Document:

Title XI Financial Agreement

 Exhibit 10.4 
  
 Case No. FF-G-013 
  
 TITLE XI FINANCIAL AGREEMENT 
  
 THIS TITLE XI FINANCIAL AGREEMENT (hereinafter, the “Financial Agreement”), dated October 17, 2005, 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 September 28, 2005, 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 $14,000,000.00, (hereinafter, the “Loan”). This transaction will be evidenced by the issuance of a promissory note in the amount of $14,000,000.00 (hereinafter, the
“Note”). The Loan, including but not limited to the Note, will be 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: 

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

  

 1 

 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 
  

 2 

 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: 
  

 3 

 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 seventh 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 ALBERT J. BOURG, O.N. 298585. 
  
 (b) A Preferred Ship Mortgage in the full amount of the FFP Debt, on the
vessel REEDVILLE, O.N. 569161. 
  
 (c) A Preferred Ship Mortgage
in the full amount of the FFP Debt, on the vessel GALVESTON BAY, O.N. 508776. 
  
 (d) A Preferred Ship Mortgage in the full amount of the FFP Debt, on the vessel TANGIER ISLAND, O.N. 565268. 
  
 4. THE GUARANTEE: An unconditional guarantee of repayment of the FFP Debt will be given to the Government by Omega Protein Corporation. 
  

 4 

 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
September 28, 2005; 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:

  

 5 

 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. 
  

 6 

 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 

	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. 

  

 7 

 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: 
  

 8 

 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 September 28, 2005, this Title XI Financial Agreement, the Promissory Note, dated October 17, 2005, the Deed of Trust dated October 17, 2005, Preferred Ship Mortgages dated
October 17, 2005, 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, or any other agreement or
document executed in connection with this transaction, 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; 
  
 (iii) ANY OTHER AMOUNT DUE in connection with this transaction; 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 
  
 (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 
  

 9 

 Article VII, DEFAULT (continued) 
  
 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 page 14 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; 
  
 (g) THE OCCURANCE OF ANY EVENT that would
adversely affect the ability of the Borrower or Guarantor to timely service the debt, actually or contingently, owed the Government or that would cause the Government to reasonably deem itself an insecure creditor. 
  
 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 
  

 10 

 Article VII, DEFAULT (continued) 
  
 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 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 
  

 11 

 Article VII, Default (continued) 
  
 Government shall have the right to dock the Vessel for a reasonable time at
any dock, pier, or other premises of the 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 
  

 12 

 Article VII, Default (continued) 
  
 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 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 OR GUARANTOR 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.

  
 (f) RETAKE AND/OR SELL THE EQUIPMENT WITHOUT LEGAL PROCESS as
provided by the Real Estate Mortgages, Security Agreements, and Preferred Ship Mortgages, or any other document which has been executed by or on behalf of the Borrower; and 
  
 (g) Make demand upon, institute action against, foreclose collateral, if any, or make any attempt of any nature to collect
outstanding sums from any Guarantor, whether or not similar efforts have been made against the Borrower. 
  
 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. 
  

 13 

 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. 
  
 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. 
  

 14 

 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:	 	/s/    MICHAEL BARRY        
	 	 	 	 	 	 	 Title:
	 	Chief, Financial Services Branch Southeast Region
					
	 	 	 	 	 	 	 Date:
	 	October 17, 2005
			
	 Attest:
	 	 	 	BORROWER: OMEGA PROTEIN, INC.
					
	By:	 	/s/    JOHN D. HELD        	 	 	 	By:	 	/s/    ROBERT W.
STOCKTON        
	 Title:
	 	Secretary	 	 	 	 Title:
	 	Vice President and Treasurer
					
	 Date:
	 	October 17, 2005	 	 	 	 Date:
	 	October 17, 2005
				
	(SEAL)	 	 	 	 	 	 
			
	 Attest:
	 	 	 	GUARANTOR: OMEGA PROTEIN CORPORATION
					
	By:	 	/s/    JOHN D. HELD        	 	 	 	By:	 	/s/    ROBERT W.
STOCKTON        
	 Title:
	 	Secretary	 	 	 	 Title:
	 	Executive Vice President and Chief Financial Officer
					
