Case No.

  FF-G-011  

EXHIBIT 10.68

   

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TITLE XI FINANCIAL AGREEMENT

 

THIS TITLE XI FINANCIAL AGREEMENT (hereinafter, the “Financial Agreement”),
dated December 29, 2003, is made and entered into by Omega Protein, Inc.,
(hereinafter, the “Borrower”), Omega Protein Corporation, (hereinafter, the
“Guarantor”),1 and the UNITED STATES OF AMERICA acting by and through the
Secretary of Commerce, (hereinafter, the “Government”),

 

DEFINITIONS: All terms contained herein are defined in the Acknowledgment of
Definitions executed by all parties to this transaction.

 

WHEREAS, heretofore, the Government, pursuant to the provisions of Title XI of
the Merchant Marine Act, 1936, as amended, found at 46 USC § 1271 et seq., and
50 CFR 253, as amended by Public Law 104-297 on October 11, 1996, known as the
Fisheries Finance Program (FFP), made, entered into, and delivered certain
agreements and covenants, as contained in an approval and agreement letter
(hereinafter, the “Approval Letter”), dated October 1, 2003, and such Approval
Letter has been accepted by the Borrower and the Guarantor. The Approval Letter
contemplates a loan from the Government to the Borrower, in the amount of
$5,300,000.00 This transaction will be evidenced by the issuance of a Promissory
Note to the United States of America by the Borrower, in the amount of
$5,300,000.00, (hereinafter, the “Promissory Note”) secured by the property
listed in ARTICLES I and II, below; and

 

WHEREAS, the Borrower and Guarantor understand that the Government is unwilling
to enter into the aforementioned transaction unless this Financial Agreement and
related documents are executed by the Borrower and Guarantor. For that reason,
the Borrower and Guarantor have agreed to execute and deliver this Financial
Agreement.

 

NOW THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
Borrower and Guarantor hereby agree to the following:

 

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1 In this agreement, use of the singular includes the plural and vice versa.

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ARTICLE I: COLLATERAL

 

The Collateral which the Borrower is giving to the Government in order to obtain
this loan from the Government, includes all of the items listed below:

 

1.    THE EQUIPMENT: The Borrower will provide to the Government security
interests, evidenced by UCC filings, in the full amount of the Promissory Note,
on all of the property described below (hereinafter, the “Equipment”).

 

All fisheries unloading, processing holding and distribution equipment of
whatsoever nature, now or at any time in the future, together with all
accessories, improvements, replacements, substitutions, or additions thereto,
used for the Borrower’s business on the properties which secure the Promissory
Note and any other debt to the Government, or on any other Borrower’s business
premises at any other site at which the Borrower now conducts, or in the future
may conduct, its operations and regardless of the Equipment’s actual location at
any given time. The Equipment shall include, but not be limited to: all
forklifts, bobcats, cranes, pallet trucks, lift trucks, and other product or
material movement equipment; all trailers, tanks, trucks, or other rolling
stock; all fish unloading, transfer, and conveying equipment, all fish
processing and fish weighing equipment; all cooling, refrigerating, freezing,
and other fish holding equipment (blast freezers, plate freezers, coolers, or
other refrigeration equipment); all fish packaging equipment; all fish baskets,
totes, tanks, tubs, and other fish holding equipment; all ice makers; all hand
and power tools; all inventory and product, subject to lien of credit line
lender; and all office equipment—all together with all associated equipment,
machinery, parts, tools, or other items of whatsoever nature and whether fixed
or unfixed to the aforementioned properties securing the Promissory Note.

