SCHEDULE 14A INFORMATION
                    Proxy Statement Pursuant to Section 14(a)
             of the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[ ]      Preliminary Proxy Statement
[ ]      Confidential,  for Use of the Commission Only (as permitted by Rule 14a
         6(e) (2))
[X]      Definitive Proxy Statement
[ ]      Definitive Additional Materials
[ ]      Soliciting Material Pursuant to Section 14a-12

                               BALCHEM CORPORATION
--------------------------------------------------------------------------------
                (Name of Registrant as Specified In Its Charter)

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

         (Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]      No fee required.

[ ]      Fee computed on table below per Exchange Act Rules 14a-6(i)(1)and 0-11.

         1)       Title  of  each  class  of  securities  to  which  transaction
                  applies: N/A

         2)       Aggregate number of securities to which  transaction  applies:
                  N/A

         3)       Per  unit  price  or other  underlying  value  of  transaction
                  computed  pursuant  to  Exchange  Act Rule 0-11 (Set forth the
                  amount on which the filing fee is calculated  and state how it
                  was determined):
                  N/A

         4)       Proposed maximum aggregate value of transaction: N/A

         5)       Total fee paid: N/A

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange  Act Rule
0-11(a)(2)  and  identify  the  filing  for  which the  offsetting  fee was paid
previously.  Identify the previous filing by registration  statement  number, or
the Form or Schedule and the date of its filing.

         1)       Amount Previously Paid: N/A
         2)       Form, Schedule or Registration Statement No.: N/A
         3)       Filing Party: N/A
         4)       Date Filed: N/A

<PAGE>

                              BALCHEM CORPORATION
                    ----------------------------------------

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                           TO BE HELD ON JUNE 23, 2006

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


         TO OUR STOCKHOLDERS:

         NOTICE IS HEREBY  GIVEN that the  Annual  Meeting  of  Stockholders  of
BALCHEM CORPORATION will be held in the Board of Governors Room, 13th floor, the
American Stock Exchange,  86 Trinity Place, New York, New York, on Friday,  June
23, 2006 at 11:00 a.m. for the following purposes:

         1.       To elect two Class 2 directors  to the Board of  Directors  to
                  serve  until the Annual  Meeting of  Stockholders  in 2009 and
                  thereafter until their  respective  successors are elected and
                  qualified.

         2.       To transact  such other  business as may properly  come before
                  the Meeting or any adjournment thereof.

         Information with respect to the above matters is set forth in the Proxy
Statement, which accompanies this Notice.

         The Board of Directors has set April 7, 2006 as the record date for the
Annual  Meeting.  This  means that only  stockholders  of record at the close of
business  on that date are  entitled  to notice of and to vote at the Meeting or
any adjournment thereof.

         We hope that all  stockholders  who can  conveniently do so will attend
the Meeting. Stockholders who do not expect to be able to attend the Meeting are
requested to fill in, date and sign the enclosed  proxy and promptly  return the
same in the stamped,  self-addressed  envelope  enclosed  for your  convenience.
Stockholders  who are present at the Meeting may withdraw their proxies and vote
in person, if they so desire.

                                            BY ORDER OF THE BOARD OF DIRECTORS

                                            /s/ Dino A. Rossi

                                            Dino A. Rossi, President & CEO
Dated: April 28, 2006

           P.O. Box 600, New Hampton, New York 10958 Tel: 845-326-5600
                       Fax: 845-326-5702 www.balchem.com
                                         ---------------

<PAGE>

                                 PROXY STATEMENT

                               BALCHEM CORPORATION

                                     GENERAL

This Proxy Statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors of Balchem Corporation (the "Company") to be
voted at the 2006 Annual Meeting of  Stockholders  (the "Annual  Meeting" or the
"Meeting")to be held at the Board of Governors  Room,  13th Floor,  The American
Stock  Exchange,  86 Trinity Place,  New York,  NY, on Friday,  June 23, 2006 at
11:00 AM, local time, and at any  adjournments or  postponements  thereof.  This
Proxy  Statement  and a proxy  card  are  expected  to be  sent to  stockholders
beginning on or about April 28, 2006.

