EXHIBIT 10.54
Case No. FF-G-008
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SECURITY AGREEMENT
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This Security Agreement (hereinafter, the "Agreement"), made between Omega
Protein, Inc., (hereinafter, the "Borrower"), whose address is X.X. Xxx 0000,
Xxxxxxx, Xxxxxxxxx 00000 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, 0000 Xxxx-Xxxx
Xxxxxxx, Xxxxxx Xxxxxx, Xxxxxxxx 00000, which is the Secured Party, (hereinafter
the "Government").
All terms contained herein are defined in the Acknowledgment of Definitions
executed by all parties to this transaction.
W I T N E S S E T H
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WHEREAS, the Borrower desires to enter into a Promissory Note to the United
States (hereinafter, the "Note"), dated October 19, 2001, in the amount of ONE
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MILLION, NINE HUNDRED THOUSAND, and no/Dollars ($1,900,000.00), pursuant to the
provisions of Title XX xx xxx Xxxxxxxx Xxxxxx Xxx, 0000, as amended, found at 46
USC Section. 1271 et seq., and 00 XXX 000, as amended by Public Law 104-297 on
October 11, 1996, known as the Fisheries Finance Program, (hereinafter, the "FFP
Debt"); and
WHEREAS, the Government will not enter into this transaction unless the
Government is granted a security interest in certain property.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt whereof being hereby acknowledged, the parties agree
as follows:
Section 1. The Borrower hereby grants to the Government a security interest
in the following described property, together with all accessories,
substitutions, additions, replacements, parts and accessions affixed to or used
in connection therewith (hereinafter, the "Collateral"):
(a) The whole of the Fishing Vessels RACCOON POINT, Official Number 532143,
and XXXXX POINT, Official Number 298617, together with all related gear,
boilers, machinery, electronics, equipment, motors, skiffs, inventory, supplies,
contracts, contract rights, charter hire
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freight, licenses and/or permits, general intangibles, transferable fishery
conservation and management allocations, now owned or hereafter acquired,
attached or not attached or to be attached, to secure payment of the Borrower's
debt to the Government as evidenced hereby and by Borrower's Promissory Note,
(hereinafter, the "Note"), to the Government of even date herewith payable to
the Government, in accordance with the Note, in the amount of ONE MILLION, NINE
HUNDRED THOUSAND, and no/Dollars, ($1,900,000.00) payable on the terms, at the
times, and with interest as set forth in said Note. Borrower agrees to pay the
Note and, if any portion thereof, principal or interest, is not paid when due,
Borrower agrees to pay, in addition to the foregoing, the reasonable collection
costs of the Government;
(b) Any and all federal or state fisheries permits, individual fishing
quotas (IFQ), individual transferable quotas (ITQ), community development quotas
(CDQ), quota shares, allocations, endorsements, rights, licenses, or tags,
whether vested individually with the Borrower or appurtenant to the Vessel,
whether now owned or hereafter acquired, whether now existing or hereafter
created by rule, regulation, statute or fishery management council action, which
now exist or are hereafter created pursuant to any limited entry programs,
moratorium periods, high seas permits, license limitation programs or total
allowable catch and domestic annual processing assessments or like programs or
assessments whether or not any of the foregoing relate to or affect the fishing
operations of the vessel.
(c) All insurances pertaining to the Collateral, including, without
limitation, hull and machinery, increased value, war risk, protection and
indemnity, pollution, workmen's liability and compensation, loss of earnings,
personal property, liability and all other insurances and association entries,
and all claims and all returns of premiums, dues, calls, and assessments that
are not immediately applied to future premiums, dues, calls, and assessments,
and all other sums or claims for sums due or to become due thereunder;
(d) All debts and obligations owing to the Borrower, including, without
limitation, interest thereon, charges and other expenses and fees advanced by or
incurred by or for the Government, and all liens and encumbrances securing any
or all of the foregoing;
(e) Borrower grants the Government a security interest in the following
real estate situated in Northumberland County, Commonwealth of Virginia and
fully described in Exhibit A.
