EXHIBIT 10.12
LOAN AND SECURITY AGREEMENT
BETWEEN
OMEGA PROTEIN CORPORATION, OMEGA PROTEIN, INC.
AND
BANK OF AMERICA, N.A.
DECEMBER 20, ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, N.A.
Commercial Finance
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Borrowers are pleased to confirm the following agreement by which Bank of
America, N.A. (the "BANK") is to provide financing to Omega Protein Corporation,
a Nevada corporation ("PARENT") and Omega Protein, Inc., a Virginia corporation
("OPI") (Parent and OPI are sometimes referred to herein collectively as the
"BORROWERS" and individually as a "BORROWER"), on the following terms and
conditions:
1. Collateral.
(a) Grant of Security. To induce Bank to accept this Agreement and to make
loans and provide other financial accommodations to Borrowers from time to time
pursuant to its terms, each Borrower hereby grants to Bank for itself and as
agent for any Affiliate of Bank a security interest in, and assigns, mortgages
and pledges to Bank for itself and as agent for any Affiliate of Bank, all of
such Borrower's right, title and interest in and to the following property,
whether now owned or hereafter acquired by such Borrower and whether now
existing or hereafter arising:
(i) all accounts, instruments, contract rights, chattel paper,
documents and general intangibles, and goods represented by accounts and
that are returned (collectively, "RECEIVABLES");
(ii) all inventory, including all raw materials, work in process, and
finished goods of every kind or character, wherever located (collectively,
"INVENTORY");
(iii) all machinery, apparatus, equipment, motor vehicles, tractors,
trailers, rolling stock, fittings, fixtures and other tangible personal
property of every kind and description together with all parts, accessories
and special tools and all increases and accessions thereto and
substitutions and replacements therefor (collectively, "EQUIPMENT");
(iv) all contract rights, whether or not earned by performance, all
choses in action, all licenses, all rights in respect of Receivables and
Inventory including the right to stop goods in transit or to replevy or to
reclaim such goods, all patents, trademarks, tradenames, copyrights and
applications for any thereof or rights to ▇▇▇ on account of infringement or
violation of any thereof, and all other intangible personal property,
including tax refund claims;
(v) all documents, books and records relating to the collateral
described above;
(vi) all investment property, securities and securities accounts,
financial assets, and all other accounts of Borrower in which financial
assets are held or maintained including without limitation all accounts
with any securities intermediary, stock broker, brokerage firm, investment
firm, mutual fund, money market account, bank or other entity, and all
deposit accounts;
(vii) all insurance policies and proceeds thereof payable by reason
of loss or damage to any collateral;
(viii) all other property of Borrower now or hereafter in the
possession or control of Bank or any of Bank's Affiliates; and
(ix) all products and proceeds, cash and non-cash, of any and all of
the foregoing (all of the property listed in clauses (i) through (ix) is
collectively referred to herein as the "COLLATERAL").
(b) Secured Obligations. Such grant, assignment, mortgage and pledge of
the Collateral is made for the purpose of securing, and the Collateral secures
and will continue to secure, any and all loans made to Borrowers under this
Agreement (including, without limitation the Revolving Loans), together with all
other indebtedness and obligations, whether now or hereafter existing, of each
Borrower to Bank or any Affiliate of Bank under or in connection with this
Agreement, any note, letter of credit, acceptance, foreign exchange contract,
any agreement with regard to the assignment of accounts receivable (including
any advances or over-advances made thereunder), all contracts of suretyship,
guaranty, or accommodation, and all other indebtedness, liabilities and
obligations of Borrowers to Bank or any Affiliate of Bank, whether now or
hereafter existing, however and whenever created, arising, or evidenced, whether
direct or indirect, through assignment from or factoring for third parties,
joint, several or joint and several, absolute, contingent, or otherwise, due or
to become due, including, without limitation, indebtedness, liabilities and
obligations which may be acquired by or assigned to Bank from third parties, it
being contemplated that Bank may make such acquisitions (collectively, "SECURED
OBLIGATIONS").
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2. Loans.
(a) Revolving Line of Credit. From time to time either Borrower may
request on behalf of both Borrowers, and Bank will, subject to the other terms
and conditions of this Agreement, lend to Borrowers (all such loans referred to
collectively herein as the "REVOLVING LOANS") up to an amount at any time
outstanding equal to the lesser of (A) $20,000,000 (the "REVOLVING LINE"), or
(B) the sum (the "BORROWING BASE") of:
(i) up to eighty-five percent (85%) of the face value of all
Receivables of Borrowers (net of any returns, discounts, claims, credits,
charges or other allowances, offsets, deductions, counterclaims, disputes
or other defenses) other than any Receivable (A) which is unpaid more than
sixty (60) days after the original invoice date; (B) arising from sales to
Affiliates of any Borrower; (C) owing by a customer of a Borrower (a
"CUSTOMER") that, alone or together with its Affiliates who are also
Customers, has more than fifty percent (50%) of its then-existing
Receivables owing to Borrowers that do not meet the requirements for
eligibility set forth in clause (A) above; (D) arising out of sales to
Customers located outside the United States of America unless and only to
the extent that the goods which gave rise to such Receivable were shipped
after receipt by a Borrower from the Customer of an irrevocable letter of
credit that (i) has been confirmed by a financial institution acceptable to
Bank, (ii) is in form and substance acceptable to Bank, (iii) is payable in
the full face amount of the Receivable in Dollars at a place of payment
located within the United States, and (iv) has been duly transferred to
Bank; (E) arising out of sales to United States governmental entities or
agencies; (F) with respect to which a Borrower has breached any warranty or
representation; (G) owing by a Customer that has filed (or had filed
against it), any petition or other application for relief under federal or
state bankruptcy or insolvency laws; (H) owing by a Customer whose credit
standing Bank is not or does not continue to be, in Bank's sole discretion,
satisfied with in relation to the amount of credit extended; (I) owing by a
Customer that alone or with its Affiliates is the obligor on 20% (or more)
of Borrowers' Receivables to the extent of the amount of such Receivables
over such 20%; (J) arising from finance, delinquency or other charges for
the use of money; (K) on which the Customer is also a Borrower's creditor;
(L) on which Bank does not have a perfected first priority security
interest; (M) arising out of sales on a ▇▇▇▇ and hold, consignment, sale or
return, or similar basis for as long as such sales are on such basis; (N)
arising out of sales to Customers on C.O.D. or similar terms; or (O) that
Bank determines in Bank's sole discretion are not eligible; plus
(ii) up to the lesser of (1) $10,000,000 or (2) fifty percent (50%) of
the lower of the fair market value or cost of each Borrower's Inventory
other than Inventory (A) in which Bank does not have a perfected first
priority security interest; (B) which is subject to any Lien other than a
Permitted Lien; (C) which consists of consigned goods or work in process;
(D) which is not in good condition or does not meet all standards
applicable to such goods imposed by any governmental agency having
regulatory authority over such matters; (E) with respect to which a
Borrower has breached any warranty or representation; (F) which is not
currently saleable, at prices approximating at least the cost thereof, in
the normal course of Borrowers' business; (G) which is returned or
repossessed or used goods taken in trade; (H) which is in the possession or
control of any third party or which is located on premises leased by a
Borrower (unless, if located in a
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warehouse or other facility leased by a Borrower, the warehouseman or
lessor has delivered to Bank a waiver and consent in form and substance
satisfactory to Bank in its sole discretion) or which is located in a
jurisdiction other than the United States of America; (I) that is obsolete
or slow moving, (J) that consists of packaging or shipping material or
maintenance supplies or shipping or product labels; or (K) that Bank
determines in its sole discretion to be ineligible; PROVIDED, HOWEVER, that
in determining the "cost" of Inventory, the off season costs of Borrowers,
as now calculated for reporting on Borrowers' financial statements, whether
such off season costs continue to be so reported or not, shall be excluded;
provided, that the amount available to be borrowed by Borrowers will be reduced
by such reserves as Bank deems appropriate in its sole discretion, and that if
any Letters of Credit or acceptances have been issued or created by Bank or any
Affiliate of Bank for a Borrower's account and remain outstanding, the amount
available to be borrowed as a Revolving Loan by Borrowers will be further
reduced by the Letter of Credit Exposure (as such term is defined in SECTION
2(d)). The amount borrowed under the Revolving Loan that is repaid may be
reborrowed upon the terms and conditions of this Agreement.
(b) Standards. Bank will determine eligibility and the loan value of
Collateral, in Bank's sole discretion, consistent with Bank's experience,
prudent business judgment and standards of commercial reasonableness applicable
to asset-based credits and in good faith. Any advances under the Revolving Line
requested by Borrowers and made by Bank or at any time outstanding in excess of
the amount then available to be borrowed under this SECTION 2 shall,
nevertheless, be subject to the terms of this Agreement, will constitute Secured
Obligations for all purposes and be entitled to the benefits of the Collateral.
(c) Application of Remittances. Borrowers will cause the proceeds of
Receivables to be forwarded to a lock box under the control of Bank or, if Bank
consents, one or more blocked collection accounts; the proceeds of all
Receivables will be applied to payment of Secured Obligations. All checks or
other remittances received by any Borrower for application to Receivables will
be received by such Borrower in trust for Bank and Borrowers will turn over to
Bank the identical remittances as speedily as possible, appropriately endorsed,
if necessary. As compensation to Bank for delays in the collection and clearance
of such checks, Borrowers agree to pay interest on each remittance from the date
of Bank's receipt thereof through the first Business Day which follows at the
rate applicable to the Contract Rate Loans. Borrowers will account fully and
faithfully for and promptly pay or turn over to Bank proceeds in whatever form
received of the sale or other disposition of any Collateral, and Borrowers agree
that the inclusion of proceeds in "Collateral" will not be deemed to mean that
Bank consents to a Borrower's disposition of Collateral other than in accordance
with the terms of this Agreement.
(d) Letter of Credit Facility. Bank will, from time to time, issue
standby or documentary Letters of Credit requested by a Borrower provided that
(i) Borrowers would be entitled to an advance under SECTION 2(a) in the amount
of the requested Letter of Credit, (ii) the aggregate face amount of such
Letters of Credit (including the amount of the requested Letter of Credit) does
not exceed $10,000,000 and (iii) any Letter of Credit issued hereunder shall
have an
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expiration date no later than the earlier of (A) one year from issuance or (B)
seven days prior to the Maturity Date. Borrowers shall execute and deliver
Bank's customary Letter of Credit application for each Letter of Credit, and
each Letter of Credit shall be issued in form satisfactory to Bank. If any
Letter of Credit is presented for payment by the beneficiary thereof, Bank shall
be entitled to cause an advance as a Revolving Loan to be made to reimburse it
for the payment under such Letter of Credit, whether or not Borrowers would be
entitled to an advance for such amount pursuant to SECTION 2(a). At the time of
the issuance of each Letter of Credit, Borrowers shall pay to Bank the customary
transaction and issuance fees of Bank. On the first day of each month, Borrowers
shall pay to Bank, in arrears, a Letter of Credit fee equal to the greater of
(1) the product of the face amount of the Letter of Credit multiplied by a rate
per annum equal to the then effective LIBOR Margin or (2) a minimum letter of
credit fee established by Bank, which, as of the date hereof is $300, but which
may be changed by Bank in its sole discretion and upon notice thereof to
Borrowers. As used herein, "LETTER OF CREDIT EXPOSURE" means, at any time, 100%
of the sum of (i) the aggregate undrawn amount of all Letters of Credit
outstanding at such time for any Borrower's account, plus (ii) the aggregate
amount of all drawings under Letters of Credit for any Borrower's account for
which Bank has not been reimbursed either directly or through a Revolving Loan
made hereunder.