	 Date:
	 	October 17, 2005	 	 	 	 Date:
	 	October 17, 2005
				
	(SEAL)	 	 	 	 	 	 

  

 15Guaranty Agreement

 Exhibit 10.5 
  
 Case No. FF-G-013 
  
 GUARANTY AGREEMENT 
  
 RECITALS: THIS GUARANTY AGREEMENT, is made and entered into by Omega Protein Corporation, 1717 St. James Place, Suite 550, Houston, Texas 77056 (hereinafter, the “Guarantor”), and the UNITED STATES OF AMERICA, acting by and
through the Secretary of Commerce, National Oceanic and Atmospheric Administration, National Marine Fisheries Service, Financial Services Division (hereinafter, the “Government”). 
  
 DEFINITIONS: All terms contained herein are defined in the Acknowledgment of Definitions
executed by all parties to this transaction. 
  
 WHEREAS, the Government has made,
entered into, and delivered that certain Approval in Principle Letter dated September 28, 2005, (the “Approval Letter”), which Approval Letter has been accepted by Omega Protein, Inc., (the “Borrower”) and the Guarantor, and
which Approval Letter contemplates the Government providing financing to the Borrower in the amount of $14,000,000.00 (the “Loan”). The Government will provide the Borrower with $14,000,000.00 evidenced by the execution and delivery to the
Government of a promissory note (the “Note) dated October 17, 2005, in the principal amount of $14,000,000.00, and the Borrower has agreed to execute and deliver certain Preferred Ship Mortgages, a Deed of Trust and Security Agreement, UCC
Financing Statements, (collectively, the “Loan Documents”) to the Government for the purpose of securing the payment of the principal of and interest on the Note and all other sums due the Government in connection with the Loan and in
accordance with its terms and the terms contained in the Loan Documents. 
  
 WHEREAS, the Guarantor understands that the Government is unwilling to enter into the aforementioned transaction, unless this Guaranty Agreement is executed by the Guarantor, therefore, in order to induce the Government to enter into the
aforementioned transaction with the Borrower, the Guarantor has agreed to execute and deliver to the Government an absolute and unconditional guaranty, (hereinafter, the “Guaranty”) of the above-referenced Note, thereby guaranteeing that
all sums stated in the Note and all other sums of any nature owed to the Government by the Borrower, shall be promptly paid in full when due. 
  
 WHEREAS, Omega Protein Corporation further represents to the Government that it is a corporation in good standing in the State of Nevada and that it will not allow or
permit said status to change, except with the express, written consent of the Government. 
  

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 NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties agree as follows: 
  
 1. The Guarantor unconditionally
guarantees that all sums stated in, arising under the Note, including any and all amendments thereto, to be payable to the Government, shall be promptly paid in full when due, in accordance with the provisions governing such payment. This Guaranty
Agreement is unconditional and absolute and if for any reason such sums, or any part thereof, shall not be paid promptly when due, the Guarantor will immediately pay the same to the Government pursuant to the provisions governing such payment,
regardless of any defenses or rights of set-off or counterclaims which the Borrower, Guarantor or any other party may have or assert, and regardless of whether the Government shall have taken any steps to enforce any rights against the Borrower, the
Guarantor or any other person to collect such sums, or any part thereof, and regardless of any other condition or contingency. The Guarantor also expressly agrees to pay the Government all the costs and expenses of collecting such sums, or any part
thereof, or of enforcing this Guaranty Agreement, expressly including, but not limited to, attorney’s fees. It is expressly understood by the Guarantor that collection expenses may accrue rapidly and result in significant expenses for which the
Guarantor agrees to be liable. It is further agreed to and understood by the Guarantor that “costs and expenses” of collection are deemed to include any and all costs, including but not limited to, accelerated interest charges, attorney
fees, and all other costs and expenses, which the Government may incur to collect sums due under the Note or hereunder or to protect and preserve collateral pledged in relation to the obligation, regardless of whether said collateral was pledged by
the Guarantor. The Guarantor agrees to be liable for and pay for said costs and expenses (including all interest charges thereon) which will continue to accrue until such time as the Guarantor fully satisfies and discharges the obligation arising
under this Guaranty Agreement. 
  