EXHIBIT "A" IS ATTACHED AND MADE A PART HEREOF
together with all buildings and other improvements, hereditaments and
appurtenances thereunto belonging, or in any wise appertaining now existing or
hereafter erected upon the premises and all the income and
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rents arising therefrom. Borrower does hereby intend to convey and does convey
all of Borrower's right, title and interest in and to any strips and gores
Borrower may now own contiguous to the above described property;
(f) It is expressly understood and agreed, as a part of the consideration
for the loan made to the Borrower and secured by the premises described in
Exhibit A, this instrument covers and includes all surface, subsurface and/or
mineral estate ownership now or after acquired by the undersigned in the above
property and whether or not expressly excepted from the description to the above
security premises, any provisions herein to the contrary being of no force and
effect;
(g) For the consideration aforesaid, and as further security for any and
all debt(s) and obligation(s) described above, said Borrower does hereby assign,
pledge and transfer to the Government, and grant to the Government a security
interest in and to the following described property and interests which are
listed on Exhibit B and/or set out as follows: (1) all timber of all kind,
character and description planted and/or growing, or to be planted and/or grown,
on the hereinabove described property; (2) all crop allotments, quotas, and/or
(3) all rents, profits, issues, income, royalties, bonuses, and revenue of said
property, or any part or interest herein, from time to time accruing whether
under leases or tenancies now existing or hereafter created; (4) each and every
policy of hazard insurance, or the like, now or hereafter in effect which
insures said property or any building, fixture and/or improvement thereon, or
any part thereof, together with all the right, title and interest of Borrower in
and to such policy, including but not limited to any premiums paid (or rights to
return premiums) and/or all proceeds or payments thereunder; (5) all judgments,
award of damages and settlements hereafter made resulting from condemnation
proceedings or the taking of the real property, or any part thereof, under the
power of eminent domain, or for any damage (whether caused by such taking or
otherwise) to the property, or any part thereof, or to any rights appurtenant
thereto; (6) all building materials, equipment, fixtures and fittings of all
kind, character, and description used in connection with or relating to said
property and/or buildings, fixtures or improvements thereon; (7) all equipment,
including, but not limited to: forklifts, bobcats, cranes, pallet trucks, lift
trucks and other product or material movement equipment of whatsoever nature;
all trailers, tanks, trucks or other rolling stock of whatsoever nature; all
fish unloading, transfer and conveying equipment of whatsoever nature; fungible
goods, including fish; all fish processing equipment of whatsoever nature; all
fish weighing equipment of whatsoever nature; all cooling, refrigerating,
freezing and other fish holding equipment (blast freezers, coolers, or other
refrigeration equipment) of whatsoever
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nature; all fish packaging equipment of whatsoever nature; all fish baskets,
totes, tanks, tubs and other fish holding equipment of whatsoever nature; all
ice makers of whatsoever nature, all hand and power tools of whatsoever nature;
all office equipment of whatsoever nature; all fish hatching, releasing,
rearing, growing, tending and other equipment of whatsoever nature in any way
associated with fisheries cultivation of every sort--all together with all
associated equipment, machinery, parts, tools, or other items of whatsoever
nature and whether fixed or unfixed to the property or any other premises
whatsoever; and/or (8) all tangible or intangible property found on the premises
which is not listed on Exhibit "B", and products, proceeds, and additions and/or
replacements of any or all of the property described above in Items 1 through 7,
also including all after-acquired personal property to be located in or about
the said facility of Borrower, subject to any purchase-money security interest
acquired by any vendor of said after-acquired personal property;
EXHIBIT "B" IS ATTACHED AND MADE A PART HEREOF
Section 2. The Borrower hereby warrants and covenants that:
(a) Except as may otherwise be required in the ordinary course of business,
at all times the items listed on Exhibit B will be kept on the property itself,
in transit, or in storage and shall not be removed from said location, in whole
or in part, until such time as written consent to a change of location is
obtained by the Borrower from the Government;
(b) The Collateral is to be used primarily for business use and kept at the
Borrower's principal place of business.
Section 3. Other terms and conditions:
(a) In the event that this Security Agreement, the Note, or any provisions
hereof or thereof shall be deemed invalid in whole or in part by reason of any
present or future law of the United States or any decision of any authoritative
court, or if the documents at any time held by the Government be deemed by the
Government, for any reason, insufficient to carry out the true intent and spirit
of this Security Agreement and the Note, then, from time to time, the Borrower
will execute on its own behalf such other and further assurances and documents
as in the opinion of counsel for the Government may be required to more
effectually subject the Collateral to the payment of the principal sum of the
Note, together with interest thereon, as in the Note and as herein provided, and
in the performance of the terms and conditions of the Note and this Security
Agreement. Upon failure of the Borrower so to do, the Government may execute
such other and further assurances and documents, for and in the name of the
Borrower, and the Borrower hereby irrevocably appoints the Government the agent