(e) Conditions to Obligation to Make Loans. Borrowers acknowledge that
Bank's obligation to make any Loan to Borrowers or to issue any Letter of Credit
is subject to the following terms and conditions:
(i) Bank has no obligation to make advances under the Revolving Loan
to Borrowers or to issue Letters of Credit for the account of either or
both Borrowers unless and until Borrowers (a) deliver to Bank, in form and
substance satisfactory to Bank in its sole discretion, each note,
instrument, legal opinion and other document specified on EXHIBIT A and (b)
fulfill the other conditions described on EXHIBIT A.
(ii) Thereafter, Bank's obligation to continue to make advances to
Borrowers under the Revolving Loan and to issue Letters of Credit will be
subject to the conditions that, as of the date of any such Loan or other
accommodation, (A) no Default (as defined in SECTION 13 (A)) will have
occurred and be continuing hereunder and no event or circumstance that with
the giving of notice or lapse of time or both would constitute a Default
has occurred and is continuing, (B) there will have occurred no material
adverse change in Borrowers' financial condition or operations or in
Borrowers' business prospects as compared to the state of facts existing on
the date of this Agreement, and (C) Borrowers' representations and
warranties set forth in this Agreement (including any amendment,
modification, supplement or extension hereof) will be true and correct in
all material respects as if made on and as of the date of each subsequent
credit request. Each request by a Borrower for an advance under the
Revolving Loan or for the issuance of a letter of credit will be deemed to
be a reaffirmation of each of Borrowers' warranties and representations
hereunder.
(iii) Further, Bank's obligation to make advances to Borrowers under
the Revolving Loan and to issue letters of credit shall terminate on the
Maturity Date (as defined in SECTION 15(a)).
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3. Mandatory Repayment. In the event of any Default or upon termination
of this Agreement, Borrowers will repay upon demand all of the Secured
Obligations. All Secured Obligations are joint and several obligations of
Borrowers. If no demand is earlier made, Borrowers will repay all Secured
Obligations in full, without demand or notice, on the Maturity Date. If at any
time for any reason, the aggregate outstanding principal amount of the Revolving
Loans exceeds the amount available to be borrowed, computed in accordance with
the provisions of SECTION 2(a), Borrowers will, on demand, repay the outstanding
principal amount of the Revolving Loans, together with accrued and unpaid
interest on the amount repaid, in an amount equal to such excess. To the extent
that any accrued interest on any of the Loans is not paid on the date such
interest is due as specified herein, Bank may at its option (but with no
obligation to do so), add the amount of such accrued interest to the unpaid
principal due by Borrowers under the Revolving Loans, in which event such amount
will be deemed paid and the aggregate amount thereof shall be treated as a loan
under the Revolving Loan.
4. Interest and Fees.
(a) Interest on Loans.
(i) Contract Rate Loans. Borrowers will pay interest on the unpaid
principal amount of each Contract Rate Loan made to Borrowers for each day from
the day such Loan was made until such Loan is paid (whether at maturity, by
reason of acceleration or otherwise), or is converted to a Loan of a different
Type, at a rate per annum equal to the lesser of (A) the Maximum Rate, or (B)
the Contract Rate, payable monthly in arrears on each Interest Payment Date and
on the Termination Date.
(ii) LIBOR Loans. Borrowers will pay interest on the unpaid principal
amount of each LIBOR Loan made to Borrowers for the Interest Period applicable
thereto at a rate per annum equal to the lesser of (A) the Maximum Rate, or (B)
the sum of the LIBOR Margin plus LIBOR (the "LIBOR RATE"), payable in arrears on
each Interest Payment Date, on the last day of such Interest Period, and when
such LIBOR Loan is paid (whether at maturity, by reason of acceleration or
otherwise).
(iii) LIBOR Loan Request. Borrowers may request and, subject to the
other terms hereof, obtain a LIBOR Loan by notifying Bank (which notice shall be
irrevocable) not later than 11:00 a.m. (Dallas, Texas, time) on the date two
Business Days before the day on which the requested LIBOR Loan is to be made,
specifying the effective date and amount of such LIBOR Loan and the duration of
the applicable Interest Period. Any such request made by a Borrower shall be
binding on both Borrowers.
(iv) Notice of Borrowing. Any request for a Contract Rate Loan or a LIBOR
Loan (a "NOTICE OF BORROWING") shall be made by telephone or in writing
(including telecopy) and, in the case of any telephonic notice, shall be
immediately followed by a written confirmation thereof in a form acceptable to
Bank, provided that the failure to provide written confirmation shall not
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invalidate any telephonic notice and, if such written confirmation differs in
any respect from the action taken by Bank, Bank's records shall control absent
manifest error. Borrowers may request a Contract Rate Loan by notifying the
Bank, before 11:00 a.m. (Dallas, Texas time) on the proposed borrowing date, of
its intention to borrow, specifying the effective date and amount of such
proposed Contract Rate Loan. Any such request made by a Borrower shall be
binding on both Borrowers.
(v) Notice of Conversion or Continuation of Loans. Whenever Borrowers
desire, subject to the provisions of SECTION 4(a)(vi), to convert part or all of
an outstanding Contract Rate Loan into a LIBOR Loan, or vice versa, or to
continue all or a portion of an outstanding LIBOR Loan for a subsequent Interest
Period, Borrowers shall notify Bank (which notice shall be irrevocable) in
writing (including telecopy) not later than 11:00 a.m. (Dallas, Texas, time) on
the date two Business Days before the day on which a proposed conversion of a
LIBOR Loan into a Contract Rate Loan is to be effective (which effective date
shall be the last day of the Interest Period applicable to such LIBOR Loan) and
two Business Days before the day on which a proposed conversion of a Contract
Rate Loan into, or continuation of a LIBOR Loan as, a LIBOR Loan is to be
effective (and such effective date of any continuation shall be the last day of
the Interest Period for such LIBOR Loan). Each such notice (a "NOTICE OF
CONVERSION OR CONTINUATION") shall (a) identify the Loan to be converted or
continued, including the Type thereof, the aggregate outstanding principal
balance thereof and, in the case of a LIBOR Loan, the last day of the Interest
Period therefor, (b) specify the effective date of such conversion or
continuation, (c) specify the principal amount of such Loan to be converted or
continued and, if converted, the Type or Types of Loan into which conversion of
such principal amount or specified portions thereof is to be made, and (d) in
the case of any conversion into or continuation as a LIBOR Loan, the Interest
Period to be applicable thereto.
(vi) Conversion or Continuation. Provided that no Default shall have
occurred and be continuing and subject to the other terms of this Agreement,
Borrower may (a) convert all or any part of any outstanding loan of one Type,
either a LIBOR Loan or a Contract Rate Loan, into a loan or loans of the other
Type, or (b) continue all or any part of any outstanding Loan of one Type,
either a LIBOR Loan or a Contract Rate Loan, as a Loan or Loans of the same
Type, in the same aggregate principal amount, on any Business Day (which, in the
case of a conversion or continuation of a LIBOR Loan, shall be the last day of
the Interest Period applicable to such LIBOR Loan), upon notice (which notice
shall be irrevocable) given in accordance with SECTION 4(a)(v).
(vii) Duration of Interest Periods; Maximum Number of LIBOR Loans; Minimum
Increments.
(1) Subject to the provisions of the definition of "Interest Period", the
duration of each Interest Period applicable to a LIBOR Loan shall be as
specified in the applicable Notice of Borrowing or Notice of Conversion or
Continuation. Borrowers may elect a subsequent Interest Period to be applicable
to any LIBOR Loan by giving a Notice of Conversion or Continuation with respect
to such Loan in accordance with SECTION 4(a)(v).
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(2) If Bank does not receive a Notice of Conversion or Continuation in
accordance with SECTION 4(a)(v) with respect to the continuation of a LIBOR Loan
within the applicable time limits specified in SECTION 4(a)(v), or if, when such
notice must be given, a Default exists or such Type of Loan is not available,
Borrowers shall be deemed to have elected to convert such LIBOR Loan in whole
into a Contract Rate Loan on the last day of the Interest Period therefor.
(3) Notwithstanding the foregoing, Borrowers may not select an Interest
Period that would end, but for the provisions of the definition "Interest
Period," after the date that is thirty days prior to the then effective Maturity
Date.
(4) In no event shall there be more than five (5) LIBOR Loans outstanding
hereunder at any time. For the purpose of this subsection (4), each LIBOR Loan
having a distinct Interest Period shall be deemed to be a separate LIBOR Loan
hereunder.
(5) Each LIBOR Loan shall be in a minimum amount of $1,000,000 or
increments of $500,000 in excess thereof.
(viii) Changed Circumstances.
(1) If the introduction of or any change in or in the interpretation of (in
each case, after the date hereof) any law or regulation makes it unlawful, or
any governmental authority asserts, after the date hereof, that it is unlawful,
for Bank to perform Bank's obligations hereunder to make or maintain LIBOR
Loans, Bank shall notify Borrowers of such event, and Borrowers' right to select
LIBOR Loans for any subsequent Interest Period or in connection with any
subsequent conversion of any Loan shall be suspended until Bank shall notify
Borrowers that the circumstances causing such suspension no longer exist, and,
if it is unlawful to maintain LIBOR Loans, Borrowers shall forthwith prepay in
full all LIBOR Loans then outstanding, and shall pay all interest accrued
thereon through the date of such prepayment or conversion; provided, that if the
date of such repayment or proposed conversion is not the last day of the
Interest Period applicable to such LIBOR Loans, Borrowers shall also pay any
amount due pursuant to SECTION 4(a)(ix).
(2) If Bank shall, prior to the disbursement of any requested Loan or the
effective date of any conversion or continuation of an existing Loan to be made
or continued as or converted into a LIBOR Loan (each such requested Loan made
and Loan to be converted or continued, a "PENDING LOAN"), notify Borrowers that
LIBOR will not adequately reflect the cost to Bank of making or funding such
Pending Loan as a LIBOR Loan or that the Interbank Offered Rate is not
determinable from any interest rate reporting service of recognized standing,
then Borrowers' right to select LIBOR Loans for such Pending Loan, any
subsequent Loan, or in connection with any subsequent conversion or continuation
of any Loan, shall be suspended until Bank shall notify Borrowers that the
circumstances causing such suspension no longer exist, and each Loan comprising
each Pending Loan and each such subsequent Loan requested to be made, continued
or converted shall be made or continued as or converted into a Contract Rate
Loan.
