANTEE

	5.01	 	Cofina hereby:

	 	(a)	 	absolutely and unconditionally guarantees the full payment of each Participated
Loan placed in the Full Recourse Pool; provided, however, that a Participated Loan will
not be placed in the Full Recourse Pool without the written consent of Cofina; and

	 	(b)	 	absolutely and unconditionally guarantees the payment of the Participated Loans
placed in the 50% Recourse Pool; provided, however, that for each calendar year,
Cofina’s guarantee under this Section 5.01(b) shall be limited to the greater of (i)
the sum of 50% of the aggregate total Commitments in favor of all Borrowers with
respect to the outstanding Participated Loans contained in the 50% Recourse Pool as of
the business day preceding the date of payment, plus any accrued interest, minus any
guaranty payments previously made by Cofina under this Section 5.01(b), or (ii)
$10,000,000; provided, further, that any guarantee payment made by Cofina towards such
limitation must be acknowledged as such in writing by ProPartners; and

	 	(c)	 	absolutely and unconditionally guarantees the payment of the Participated Loans
placed in the 20% Recourse Pool; provided, however, that for each calendar year,
Cofina’s guarantee under this Section 5.01(c) shall be limited to the greater of (i)
the sum of 20% of the aggregate total Commitments in favor of all Borrowers with
respect to the outstanding Participated Loans contained in the 20% Recourse Pool as of
the business day preceding the date of payment, plus any accrued interest, minus any
guaranty payments previously made by Cofina under this Section 5.01(c), or (ii)
$5,000,000; provided, further, that any guarantee payment made by Cofina towards such
limitation must be acknowledged as such in writing by ProPartners.

	5.02	 	ProPartners may make a call by written notice to Cofina under any of the foregoing guarantees
with respect to any Participated Loan that becomes a Defaulted Loan, and the

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	 	 	guaranty payment once a call is made shall be paid on the tenth business day after confirmed
receipt of such notice by Cofina.

	5.03	 	Cofina hereby agrees that it will not exercise or enforce any right of contribution,
reimbursement, recourse or subrogation against any Borrower under a Participated Loan or any
collateral securing a Participated Loan unless and until ProPartners has been indefeasibly
paid in full all amounts owed to it under such Participated Loan.

	5.04	 	Cofina agrees that ProPartners may, at any time, extend payment of any Participated Loan in
whole or in part, otherwise change the terms of payment (including interest rate), accept
partial payments, release or impair any collateral security, release or agree not to sue any
party liable on said Participated Loan and/or take any other actions with respect to any
Participated Loan or parties thereto, all without releasing or diminishing any liability of
Cofina pursuant to this Article V.

	5.05	 	The guarantees of Cofina herein are promises of payment, and not of collection, and Cofina
waives any right to require ProPartners to bring any action against a Borrower under the
Participated Loans or against any other Person or to require that resort be had to any
security or credit on the books of ProPartners in favor of a Borrower, prior to the
fulfillment by Cofina of its guarantee obligations hereunder.

	5.06	 	No delay on the part of ProPartners in exercising any rights hereunder or failure to exercise
the same shall operate as a waiver of such rights. In no event shall any modification or
waiver of the provisions of the guarantee of Cofina hereunder be affected unless in writing
nor shall any such waiver be applicable except in the specific instance for which given.

	5.07	 	The guarantees of Cofina hereunder shall constitute continuing and irrevocable agreements of
guarantee. The guarantees of Cofina shall continue until all amounts owed to ProPartners
under the Participated Loans have been fully and completely discharged.

VI. COVENANTS OF COFINA

	6.01	 	During the Term, Cofina shall maintain at all times, measured as of the end of each calendar
quarter, Total Capital of not less than $65,000,000.

	6.02	 	During the Term, Cofina shall maintain as of the last day of each month a ratio of (i) its
total debt to (ii) its Total Capital plus its loan loss reserve, of not more than 8.00 to
1.00. For this purpose, (a) Cofina’s “total debt” means all of Cofina’s indebtedness incurred
or assumed for borrowed money and all of Cofina’s lease obligations if, in either case,
categorized as debt according to GAAP, together with all indebtedness of any indebtedness of
any other Person if categorized as debt according to GAAP, and (b) Cofina’s “loan loss
reserve” means the amount identified on Cofina’s balance sheet as loan loss reserves as of the
last day of the appropriate month.