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attorney-in-fact of the Borrower so to do. Any expenses of the Government in
connection with the foregoing shall be a debt due from the Borrower to the
Government in payment thereof and shall be secured by the lien of this Security
Agreement;
(b) The Borrower will faithfully observe, perform and discharge all of the
covenants, conditions, and obligations which are imposed on the Borrower by any
and all indentures and other agreements or documents and will not permit to
occur any act or omission which is or may be declared to be a default under any
such indenture, agreement, or document;
Section 4. The Borrower hereby further warrants and covenants that:
(a) No financing statement covering any of the Collateral described herein
is on file in any public office except in favor of the Government. The Borrower
is the owner of the Collateral free from any prior lien, security interest or
encumbrance, except in favor of the Government, and will defend the Collateral
against the claims and demands of all persons whomsoever;
(b) Except as may otherwise be required in the ordinary course of business,
the Borrower will not sell, exchange, lease, or otherwise dispose of the
Collateral, or any part thereof, or suffer or permit any lien, levy, or
attachment, or security interest therein, or financing statement to be filed
with reference thereto, other than that of the Government;
(c) The Borrower will maintain the Collateral in good condition and repair
and preserve the same against waste, loss, damage, or depreciation in value
other than by reasonable wear. The Borrower will not use any of the Collateral
in violation of any law or public regulation. The Government may examine and
inspect the Collateral at any reasonable times, wherever located, and for that
purpose hereby is authorized by the Borrower to enter any place or places where
the Collateral may be;
(d) The Borrower will keep the Collateral fully insured against loss or
damage by fire, theft (and collision if applicable), and such other hazards as
the Government may from time to time require, with such deductible provisions,
upon such terms, including loss payable and other endorsements, and in such
company or companies as the Government may approve; Borrower immediately will
deliver all policies to the Government, to be retained by the latter in pledge
to secure Borrower's obligations hereunder, with irrevocable authority to adjust
any loss, receive and receipt for any sum payable, surrender any policy,
discharge and release any insurer, endorse in Borrower's name
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any loss or refund check or draft and, in general, exercise in the name of the
Borrower or otherwise, any and all rights of the Borrower in respect thereto or
in respect to the proceeds thereof;
(e) The Borrower will pay, when due, all taxes, license fees and
assessments relative to the Collateral or its use and relative to the Note.
Should the Borrower fail in its performance of any of the foregoing, the
Government may pay the same, including any security interest having priority
hereto, may order and pay for the repair, maintenance and preservation of the
Collateral, or any part thereof, may place and pay for any such insurance and
may pay any such taxes; the Borrower agrees to pay to the Government on demand
all of the latter's disbursements for any of said purposes with interest at the
rate of eighteen percent (18%) per annum, or such lesser rate which the
Government, in its sole discretion, may determine. Said sum shall be added to
the sums due under the Note, shall be an indebtedness of the Borrower,
immediately due and payable, and shall be secured by this Security Agreement.
Notwithstanding the Government's election under this provision to fix an
interest rate of less than eighteen percent (18%), acceleration of sums due
under this Note will result in the application of the accelerated interest rate
of eighteen percent (18%), on all sums so paid from the date of payment until
repaid;
(f) The Borrower agrees to notify the Government promptly in writing of any
change in its business name or address, corporate structure (including the
jurisdiction under which it is incorporated), principal place of business and
Borrower's residence.
(g) By executing this Security Agreement, the Borrower authorizes the
Government to file financing statements and amendments thereto to perfect the
security interests created by this Agreement. The recording of these financing
statements will be at the Borrower's expense.
(h) The Borrower hereby consents to any extension of time of payment and to
any substitution, exchange, or release of Collateral and to the addition to or
release of any party or person primarily or secondarily liable for the Note.
Section 5. General terms:
(a) The Note is a separate instrument and may be negotiated, extended, or
renewed by the Government without releasing the Borrower, all Collateral, or any
guarantor or co-maker;
(b) All of the benefits of this Security Agreement shall inure to the
Government, its successor in interest and assigns, and the obligations hereunder
shall be binding upon the Borrower, its legal representatives, successors and
assigns;
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(c) If there is more than one Borrower or guarantor or co-maker of the
Note, the obligation of each and all shall be primary and joint and several;
(d) The provisions of this Security Agreement are severable, if a provision
is held invalid or unenforceable by a court of competent jurisdiction, such
holding shall not affect or impair any of the remaining provisions;
(e) The Government shall not be deemed to have waived any of its rights
under this or any other agreement executed by the Borrower unless the waiver is
in writing signed by the Government. No delay in exercising the Government's
rights shall be a waiver nor shall a waiver on one occasion operate as a waiver
of such right on a future occasion;
(f) Each notice from one to the other party in this Security Agreement
shall be sufficient if served personally or given by U. S. registered or
certified mail, addressed to the other party at its last known address.