(ix) Funding Losses. The Borrowers shall reimburse Bank and hold Bank
harmless
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from any loss or expense which Bank may sustain or incur as a consequence of:
(a) the failure of the Borrowers to make on a timely basis any payment
of principal of any LIBOR Loan;
(b) the failure of the Borrowers to borrow, continue, or convert a
Loan after Borrowers have given (or are deemed to have given) a Notice of
Borrowing or a Notice of Conversation/Continuation;
(c) the prepayment or other payment (including after acceleration
thereof) of any LIBOR Loan on a day that is not the last day of the
relevant Interest Period;
including any such loss of anticipated profit and any loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain its
LIBOR Loans or from fees payable to terminate the deposits from which such funds
were obtained. The Borrowers shall also pay any customary administrative fees
charged by Bank in connection with the foregoing. Upon the occurrence of any
prepayment or payment described in clause (c) preceding, the Borrowers shall pay
to Bank a prepayment fee in an amount reasonably determined by Bank. Borrowers
shall pay such amounts described in this Section upon presentation by Bank of a
statement setting forth the amounts and Bank=s calculation thereof pursuant
hereto, which statement shall be deemed true and correct absent manifest error.
(x) Increased Costs and Reduced Returns. Borrowers agree that if any
law now or hereafter in effect and whether or not presently applicable to Bank
or any request, guideline or directive of any governmental authority (whether or
not having the force of law and whether or not failure to comply therewith would
be unlawful) or the interpretation or administration thereof by any governmental
authority, shall either (a)(i) impose, affect, modify or deem applicable any
reserve, special deposit, capital maintenance or similar requirement against any
Loan, (ii) impose on Bank any other condition regarding any Loan, this
Agreement, the promissory notes or the facilities provided hereunder, or (iii)
result in any requirement regarding capital adequacy (including any risk-based
capital guidelines) affecting Bank being imposed or modified or deemed
applicable to Bank, or (b) subject Bank to any taxes on the recording,
registration, notarization or other formalization of the Loans or the promissory
notes, and the result of any event referred to in clause (a) or (b) above shall
be to increase the cost to Bank of making, funding or maintaining any Loan or to
reduce the amount of any sum receivable by Bank or Bank's rate of return on
capital with respect to any Loan to a level below that which Bank could have
achieved but for such imposition, modification or deemed applicability (taking
into consideration Bank's policies with respect to capital adequacy) by an
amount deemed by Bank (in the exercise of Bank's reasonable discretion) to be
material, then, upon demand by Bank, Borrowers shall immediately pay to Bank
additional amounts which shall be sufficient to compensate Bank for such
increased cost, tax or reduced rate of return. A certificate from Bank to
Borrowers claiming compensation under this subsection (x) shall be final,
conclusive and binding on all parties for all purposes in the absence of
manifest error. Such certificate shall set forth the nature of the occurrence
giving rise to such compensation, the additional amount or amounts to be paid to
Bank hereunder, and the method by which such amounts were determined. In
determining such amount, Bank may use any reasonable averaging and attribution
methods.
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(b) Default Interest. Upon written notification to Borrowers at any time
when any Default exists, the unpaid principal amount of each Secured Obligation
shall, at the option of Bank, bear interest, beginning on the effective date
specified in such written notice (which may be, at the election of Bank, on or
after the date on which any such Default shall have first occurred) and
continuing thereafter until paid in full (or, if earlier, until such Default is
waived in writing by the Bank), at a rate per annum equal to the lesser of (A)
the Maximum Rate, or (B) the Default Margin plus the rate otherwise in effect
under SECTION 4(a)(i) OR 4(a)(ii), payable on demand. All past due principal of
and, to the extent permitted by law, all past due interest and any other amount
due under this Agreement or any other document or agreement executed by or
purporting to be binding upon Borrowers in connection herewith will bear
interest from the date due until paid at a per annum rate equal to the Maximum
Rate. In the event of termination of this Agreement by either party hereto,
Bank=s entitlement to this charge will continue until all Secured Obligations
are paid in full. Bank will render a statement of account monthly and such
statement rendered by Bank will be binding upon Borrowers absent manifest error.
(c) Fees.
(i) Subject to the provisions of SECTION 4(d), upon execution of this
Agreement, in consideration of Bank's structuring, approving and committing
to make the Revolving Loans and to issue Letters of Credit, but without
affecting Borrowers' obligation to reimburse Bank for costs associated with
this Agreement and the transactions contemplated hereby as provided in
SECTION 17(j), Borrowers agree to pay Bank a closing fee in the amount of
$100,000.00 which will be fully earned and non-refundable when paid.
(ii) In consideration of the maintenance of Bank's commitment to make
Loans hereunder, Borrowers will pay Bank a fee at the rate of one-half of
one percent (0.5%) per annum on the daily average unused portion of the
Revolving Line, payable monthly in arrears, on the first day of each
calendar month beginning January 1, 2001, and continuing on the first day
of each month thereafter during the term of this Agreement and on the
Termination Date; provided, however, that such fee for any month shall be
at the rate of one-quarter of one percent (0.25%) per annum if the average
outstanding principal balance of the Revolving Loans for such month is
greater than $5,000,000.
Such fees are compensation to Bank and are not interest or a charge for the use
of money.
(d) No Usury. Notwithstanding anything contained herein, in any note
delivered pursuant hereto or in any other loan document to the contrary, it is
not intended by Bank to contract for, charge, receive, collect or apply interest
calculated at a rate in excess of the Maximum Rate. Further, Bank shall never
be deemed to have contracted for or be entitled to charge, receive, collect or
apply as interest on the Secured Obligations, any amount in excess of the amount
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permitted and calculated at the Maximum Rate, and, in the event Bank ever
contracts for, charges, receives, collects or applies as interest any amount in
excess of the amount permitted and calculated at the Maximum Rate, such amount
which would be excessive interest shall be applied to the reduction of the
unpaid principal balance of the Secured Obligations, and, if the principal
balance of the Secured Obligations has been paid in full, any remaining excess
shall forthwith be paid to Borrowers. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum
Rate, Borrowers and Bank shall, to the maximum extent permitted under applicable
law, (i) characterize any non-principal payment (other than payments which are
expressly designated as interest payments hereunder) as an expense, fee, or
premium, rather than as interest, (ii) exclude voluntary prepayments and the
effect thereof, and (iii) spread the total amount of interest throughout the
entire contemplated term of the Loans.
As used herein, the "EFFECTIVE INTEREST RATE" means the rate of interest
per annum on the Loans in effect from time to time pursuant to SECTION 4(a) and
4(b). If, in any month, the Effective Interest Rate, absent the limitation to
the Maximum Rate, would have exceeded the Maximum Rate, then the Effective
Interest Rate for that month shall be the Maximum Rate, and if, in future
months, the Effective Interest Rate would otherwise be less than the Maximum
Rate, then the Effective Interest Rate shall remain at the Maximum Rate until
such time as the amount of interest paid hereunder equals the amount of interest
which would have been paid if the same had not been limited by the Maximum Rate.
In this connection, in the event that, upon payment in full of the Secured
Obligations, the total amount of interest paid or accrued under the terms of
this Agreement is less than the total amount of interest which would have been
paid or accrued if the Effective Interest Rate had at all times been in effect,
then Borrowers shall, to the extent permitted by applicable law, pay to Bank an
amount equal to the difference between (i) the lesser of (A) the amount of
interest which would have been charged if the Maximum Rate had, at all times,
been in effect and (B) the amount of interest which would have accrued had the
Effective Interest Rate, at all times, been in effect, and (ii) the amount of
interest actually paid or accrued under this Agreement.
In no event shall Chapter 346 of the Texas Finance Code, as amended (the
Texas Finance Code is referred to herein as the "Act"), (which regulates certain
revolving loan accounts and revolving tri-party accounts) apply to any note
delivered pursuant hereto.
The interest rates provided for in SECTION 4(a) shall be computed on the
basis of a year of 360 days and the actual number of days elapsed; provided,
however, any calculation of the Maximum Rate shall be computed on the basis of
the actual days elapsed in a year of 365 or 366 days, as appropriate, unless the
Act permits any applicable interest rate ceiling to be calculated on the basis
of a 360-day year and twelve 30-day months.
"MAXIMUM RATE" means the maximum nonusurious interest rate, if any, that at
any time, or from time to time, may be contracted for, taken, reserved, charged,
or received on the Secured Obligations under the laws which are presently in
effect of the United States and the State of Texas applicable to Bank and such
Secured Obligations or, to the extent permitted by law, under such applicable
laws of the United States and the State of Texas which may hereafter be in
effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow. To the extent that the Act is relevant to any holder
of the Secured Obligations for the
11
purposes of determining the Maximum Rate, each such holder elects to determine
such applicable legal rate under the Act pursuant to the "monthly ceiling", from
time to time in effect, as referred to and defined in the Act; subject, however,
to the limitations on such applicable ceiling referred to and defined in the
Act, and further subject to any right such holder may have subsequently, under
applicable law, to change the method of determining the Maximum Rate.
5. Representations and Warranties of Borrowers. All of the following
representations and warranties are made jointly and severally by Borrowers:
(a) Authority, Compliance with Laws, Litigation, No Material Adverse
Change, Etc. Borrowers warrant and represent to Bank that: (i) each Borrower is
a corporation, duly organized and validly existing under the laws of the state
of such Borrower's formation; (ii) the execution, delivery, and performance of
this Agreement and any related loan documents are within each Borrower's
corporate powers, have been duly authorized, do not violate such Borrower's
constituent documents, any law or regulation, including without limitation, any
law or regulation relating to occupational health and safety or protection of
the environment applicable to either Borrower, or any indenture, agreement, or
undertaking to which a Borrower is a party or by which a Borrower or its
property is bound; (iii) neither Borrower has any subsidiaries or other
investments in other persons, except as set forth on PART I OF EXHIBIT B; (iv)
each Borrower, to date, is in compliance in all material respects with all laws,
rules and regulations applicable to it, including laws, rules or regulations
concerning the environment, occupational health and safety and pensions or other
employee benefits; moreover, going forward from the date of this Agreement,
Borrowers will give written notice to the Bank within ten (10) days of receipt
by either Borrower of notice of non-compliance from any regulatory agency or
governmental entity; (v) there is no litigation or investigation pending against
a Borrower (or, so far as Borrowers are aware, threatened nor is there any basis
therefor) which, if it were decided adversely to a Borrower, would reasonably be
likely to have a material adverse effect on such Borrower, such Borrower's
financial or operational condition or such Borrower's prospects (taking into
account any insurance coverage that has been acknowledged by the insurer); (vi)
other than debt set forth on PART II OF EXHIBIT B, neither Borrower is indebted
to any other person for money borrowed nor has either Borrower issued any
guaranty of payment or performance by any other person, except as set forth on
PART II OF EXHIBIT B; (vii) since October 31, 2000, there has been no material
adverse change in Borrowers' business, Borrowers' financial or operational
condition or Borrowers' business prospects; and (viii) each Borrower is, and
after giving effect to the initial loans under this Agreement and the
application of the proceeds of such loans each Borrower will be, solvent and has
sufficient revenues to pay such Borrower's obligations as they come due and
adequate capital with which to conduct such Borrower's business.