 2. The Guarantor unconditionally guarantees
that the Borrower will promptly and punctually pay all other sums payable under the Note and the Loan Documents, including any amendments or substitutions therefor, and will duly perform and observe each and every agreement, covenant, term and
condition in such Note and Loan Documents, or amendments thereto, to be performed or observed by the Borrower, and upon the Borrower’s failure to do so, the Guarantor will promptly pay such sums and duly perform and observe each such agreement,
covenant, term and condition, or cause the same promptly to be performed and observed. 
  
 3. The obligations, covenants, agreements and duties of the Guarantor under this Guaranty shall in no way be affected or impaired by reason of the happening from time to time of any of the following with respect to the Note or the Loan
Documents, including amendments or substitutions therefor, or any other document executed in connection therewith, although without notice to or the further consent of the Guarantor: 
  
 a. the waiver by the Government, or its successors or assigns, of the performance or observance by the Borrower, the
Guarantor or any other party of any of the agreements, covenants, terms or conditions contained in the Note and the Loan Documents, or any other document executed in connection therewith; 
  

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 b. the extension, in whole or in part, of the time for payment by the Borrower, the Guarantor or any
other party to the obligation of any sums owing or payable under the Note, the Loan Documents or this Guaranty Agreement or of the time for performance by the Borrower, the Guarantor or any other party to the obligation of any other obligations
under or arising out of or on account of the Note, the Loan Documents any other document executed in connection therewith; 
  
 c. the modification or amendment (whether material or otherwise) of any of the obligations of the Borrower, the Guarantor or any other party to the
obligation as set forth in the Note, the Loan Documents or any other documents executed in connection therewith; 
  
 d. the doing or the omission of any of the acts referred to in the Note, the Loan Documents or any other document executed in connection therewith;

  
 e. any failure, omission, or delay of the Government to
enforce, assert, or exercise any right, power or remedy conferred on the Government in the Note, the Loan Documents or any other document or agreement executed in connection therewith, or any action on the part of the Borrower or the Government
granting indulgence or extension in any form whatsoever; and 
  
 f. the voluntary or involuntary liquidation, dissolution, sale of all or substantially all of the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition, or readjustment of, or other similar proceeding affecting the Borrower or any of its assets or any other party to the obligation; and 
  

g. the release of the Borrower, the Guarantor or any other party from the performance or observance of any of the agreements, covenants, terms or
conditions contained in the Note, the Loan Documents or any other document executed in connection therewith, by the operation of law; and 
  
 h. any Order of Judgment entered by a Bankruptcy Court which diminishes, discharges or declares any of the obligations or amounts owed under the Note and
Loan Documents to be paid or satisfied. The undersigned hereby waive any defense based upon any Bankruptcy Court order or judgment with respect to any action based upon this Guaranty Agreement, which is brought against the undersigned in Federal
District Court, or any other court of competent jurisdiction; and 
  

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 i. the assumption and/or refinancing of the underlying indebtedness by a third party. 
  
 4. Notice of acceptance of this Guaranty Agreement and notice of any obligations or
liabilities contracted or incurred by the Borrower or any other party to the obligation are hereby waived by the Guarantor. 
  
 5. This Guaranty Agreement may not be modified or amended except by a written agreement executed by the Guarantor with the consent in writing of the Government.

  
 6. This Guaranty Agreement may be assigned to any holder of the Note.

  
 7. All agreements, covenants, terms and conditions in this Guaranty Agreement
shall inure to the benefit of the Government and its successors and assigns, and, without limitation of the generality of the foregoing, shall in particular inure to the benefit of any holder of the Note. 
  
 8. The signature of the Guarantor hereto is, in addition to and not in limitation of the
foregoing, intended as and to have the effect of an endorsement of the Note by the Guarantor, who hereby waives presentment, demand of payment, protest and notice of nonpayment of dishonor, and of protest of the Note and any and all other notices
and demands whatsoever. 
  
 9. The terms of this Guaranty Agreement shall apply to
the Note and all other loan documents and shall bind the Guarantor to the same extent as though the Guarantor executed and delivered a separate instrument of guaranty with respect to each of such instruments and annexed the same thereto. 

 
 10. This Guaranty Agreement shall be binding upon the Guarantor and the Guarantor’s
heirs, executors, administrators, successors, assigns and all other legal representatives. 
  