Reasonable notice, when notice is required, shall be deemed to be five days from
date of mailing;
Section 6. Default:
(a) The Borrower shall be in default under this Security Agreement upon the
happening of any of the following events or conditions:
(1) The Borrower's failure to pay, when due, the principal of or
interest on the Note, including any amendments thereto or substitutions
therefor;
(2) The Borrower's failure to keep, observe, or perform any provision
of this Security Agreement or any other agreement between the Borrower and
the Government, including but not limited to, the Preferred Ship Mortgages
on the aforementioned fishing vessels, and the Deed of Trust on the
aforementioned real property, and all loan documents;
(3) The failure of any guarantor, co-maker, or other party to keep,
observe or perform any agreement between said party and the Government
connected with or arising from the aforementioned obligation;
(4) The discovery of any misrepresentation, or material falsity of any
warrant, representation, or statement made or furnished by the Borrower to
the Government, whether or not in connection with this Security Agreement;
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(5) The loss, theft, or destruction of or substantial damage to the
Collateral;
(6) The Government deems or has reasonable cause to deem itself
insecure;
(7) The failure or termination of the business, or commencement of any
insolvency or receivership proceedings by or against the Borrower, or if
the Borrower dies or becomes insolvent, and if Borrower is a partnership,
the death of any partner, and if the Borrower is a corporation, the
dissolution of said corporation.
Section 7. Cure of Defaults:
If the Borrower shall have, within fifteen (15) days after the occurrence
thereof, removed and remedied each event of default as set forth herein, then in
every such case, the Secretary 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.
Section 8. Remedies of the Government:
Upon Borrower's default, the Government shall have each and all of the
rights and remedies granted to him by the Uniform Commercial Code of the state
in which this Security Agreement is filed, by the Note, by this Security
Agreement, and by the Preferred Ship Mortgages, by the Deed of Trust, and other
loan documents, and may declare the Note immediately due and payable and
thereafter shall bear interest at eighteen percent (18%) per annum, unless
limited by applicable state law, and may require the Borrower to assemble the
Collateral and make it available to the Government at a place to be designated
by the Government which is reasonably convenient to both parties. The Borrower
agrees to pay the Government's reasonable counsel fees and other expenses
incurred by the latter in retaking, holding, preparing for sale, and realizing
on said Collateral. Should suit or action be instituted on this Security
Agreement, on the Note, or to replevy the Collateral, or any part thereof,
Borrower agrees to pay (1) the Government's reasonable attorney's fees to be
fixed by the trial court and (2) on appeal, if any, similar fees in the
appellate court. 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
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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 year, as aforesaid) and the reasonable charges and expenses, if any, of
the Government, its agents and attorneys, shall have been paid, then and in
every such case the Government may 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.
Section 9. Governing Law:
Except to the extent that the laws of the United States govern, all
provisions of this Agreement shall be construed, given effect, and enforced
according to the laws of the Commonwealth of Virginia. With respect to any claim
or proceeding related to this Agreement the Borrower hereby consents to and
subjects itself to the jurisdiction of the federal court of competent
jurisdiction of the Commonwealth of Virginia and agrees that the venue of any
action or proceeding relating to this Agreement shall be exclusively in the
federal court situated in the Commonwealth of Virginia unless the Secretary has
instituted proceedings where the Collateral may be found and in such case,
Borrower consents to and subjects itself to the jurisdiction of the federal
court which maintains jurisdiction over the Collateral.
IN WITNESS WHEREOF, the parties have executed and delivered this Security
Agreement as of the 19th day of October, 2001.
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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/
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Title:
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Chief, Financial Services Branch
Southeast Region
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BORROWER: Omega Protein, Inc.
Attest:
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxx
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Title: Executive Vice President, Title: Controller and
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Chief Financial Officer and Assistant Treasurer
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Secretary
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Date: October 19, 2001 Date: October 19, 2001
(SEAL)
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ACKNOWLEDGMENT
STATE OF )
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)ss
COUNTY OF )
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On the day of , 2001, before me personally came
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Xxxx Xxxxxxx to me known and known to me to be the duly authorized
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representative of the Secretary of Commerce of the United States of America and
he duly acknowledged to me that he executed the above instrument as such
representative of the Secretary of Commerce pursuant to the authority vested in
him by the laws of the United States.
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Notary Public
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ACKNOWLEDGMENT
STATE OF )
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)ss
COUNTY OF )
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On the 19th day of October, 2001, before me personally appeared Xxxxx X.
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Xxxxx, to me known or produced satisfactory identification, and who acknowledged
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that he is the Controller and Assistant Treasurer of Omega Protein, Inc. , and
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that he executed the foregoing instrument as the Controller and Assistant
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Treasurer of said corporation, for the uses and purposes therein expressed.
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Notary Public
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ACKNOWLEDGMENT
STATE OF )
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)ss
COUNTY OF )
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On the 19th day of October, 2001, before me personally appeared Xxxxxx X.
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Stockton, to me known or produced satisfactory identification, and who
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acknowledged that he is the Executive Vice President, Chief Financial Officer
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and Secretary of Omega Protein Corporation, and that he executed the foregoing
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instrument as the Executive Vice President, Chief Financial Officer and
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Secretary of said corporation, for the uses and purposes therein expressed.
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Notary Public
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