(b) Title to Assets, Other Collateral Matters; Defaults. Borrowers
represent and warrant to Bank that: (i) Borrowers have good and marketable title
to the Collateral, free of all security interests, liens, and claims whatsoever
("LIENS") except as set forth on EXHIBIT C hereto and, except for Permitted
Liens set forth on EXHIBIT C, and no financing statement, mortgage, notice of
lien, deed of trust, security agreement, or any other agreement or instrument
creating or giving notice of an encumbrance or charge against any of the
Collateral has been signed and delivered by any Borrower, except in Bank's favor
and except for those listed on EXHIBIT C; (ii)
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with regard to each Receivable of any Borrower as it arises, except as set forth
on a borrowing base certificate including such Receivable: (A) Borrowers will
have made delivery of the goods or will have rendered the services ordered; (B)
the Customer will have accepted the goods and/or services subject to customary
rights of return; and (C) no Customer dispute will exist in any respect,
including, without limitation, disputes as to price, terms, warranties, quantity
or quality, and claims of set-off, release from liability or defense based upon
any act of God or a public enemy or war or because of the requirements of law or
of rules, orders, or regulations having the force of law; (iii) all Inventory is
in good condition, meets any applicable governmental standards and is currently
usable or saleable in the ordinary course of Borrowers' business for a price
approximating, or greater than, Borrowers' cost thereof; (iv) all Equipment is
in good condition and state of repair; (v) all other Collateral meets applicable
government standards; (vi) each Borrower uses only the name appearing above its
signature at the end of this Agreement and, except as set forth on PART V OF
EXHIBIT D, no Borrower uses any trade names or fictitious names; (vii)
Borrowers' chief executive office, principal place of business, Inventory,
Equipment and all other Collateral are located at the addresses (including the
county) set forth on EXHIBIT D and have not been located at any other location
during the four month period prior to the date of this Agreement; and (viii) no
Default has occurred and is continuing and no condition or event which, with the
passage of time or giving of notice or both, would constitute a Default has
occurred and is continuing.
(c) Existing Bank Debt. Borrowers represent and warrant to Bank that there
is no indebtedness outstanding or owed by either or both Borrowers to any bank
or financial institution other than up to $16,018,000 in principal indebtedness
outstanding to various banks provided pursuant to Title XI of the Marine Act of
1936 ("TITLE XI LOANS").
(d) Real Estate. Borrowers represent and warrant to Bank that OPI has good
and marketable title to the real estate located in Abbeville, Louisiana,
Reedville, Virginia and Moss Point, Mississippi described in PART V of EXHIBIT D
hereto (the "OPI REAL ESTATE") and that the only liens encumbering the OPI Real
Estate are the mortgage liens granted to secure the Title XI Loans.
(e) Additional Representations. Borrowers represent and warrant to Bank
that: (i) neither Borrower is engaged as one of its principal activities in
owning, carrying or financing the purchase or ownership by others of "margin
stock" (as defined in Regulation U of the Board of Governors of the Federal
Reserve System); (ii) neither Borrower owns any real property or leases any real
property other than as listed in PART V OF EXHIBIT D; and (iii) Borrowers'
principal business is set forth on PART III OF EXHIBIT B.
6. Financial Covenants. Until the repayment of the Secured Obligations
and the termination of the obligation of Bank to make advances hereunder,
Borrowers jointly and severally covenant and agree that they will not directly
or indirectly:
(a) Minimum Tangible Net Worth. Permit the consolidated Tangible Net Worth
of Parent to be less than (i) $123,000,000 as of December 31, 2000 and (ii) the
sum of (a) $123,000,000 plus (b), if positive, 75% of Parent's cumulative
Adjusted Net Income from
13
January 1, 2001 to the particular fiscal quarter end as of which the test is
being applied, such test commencing March 31, 2001 and continuing as of the last
day of each fiscal quarter thereafter.
(b) Net Capital Expenditures. Make Net Capital Expenditures during any
fiscal year, commencing with the fiscal year beginning on January 1, 2001, which
in the aggregate, for both Borrowers, exceed $3,500,000.
(c) EBITDA. Permit Parent's EBITDA to be less than the following for the
period indicated: $1,000,000 for the fiscal quarter ending March 31, 2001;
$1,500,000 for the fiscal quarter ending June 30, 2001; $2,000,000 for the
fiscal quarter ending September 30, 2001; $2,500,000 for the fiscal quarter
ending December 31, 2001; and $7,000,000 for the twelve consecutive months
ending December 31, 2001 and each December 31 thereafter.
(d) Minimum Excess Coverage. Permit the amount by which the Borrowing
Base, computed for purposes of this subsection (d) without regard to the
$10,000,000 limit set forth in SECTION 2(A)(B)(II), exceeds the outstanding
principal of the Revolving Loans to be less than $5,000,000 at any time.
7. Collateral Covenants. All of the following covenants are made, jointly
and severally, by Borrowers for the benefit of Bank:
(a) Receivables. Borrowers will notify Bank promptly of and settle all
Customer disputes, but, if Bank so elects, Bank will have the right (after
notice to Borrowers and after the occurrence of any Default) to settle,
compromise, adjust, or litigate all Customer disputes directly with the Customer
or other complainant upon such terms and conditions as Bank deems advisable
without incurring liability to Borrowers for Bank's performance of such acts.
All of Borrowers' books and records concerning Receivables and a copy of
Borrowers' general ledger will be maintained at the addresses set forth in PART
I OF EXHIBIT D. All Receivables included on any borrowing base certificate will
be, except as indicated on such borrowing base certificate or subsequently in
writing to Bank, bona fide and existing obligations of Customers arising out of
the sale of goods and/or the rendering of services by a Borrower in the ordinary
course of Borrowers' business and will be free and clear of all liens and
encumbrances other than those in favor of Bank, owned by and owing to a Borrower
without defense, setoff or counterclaim, and will be subject to a perfected
first priority security interest in Bank's favor.
(b) Inventory. All Inventory will at all times be located at one of the
Inventory locations set forth on PART II OF EXHIBIT D and will be subject to a
perfected first priority security interest in Bank's favor. Sales of Inventory
will be made in compliance with all material requirements of applicable law.
(c) Equipment. Borrowers will maintain all Equipment used or useful in
Borrowers' business in good and workable condition, ordinary wear and tear
excepted, subject to a perfected first priority security interest in Bank's
favor, at one of the locations set forth on PART III OF EXHIBIT D.
14
(d) Defense of Title. All Collateral will at all times be owned by a
Borrower and Borrowers will defend its title to the Collateral against the
claims of third parties. Borrowers will at all times keep the Collateral
separate and distinct from its other property and keep accurate and complete
records of the Collateral.
(e) Perfection, Further Assurances. Each Borrower will give Bank at least
30 days' notice of any change in its name, any change in the location of its
principal place of business or chief executive office, any change in the
locations of its Inventory or Equipment and any acquisition by a Borrower of any
interest in real property. Borrowers will, at their expense, execute and deliver
from time to time at Bank's request and pay the costs of filing such additional
financing statements, mortgages, or other evidences of liens as may be necessary
or desirable to perfect or continue perfection of Bank's security interest in
its property. Borrowers will use all reasonable efforts to obtain from any
landlord, warehouseman, or other third party operator of premises on which any
Collateral is located, an acceptable lien waiver or subordination agreement in
Bank's favor with respect to such Collateral. All Collateral is and will
continue to be, except as expressly consented to by Bank, personal property and
will not, by reason of attachment or connection to any realty, either become or
be deemed to be a fixture or appurtenance to such realty and will at all times
be readily removable without material damage to any realty. Borrowers will
immediately deliver to Bank each promissory note and other instrument (excluding
routine invoices) evidencing any Receivable.
(f) Insurance. Borrowers will obtain and maintain in force until Bank's
commitment hereunder is terminated and all Secured Obligations are paid in full,
insurance covering the Collateral against all insurable risks to which the
Collateral is exposed, including loss, damage, fire, theft, and all other such
risks, in such amounts, with such companies, under such policies and in such
form as will be reasonably satisfactory to Bank, which policies will name Bank
as an additional insured and provide that loss thereunder will be payable to
Bank as its interests may appear under a loss payee endorsement form acceptable
to Bank. All proceeds of any such insurance will be paid over to Bank directly
and Bank may apply such proceeds to payment of the Secured Obligations, whether
or not due, in such order of application as Bank determines or, in its sole
discretion, apply such proceeds, in whole or in part, to the replacement,
restoration or rebuilding of the lost or damaged property. Borrowers will
provide to Bank from time to time, certificates showing such coverage in effect
and, at Bank's request, the underlying policies.
(g) Deposit Accounts. Borrowers will maintain their principal depository
accounts with Bank, including the maintenance of operating, administrative, cash
management, collection and other deposit accounts utilized in the conduct of its
business.
(h) Inventory Appraisal. Whenever a Default exists, and at such other
times not more frequently than once each Agreement Year as Bank shall determine
in its sole discretion and provided that a loan amount is outstanding under this
Agreement, Borrowers shall provide to Bank, at Borrowers' expense, an inventory
appraisal prepared by an independent appraiser acceptable to Bank in its sole
discretion and prepared on a basis and in a form acceptable to Bank in its sole
discretion.
15
(i) Taxes. Each Borrower shall pay or discharge when due (a) all taxes,
assessments and governmental charges imposed upon it or its properties, and (b)
all lawful claims which, if unpaid, might become a Lien on any properties of a
Borrower, except that this subsection shall not require the payment or discharge
of any such tax, assessment, charge, levy or claim which is being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established on the appropriate books of Borrowers.
8. Negative Covenants. All of the following covenants are made, jointly
and severally, by Borrowers for the benefit of Bank:
(a) No Merger or Waste. Without Bank's prior written consent, neither
Borrower will (i) merge or consolidate with any other entity or (ii) sell,
transfer, lease, abandon, or otherwise dispose of a substantial portion of its
assets or any of the Collateral or any of its real estate or any interest
therein, except that, so long as no Default has occurred or is continuing,
Borrowers may (A) sell Inventory in the ordinary course of its business, and (B)
sell, during the term of this Agreement, up to an aggregate of $5,000,000 in
book value of other assets each fiscal year provided that the proceeds of such
sales are immediately applied to the payment of the Secured Obligations.
Borrowers will not waste any of their assets.
(b) No Debt or Liens. Except for (i) trade payables incurred in the
ordinary course of business, (ii) up to an aggregate $25,000,000 in Title XI
Loans outstanding at any time (including those Title XI Loans now outstanding)
and made on terms similar to those Title XI Loans now outstanding and (iii) debt
listed in Part II of Exhibit B (other than Title XI Loans), neither Borrower
will obtain or attempt to obtain from any party other than Bank, or permit to be
outstanding, any loans, advances, or other financial accommodations or
indebtedness of any kind, nor will either Borrower enter into any direct or
indirect guaranty of any obligation of another Person (other than a guaranty of
indebtedness of a Borrower that is permitted hereunder). Neither Borrower will
permit any of its assets to be subject to any Lien other than Permitted Liens as
set forth on Exhibit C and existing Liens securing Title XI Loans.
(c) No Distributions. Neither Borrower will retire, repurchase or redeem
any of its capital stock or other ownership interest, nor declare or pay any
dividend in cash or other property (other than additional shares of capital
stock or additional ownership interests and other than dividends paid by OPI
solely to Parent) to any owner or holder of its shares or other ownership
interest. Neither Borrower will pay any fees or make any other cash
distributions to ▇▇▇▇▇▇ Corporation or any of its subsidiaries or Affiliates
(other than customary director fees or reimbursements).