         The Board of  Directors  has fixed the closed of  business  on April 7,
2006 as the record date for the determination of stockholders entitled to notice
of, and to vote at, the Annual Meeting. At the Annual Meeting, stockholders will
be asked to consider  and vote upon the election of two Class 2 directors to the
Board of Directors to serve until the annual meeting of Stockholders in 2009 and
thereafter  until  their  respective   successors  are  elected  and  qualified.
Stockholders  may also  consider and act upon such other matters as may properly
come before the Annual Meeting or any adjournment or adjournments thereof.

         You can ensure  that your  shares  are voted at the  Annual  Meeting by
completing,  signing,  dating  and  returning  the  enclosed  proxy  card in the
envelope  provided.  Sending in a signed  proxy  will not  affect  your right to
attend the Meeting and vote.  A  stockholder  who gives a proxy may revoke it at
any time before it is  exercised by voting in person at the Annual  Meeting,  by
submitting  another proxy bearing a later date or by notifying the Inspectors of
Election or the Secretary of the Company of such  revocation in writing prior to
the Annual Meeting. Please note, however, that if your shares are held of record
by a broker,  bank or other nominee and you wish to attend and vote in person at
the Annual  Meeting,  you must obtain from the record  holder a proxy  issued in
your name.

         Proxies  may  be  solicited,   without  additional   compensation,   by
directors,  officers and other  regular  employees of the Company by  telephone,
email,  telefax or in person.  All  expenses  incurred in  connection  with this
solicitation will be borne by the Company.  Brokers,  nominees,  fiduciaries and
other  custodians  have been  requested  to forward  soliciting  material to the
beneficial  owners of Common Stock held of record by them,  and such  custodians
will be reimbursed for their reasonable expenses.


                                  PROPOSAL NO.1
                              ELECTION OF DIRECTORS

         The Company's  By-laws  provide for a staggered term Board of Directors
consisting of six (6) members, with the classification of the Board of Directors
into three  classes  (Class 1, Class 2 and Class 3). The term of the two current
Class 2 directors who are nominated for election as directors will expire at the
Annual  Meeting.  The Class 1 and Class 3 directors  will remain in office until
their terms expire,  at the annual  meetings of  stockholders  to be held in the
years 2007 and 2008, respectively.

                                       3
<PAGE>

         Accordingly,  at the 2006 Annual Meeting,  two Class 2 directors are to
be elected to hold office until the annual meeting of stockholders to be held in
2009 and thereafter until their successors have been elected and qualified.  The
nominees listed below with brief  biographies  are currently  directors and have
been nominated for election after due consideration by the Corporate  Governance
and  Nominating  Committee.  The Board is not aware of any  reason  why any such
nominee may be unable to serve as a director. If either or both of such nominees
are unable to serve,  the shares  represented by all valid proxies will be voted
for the  election of such other  person or  persons,  as the case may be, as the
Board may recommend.


Vote Required to Elect Directors

         Under the rules of the Securities and Exchange Commission,  boxes and a
designated  blank space are  provided on the form of proxy for  stockholders  to
mark if they  wish to vote in favor  of or  withhold  authority  to vote for the
Company's nominees for director.

         Assuming a quorum has been reached,  a determination must be made as to
the results of the vote on each matter submitted for stockholder approval.

         A Director  nominee  must  receive a plurality of the votes cast at the
Meeting, which means that a broker non-vote or a vote withheld from a particular
nominee or nominees  will not affect the outcome of the  election of  directors.
Approval of any other  matter that may come  before the Annual  Meeting  will be
determined  by the vote of a majority of the shares of Common  Stock  present in
person  or by proxy at the  Annual  Meeting  and  voting on such  matters.  With
respect to an abstention,  the shares will be considered present and entitled to
vote at the Annual  Meeting and they will have the same effect as votes  against
the matter. With respect to broker non-votes,  the shares will not be considered
entitled to vote at the Annual Meeting for such matter and the broker  non-votes
will have the  practical  effect of  reducing  the number of  affirmative  votes
required to achieve a majority vote for such matter by reducing the total number
of shares from which the majority is calculated.

         All shares  represented by duly executed  proxies will be voted For the
election of the  nominees  named in this Proxy  Statement  as  directors  unless
authority to vote For any such nominee has been withheld.  If for any reason any
such named  nominee  should not be available as a candidate  for  director,  the
proxies will be voted in accordance  with the  authority  conferred in the proxy
for  such  other  candidate  as  may be  nominated  by the  Company's  Board  of
Directors.