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VII. EVENTS OF DEFAULT AND REMEDIES

	7.01	 	The occurrence of any one or more of the following events will constitute an “Event of
Default” hereunder:

	 	(a)	 	Cofina, CPL or ProPartners materially breach any covenant or term, or fail to
perform in any material respect, any obligations under this Agreement;

	 	(b)	 	Any warranty, representation, or statement now or hereafter furnished by or on
behalf of Cofina or CPL to ProPartners in connection with this Agreement proves to be
false or misleading in any material respect when furnished;

	 	(c)	 	Failure by Cofina or CPL to remit to ProPartners, within 10 days of its receipt
thereof, ProPartners’ share of Payments received with regard to any Participated Loan;
or

	 	(d)	 	Cofina, CPL or ProPartners become insolvent, or declare bankruptcy.

	7.02	 	Upon the occurrence of any Event of Default, the non-defaulting party may, at its sole option
and discretion and upon prior written notice to the defaulting party, suspend or terminate its
obligations hereunder, or exercise any rights contained in this Agreement. In addition, or in
the alternative, the non-defaulting party may exercise any rights available to it at law or
equity, which rights are hereby expressly preserved. Such rights and remedies will be
cumulative and not exclusive to the fullest extent necessary in order to provide the
non-defaulting party with its benefit of the bargain under this Agreement.

VIII. INDEMNIFICATION

	8.01	 	Each of Cofina and CPL, by executing this Agreement, agrees to indemnify ProPartners, its
agents and employees, for any losses suffered by ProPartners or such agents and employees when
such losses are caused by the gross negligence of Cofina or CPL or any of their employees or
agents or by the willful, wanton, or criminal conduct of Cofina or CPL or any of their
employees or agents.

	8.02	 	ProPartners, by executing this Agreement, agrees to indemnify Cofina, CPL, their agents and
employees, for any losses suffered by Cofina, CPL or such agents or employees when such losses
are caused by the gross negligence of ProPartners or any of its employees or agents or by the
willful, wanton, or criminal conduct of ProPartners or any of its employees or agents.

	8.03	 	The failure of ProPartners to file or continue UCC financing statements pursuant to the
written instructions of Cofina shall be considered to be gross negligence.

IX. FINANCIAL INFORMATION AND REPORTING

	9.01	 	Cofina shall furnish ProPartners with Cofina’s monthly financial statements prepared in
accordance with GAAP within 30 days after the end of each month. Cofina shall also furnish
ProPartners with Cofina’s individual fiscal year-end financials, president’s reports

12

 

	 	 	and internal reviews and audits to within 120 days of each such fiscal year-end or, if
earlier, within 30 days of completion thereof.
	 
	9.02	 	ProPartners shall furnish Cofina with those reports set forth on Exhibit D, as well
as any additional reports requested by Cofina and agreed to by ProPartners, which agreement
shall not be unreasonably withheld.

X. SUCCESSORS AND PARTICIPANTS

	10.01	 	This Agreement shall bind and inure to the benefit of ProPartners, Cofina and CPL and their
respective successors and assigns, but may be assigned only with the consent of the other
parties.

	10.02	 	ProPartners may sell participation ownership interests in the Participation Interests,
including, without limitation, to other institutions within what is known as the Farm Credit
System, the name commonly used to refer to the entities and activities authorized by the terms
of the Farm Credit Act of 1971 and the regulations thereunder (collectively, the
“Participants”). Each of Cofina and CPL consents to the grant of such
subparticipations, as well as any other participation or subparticipation which ProPartners or
any Participant may elect to grant in any or all of the Participated Loans.

XI. EXPIRATION AND TERMINATION

	11.01	 	This Agreement shall continue in effect until December 31, 2011 (“Term”), which Term
will automatically renew for additional one-year increments unless a written termination
notice is given to the other parties at least 90 days prior to the end of the current Term;
provided, however, that either party may terminate this Agreement upon written notice to the
other in the event that the other party is in breach in any material respect of its
obligations hereunder and such breach remains uncured for 10 business days following written
notice thereof to such party or such longer period if otherwise provided herein. In the event
this Agreement is expired, terminated or suspended, the respective rights and obligations of
the parties shall continue with respect to any outstanding Participated Loans until all
indebtedness and other obligations under all such Participated Loans and related Loan
Documents have been fully and completely discharged. This Agreement shall terminate upon full
payment of all indebtedness and other obligations under all such Participated Loans and
related Loan Documents and the closing of all of the purchase pools.