(d) No ERISA Liabilities. Borrowers will make timely payments of all
contributions required to meet the minimum funding standards for its employee
benefit plans subject to the Employee Retirement Income Security Act of 1974 (as
amended, "ERISA") and will promptly report to Bank the occurrence of any
reportable event (as defined in ERISA) and any giving or receipt by it of any
governmental notice (other than routine requests for information) in respect of
any such plan.
(e) Transactions with Affiliates. Neither Borrower will engage in any
transaction
16
with any of its officers, directors, employees or other Affiliates,
except for an "arms-length" transaction on terms no more favorable to the other
party than would be granted to an unaffiliated party, which transaction
involving an officer, director or Affiliate shall be approved by such Borrower's
disinterested directors and shall be disclosed in a timely manner and in writing
to Bank prior to the consummation of the transaction.
(f) Loans/Investments. Neither Borrower will make any loans or advances to
or extend any credit to any Person except (i) the extension of trade credit in
the ordinary course of business; and (ii) advances to employees not to exceed at
any time $250,000 in the aggregate for all employees. Neither Borrower will make
any payments on any loans, advances, non-compensation related obligations or
management fees (other than customary directors' fees or reimbursements) to or
for the benefit of any officer, director, shareholder, employee, subsidiary, or
Affiliate of either Borrower, or any Person in which any such officer, director,
shareholder, employee, subsidiary, or Affiliate owns any interest, or make any
payments on any indebtedness which by its terms or by agreement is subordinate
to Bank in respect of payment or security therefor except as permitted by this
Agreement or by any executed subordination agreement. Neither Borrower will
make any payments arising out of the lease or rental of real or personal
property from any Person (or Person directly or indirectly controlled by such
Person) who is an officer, director, or shareholder of such Borrower (other than
Persons owning less than five percent (5%) of Parent's common stock). Without
Bank's prior written consent, neither Borrower will create or invest in any new
subsidiary organized after the date hereof or purchase or otherwise acquire all
or a substantial part of the assets of any business or Person or acquire
ownership interests in, or otherwise invest in, any Person except: (A) existing
investments in Parent's subsidiaries described in PART I OF EXHIBIT B; (B)
direct obligations of the United States of America maturing within one (1) year
from the acquisition thereof; (C) certificates of deposit issued by, or
investment accounts in, Bank; (D) commercial paper rated A-1 by Standard &
Poor's Ratings Group or P-1 by ▇▇▇▇▇'▇ Investors Service, Inc. and (E) up to
$100,000 in investments in other investments.
9. Reporting and Information.
(a) Financial Statements.
(1) Audited Year-End Statements. As soon as available, but in any event
within one hundred and twenty (120) days after the end of each fiscal year
of Parent, Borrowers will deliver to Bank copies of the consolidated and
consolidating balance sheet of Parent and its subsidiaries as of the end of
such fiscal year and the related consolidated and consolidating statements
of income, shareholders' equity and cash flow for such fiscal year, in each
case setting forth in comparative form the figures for the previous year of
Parent and each of its subsidiaries and accompanied by an opinion of
independent certified public accountants selected by Borrowers and
acceptable to the Bank stating, without material qualification, that such
consolidated financial statements fairly present the financial condition of
Borrowers and the results of their operations and their cash flows in
accordance with GAAP and that their audit was conducted in accordance with
generally accepted auditing standards.
17
(2) Monthly Financial Statements. As soon as available, but in any event
within thirty (30) days after the end of each calendar month, Borrowers
will deliver to Bank copies of the unaudited consolidated and consolidating
balance sheet of Parent and its subsidiaries as of the end of such month
and the related unaudited consolidated and consolidating income statement
for Parent and its subsidiaries for such month and for the portion of the
fiscal year of Parent through such month, certified by the chief financial
officer of Parent as presenting fairly the financial condition and results
of operations of Parent and its subsidiaries as of the date thereof and for
the periods ended on such date, subject to normal year end adjustments.
(3) Projected Financial Statements. As soon as available, but in any event
within thirty (30) days prior to the end of each fiscal year of Borrowers,
Borrowers will deliver to Bank forecasted financial statements for the next
fiscal year, prepared by Borrowers, consisting of consolidated and
consolidating balance sheets, cash flow statements and income statements of
Parent and its subsidiaries, reflecting projected borrowing hereunder and
setting forth the assumptions on which such forecasted financial statements
were prepared.
(4) Compliance Certificate. Within forty-five (45) days of the end of each
fiscal quarter, Parent will deliver to Bank a certificate of Parent's
President or chief financial officer, in the form of EXHIBIT E hereto, (a)
stating that, based on an examination sufficient to enable him to make an
informed statement, no Default exists or, if such is not the case,
specifying such Default and its nature, when it occurred, whether it is
continuing and the steps being taken by the Borrowers with respect to such
Default, and (b) setting forth the calculations necessary to establish
whether or not the Borrowers were in compliance with the covenants
contained in SECTION 6 as of the date of such statements.
All such financial statements shall be complete and correct in all material
respects and all such financial statements referred to in CLAUSES (1) and (2)
shall be prepared in accordance with GAAP (except, with respect to interim
financial statements, for the omission of footnotes) applied consistently
throughout the periods reflected therein.
(b) Collateral Reports. Borrowers will deliver to Bank, as needed in order
to determine availability under the Borrowing Base but at least monthly within
FIFTEEN (15) days of the end of each month, a borrowing base certificate, in
form acceptable to Bank, specifying the book value of the Collateral as of the
last day of the preceding week and identifying any items of Collateral as to
which a representation, covenant or, in the case of Receivables, any condition
set forth in SECTION 2(a)(i) is not true. Borrowers will deliver to Bank, no
later than the 20th day of each month end, a detailed aging of Receivables and
an accounts payable aging, both prepared as of the last day of such month end
and in such form as required by Bank, including the names and addresses of
Borrowers' Customers. Borrowers will maintain a perpetual inventory system at
all times and deliver to Bank monthly a list of locations of Inventory and the
types and values of Inventory at each such location, in such form as Bank may
require. Borrowers will also conduct
18
a physical inventory count each year and adjust its records to reflect the
results of the count. At Bank's request, Borrowers shall deliver such
information more or less often than described above and such other information
with respect to the Collateral as Bank may reasonably request.
(c) Other Information. Each Borrower will notify Bank as promptly as
possible of any Default, any receipt by it of notice from any governmental
authority that a Borrower has or may have violated any law, rule or regulation
applicable to such Borrower or the terms or conditions of any permit or license
any Borrower holds or is required to hold in connection with the conduct of its
business, any amendment to a Borrower's constituent documents and any change in
its management or ownership, and the commencement of any material litigation,
claim or action against any Borrower. Each Borrower will also deliver to Bank,
promptly upon receipt thereof, copies of all reports, if any, submitted to such
Borrower or its Board of Directors by its independent public accountants,
including, without limitation, all management reports.
10. Inspection Rights, Expenses, Etc.
(a) Inspection. Bank may examine and make copies of Borrowers' records,
the Collateral and all other assets of Borrowers or any portion thereof,
wherever located, and may enter upon any Borrower's premises for such purposes,
without notice and from time to time, during business hours. Borrowers will
assist Bank in whatever ways are reasonably necessary to make each such
examination. Bank may discuss Borrowers' financial condition with its
independent accountants without liability to Bank or such accountants.
(b) Performance by Bank. Bank may, from time to time at Bank's option,
perform any agreement of Borrowers' hereunder which a Borrower fails to perform
and take any other action which Bank deems necessary for the maintenance or
preservation of any of the Collateral or Bank's interest therein, and Borrowers
agree to reimburse Bank immediately on demand for all of Bank's reasonable
expenses in connection with the foregoing (including, without limitation,
reasonable fees and expenses of legal counsel), together with interest thereon
at the rate of Contract Rate from the date any such expense is incurred until
reimbursed by Borrowers.
(c) Field Examinations; Inspections. Bank shall have the right without
hinderance or delay to conduct field examinations and to inspect the Collateral,
from time to time. To reimburse Bank for its costs and expenses in connection
with the conduct of such field examinations and inspections, Borrowers will pay
to Bank a $750.00 per diem fee for each of Bank's personnel and representatives
engaged in conducting field examinations of Borrowers' operations and books and
records plus actual out-of-pocket expenses for reasonable travel, lodging, and
meals for such personnel and representatives; such fees and expenses shall be
payable by Borrowers upon demand by Bank. Bank shall have full access to all
records available to any Borrower from any credit reporting service, bureau or
similar service and shall have the right to examine and make copies of any such
records. Bank may exhibit a copy of this Agreement to such service and such
service shall be entitled to rely on the provisions hereof in providing access
to Bank as provided herein.
19
11. Rights of Setoff, Etc.
Bank will be entitled to hold or set off any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness and other property at any time owing by or in the possession of,
Bank (or any of Bank's Affiliates) to or for the credit or the account of any
Borrower against any and all Secured Obligations, now or hereafter existing.
Bank will have the right and is hereby irrevocably authorized and directed to
charge to any of Borrowers' accounts the amounts of any and all such Secured
Obligations. Recourse to the Collateral or other security for the Secured
Obligations will not at any time be required, and Borrowers hereby waive any
right of marshalling they may have. Borrowers' obligation to pay or repay the
Secured Obligations is unconditional and joint and several. Borrowers agree that
Bank may take such action with regard to the custody and collection of
Receivables assigned to Bank as Bank may deem necessary. Borrowers agree that
failure to take any action with regard to any given Receivable will not be
unreasonable until and unless Bank receives a written request for specific
action from Borrowers with regard thereto, such action is lawful and will not
create any risk that Bank may subject itself to liability for taking such
requested action and Bank fails to respond to such request within a commercially
reasonable time.
12. Attorney-in-Fact.
Borrowers hereby appoint and constitute Bank as their attorney-in-fact: to
receive, open, and dispose of all mail addressed to any Borrower pertaining to
the Collateral; to notify the postal authorities to change the address and
delivery of mail addressed to any Borrower to such address as Bank may
designate; to endorse a Borrower's name upon any notes, acceptances, checks,
drafts, money orders, and other evidences of payment that come into Bank's
possession and to deposit or otherwise collect the same; to sign a Borrower's
name on any invoice or ▇▇▇▇ of lading relating to the Collateral, on drafts
against Customers, and notices to Customers; to send verifications of accounts
to Customers; to execute in a Borrower's name any financing statements,
affidavits and notices with regard to any and all lien rights; and to do all
other acts and things necessary to carry out this Agreement. All acts of said
attorney-in-fact are hereby authorized, ratified and approved, and said
attorney-in-fact will not be liable for any errors or mistake of fact or law.
This power, being coupled with an interest, is irrevocable while any of the
Secured Obligations remain unpaid or Bank has any commitment to Borrowers under
this Agreement or otherwise. Other than with respect to Bank's rights to endorse
notes, acceptances, checks, drafts, money orders and other evidences of payment,
send verifications of accounts to Customers and execute financing statements as
set forth above, such power of attorney will not be effective until a Default
has occurred. Bank may at any time, whether or not a Default has occurred and
without prior notice to Borrowers, notify any or all of each Borrower's account
debtors to make payment to Bank at such address designated by Bank.
