§206. Matters to be covered by contract for continuing credit loan

           A. Corporations operating under this Chapter may contract with the borrower applying for a continuing credit loan to advance him monies, supplies, seeds, fertilizer, work animals, agricultural implements, livestock, cows, and poultry for his successive annual operations, not exceeding in the aggregate at any time the designated maximum amount. The maximum amount plus attorney's fees and costs, as set forth in the contract, shall during the entire period of the loan be the amount due by the borrower to the corporation for the advances already made and to be made.

           B. The mortgage and security agreement between the corporation and the borrower shall contain in addition to rules, regulations, conditions, and stipulations required by the corporation the following:

           (1) A declaration by the borrower setting forth that he has applied to the corporation for a continuing credit loan of $_____ (maximum amount), to be made to him from time to time, not exceeding at any time in the aggregate the maximum amount, to enable him to continue his agricultural operations over a stated period not to exceed ten years, on a specifically described farm of which he is the owner or lessee, by planting, cultivating, and harvesting crops thereon and therefrom during the period of time.

           (2) A declaration by the borrower:

           (a) That the farm together with the presently planted crops and all the crops proposed to be planted for that current year and all future crops thereafter planted thereon of any nature or kind, and together with all livestock and work animals and agricultural implements thereon, shall, for the purpose of this Chapter and during the term of the continuing credit loan, be considered and dealt with as a whole, as part and parcel of the realty.

           (b) That during the period the borrower binds and obligates himself, his heirs and assigns not to grant any additional security interest affecting any of its crops, nor to obtain any advances for the crops, nor to grant any additional security interest affecting any of the chattels thereon, to any one else than the corporation, nor to do any act or thing to the prejudice of the corporation's security interest securing the continuing credit loan and the advances made and to be made thereunder.

           C. The security agreement shall affect and include:

           (1) All crops now planted and to be planted, cultivated, and harvested on the farm during the period.

           (2) All livestock and work animals and agricultural implements, belonging to borrower.

           (3) The pledge of the capital stock of the corporation of an aggregate par value of not less than one tenth of the maximum amount of the loan.

           (4) Such other collateral security as may be given and accepted by the corporation.

           D.(1) The security agreement shall further provide that during the period of the continuing credit loan and in order to enable and facilitate the corporation's ability to secure and to obtain the necessary funds to make the advances to borrower as contracted for between them, the borrower shall from time to time furnish and deliver to it his promissory notes. At no time shall the sum of the principals of the notes exceed the maximum amount of the continuing credit loan.

           (2) The notes shall be consecutively numbered as issued, beginning with number one to the number of the last note. They shall be drawn by the maker upon a form approved by the corporation, payable to the order of the corporation at such place and at such dates and providing for such attorney's fees, if placed in the hands of an attorney for collection, as prescribed by the corporation, and shall have endorsed on the reverse of each the following words: "This is Note No. _____ of an indeterminate series of notes issued in accordance with the provisions of Chapter 3 of Title 3 of the Revised Statutes of Louisiana, providing for continuing credit loans by agricultural credit corporations; notes previously issued, Nos. _____; of which notes Nos. _____ have been retired and cancelled, leaving the sum of the principals of this and all the notes prior hereto, outstanding $_____", followed by signature of maker.

           (3) Each note thus issued shall be delivered to the corporation, and shall be in its hands negotiable, for sale or discount to a third party. The security interest and mortgages securing the continuing credit loan, shall inure to the benefit of any holder thereof without the necessity of any notarial assignment and the holder of the notes shall have the right to enforce the full and punctual payment of each note in the order of its serial number for its full amount, with interest and attorney's fees, in accordance with its tenor. In any sale to enforce the payment of the continuing credit loan or of any of the notes thus issued, of any of the property mortgaged, or pledged or on which a security interest has been granted, and all proceeds of the sales shall be applied first to the payment of all court costs, charges, and legal expenses, and thereafter by preference and priority to the payment of all notes issued and not retired and cancelled, for the full amount of each, with interest, attorney's fees, and costs, in accordance with their tenor and in the order of their serial numbers, so that the holder of any of the notes shall not be paid or receive any of the proceeds until each note, issued prior thereto and at that time outstanding and unpaid, shall have been fully satisfied, and thereafter the corporation shall be paid from the proceeds the amount of any balance due it on account of advances made, with interest, attorney's fees, and costs.

           E. The security agreement shall further provide that, during the entire period of the term of the continuing credit loan:

           (1) The proceeds of all crops harvested shall be paid over to the corporation, with recognition of its lien, up to the amount of all advances at that time made and unsatisfied with interest, attorney's fees, and costs, in accordance with the terms thereof.

           (2) The proceeds shall be applied to the payment of the notes as provided in this Section.

           (3) The payment of the notes shall not operate to satisfy, diminish, extinguish, or to cancel the continuing credit loan in whole or in part.

           (4) The maximum contracted debt shall continue to exist as the principal obligation and remain in full force for its full amount with interest, attorney's fees, and costs, secured by the mortgage and the security agreement affecting crops and pledge of stock and all such other collateral security belonging thereto.

           F. The security agreement may additionally provide that the continuing credit loan may at the option of either party be terminated by written notice to the other party and that thereafter the immobilization for the purposes of this Chapter, as provided for in Paragraph (B)(2) of this Section, and the collateral security given by borrower to corporation shall cease at such time as all the notes issued and all advances made under this contract, remaining due and unpaid, shall have been paid in full with interest, attorney's fees, and costs.

           G. The security agreement may further provide that there shall be at all times reserved to the corporation as lender the right to increase, diminish, or discontinue entirely the advances whenever the condition of the crops or the elements or the happening of events, in the opinion of the corporation, so demand or warrant.

           H. The security agreement may also provide that whenever notice of the intention to terminate the continuing credit loan has been given by one party to the other, then the corporation's continuing security interest as affecting successive crops shall not operate to secure any deficit remaining after all the proceeds of the crops planted, grown, and harvested during the current year have been received, paid, and imputed as provided in this Chapter.

           Acts 1991, No. 539, §1, eff. Jan. 1, 1992.