XII. MISCELLANIOUS

	12.01	 	No provision of this Agreement or any other related agreement among ProPartners, Cofina and
CPL regarding the Participated Loans can be waived, modified, amended, supplemented, or
terminated, except by a writing executed by ProPartners, Cofina and CPL. The failure of any
party to enforce at any time any of the provisions of this Agreement shall in no way be
construed to waive any such provision, nor in any way to affect the validity of this Agreement
or any part thereof or the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to be a waiver of any
other or subsequent breach.

13

 

	12.02	 	This Agreement and any other agreements among the parties associated with the Participated
Loans shall be governed by and construed under the laws of the State of Minnesota, without
giving effect to conflict of law principles thereof.

	12.03	 	ProPartners, Cofina and CPL agree to execute other agreements, documents or instruments as
requested by the other party in connection with this Agreement as may be deemed necessary to
carry out the purpose hereof.

	12.04	 	Except as otherwise expressly provided herein, all notices and other communications shall
have been duly given and shall be effective (a) when delivered, (b) when transmitted via
facsimile to the number set out below, (c) the business day following the day on which the
same has been delivered prepaid (or pursuant to an invoice arrangement) to a reputable
national overnight air courier service, or (d) the third business day following the day on
which the same is sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address set forth below, or at such other address as such party may
specify by written notice to the other parties hereto:

If to Cofina or CPL:

Cofina Financial, LLC

5500 Cenex Drive

Inver Grove Heights, Minnesota 55077

Attention:                                         

Fax: (651) 451-4917

If to ProPartners:

ProPartners Financial

8530 Eagle Point Blvd., Suite 100

Lake Elmo, MN 55042

Attention: Chris Mueller

Fax: (877) 282-7861

	12.05	 	All payments made by the appropriate party under this Agreement shall be made in the lawful
currency of the United States by wire transfer or other electronic method (i.e., ACH) of
immediately available funds to the appropriate party, in accordance with the wire transfer
instructions specified in a written notice delivered to the other party from time to time.

	12.06	 	This Agreement constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all previous and contemporaneous negotiations, promises,
covenants, agreements, understandings, and representations on such subjects, all of which have
become merged and finally integrated into this Agreement. The parties agree that this
Agreement supersedes and replaces the CHS Guaranty Agreement in its entirety.

	12.07	 	Wherever possible, each provision of this Agreement shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this

14

 

	 	 	Agreement shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.
	 
	12.08	 	This Agreement may be executed in any number of counterparts, each of which when so executed
and delivered shall be deemed an original and all of which counterparts, taken together, shall
constitute one and the same instrument.

[signature page follows]

15

 

     IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed
and delivered as of the date first above written.

	 	 	 	 	 
	 	AGSTAR FINANCIAL SERVICES, PCA, D/B/A PROPARTNERS FINANCIAL

 	 
	 	By:  	/s/ Chris Mueller
 	 
	 	 	Its:      President 	 
	 	 	 	 
	 
	 	COFINA FINANCIAL, LLC

 	 
	 	By:  	/s/ Brian K. Legried
 	 
	 	 	Its:      President 	 
	 	 	 	 
	 
	 	COFINA PROFUND LLC

 	 
	 	By:  	/s/ Brian K. Legried
 	 
	 	 	Its:      President 	 
	 	 	 	 

16

 

	 	 	 	 	 

EXHIBIT A

Loan Classification Standards

[attached]

17

 

EXHIBIT B

Loan Underwriting Criteria

[attached]

18

 

EXHIBIT C

Prior Approval Loan Procedures

[attached]

19

 

EXHIBIT D

Reports

Cofina Financial Reports

Daily

Interest Accrual by Loan Pool

Principal by Loan Pool Principal

Payments Principal Disbursements

Interest Payments Fee Payments &

Disbursements All other

transactions/corrections Wire

Transfer Charges Loan Payable

Interest Payable

All of the above daily reports are by loan pool and will also have a running month-to-date
balance on a pool basis

Weekly

Past due loan list

Country Loan Officer Trial Balance

Monthly

Individual loan listing within each pool to include at a minimum: 

Commitment and outstanding loan balance Interest

receivable Classification and date changed ADB

Guarantee (recourse)

Monthly Customer Statements and transaction history (provided through website access)

Income by State Report

Past Due Summary

Future Maturities & Payments

Loans Approved during the month

Loans paid off during the month

Asset Classification Summary by Loan Pool

Interest buy-downs and add-ons ADB

Country Business Partners ADB

Ex. A-1

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