13. Defaults and Remedies.
(a) Defaults. For purposes of this Agreement, "DEFAULT" means the
occurrence of any of the following events:
(i) non-payment when due of any amount payable, whether principal or
interest, on any of the Secured Obligations or any Borrower's failure to
perform, or the breach by
20
any Borrower of, any covenant or agreement of any Borrower contained
herein, in any related loan document or in any agreement out of which any
of the Secured Obligations arose and which breach of such covenant or
agreement (other than payment obligations) remains uncured for five
Business Days after the earlier of (a) the date on which either Borrower,
in the exercise of reasonable diligence, should have known of such breach
or (b) the receipt of written notice of such breach from Bank to Borrowers;
(ii) non-payment when due of the premium on any insurance policy
required to be maintained hereunder;
(iii) any statement, representation, or warranty made by any Borrower
in writing in this Agreement or in any other writing or statement at any
time furnished or made by any Borrower to Bank proves to have been untrue
in any material respect as of the date furnished or made;
(iv) any Borrower's default under any other agreement for borrowed
money or any other agreement involving more than $500,000;
(v) suspension of the operation of any Borrower's present business;
(vi) any Borrower or any other party primarily or secondarily,
directly or indirectly, liable on any of the Secured Obligations,
including, but not limited to, any guarantor thereof (Borrowers and such
other parties are referred to individually as an "OBLIGOR" and
collectively, as the "OBLIGORS"), becomes insolvent or unable to pay its
debts as they mature, or admits in writing that it is insolvent or unable
to pay its debts, makes an assignment for the benefit of creditors, makes a
conveyance fraudulent as to creditors under any state or federal law, or a
proceeding is instituted by or against any Obligor alleging that such
Obligor is insolvent or unable to pay debts as they mature, or a petition
under any provision of Title 11 of the United States Code, as amended, is
filed by or against any Obligor, and in the case of any such involuntary
proceeding, such proceeding continues undismissed or unstayed for 30
consecutive calendar days or any order granting the relief requested shall
be entered;
(vii) entry of any judgment in excess of $300,000 against any Obligor
for which no insurance covering the full amount of such judgment (other
than standard deductibles) is otherwise available or creation, assertion,
or filing of any Lien against the property of any Obligor in each case
which remains undischarged for 10 days after such entry or filing;
(viii) death of any Obligor who was a natural person, or death or
withdrawal of any partner of any Obligor which is a partnership, or
dissolution, merger, or consolidation of any Obligor which is a
corporation;
(ix) transfer of a substantial part (determined by market value) of
the property of any Obligor;
21
(x) termination, unenforceability or withdrawal of any guaranty for
the Secured Obligations, or failure of any Obligor to perform any of its
obligations under such a guaranty or assertion by any Obligor that it has
no liability or obligation under such a guaranty;
(xi) appointment of a receiver for all or any part of the Collateral
or for any property in which Bank has an interest as security for the
Secured Obligations;
(xii) seizure of the Collateral by any third party;
(xiii) the occurrence of any act, omission, event or circumstance
which has or could reasonably be excepted to have a materially adverse
effect on a Borrower or any other Obligor; or
(xiv) the Pension Benefit Guaranty Corporation or the Department of
Labor commences proceedings under ERISA to terminate any employee pension
benefit plans maintained by any Borrower; or
(xv) ▇▇▇▇▇▇ Corporation shall cease to own, directly or indirectly,
at least fifty-one percent (51%) of each class of the issued and
outstanding capital stock of Parent that is entitled to elect a majority of
the Board of Directors of Parent, or Parent shall cease to own, directly or
indirectly, all of the issued and outstanding capital stock of OPI.
(b) Remedies; Acceleration. If a Default occurs and is continuing, Bank
may, without demand or notice to Borrowers, do any one or more of the following:
(i) terminate Bank's commitment, if any, to make Loans or to extend other
financial accommodations to Borrowers; (ii) declare the entire principal amount
of all Loans outstanding hereunder, all interest accrued thereon, any unpaid
fees and all other Secured Obligations of any kind or nature to be, and
thereupon the same will immediately become, due and payable in full; and (iii)
exercise any or all rights and remedies available under hereunder or under any
other loan document, at law and/or in equity. In the event of a Default
described under clause (vi) of SECTION 13(a), such termination and acceleration
shall automatically occur without any notice, demand or presentment of any kind.
Upon the occurrence of a Default and the demand by Bank, Borrowers shall deposit
with Bank a cash sum equal to the amount of letters of credit and acceptances
which have not been drawn upon or matured which funds will be used to reimburse
Bank upon drawing under any letter of credit or maturity of any acceptances.
(c) Exercise of Other Remedies. If a Default occurs and is continuing,
Bank may, without notice to Borrowers except as expressly provided herein, at
Bank's option, exercise any of the remedies available to Bank as a secured party
under the Uniform Commercial Code as in effect in the State of Texas (whether or
not such provisions are in effect in the relevant jurisdiction), or otherwise
available to Bank under applicable law. Borrowers agree, upon Default and upon
Bank's written request, to cease the sale or other disposition of the Collateral
(other than such Collateral which is perishable), except with Bank's written
consent, and to
22
assemble at its expense all the Collateral at a convenient place acceptable to
Bank. Bank may charge to Borrowers' account and Borrowers will pay to Bank upon
demand all costs and expenses, including reasonable attorneys' fees, incurred:
(A) upon the liquidation of any Collateral; (B) to obtain or enforce payment of
the Secured Obligations; (C) in the settlement, adjustment, compromise, or
litigation of Customer disputes; or (D) in the prosecution or defense of any
action or proceeding either against Bank or against any Borrower concerning any
matter growing out of or in connection with this Agreement and/or any Collateral
and/or any Secured Obligations. If at any time Bank pays any state, city, local,
federal, or other tax or levy attributable to the Collateral, Borrowers will
repay to Bank the amount of tax so paid by Bank unless such repayment is
prohibited by applicable law. Borrowers agree that Bank may apply any proceeds
from disposition of the Collateral first to satisfy obligations secured by
security interests, liens or encumbrances prior to Bank's security interest.
Borrowers will remain liable and will pay on demand any deficiencies arising
upon the liquidation of any security held by Bank.
(d) Cumulative Remedies. All remedies provided for herein are cumulative
of any and all other remedies existing at law or in equity and are cumulative of
any and all other remedies provided in any other loan documents, or any part
thereof, or otherwise benefitting Bank; resort to any remedy provided for
hereunder or under any such loan document or provided by law shall not prevent
the concurrent or subsequent employment of any other appropriate remedy or
remedies.
(e) Notices. If any notice of intended disposition of the Collateral or of
any other act by Bank is required by law and a specific time period is not
stated therein, such notice, if given five calendar days before such disposition
or act, in accordance with the provisions of SECTION 17(a), will be deemed
reasonably and properly given.
14. Waiver of Notices. Except as otherwise expressly provided in this
Agreement, Borrowers expressly waive presentment for payment, notice of
nonpayment, protest, demand, notice of protest, notice of intent to accelerate,
notice of acceleration and dishonor, diligence in enforcement and indulgences of
every kind and any other notices of any kind with respect to the Secured
Obligations.
15. Term.
(a) Maturity. This Agreement will continue in full force and effect from
its date until DECEMBER 20, 2003 (the "MATURITY DATE"); the Maturity Date shall
be automatically extended for successive one-year periods unless either the Bank
or the Borrowers provide to the other written notice of termination not less
than 60 days prior to the then effective Maturity Date.
(b) Voluntary Termination. Borrowers may terminate this Agreement at any
time upon 60 days' written notice to Bank. On the date specified in such notice,
termination will be effective, provided that (i) Borrowers have paid to Bank, in
same day funds, an amount equal to the aggregate amount of principal of all
Loans outstanding on such date, together with accrued interest thereon, (ii) the
originals of all letters of credit and bankers acceptances, if any, issued or
created by Bank for a Borrower's account have been returned for cancellation or
have been
23
presented and paid by Borrowers or other arrangements satisfactory to Bank have
been made, (iii) all other Secured Obligations outstanding and unpaid have been
paid in full in same day funds, and (iv) Borrowers have provided Bank an
indemnification agreement satisfactory to Bank with respect to returned and
dishonored items and such other matters as Bank shall require. In the event that
termination occurs prior to the Maturity Date, Borrowers agree to pay Bank, as a
condition precedent to such termination, a prepayment fee equal to (A) if such
termination occurs on or prior to the first anniversary of the date hereof, 0.5%
of the Revolving Line and (B) if such termination occurs after the first
anniversary of the date hereof but prior to the Maturity Date, 0.25% of the
Revolving Line; PROVIDED, HOWEVER, should termination be effective as a result
of the refinancing of the Loans by Bank or any of its Affiliates, no prepayment
fee will be due from Borrowers.
(c) Termination on Default. Notwithstanding the foregoing, should a
Default occur and be continuing, Bank will have the right to terminate this
Agreement at any time without notice except as otherwise provided herein.
Notwithstanding termination all the terms, conditions, and provisions hereof
will continue to be fully operative until all transactions entered into, rights
created or obligations incurred hereunder prior to termination and all of
Borrowers= other Secured Obligations have been fully disposed of, concluded,
paid, satisfied, and liquidated.
16. Indemnification. Borrowers agree to defend, indemnify, and hold
harmless Bank and Bank's directors, officers, employees, Affiliates,
representatives, attorneys and agents (each an "INDEMNIFIED PERSON") from and
against any and all penalties, fines, liabilities, damages, costs, or expenses
of whatever kind or nature (collectively, "LOSSES") asserted against or incurred
by any such Indemnified Person, arising out of, or in any way related to this
Agreement or any related loan document, or the transactions contemplated hereby
or thereby, including without limitation (i) by reason of the violation of any
law or regulation relating to the protection of the environment or the presence,
generation, disposal, release, or threatened release of any hazardous or toxic
materials in connection with Borrowers' business on, at or from any property at
any time owned or operated by a Borrower, and (ii) attorneys' and consultants'
fees, investigation and laboratory fees, court costs, and litigation expenses
actually incurred, and (iii) SPECIFICALLY INCLUDING ANY AND ALL LOSSES ARISING
FROM ANY INDEMNIFIED PERSON'S ORDINARY NEGLIGENCE BUT EXCLUDING LOSSES RESULTING
FROM SUCH INDEMNIFIED PERSON'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
17. General Provisions.
(a) Notices. Except as specifically provided in this Agreement or in any of
the related loan documents, all notices and communications hereunder and
thereunder will be in writing or by telephone subsequently confirmed in writing.
Any notice, request or communication sent or made by a Borrower shall be binding
on both Borrowers; any notice, request or communication received, or deemed
received hereunder, by a Borrower shall be deemed received by both Borrowers.
Notices in writing will be delivered personally or sent by overnight courier
service, by certified or registered mail, postage pre-paid, or by facsimile
transmission and will be deemed received, in the case of personal delivery, when
delivered, in the case of overnight courier service, on the next Business Day
after delivery to such service, in the case of mailing, on the
24
fifth day after mailing (or, if such day is a day on which deliveries of mail
are not made, on the next succeeding day on which deliveries of mail are made)
and, in the case of facsimile transmission, upon transmittal; provided that in
the case of notices to Bank, Bank will be charged with knowledge of the contents
thereof only when such notice is actually received by Bank. A telephonic notice
to Bank as understood by Bank will be deemed to be the controlling and proper
notice in the event of a discrepancy with or failure to receive a confirming
written notice. Notices to Bank or Borrowers will be sent to the following
addresses, or any other address for either of Bank or Borrowers of which the
other is notified in writing.
