and a reconciliation of whatever amounts were received during the default (e.g., from account debtors making payments), net of lawyer fees and expenses. Ability to Modify Underlying Agreement I have seen participation agreements negate the lead’s autonomy, and I have seen them fail to address this issue completely (meaning, I suppose, that the lead could conceivably release collateral, or release a guarantor, or reduce the interest rate or whatever else it wanted to do) without consent of the participant. Make sure to pay close attention to this important provision. Inviting Additional Participants? Keeping Skin in the Game Some participants are jealous lovers, and they don’t want other participants in the deal. Some participants want to ensure that the lead retains a sizeable percentage interest (typically, at least 51%) in the agreement so that they retain some skin in the game. Some leads simply want to be servicing agents, or they want the ability to syndicate the deal. Regardless, make sure that the participation agreement addresses this properly. There are a myriad of other boilerplate provisions and “standard” provisions in a participation agreement, and this article cannot address all of them. The trick is not to get lulled to sleep because the participation agreement proposed by the counterparty looks like the hundreds you’ve seen before. Review it carefully, and have your attorney do the same. Spencer Fane partner Jason Medley represents banks and other financial institutions in all aspects of contract negotiations, workouts, intercreditor relations and secured party collections. He is also designated as a Preferred Attorney with the International Factoring Association and a board member of the Houston Chapter of SFNet. Jason can be reached at jmedley@spencerfane.com and (281) 352-6032. End-to-End Security, Missouri-Ready Compliance. Get end-to-end security plus hands-on exam support designed for Missouri community banks. Gain access to JMARK's award-winning security platform FORTIFY and clean compatability with core environments. Clients report 11% fewer remediation tasks on average and 19.72% average asset growth over two years.* All managed by JMARK—so you can get back to banking. COMPREHENSIVE IT SOLUTIONS See how MO banks cut remediation with JMARK: JMARK.com/banking 844-44-JMARK JMARK.com *Figures represent client-reported outcomes across JMARK banking clients (2023-2025), on average. Results vary. 14 | The Show-Me Banker Magazine
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