 

THIS EXCLUDES ONLY SUCH FIRST UCC SECURITY INTERESTS TO THIRD PARTIES as may be
necessary and appropriate to secure credit from such parties for the specific
purpose of purchasing specific equipment (hereinafter, the “Purchase-Money
Equipment”). In such cases, the Borrower agrees to the following:

 

(a)    To give to the Government UCC security interests on the Purchase-Money
Equipment second only to the first interests pledged to the lenders of the
purchase money (hereinafter, the “Purchase-Money UCC security interests”); and

 

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Article I, COLLATERAL (continued)

 

(b)    That the amount secured by the Purchase-Money UCC security interests
shall not exceed the specific purchase cost of said equipment; and

 

(c)    The term of the credit secured to buy the Purchase-Money Equipment (and
likewise, the duration of the Purchase-Money UCC security interests) shall not
exceed an ordinarily prudent commercial term; and

 

(d)    No other Equipment or rights shall be secured by the Purchase-Money UCC
security interests; and

 

(e)    Upon full repayment of the amounts secured by the Purchase-Money
Equipment, as reflected in the Purchase-Money UCC security interests, these
interests shall be satisfied and the Government’s second UCC security interest
will ascend to first priority.

 

THE EQUIPMENT SHALL BE INVENTORIED sufficiently to describe with certainty in
the security agreement and associated UCC filing. The inventory shall be valued
by appraisers acceptable to the Government. The inventory and appraisals shall
be at the Borrower’s cost and paid before this loan is closed, unless this
requirement is specifically waived by the Government.

 

THE UCC SECURITY AGREEMENT SHALL CONTAIN the following provisions:

 

(a)    That the Government may enter upon any premises where the Equipment may
be located and marshal, secure, protect, and do all things necessary to preserve
the Equipment immediately upon the Borrower’s default, but before any judicial
action regarding such default; and

 

(b)    Such other provisions as the Government deems necessary to accomplish the
intent and purpose of the Approval Letter and otherwise protect its interest;
and

 

(c)    Omega Protein, Inc., and Omega Protein Corporation, agree that none of
these corporations will enter into any transaction or agreement with any party
which will result in that party having a secured interest in the Equipment
unless that party first enters into a written agreement, with provisions
acceptable to the Government, that:

 

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Article I, COLLATERAL (continued)

 

(i)    Except for purchase money lien holders, recognize the Government’s senior
interest in, and sole rights to, the Equipment or proceeds of the Equipment’s
liquidation; and

 

(ii)    Agree not to interfere in any way with, but instead to cooperate in all
reasonable ways with, the Government entering upon any property owned or leased
by the Borrower in order to marshal, secure, protect, and do all things
necessary to preserve the Equipment.

 

2.    THE REAL PROPERTY includes:

 

(a)    A Deed of Trust in the full amount of the FFP Debt, on such property as
more fully described in Exhibit A, attached hereto, owned by Borrower, together
with all improvements thereon which comprise the Borrower’s fisheries processing
facility in Reedville, Virginia.

 

3.    PREFERRED SHIP MORTGAGES:

 

(a)    A Preferred Ship Mortgage in the full amount of the FFP Debt, on the
vessel TIGER POINT, O.N. 508606.

 

(b)    A Preferred Ship Mortgage in the full amount of the FFP Debt, on the
vessel JOHN DEMPSTER, O.N. 547685.

 

(c)    A Preferred Ship Mortgage in the full amount of the FFP Debt, on the
vessel MERMENTAU, O.N. 932019.

 

(d)    A Preferred Ship Mortgage in the full amount of the FFP Debt, on the
vessel KIMBERLEY, O.N. 517498.

 

(e)    A Preferred Ship Mortgage in the full amount of the FFP Debt, on the
vessel BARATARIA BAY, O.N.508201.

 

(f)    A Preferred Ship Mortgage in the full amount of the FFP Debt, on the
vessel GULF ISLAND, O.N. 619983.

 

4.    THE GUARANTEE: An unconditional guarantee of repayment of the FFP Debt
will be given to the Government by Omega Protein Corporation.