Recommendation of the Board of Directors Concerning the Election of Directors

         Upon recommendation by the Corporate Governance & Nominating Committee,
the Board of  Directors  of the Company  recommends  a vote For the  election of
Edward L.  McMillan and Kenneth P.  Mitchell as Class 2 directors to hold office
until the  Annual  Meeting  of  Stockholders  for the Year 2009 and until  their
successors are elected.  Proxies received by the Company will be so voted unless
such proxies withhold authority to vote for such nominees.

                        DIRECTORS AND EXECUTIVE OFFICERS

Nominees for Election as Director

                                       4
<PAGE>

         Edward L.  McMillan,  age 60, has been a director of the Company  since
February   2003.   Mr.   McMillan   owns   and   manages   McMillan,    LLC,   a
transaction-consulting  firm that  provides  strategic  consulting  services and
facilitates   mergers  and/or   acquisitions   predominantly  to  the  food  and
agribusiness  industry  sectors.  From 1988 to 1996, he was President and CEO of
Purina Mills,  Inc., where he was involved for approximately 25 years in various
senior level positions in marketing,  strategic  planning,  and business segment
management. Since September 2005, he has been a director of Nutracea, a publicly
traded company.

         Kenneth P. Mitchell,  age 66, was appointed Lead Director on October 1,
2005 and has been a director of the Company since 1993. Mr. Mitchell is retired.
He was Chief Executive  Officer of Oakite Products Inc. from 1986 to 1993. Since
February  1997, he has been a director of Tetra  Technologies,  Inc., a publicly
traded company.

Directors

         In  addition  to  Edward L.  McMillan  and  Kenneth  P.  Mitchell,  the
Company's Board of Directors includes the following members:

         Hoyt  Ammidon,  Jr.,  age 68, has been a director of the Company  since
October 2001. Mr. Ammidon is retired.  Mr. Ammidon served as a managing director
of Berkshire  Capital  Corporation,  a private  company that provides merger and
acquisition  related  services  to  the  investment  management  and  securities
industries, from November 1994 to January 2004 and has been an advisory director
thereof since January 2004. Prior thereto,  he held various executive  positions
at Cazenove Incorporated,  a brokerage firm, The Chase Manhattan Investment Bank
and E.F.  Hutton & Co.,  Inc.  Mr.  Ammidon is  currently  a  Director  of Tetra
Technologies, Inc. a publicly traded company.

         Dino A. Rossi,  age 51, has been a director of the Company  since 1997.
Mr. Rossi has been  President and Chief  Executive  Officer of the Company since
October 1997, Chief Financial  Officer of the Company from April 1996 to January
2004 and  Treasurer  of the  Company  from June 1996 to June  2003.  He was Vice
President,  Finance and  Administration  of Norit  Americas Inc., a wholly-owned
subsidiary  of Norit N.V.,  a chemicals  company,  from January 1994 to February
1996, and Vice President,  Finance and Administration of Oakite Products Inc., a
specialty chemicals company, from 1987 to 1993.

         Dr.  John Y.  Televantos,  age 53, has been a director  since  February
2005.  Currently,  Dr. Televantos is also an Executive Vice President of Arsenal
Capital  Partners,  Inc., a private equity  investment firm. Dr.  Televantos was
formerly  with  Hercules  as  President  of the  Aqualon  Division  and as  Vice
President of Hercules,  from April 2002 through 2005. He had been  President and
Chief Executive Officer,  and prior to that Chief Operating  Officer,  of Foamex
International  during the period from June 1999 through  December 2001. Prior to
that, he was Vice  President,  Development  Businesses  and Research at Lyondell
Chemical  Company since 1998.  Dr.  Televantos  holds B.S. and Ph.D.  degrees in
Chemical Engineering from the University of London,  United Kingdom. He also has
been on several public and private  company Boards and is affiliated  with other
key industry-related groups.

         Dr. Elaine R. Wedral,  age 62, has been a director  since October 2003.
Dr. Wedral is retired.  Dr. Wedral has held various  executive  level  positions
within  Nestle  over the  previous  20 years,  including  President  of Nestle's
Research  and  Development,  Food  Service  Systems.  Dr.  Wedral's  career  has

                                       5
<PAGE>

concentrated  in  research  and  development  in the  areas  of food  nutrition,
development and commercialization of food and beverage products.