If to Borrowers: Omega Protein Corporation
▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Bank: Bank of America, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Finance Division Manager
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Governing Law. This Agreement is made in the State of Texas, will be
governed by and construed and enforced according to the laws of the State of
Texas other than its conflicts of laws principles and will, if accepted by Bank,
be effective on the date set forth below Bank's signature block at the end of
this Agreement.
(c) No Waiver. No waiver hereunder will be valid unless in writing signed
by Bank and then only to the extent therein stated. No delay or failure on
Bank's part in the exercise of any right or remedy hereunder will operate as a
waiver thereof or of Bank's right to exercise any other right or remedy.
(d) Time of Essence. Time is of the essence of this Agreement.
(e) Severability. Wherever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement will be prohibited by or invalid under
applicable law, such provision will be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
(f) Successors and Assigns. Borrowers' rights and obligations and Bank's
rights and obligations hereunder will inure to the benefit of their respective
successors and assigns, provided that Borrowers acknowledge and agree that
without Bank's prior written consent, which may be withheld for any reason or no
reason, no Borrower may assign its rights or obligations or any part thereof
hereunder to any other Person.
25
(g) Submission to Jurisdiction, Service, Etc. BORROWERS AGREE THAT ANY
SUIT, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE SECURED OBLIGATIONS, THE RELATIONSHIP BETWEEN BORROWERS AND
BANK CREATED HEREBY, OR ARISING OUT OF ANY JUDGMENT AGAINST A BORROWER ENTERED
BY ANY COURT OR OTHER TRIBUNAL OF COMPETENT JURISDICTION WITH RESPECT TO THE
ENFORCEMENT OF THIS AGREEMENT, MAY BE INSTITUTED IN ANY STATE COURT LOCATED IN
▇▇▇▇▇▇ COUNTY, TEXAS OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF TEXAS OR IN ANY OTHER COURT HAVING SUBJECT MATTER JURISDICTION, AS
BANK WILL SELECT IN BANK'S SOLE DISCRETION. EACH BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY SUCH
COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, HEREBY WAIVING PERSONAL SERVICE OF
THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN. EACH
BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT
MAY HAVE TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING. FURTHER, EACH
BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO
SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT, ACTION
OR PROCEEDING. EACH BORROWER FURTHER AGREES THAT A FINAL JUDGMENT IN ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT OR TRIBUNAL WILL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW.
EACH BORROWER HEREBY AGREES THAT SERVICE OF PROCESS MAILED OR DELIVERED TO
IT AT ITS ADDRESS AS PROVIDED HEREIN WILL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON IT IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH
COURT OR TRIBUNAL AND WILL BE TAKEN AND HELD TO BE VALID, PERSONAL SERVICE ON
SUCH BORROWER, IRRESPECTIVE OF WHETHER SUCH BORROWER WILL THEN BE DOING, OR AT
ANY TIME WILL HAVE DONE, BUSINESS WITHIN THE STATE OF TEXAS.
NOTHING IN THIS SECTION 17(G) WILL AFFECT BANK'S RIGHT TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT BANK'S RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST ANY BORROWER'S PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
(h) WAIVER OF TRIAL BY JURY. THE PARTIES HERETO AGREE THAT NO PARTY SHALL
REQUEST A TRIAL BY JURY IN THE EVENT OF LITIGATION BETWEEN THEM CONCERNING THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENTS OR ANY CLAIMS OR TRANSACTIONS IN
CONNECTION
26
THEREWITH, IN EITHER A STATE OR FEDERAL COURT, THE RIGHT TO TRIAL BY JURY BEING
EXPRESSLY WAIVED BY BOTH BANK AND BORROWERS. BANK AND BORROWERS ACKNOWLEDGE THAT
SUCH WAIVER IS MADE WITH FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE
RIGHTS AND BENEFITS WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF
ITS CHOOSING.
(i) Certain Definitions. The terms "security interest" and "security
title," as used herein, will include, and Bank will have, all the rights,
interests, title, liens, claims, and privileges that may be derived hereunder
and under the applicable laws of the various states of the United States. The
terms accounts, general intangibles, goods, inventory, equipment, chattel paper,
documents, instruments, investment property, securities, securities accounts,
financial assets and deposit accounts, as and when used (without being
capitalized) in this Agreement or in any related loan document, shall have the
meanings given to such terms in the Texas Uniform Commercial Code, as now in
effect or as hereafter amended.
(j) Expenses. Borrowers shall pay on demand all of Bank's reasonable costs
and expenses in connection with the preparation, reproduction, execution,
delivery, administration and enforcement of this Agreement, including the fees
and out-of-pocket expenses of Bank's counsel. In addition, Borrowers shall pay
any and all stamp and other taxes and recording and filing fees payable in
connection with the execution and delivery of all other instruments and
documents to be delivered hereunder unless such payment is prohibited by
applicable law. Such amounts may be charged by Bank to Borrowers' account. ALL
PROVISIONS IN THIS AGREEMENT PROVIDING FOR THE PAYMENT OR REIMBURSEMENT OF
BANK'S ATTORNEYS' FEES AND EXPENSES INCLUDE, WITHOUT LIMITATION, SUCH FEES AND
EXPENSES INCURRED PURSUANT TO OR IN CONNECTION WITH PROCEEDINGS BROUGHT UNDER 11
U.S.C., THE FEDERAL BANKRUPTCY CODE.
(k) Execution in Counterparts. This Agreement may be executed in separate
counterparts, all of which shall constitute one and the same Agreement.
(1) Entire Agreement. This Agreement and the other documents herein
described embody the entire agreement and understanding between Bank and
Borrowers and supersede all prior agreements and understandings relating to the
subject matter hereof except to the extent provided in the remainder of this
subsection.
(m) Funds Transfer Services. Borrowers acknowledge that Bank has made
available to Borrowers a description of security procedures regarding funds
transfers executed by Bank or an Affiliate bank at a Borrower's request (the
"SECURITY PROCEDURES"). Borrowers agree with Bank that the Security Procedures
are commercially reasonable. Borrowers further acknowledge that the full scope
of the Security Procedures which Bank or such Affiliate bank offers and strongly
recommends for funds transfers is available only if a Borrower communicates
directly with Bank or such Affiliate bank as applicable in accordance with said
procedures. If a Borrower attempts to communicate by any other method or
otherwise not in accordance with the Security Procedures, Bank or such Affiliate
bank, as applicable, shall not be required to execute such instructions, but if
Bank or such Affiliate bank, as applicable, does so, Borrowers will be deemed
27
to have refused the Security Procedures that Bank or such Affiliate bank, as
applicable, offers and strongly recommends, and Borrowers will be bound by any
funds transfer, whether or not authorized, which is issued in a Borrower's name
and accepted by Bank or such Affiliate bank, as applicable, in good faith. Bank
or such Affiliate bank, as applicable, may modify the Security Procedures at
such time or times and in such manner as Bank or such Affiliate bank, as
applicable, in Bank's sole discretion, deems appropriate to meet prevailing
standards of good banking practice. By continuing to use Bank's or such
Affiliate bank's, as applicable, wire transfer services after receipt of any
modification of the Security Procedures, Borrowers agree that the Security
Procedures, as modified, are likewise commercially reasonable. Borrowers further
agree to establish and maintain procedures to safeguard the Security Procedures
and any information related thereto.
Bank or such Affiliate bank, as applicable, will generally use the Fedwire
funds transfer system for domestic funds transfers, and the funds transfer
system operated by the Society for Worldwide International Financial
Telecommunication (SWIFT) for international funds transfers. International funds
transfers may also be initiated through the Clearing House InterBank Payment
System (CHIPs) or international cable. However, Bank or such Affiliate bank, as
applicable, may use any means and routes that Bank or such Affiliate bank, as
applicable in Bank's sole discretion, may consider suitable for the transmission
of funds. Each payment order, or cancellation thereof, carried out through a
funds transfer system or a clearing house will be governed by all applicable
funds transfer system rules and clearing house rules and clearing arrangements
whether or not Bank or such Affiliate bank, as applicable, is a member of the
system, clearing house or arrangement and Borrowers acknowledge that Bank's or
such Affiliate bank's, as applicable, right to reverse, adjust, stop payment or
delay posting of an executed payment order is subject to the laws, regulations,
rules, circulars and arrangements described herein.
(n) Nonapplicability of Chapter 346 of the Texas Finance Code. Chapter 346
of the Texas Finance Code shall not be applicable to this Agreement or any loan
pursuant to it.
(o) Participations. Bank may at any time and from time to time sell to one
or more commercial banks, financial institutions, or other Persons not
Affiliates of a Borrower (a "Participant") participating interests in any Loans
and the other interests of Bank hereunder and under related loan documents;
provided, however, that (i) Bank's obligations under this Agreement shall remain
unchanged, (ii) Bank shall remain solely responsible for the performance of such
obligations, (iii) Borrowers shall continue to deal solely and directly with
Bank in connection with Bank's rights and obligations under this Agreement and
the other loan documents, and (iv) all amounts payable by Borrowers hereunder
shall be determined as if Bank had not sold such participation; except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of a Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
and subject to the same limitation as if the amount of its participating
interest were owing directly to it as a Bank under this Agreement. Prior to
executing any participation agreement with any other Person, Bank shall consult
with Borrower regarding the selection of the participant.
28
Notwithstanding any other provision in this Agreement, Bank may at any time
create a security interest in, or pledge, all or any portion of its rights under
and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR
(S)203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
18. Definitions. When used in this Agreement, the capitalized terms set
forth below shall have the definitions assigned to such terms below:
"ADJUSTED NET INCOME" means, with respect to any period, consolidated net
earnings (after income taxes) of Parent for such period, determined in
accordance with GAAP, but excluding (i) any gain or loss arising from the
sale of capital assets, (ii) any gain arising from any write-up of assets,
(iii) earnings of any other Person, substantially all of the assets of
which have been acquired by a Borrower in any manner, to the extent that
such earnings were realized by such other Person prior to the date of such
acquisition, (iv) net earnings of any Person in which a Borrower has an
ownership interest of less than 80%, unless such earnings have actually
been received by such Borrower in the form of cash distributions, (v) the
earnings of any Person which was owned by a Borrower but was disposed of
(by merger, sale or otherwise) to a third party during such period (except
that earnings actually distributed to such Borrower prior to such
disposition will not be excluded) and (vi) any gain arising from the
acquisition of any securities or any indebtedness of a Borrower.
"AFFILIATE" of any Person means any other Person which, directly or
indirectly, controls, is controlled by, or is under common control with,
such Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common
control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of
voting securities or partnership or other interests, by contract or
otherwise.
"APPLICABLE MARGIN" means, with respect to a Contract Rate Loan, zero.
"BUSINESS DAY" means (a) any day other than a Saturday, Sunday or other day
on which banks in Dallas, Texas are authorized to close, and (b) in respect
of any determination with respect to a LIBOR Loan, any day referred to in
clause (a) that is also a day on which trading is conducted in the London
interbank eurodollar market.
"CONTRACT RATE" means, on any day, a floating annual rate of interest,
calculated on the basis of actual days elapsed but computed as if each year
consists of 360 days, equal to the sum of the Prime Rate effective as of
the first day of the calendar month in which such day falls plus the then
Applicable Margin.