 

 

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ARTICLE II: ADDITIONAL COLLATERAL

 

1.    INDIVIDUAL TRANSFERABLE QUOTAS: Should a limited fisheries access system
be initiated at some future date under which the Borrower is granted a
transferable fishery conservation and management allocation (including, but not
limited to, allocations, permits, quotas, licenses, cage tags, or any other
fisheries access restriction or right, however characterized, of whatsoever
nature) affecting, necessary for, or in any other way, however characterized,
associated with any of the property included in the Collateral, the Borrower
agrees to grant to the Government a full senior security interest in such
allocation by whatsoever means deemed by the Government to be appropriate
(including, but not limited to, the Borrower’s execution of security agreements
and the filing of financing statements under the UCC). Further, if the Borrower
fails to do so, the Borrower agrees that the Government may use, for the purpose
of executing and otherwise perfecting whatever documents may be required to
effect the grant to the Government of such a full security interest in such
fisheries conservation and management allocation, the attorney-in-fact authority
conferred upon the Government by ARTICLE IX of this agreement.

 

2.    OTHER COLLATERAL: Any new, different, substitute or other collateral which
may, from time to time, be provided by the Borrower or the Guarantor to the
Government, will be subject to all of the covenants and provisions of all of the
documents executed in connection with this transaction, including, but not
limited to the Deed of Trust, Security Agreement, this Financial Agreement, the
Promissory Note, the Approval Letter, and UCC security interests.

 

ARTICLE III: GOVERNMENT’S PRIOR WRITTEN CONSENT REQUIRED

 

Without the prior written consent of the Chief, Financial Services Division,
National Marine Fisheries Service, which consent will not unreasonably be
withheld, (1) The Borrower, the Principals, or the Guaranteeing Company may not
take any of the actions prohibited by the Approval Letter dated October 1, 2003;
or prohibited by any other of the loan documents.

 

ARTICLE IV: BORROWER’S OBLIGATIONS AND COVENANTS

 

The Borrower shall be bound by and do, perform or discharge all of the following
actions.

 

1.    NOTICES TO THE GOVERNMENT: within ten (10) days of its occurrence,
Borrower and the Guarantor must give the Government written notice of any of the
following:

 

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Article IV, BORROWER’S OBLIGATIONS AND COVENANTS (continued)

 

(a)    Any pending litigation, business reverse, casualty, loss, or any other
matter which diminishes:

 

(i)    its ability to service any debt actually or contingently owed the
Government; or

 

(ii)    its ability to perform any other duty or obligation owed the Government;
or

 

(iii)    its ability to fully and faithfully perform any covenant with the
Government; or

 

(iv)    the value of any property or other assets pledged to the Government; or

 

(v)    the net worth of any party against whom the Government has recourse for
this debt.

 

(b)    The institution of any suit against the Borrower which demands $50,000 or
more; or the institution of any suit demanding $50,000 or more against any other
person or entity that may adversely affect the Government’s interest hereunder,
in the Promissory Note or otherwise.

 

ARTICLE V: FINANCIAL REPORTING TO AND INSPECTIONS BY THE GOVERNMENT

 

1.    BORROWER AGREES TO PROVIDE THE GOVERNMENT WITHIN 20 DAYS FOLLOWING THE END
OF EACH QUARTER of its tax or accounting years, a certified correct copy of:

 

(a)    a balance sheet; and

 

(b)    an income and expense statement for the preceding twelve months; and

 

(c)    an aging report of all receivables outstanding; and

 

(d)    an inventory report for all inventories maintained at the end of each
year.

 

2.    CERTIFICATION OF FINANCIAL INFORMATION: Borrower agrees that:

 

ANNUALLY:    At the end of each fiscal year, said Article V, l(a) through (d)
will be compiled by independent certified public accountants who are acceptable
to the Government.

 

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Article V, FINANCIAL REPORTING (continued)

 

ALL ANNUAL financial reports required hereunder shall include a certification
from the Borrower’s Chief Financial Officer that either:

 

(a)    There has been no default, as provided by the security instruments,
during the reporting period; or

 

(b)    There has been a default, as provided by said security instruments,
during the reporting period. In this case the nature, extent, prospective
consequences, and all other relevant details of such default shall be fully set
forth in such certification.