Executive Officers

         Set  forth  below  is  certain  information  concerning  the  executive
officers of the Company  (other than Mr.  Rossi,  whose  background is described
above under the caption "Directors"),  which officers serve at the discretion of
the Board of Directors:

         Francis  J.  Fitzpatrick,  CPA,  age 45,  has been the Chief  Financial
Officer of the Company  since  January 2004 and  Treasurer of the Company  since
June 2003, and was Controller of the Company from April 1997 to January 2004. He
has been an executive officer and Assistant  Secretary of the Company since June
1998.   He  was   Director  of  Financial   Operations/Controller   of  Alliance
Pharmaceutical  Corp., a  pharmaceuticals  company,  from September 1989 through
March 1997.

         David F. Ludwig,  age 48, has been Vice President and General  Manager,
Specialty Products since July 1999 and an executive officer of the Company since
June 2000. He was Vice President and General Manager of Scott Specialty Gases, a
manufacturer  of high  purity  gas  products  and  specialty  gas  blends,  from
September 1997 to June 1999. From 1986 to 1997 he held various international and
domestic sales and marketing positions with Engelhard Corporation's Pigments and
Additives Division.

         Robert T. Miniger,  age 52, has been Vice  President,  Human  Resources
since April 2001 and an executive officer of the Company since June 2003. He was
the Global  Director of Human  Resources for the Industrial  Coatings  Strategic
Business Unit of PPG  Industries  Inc. from 1995 to 2000.  From 1980 to 1995, he
held several human resource  positions within PPG including glass  manufacturing
and corporate office assignments.

         Paul H.  Richardson,  PhD,  CChem,  age 36, has been Vice  President of
Research  and  Development  and an Executive  Officer of the Company  since July
2005,  and was Director of Research and  Development,  January 2004 to July 2005
and  Director of Materials  Science,  January  2001 to January  2004.  Since his
Bachelors  degree in chemistry and PhD in polymer science from the University of
Durham,  England,  Dr.  Richardson  has  held  Research  Scientist  and  Project
Management  positions at Unilever Plc. (January 1995 to April 1997) and National
Starch and Chemical Company, September 1997 to December 2000.

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

Director Independence, Meetings and Compensation of Directors

         The Board of Directors has made an affirmative  determination that each
of the Company's  directors,  other than Mr. Rossi, are independent as such term
is defined under the listing standards of the American Stock Exchange ("AMEX").

         During fiscal 2005,  the Board of Directors met 5 times during  regular
meetings and 5 times for telephonic special meetings.  Each director attended at
least 75% of the meetings of the Board held when he or she was a director and of
all meetings of those Committees of the Board on which he or she served.

                                       6
<PAGE>

         The Company has adopted a policy to  strongly  encourage  directors  to
attend each annual meeting of  stockholders.  Historically,  attendance has been
excellent. All directors were in attendance at the Company's 2005 annual meeting
of stockholders.

         For 2005, the Company paid each of its directors, other than Mr. Rossi,
an annual fee of $13,000 and $4,000 for each Board meeting attended.  For fiscal
2005,  the Company also paid to each of its directors  serving on Committees the
following fees, plus expenses, for each Committee meeting attended:  Chairman of
the Audit Committee,  $2,500;  Chairman of the Compensation  Committee,  $2,000;
chairman of all other Committees,  $1,500; all other Committee members,  $1,000.
The Lead Director is paid an additional $5,000 per year.

         The Board of Directors has approved, commencing in January 2006 through
December  2008,  that the Company pay to each of the  directors,  other than Mr.
Rossi,  an annual fee of $18,000  and  $4,000 for each Board  meeting  attended.
Commencing in 2006,  the Company will also pay to each of its directors  serving
on Committees  the following  fees,  plus expenses,  for each Committee  meeting
attended: Chairman of the Audit Committee,  $2,500; Chairman of the Compensation
Committee, $2,000; Chairman of all other Committees, $1,500; all other Committee
members, $1,000. The Lead Director receives an additional $5,000 per year.

         In December,  2005, each director,  except for Mr. Rossi,  entered into
Restricted  Stock Purchase  Agreements  (the  "Agreements")  with the Company to
purchase the Company's  Common Stock  pursuant to the Company's 1999 Stock Plan,
as amended and restated (the "1999 Stock Plan").  These  Agreements  replace the
stock option plan that non-employee directors participated in prior years.