 11. Community Property Rights: Each and every term and provision of this Agreement shall, to the extent necessary or required to subject community property rights, if any, in the collateral, to the terms hereof and
herein contained be read and interpreted to apply to the Guarantor. 
  
 12. The
Guarantor acknowledges and represents to the Government that it is a principal party of interest with respect to the past, present and future operation of the Borrower’s business and that the past, present and future financial success of the
Borrower’s business has, does and will directly, materially and substantially benefit the Guarantor. Accordingly, the Guarantor acknowledges and consents to any and all regulations and/or Financial Services Division requirements 

  

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which require, permit or authorize the Government to request that the Guarantor execute and deliver a guaranty of sums due under the Note. 
  
 13. All provisions of this Guaranty Agreement shall be construed, given effect, and enforced
according to the laws of the United States. With respect to any claim or proceeding relating to this Guaranty Agreement, the Guarantor hereby consents to and subjects itself to the jurisdiction of the federal court of competent jurisdiction of the
State of Louisiana, and agrees that the venue of any action or proceeding relating to this Guaranty Agreement shall lie exclusively in the federal court situated in the State of Louisiana, unless the Government has instituted proceedings where the
collateral may be found and in such case, the Guarantor consents to and subjects itself to the jurisdiction of the federal court which maintains jurisdiction over the collateral. 
  
 14. Prior written consent must be granted by the Government, consent of which will not be unnecessarily withheld, before the Guarantor shall
split-up, spin-off, merge, consolidate, transfer or allow transfer of its shares and/or assets as to effect a change in its controlling interest, management, and financial conditions. 
  
 15. If the Guarantor is a corporation, the Guaranty Agreement shall be binding upon its parent corporation and its subsidiaries. 

 
 16. Severability: The unenforceability or invalidity of any provision(s) of this Guaranty
Agreement shall not render any other provision(s) herein unenforceable or invalid. 
  
 IN WITNESS WHEREOF, the undersigned has executed and delivered this Guaranty Agreement. 
  

			
	 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:	 	/s/    MICHAEL BARRY        
	 Title:
	 	Chief, Financial Services Branch Southeast Region
		
	 Date:
	 	October 17, 2005

  

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	 Attest:
	 	 	 	 GUARANTOR:
 Omega Protein
Corporation

					
	 By:
	 	/s/    JOHN D. HELD        	 	 	 	 By:
	 	/s/    ROBERT W.
STOCKTON        
	 	 	 	 	 	 	 Title:
	 	Executive Vice President and Chief Financial Officer
					
	Date:	 	October 17, 2005	 	 	 	Date:	 	 October 17, 2005

  
 (SEAL) 
  

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 ACKNOWLEDGMENT 
  

					
	STATE OF FLORIDA	  	)	  	 
	 	  	)	  	ss
	COUNTY OF PINELLAS	  	)	  	 

  
 On this the 17th day
of October ,2005, Michael S. Barry, Chief, Financial Services Branch, National Marine Fisheries Service, Southeast Region, who is the duly authorized representative of the Secretary of Commerce of the United States of America, acknowledged that he
executed the foregoing instrument as such representative of the Secretary of Commerce pursuant to the authority vested in him by the laws of the United States. He is personally known to me and did not take an oath. 
  

	
	
	 
	Notary Public

  

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 ACKNOWLEDGMENT 
  

					
	STATE OF TEXAS	  	)	  	 
	 	  	)	  	ss
	COUNTY OF HARRIS	  	)	  	 

  
 On the 17 day of
October, 2005, before me personally appeared Robert W. Stockton, to me known or produced satisfactory identification, who being duly sworn, did depose and say that he is the Executive Vice President and Chief Financial Officer of Omega Protein
Corporation, and that he signed his name to said Guaranty Agreement by like order, and the said Executive Vice President and Chief Financial Officer acknowledged to me that he executed said Guaranty Agreement as the Executive Vice President and
Chief Financial Officer of said corporation; and that the same is the free and voluntary act and deed of said corporation and of himself as such Executive Vice President and Chief Financial Officer for the uses and purposes therein expressed.

  

	
	
	 
	Notary Public

  

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