 

3.    INCOME TAX RETURNS: All tax returns shall be timely filed2 and an executed
copy of Borrower’s Federal Income Tax Return, along with all supporting
schedules, must be delivered to the Government within 15 days of its filing or
issuance. Borrower agrees to execute a consent and waiver, valid so long as
Borrower owes a debt to the Government, which allows the Internal Revenue
Service to release directly to the Government, Borrower’s Federal Income Tax
Returns, whenever the Government requests same.3

 

4.    BORROWER TO DELIVER ALL REQUIRED FINANCIAL STATEMENTS, notices, returns or
reports to the Government’s Southeast Regional Financial Services Branch. All
financial statements shall be signed and delivered within 90 days of the close
of the fiscal or accounting year, or such quarter in such year, to which they
relate.

 

5.    METHOD OF BOOKKEEPING: Borrower will, at all times, keep proper books of
account according to generally accepted accounting principles, including
financial and operating statements that include schedules showing all
compensation paid by the Borrower.

 

6.    GOVERNMENT INSPECTIONS: Permit the Government, or any representative
selected by the Government, in such manner and at such times as the Government
may require, to (a) make inspections and audits of any books, records, papers,
or other documents4 of whatsoever nature in the custody and control of the
Borrower, Guarantor, or any other entity, relating in any way to the financial
or business condition or prospects of the Borrower, or Guarantor, including the
making of copies thereof and extracts therefrom, and

 

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2 Timely filing shall include valid extensions filed with the Internal Revenue
Service.

3 Borrower agrees to execute IRS Form Nos. 4506 and 8821 or any other form
necessary to implement the provisions of 26 USC §6103(c). Failure to do so
constitutes an event of default.

4 Including but not limited to off-loading receipts, business transaction
journals, etc.

 

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Article V, FINANCIAL REPORTING (continued)

 

(b)    make inspections and appraisals of any of the Borrower’s or Guarantor’s
physical assets.

 

7.    BORROWER TO PAY THE COST OF ALL SUCH INSPECTIONS: The cost of all such
inspections, audits, or appraisals shall be initially paid by the Government,
but the Borrower shall reimburse the Government for the full cost thereof within
30 days of the Government’s demand and all such amounts disbursed by the
Government for such purpose shall, until fully repaid by the Borrower, be added
to the Borrower’s Promissory Note to the Government (payable on demand) and
shall earn interest at the same rate as the other principal of the Borrower’s
Promissory Note and shall be secured by the security instruments securing the
Borrower’s Promissory Note.

 

8.    GUARANTOR’S OBLIGATIONS: Paragraphs 1, 2, 3, 4, 5, and 6, above, of this
ARTICLE V, apply to the Guarantor, with the only exception being in Paragraph 4,
the Guarantor has 120 days to deliver financial statements. Additionally, the
Guarantor shall provide to the Government, at the end of each tax year, a
certified correct copy of its Statement of Financial Condition, and if
applicable its SEC-10K Report.

 

ARTICLE VI: VIRGINIA LAW TO GOVERN

 

To the extent not governed by the laws of the United States, all provisions of
this Financial Agreement shall be construed, given effect, and enforced
according to the laws of the Commonwealth of Virginia. With respect to any claim
or proceeding relating to this Financial Agreement, the Borrower and Guarantor
hereby consent to and subject themselves to the jurisdiction of the state and
federal courts located in the Commonwealth of Virginia, and agree that the venue
of any action or proceeding relating to this Financial Agreement shall lie
exclusively in said state. The parties hereto acknowledge and agree, however,
that in the event that an action to foreclose a real property mortgage and
security agreement or deed of trust and security agreement is brought, it will
be brought pursuant to the laws of the state where the real property is located
and the parties hereto hereby consent to and subject themselves to the
jurisdiction of the courts of said state.