         Under the Agreements,  each of Mr. Ammidon,  Jr., Dr.  Televantos,  Mr.
McMillan,  Mr.  Mitchell and Dr. Wedral  purchased 3,000 shares of the Company's
Common Stock at the purchase price of $.06-2/3 per share. The purchased stock is
subject to a repurchase  option in favor of the Company and to  restrictions  on
transfer until it vests in accordance with the provisions of the Agreements. The
purchased  stock will vest in full seven years from the date of the  Agreements,
provided  the  purchaser  is still a director of the  Company on that date.  The
purchased  stock  will  also vest in full  prior to seven  years  upon:  (1) the
purchaser's retirement from the Company's Board of Directors at or after age 70;
(2) the purchaser's death or major disability,  (3) the purchaser's  resignation
from the  Company's  Board of Directors due to a conflict of interest or serious
illness,  and  (4) a  change  of  control  of the  Company  (as  defined  in the
Agreements).  The purchased  shares will not vest and the Company may repurchase
all of the  purchased  shares at a purchase  price of $.06-2/3  per share in the
event of gross misconduct on the part of the purchaser in the performance of his
or her duties as a director of the Company  prior to vesting,  as  determined by
majority  vote of the Board of  Directors.  A pro rated amount of the  purchased
shares may be  repurchased  by the Company at a purchase  price of $.06-2/3  per
share in the event the purchaser ceases to be a director of the Company prior to
vesting of the purchased shares for any reason other than gross misconduct.

         The Company does not pay any other direct or indirect  compensation  to
directors in their capacity as such.


Committees of the Board of Directors

                                       7
<PAGE>

         The  Company's  Board of  Directors  has a  standing  Audit  Committee,
Executive Committee,  Compensation  Committee, as well as a Corporate Governance
and Nominating  Committee.  The Board of Directors  appoints the members of each
Committee.  In 2005, the Corporate  Governance  and Nominating and  Compensation
Committees  each held two meetings.  The Audit  Committee  held five meetings in
2005.  In 2005,  the  Board  also  implemented  a Lead  Director  role (see Lead
Director section below).

         Audit Committee. The Audit Committee, in its capacity as a committee of
the Board of Directors, is directly responsible for appointing, compensating and
overseeing  the  work  of the  accounting  firm  retained  for the  purposes  of
preparing or issuing  audit reports or related work.  The Audit  Committee  also
assists the Board of Directors in fulfilling its oversight responsibilities with
respect to the Company's financial reporting,  internal controls and procedures,
and audit functions. Responsibilities,  activities and independence of the Audit
Committee  are  discussed  in  greater  detail  under the  section of this Proxy
Statement entitled "Audit Committee Report."

         The current members of the Audit Committee are Messrs. Ammidon (Chair),
McMillan, and Mitchell.

         The Board of  Directors  of the Company has  determined  that the Audit
Committee  Chairman,  Mr. Ammidon,  qualifies as an "audit  committee  financial
expert",  as defined in Section 407 of the  Sarbanes-Oxley Act of 2002, and that
all members of the Audit  Committee  are  "independent"  under the AMEX  listing
standards.  The Board of Directors of the Company has adopted a written  charter
for the Audit Committee,  and a copy of this charter is attached as Exhibit A to
the Company's  Proxy Statement for the 2005 Annual Meeting and is also available
at the Company's website.

         Compensation Committee. The duties of the Compensation Committee are to
(i)  recommend  to the Board of  Directors  a  compensation  program,  including
incentives,  for the Chief  Executive  Officer and other senior  officers of the
Company,  for  approval by the full Board of  Directors,  (ii) prepare an Annual
Report of the  Compensation  Committee  for  inclusion  in the  Company's  Proxy
Statement as contemplated by the  requirements of Schedule 14A of the Securities
Exchange Act of 1934,  as amended,  (iii) propose to the full Board of Directors
the compensation of directors, a significant part of which compensation is to be
in the form of stock or stock  options,  and (iv) to  administer  the 1999 Stock
Plan.

         The current members of the Compensation Committee are Messrs. McMillan,
Mitchell,  Dr. Televantos  (Chair) and Dr. Wedral,  each of whom are independent
directors.

         See "Report of the  Compensation  Committee of the Board of  Directors"
below.