"CONTRACT RATE LOAN" means a Revolving Loan bearing interest at the time in
question determined with reference to the Contract Rate.
29
"DEFAULT MARGIN" means two percent (2.0%).
"EBITDA" means, for any period, the sum of (i) the Adjusted Net Income of
Parent before provision for income taxes for such period, plus (ii)
interest expense which was deducted in calculating Adjusted Net Income,
plus (iii) depreciation, amortization, and all other non-cash, non-
operating items deducted in calculating Adjusted Net Income.
"GAAP" means generally accepted accounting principles consistently applied
and maintained throughout the period indicated and consistent with the
prior financial practice of the Person referred to.
"INTERBANK OFFERED RATE" means, with respect to any LIBOR Loan for the
Interest Period applicable thereto, the average (rounded upward to the
nearest one-sixteenth (1/16) of one percent) per annum rate of interest
determined by Bank (each such determination to be conclusive and binding
absent manifest error) as of two Business Days prior to the first day of
such Interest Period from Telerate Page 3750 as the effective rate at which
deposits in immediately available funds in Dollars are being offered or
quoted to major banks in the interbank market for eurodollar deposits for a
term comparable to such Interest Period and in the amount of the LIBOR
Loan. If such rate is unavailable from such service, then such rate may be
determined by Bank from any other interest rate reporting service of
recognized standing that Bank shall select.
"INTEREST PAYMENT DATE" means the first day of each calendar month
commencing, with respect to any Loan, on the first day of the month after
the initial advance of such Loan, and continuing on the first day of each
month thereafter until the Secured Obligations have been irrevocably paid
in full.
"INTEREST PERIOD" means, with respect to each LIBOR Loan, the period
commencing on the date of the making or continuation of or conversion to
such LIBOR Loan and ending one (1), two (2) or three (3) months thereafter,
as Borrowers may elect in the applicable Notice of Borrowing or Notice of
Conversion or Continuation; provided, that:
(a) any Interest Period that would otherwise end on a day that
is not a Business Day shall, subject to the provisions of CLAUSE (c)
below, be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case such
Interest Period shall end on the immediately preceding Business Day;
(b) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to CLAUSE (c) below, end on the last Business
Day of a calendar month;
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(c) any Interest Period that would otherwise end after the
Maturity Date shall end on such day; and
(d) notwithstanding CLAUSE (c) above, no Interest Period shall
have a duration of less than one month.
"LIBOR" means, with respect to the Interest Period applicable thereto, a
simple per annum interest rate determined pursuant to the following
formula:
LIBOR = Interbank Offered Rate
____________________________
1 - LIBOR Reserve Percentage
LIBOR shall be adjusted automatically as of the effective date of any
change in the LIBOR Reserve Percentage.
"LIBOR LOAN" means a Revolving Loan bearing interest at the LIBOR Rate.
"LIBOR MARGIN" means two and one-half percent (2.50%); provided, however,
that if Borrowers' quarterly compliance certificate prepared as of the end
of a fiscal quarter establishes that Parent's EBITDA for the four fiscal
quarters ending with such fiscal quarter equals or exceeds $30,000,000, the
LIBOR Margin for the period commencing three Business Days after receipt
of such compliance certificate and ending on the due date of the next due
compliance certificate shall be two percent (2.00%).
"LIBOR RATE" shall have the meaning as set forth in SECTION 6(a)(ii)
hereof.
"LIBOR RESERVE PERCENTAGE" means, for any day, that percentage (expressed
as a decimal) which is in effect from time to time under Regulation D of
the Board of Governors of the Federal Reserve System, as such regulation
may be amended from time to time, or any successor regulation, as the
maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special or marginal reserves) applicable to any
member bank with respect to Eurocurrency liabilities as that term is
defined in Regulation D (or against any other category of liabilities that
includes deposits by reference to which the interest rate of any LIBOR Loan
is determined), whether or not Bank has any Eurocurrency liabilities
subject to such reserve requirement at that time. All LIBOR Loans shall be
deemed to constitute Eurocurrency liabilities and as such shall be deemed
subject to reserve requirements without the benefit of credits for
proration, exceptions or offsets that may be available from time to time to
Bank.
"LOANS" means the Revolving Loans.
"NET CAPITAL EXPENDITURES" means, for any period, gross expenditures made
during such period that are required to be capitalized for financial
reporting purposes in accordance with GAAP, less such capital expenditures
that are financed by third parties.
"NET WORTH" of any Person means the sum of (i) total shareholders' equity
(including
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capital stock, additional paid-in capital and retained earnings, after
deducting treasury stock) which would appear as such on a balance sheet of
such Person prepared in accordance with GAAP, plus (ii) indebtedness of
borrowed money that has been subordinated to the Secured Obligations on
terms and conditions acceptable to Bank.
"PERSON" means an individual, corporation, limited liability company,
partnership, joint venture, association, trust or unincorporated
organization or a government or any agency or political subdivision
thereof.
"PRIME RATE" means the per annum rate of interest publicly announced by the
Bank at its principal office as its "prime rate" or "base rate" as in
effect on any particular day The Prime Rate is a reference rate used by
the Bank in determining interest rates on certain loans and is not intended
to be the lowest rate of interest charged on any extension of credit to any
debtor.
"TANGIBLE NET WORTH" means, as applied to any Person, the Net Worth of such
Person at the time in question, after deducting therefrom the amount of all
intangible items reflected therein, including all unamortized debt discount
and expense, unamortized research and development expense, unamortized
deferred charges, goodwill, intellectual property, unamortized excess cost
of investment in subsidiaries over equity at dates of acquisition, and all
similar items which should properly be treated as intangibles in accordance
with GAAP.
"TERMINATION DATE" means the earliest of (i) the Maturity Date, (ii) the
early termination of the Revolving Facility pursuant to SECTION 15(b) or
(iii) the acceleration of the Secured Obligations by Bank pursuant to
SECTION 13(b).
"TYPE" means, with respect to a Loan, its classification as a LIBOR Loan or
Contract Rate Loan.
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
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ACCORDINGLY, Borrowers have executed this Agreement as of the day and year
first above written.
OMEGA PROTEIN CORPORATION
By:
Its: Executive Vice President
OMEGA PROTEIN, INC.
By:
Its: Executive Vice President
Accepted in Dallas, Texas this December 20, 2000.
BANK OF AMERICA, N.A.
By:
Its:____________________________
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EXHIBIT A
CONDITIONS TO LOANS
The items set forth below are required to be delivered, duly executed by
the parties thereto and in form and substance acceptable to Bank in its sole
discretion, and the actions and conditions set forth below are required to be
fulfilled, as conditions to Bank's obligation to fund the Loans or extend the
first financial accommodation to Borrowers under this Agreement:
(a) Documents:
Revolving Credit Note in the principal amount of $20,000,000 made by Borrowers
to the order of Bank (the "Revolving" Credit Note A)
Completed EXHIBITS B THROUGH D to this Agreement
Certified resolutions of the Board of Directors and Certificate of Incumbency
for each Borrower
Certificate of Existence and Good Standing for Parent from Nevada Secretary of
State
Certificate of Authority to do Business for Parent from the Secretary of State
of Texas
Certified Articles of Incorporation and Bylaws of Parent
Certificate of Existence and Good Standing for OPI from the Virginia Secretary
of State
Certificate of Authority to do Business for OPI from the Secretary of State of
Louisiana, Mississippi and Virginia
Certified Articles of Incorporation and Bylaws of OPI
UCC-1 Financing Statements for Nevada, Texas, Louisiana, Mississippi, Virginia
and each other state or jurisdiction where a Borrower is doing business or where
any of the Collateral is located and for the counties in such states where a
Borrower is doing business
To the extent not previously delivered to Bank, a Landlord Lien Waiver for each
leased location where any Collateral is located.
Opinion of counsel to Borrowers addressed to Bank
Notice of Final Agreement
Releases of all Liens on, and termination statements with respect to financing
statements covering, Collateral other than releases of Permitted Liens
Officer's Closing Certificate
34
Evidence of insurance, including copies of policies, in compliance with the
requirements of this Agreement and loss payable endorsements naming Bank as a
loss payee
Lock Box Agreement with Bank
35
EXHIBIT B
Part I
SUBSIDIARIES:
Subsidiaries of Omega Protein Corporation
Omega Shipyard, Inc., a Delaware corporation
Protein Finance Company, a Delaware corporation
Protein Operating Company, a Delaware corporation
Omega Protein, Inc., a Virginia corporation
Omega Nets, Inc., a Delaware corporation
Subsidiaries of Omega Protein, Inc.
Protein Securities Company, a Delaware corporation
Northeast Organics, Inc., a Massachusetts corporation of which OPI
owns 51% of the common stock
Protein (U.S.A.), Inc., a Delaware corporation
Part II
EXISTING DEBT AND GUARANTIES
Trade payables incurred in the ordinary course of business
Title XI Loans in the aggregate principal amount not exceeding $16,000,000
Other debt not exceeding $350,000
PART III
DESCRIPTION OF PRINCIPAL BUSINESS
Borrowers are engaged in the processing, marketing and distribution of marine
products and fats and in the production and sale of a variety of protein
products derived from menhaden.
36
EXHIBIT C
Part I
EXISTING LIENS:
Liens securing the Title XI Loans and other liens covering specific items of
equipment
OTHER PERMITTED LIENS
(a) Liens or charges for current taxes, assessments or other governmental
charges which are not delinquent or remain payable without any penalty, or the
validity of which is contested in good faith by appropriate proceedings upon
stay of execution of the enforcement thereof and for which appropriate reserves
have been established in accordance with the GAAP;
(b) deposits or pledges to secure;
(i) statutory obligations;
(ii) surety or appeal bonds; or
(iii) bonds for release of attachment, stay of execution or
injunction;
(c) statutory Liens on property arising in the ordinary course of business
which, in the aggregate, do not materially impair the use of such property or
materially detract from the value of such property;
(d) Liens existing on the date hereof and described above; and
(e) Purchase money Liens permitted by the terms of this Agreement.;
provided, however, that (i) such Lien is created contemporaneously with the
acquisition of such property; (ii) such Lien attaches only to the specific items
of property so acquired; and (iii) such Lien secures only the indebtedness
incurred to acquire such property.
Part II
FINANCING STATEMENTS:
Financing Statements covering equipment securing Title XI Loans and other
financing statements covering specific items of equipment
37
EXHIBIT D
Part I
CHIEF EXECUTIVE OFFICE/PRINCIPAL PLACE OF BUSINESS
▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
LOCATIONS OF RECORDS RELATING TO ACCOUNTS RECEIVABLE
Omega Protein, Inc.
▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Part II
LOCATIONS OF INVENTORY [LIST]
See attachment
Part III
LOCATIONS OF EQUIPMENT [LIST]
See attachment
Part IV
TITLE XI LOAN LOCATIONS
See attachment
Part V
REAL PROPERTY
Owned real property:
See attachment
Leased real property:
See attachment
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Part VI
TRADE AND FICTITIOUS NAMES
Trade names:
Fictitious names:
Trademarks:
1. Omega Grow
2. Omega Pure
3. Silver ▇▇▇▇▇▇▇
4. Special Select
5. Omega Equis
39