 

ARTICLE VII: DEFAULT

 

1.    THE OCCURRENCE OF ANY OF THE FOLLOWING CONSTITUTES AN EVENT OF DEFAULT:

 

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Article VII, DEFAULT (continued)

 

(a)    ANY FAILURE TO OBSERVE, PERFORM, COMPLY WITH AND DISCHARGE ALL OF THE
COVENANTS, CONDITIONS, AND OBLIGATIONS WHICH ARE IMPOSED ON:

 

(i)    BORROWER by the Approval Letter, dated October 1, 2003, this Title XI
Financial Agreement, the Promissory Note, dated December 29, 2003, the Deed of
Trust dated December 29, 2003, Preferred Ship Mortgages dated December 29, 2003,
and any other agreement or document executed in connection with this Financial
Agreement and the Promissory Note, concurrently or otherwise, inclusive of
amendments thereto, in connection with this Financial Agreement, or subsequent
amendment or agreement, regardless of whether or not the Borrower shall be a
party to said agreement or document, and such default shall continue for fifteen
(15) days; or

 

(ii)    ANY GUARANTOR by any Guaranty Agreement, whether or not the Borrower is
party to said agreement; or

 

(b) ANY FAILURE TO PAY OR MAKE PAYMENTS ON:

 

(i)    INTEREST ON THE PROMISSORY NOTE when and as the same shall become due and
payable as therein provided; or

 

(ii)    PRINCIPAL ON THE PROMISSORY NOTE when and as the same shall become due
and payable, whether at maturity, by notice of acceleration, or otherwise; or

 

(c) FINANCIAL EVENTS:

 

(i)    Borrower makes a general assignment for the benefit of the Borrower’s
creditors; or

 

(ii)    Borrower loses the right to do business, by forfeiture or otherwise; or

 

(iii)    A receiver or receivers of any kind whatsoever, whether appointed or
not, in admiralty, bankruptcy law, common law, or equity proceedings, and
whether temporary or permanent, shall be appointed for property of the Borrower;
or

 

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Article VII, DEFAULT (continued)

 

(iv)    PETITION OR OTHER PROCEEDING OR ACTION IN BANKRUPTCY, regarding the
BORROWER, is filed by the BORROWER or by creditors of the BORROWER; however, no
proceeding or action in bankruptcy filed against BORROWER by its creditors shall
constitute an event of default under the Financial Agreement unless such
proceeding or action has not been dismissed within 60 days of filing. ALL
PARTIES TO THIS AGREEMENT ACKNOWLEDGE AND UNDERSTAND THAT IN THE EVENT THAT A
PETITION IN BANKRUPTCY IS FILED BY ANY PARTY OR AN INVOLUNTARY BANKRUPTCY
PETITION FILED BY A THIRD PARTY IS NOT DISMISSED WITHIN 60 DAYS OF FILING, THAT
THE FOLLOWING EVENT WILL OCCUR:

 

1.    THE GOVERNMENT WILL IMMEDIATELY ACCELERATE THE ENTIRE AMOUNT OUTSTANDING
AND DEMAND IMMEDIATE PAYMENT THEREOF; AND

 

2.    ANY VESSEL THAT SECURES, IN WHOLE OR IN PART, THE SUM OWED THE GOVERNMENT
WILL RETURN TO PORT AND NOT DEPART UNLESS ORDERED BY THE BANKRUPTCY COURT.

 

(d)    FAILURE TO MAINTAIN ANY OF THE INSURANCE COVERAGE as outlined in
Paragraph 4: Insurance Requirements, found on pages 14 and 15 of the Approval
Letter.

 

(e)    A MISREPRESENTATION OR UNDISCLOSED FACT, deemed material by the
Government, made or omitted in any application, agreement, affidavit, or other
document, submitted in connection with this transaction, on behalf of, or for
the benefit of, or by the Borrower; or

 

(f)    INSTITUTION OF ANY SUIT AGAINST THE BORROWER or others deemed by the
Government to affect adversely its interest hereunder, in the Promissory Note or
otherwise;

 

2.    UPON OCCURRENCE OF AN EVENT OF DEFAULT, THE BORROWER AGREES, ACKNOWLEDGES
AND CONSENTS TO the Government, within its authority or discretion, to take any
or all of the following steps, measures or actions, including but not limited
to:

 

(a)    Declare the Promissory Note to be due and payable immediately and upon
such declaration the entire principal of and interest on the Promissory Note,
and any other sums owed to the Government, shall become and be immediately due
and payable, and thereafter shall bear interest at eighteen percent (18%) per
annum unless such would violate applicable usury laws, if any, in which case,
the maximum legal rate permitted by applicable laws

 

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Article VII, DEFAULT (continued)

 

shall prevail; provided, however, that if the Borrower shall have removed and
remedied each Event of Default within fifteen (15) days after the occurrence
thereof, then in every such case, the Government shall waive any such Event of
Default; but no such waiver shall extend to nor affect any subsequent or other
Event of Default nor impair any rights or remedies consequent thereon; and
provided, further, that if at any time after the expiration of fifteen (15) days
after any Event of Default shall have occurred, all Events of Default shall have
been remedied and removed and full performance made by the Borrower to the
satisfaction of the Government and all installments of principal and interest in
arrears (including interest at the rate per annum, as aforesaid) and the
reasonable charges and expenses, if any, of the Government, its agents and
attorneys, shall have been paid (including interest at the rate per annum, as
aforesaid), then and in every such case the Government may, in its discretion,
waive any such Event of Default; and provided, also, that no waiver hereunder
shall extend to nor affect any subsequent or other Event of Default nor impair
any rights or remedies consequent thereon;

 

(b)    BRING SUIT IN COURT OF COMPETENT JURISDICTION, at the discretion of the
Government, to obtain judgment for any and all amounts due under the Promissory
Note, or otherwise hereunder, and collect the same out of any and all collateral
of the Borrower; and/or

 

(c)    FORECLOSE THE REAL ESTATE MORTGAGES AND SECURITY AGREEMENTS AND/OR
PREFERRED SHIP MORTGAGE AND SELL any real and/or personal property which secures
the FFP Debt; and/or in the case of a Vessel, retake the Vessel without legal
process wherever the same may be found, and the Borrower or other person in
possession, forthwith upon demand of the Government, shall immediately surrender
to the Government possession of the Vessel, and, without being responsible for
loss or damage, the Government may hold, lay-up, lease, charter, operate, or
otherwise use the Vessel for such time and upon such terms as it may deem to be
for its best advantage, accounting only for the net profits, if any, arising
from such use of the Vessel and charging against all receipts from the use of
the Vessel, or from the sale thereof by court proceeding or pursuant to
subsection (e) below, all costs, expenses, charges, damages, or losses by reason
of such use; and if at any time the Government shall avail itself of the right
herein given it to retake the Vessel and shall retake it, the Government shall
have the right to dock the Vessel for a reasonable time at any dock, pier, or
other premises of the

 

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Article VII, Default (continued)

Borrower without charge, or to dock it at any other place at the cost and
expense of the Borrower; IT IS EXPRESSLY UNDERSTOOD AND AGREED TO BY THE
BORROWER THAT SURRENDER OF THE VESSEL UNDER THIS SECTION MUST BE AND WILL BE
IMMEDIATE AND IN ACCORDANCE WITH THE DIRECTIONS OF THE GOVERNMENT. FAILURE OF
THE BORROWER TO IMMEDIATELY COMPLY WITH THE GOVERNMENT’S DEMAND FOR SURRENDER OF
THE VESSEL WILL CAUSE THE POSSESSION OF THE VESSEL BY THE BORROWER (INCLUDING,
BUT NOT LIMITED TO, POSSESSION AND CONTROL OF THE VESSEL BY A MASTER OR CREW
MEMBER ON BOARD THE VESSEL) TO BE UNLAWFUL AND TO CONSTITUTE A CONVERSION OF THE
VESSEL, ITS APPURTENANCES AND EQUIPMENT, THEREBY SUBJECTING THE BORROWER
(EXPRESSLY INCLUDING, IF APPLICABLE, ITS OFFICERS AND DIRECTORS) TO ALL FINES,
PENALTIES AND ACTIONS WHICH THE GOVERNMENT DEEMS APPLICABLE AND APPROPRIATE.
SHOULD THE BORROWER CONTINUE TO OPERATE, POSSESS OR CONTROL THE VESSEL CONTRARY
TO THE GOVERNMENT’S DIRECTIONS AND THE PROVISIONS HEREIN, THEN THE GOVERNMENT
SHALL, IN ADDITION TO ANY OTHER RIGHTS AND REMEDIES AT LAW AND IN EQUITY, BE
ENTITLED TO A TEMPORARY RESTRAINING ORDER AND/OR ORDER FOR INJUNCTIVE RELIEF
NECESSARY TO GAIN COMPLIANCE HEREWITH, IN ADDITION TO EXPRESSLY CONSENTING THAT
THE INJURY AND DAMAGE RESULTING FROM BREACH HEREOF WOULD BE IMPOSSIBLE TO
MEASURE MONETARILY, BORROWER EXPRESSLY WAIVES ANY DEFENSE BASED UPON AN ALLEGED
EXISTENCE OF AN ADEQUATE REMEDY AT LAW.

 

(d)    Foreclose this Mortgage pursuant to the terms and provisions of the 46
USC, Chapter 313, or by other judicial process as may be provided in the
statutes; and

 

(e)    In addition to any and all other rights, powers, and remedies elsewhere
in this Mortgage or by law granted to and conferred upon the Government, sell
the Vessel upon such terms and conditions as it may deem to be for its best
advantage, including the right to sell and dispose of the Vessel free from any
claim of or by the Borrower, at public sale, by sealed bids or otherwise, after
first giving notice of the time and place of sale, with a general description of
the property by first publishing notice of any such sale for ten (10)
consecutive days, except Sundays, in some newspaper of general circulation at
the place designated for such sale, and by mailing notice of such sale to the
Borrower at its last known address; such sale may be held at such place and at
such time as the Government in such notice may have specified, or may be
adjourned by the Government from time to time by announcement at the time and
place appointed for such sale or for such adjourned sale, and without further
notice of publication and the Government may make any such sale at the time and
place to which the same shall be so adjourned; and any such sale may be
conducted without bringing the Vessel to

 

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Article VII, Default (continued)

 

the place designated for such sale and in such manner as the Government may deem
to be for its best advantage, and the Government may become the purchaser at any
such sale, and shall have the right to credit on the purchase price any or all
sums of money due to the Government under the Promissory Note, or otherwise
hereunder. THE BORROWER EXPRESSLY AGREES AND ACKNOWLEDGES THAT SALE OF THE
VESSEL PURSUANT TO THIS SECTION WILL NOT (NOTWITHSTANDING FEDERAL OR STATE LAW
TO THE CONTRARY, IF ANY,) IMPAIR OR LIMIT THE GOVERNMENT’S LEGAL RIGHT TO
COLLECT FROM THE BORROWER ANY DEFICIENCY REMAINING AFTER THE SALE. IF ANY SUCH
FEDERAL OR STATE LAWS OR LEGAL PRECEDENTS MAY BE CONSTRUED TO LIMIT THE
GOVERNMENT’S RIGHTS TO COLLECTION OF SAID DEFICIENCY FROM THE BORROWER, THEN
BORROWER HEREBY EXPRESSLY WAIVES, RELINQUISHES AND FOREVER GIVES UP THE RIGHT TO
AVAIL ITSELF OF SUCH LAWS AND/OR DEFENSES.

 

(d)    RETAKE AND/OR SELL THE EQUIPMENT WITHOUT LEGAL PROCESS as provided by the
Real Estate Mortgages, Security Agreements, and Preferred Ship Mortgage, or any
other document which has been executed by or on behalf of the Borrower; and

 

ARTICLE VIII: TITLE XI FINANCIAL AGREEMENT GOVERNS; SEVERABILITY

 

1.    To the extent that any of the terms and conditions of this Financial
Agreement are inconsistent or in contradiction with the terms and conditions of
any other agreement between the Government and the Borrower, including but not
limited to previously executed Title XI Financial Agreements, then the terms of
this Financial Agreement shall govern, otherwise, all such terms and conditions
of such other agreements will continue with full force and effect.

 

2.    The unenforceability or invalidity of any provision(s) of this Title XI
Financial Agreement shall not render any other provision(s) herein unenforceable
or invalid.

 

ARTICLE IX: POWER OF ATTORNEY

 

Borrower hereby irrevocably appoints the Government the true and lawful attorney
of the Borrower, in its name and stead to execute any other document necessary
to perfect the Government’s security interests regarding this transaction and/or
all aspects of the FFP Debt.

 

 

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ARTICLE X: ENVIRONMENTAL HAZARD INDEMNIFICATION

 

Borrower and Guarantor hereby agree to the following with respect to any
environmental hazards or contamination associated with the Collateral:

 

1.    At closing, Borrower must certify in writing that, to the best of its
knowledge, there are currently no defects or environmental hazards on or about
the Collateral. Notwithstanding this, at closing, Borrower and Guarantor will
execute a Certification and Indemnification Agreement Regarding Environmental
Matters which provides that they shall, jointly and severally, be liable for any
and all contamination, cleanup, and environmental actions against the Collateral
and that they are, jointly and severally, liable for all costs and claims
associated with or resulting from any claim, cleanup, or lien imposed against
any of the Collateral.

 

2.    That Borrower and Guarantor will hold the Government harmless from any
claim or duty arising from environmental defects or hazards associated with the
Collateral.

 

In the event this loan is not closed because of the discovery of such defects or
environmental hazards previously unknown to Borrower, the Government will refund
the commitment fee less all costs incurred by the Government in attempting to
close.

 

IN WITNESS WHEREOF, the Borrower and the Guarantor have executed this Title XI
Financial Agreement.

 

GOVERNMENT:

UNITED STATES OF AMERICA

Acting by and through the Secretary of Commerce

National Oceanic and Atmospheric Administration

National Marine Fisheries Service

Financial Services Division

 

By:        

--------------------------------------------------------------------------------

Title:  

Chief, Financial Services Branch Southeast Region

   

--------------------------------------------------------------------------------

Date:  

December 30, 2003

   

--------------------------------------------------------------------------------

     

 

 

 

 

 

 

 

 

 

 

 

14

--------------------------------------------------------------------------------

       

BORROWER: OMEGA PROTEIN, INC.

Attest:

        By:          

By:

       

--------------------------------------------------------------------------------

         

--------------------------------------------------------------------------------

                 

 

 

         

Title:

 

Executive Vice President

     

Title:

  Vice President Administration    

--------------------------------------------------------------------------------

         

--------------------------------------------------------------------------------

Chief Financial Officer

     

and Controller

--------------------------------------------------------------------------------

     

--------------------------------------------------------------------------------

and Secretary

           

--------------------------------------------------------------------------------

           

 

          Date:  

December 29, 2003

      Date:  

December 29, 2003

   

--------------------------------------------------------------------------------

         

--------------------------------------------------------------------------------

                 

 

(SEAL)

 

       

GUARANTOR: OMEGA PROTEIN CORPORATION

Attest:

        By:           By:        

--------------------------------------------------------------------------------

         

--------------------------------------------------------------------------------

                 

 

         

Title:

 

Vice President

     

Title:

 

Executive Vice President

   

--------------------------------------------------------------------------------

         

--------------------------------------------------------------------------------

Administration and Controller

      Chief Financial Officer and

--------------------------------------------------------------------------------

     

--------------------------------------------------------------------------------

        Secretary        

--------------------------------------------------------------------------------

 

          Date:  

December 29, 2003

      Date:  

December 29, 2003

   

--------------------------------------------------------------------------------

         

--------------------------------------------------------------------------------

                 

 

(SEAL)

 

15