         Executive Committee.  The Executive Committee is authorized to exercise
all the powers of the Board of Directors in the interim between  meetings of the
Board,  subject  to the  limitations  imposed by  Maryland  law.  The  Executive
Committee is also responsible for the  recruitment,  evaluation and selection of
suitable  candidates for the position of Chief Executive  Officer  ("CEO"),  for
approval by the full Board, for the preparation,  together with the Compensation
Committee,  of objective  criteria for the evaluation of the  performance of the
CEO, and for reviewing the CEO's plan of succession for officers of the Company.

                                       8
<PAGE>

         The current members of the Executive Committee are Messrs. McMillan and
Mitchell (Chair), and Dr. Televantos.

         Corporate  Governance  &  Nominating  Committee.   The  duties  of  the
Corporate  Governance  &  Nominating  Committee  are set forth in the  Corporate
Governance &  Nominating  Committee's  Charter,  which is attached to this Proxy
Statement  as  Exhibit A. The  current  members of the  Corporate  Governance  &
Nominating  Committee are Messrs.  Ammidon and Mitchell and Drs.  Televantos and
Wedral (Chair), all of whom are "independent" under AMEX listing standards.

         Nominations  of  Directors.  Consistent  with  previous  practice,  the
Corporate Governance & Nominating  Committee continues to re-nominate  incumbent
directors who continue to satisfy the Company's  criteria for  membership on the
Board; whom the Board believes will continue to make contributions to the Board;
and who consent to  continue  their  service on the Board.  The  Committee  also
considers external director candidates or candidates  recommended by one or more
substantial, long-term stockholders. Generally, stockholders who individually or
as a group hold 5% or more of the Company's  common stock and have  continued to
do so for over one year will be considered substantial, long-term stockholders.

         The Committee and the Board has adopted  guidelines for  identifying or
evaluating  nominees for director,  including  incumbent  directors and nominees
recommended by stockholders.  The Company's  current policy is to require that a
majority  of the  Board of  Directors  be  independent;  at  least  three of the
directors  have the  financial  literacy  necessary  for  service  on the  audit
committee and at least one of these  directors  qualifies as an audit  committee
financial  expert.  In addition,  directors  may not serve on the boards of more
than  three  other  public  companies,  without  the  approval  of the  Board of
Directors;  and  directors  must  satisfy  the  Company's  age limit  policy for
directors  which requires that a director retire at the conclusion of his or her
term in the  calendar  year  during  which he or she  reaches the age of 70. The
guidelines do not otherwise establish specific minimum  qualifications that must
be met for nomination for a position on the Board of Directors,  but provide for
the  selection  of nominees  based on the  nominees'  skills,  achievements  and
experience,  and contemplate that the following will be considered,  among other
things,  in  selecting  nominees:  knowledge,  experience  and  skills  in areas
critical   to   understanding   the   Company   and   its   business,   personal
characteristics,  such as integrity and judgment, and the candidate's commitment
to the boards of other companies.



Lead Director

         Mr.  Mitchell  is  currently  the  Lead  Director.  The  Lead  Director
functions,  in general,  to reinforce the independence of the Board of Directors
of  the  Company.  This  person  is  appointed  on a  rotating  basis  from  the
independent  Directors.  The  initial  term is a two year  assignment.  The Lead
Director will serve at the election of the Board and, in any event, only so long
as that person shall be an  independent  Director of the Company.  The Corporate
Governance and Nominating  Committee will review annually the description of the
Lead Director  position and recommend to the Board any changes that it considers
appropriate.   The  Lead  Director   provides  a  source  of  Board   leadership
complementary  to that of the CEO.  Amongst other  things,  the Lead Director is
responsible  for  working  with the CEO and other  directors  to set agendas for
Board  meetings;  providing  leadership  in times of  crisis

                                       9
<PAGE>

together with the Executive Committee;  chairing regular meetings of independent
Board members without management present (executive sessions); acting as liaison
between the independent  Directors and the CEO; and chairing Board meetings when
the CEO is not in attendance.


Communicating With the Board of Directors

         Members of the Board and executive  officers are  accessible by mail in
care of the Company.  Any matter  intended for the Board,  or for any individual
member or members of the Board, should be directed to the General Counsel with a
request  to  forward  the  communication  to  the  intended  recipient.  In  the
alternative,  stockholders can direct  correspondence to the Board via the Chief
Executive  Officer,  or to the  attention of the Lead  Director,  in care of the
Company at the Company's principal  executive office address,  P.O. Box 600, New
Hampton,  NY 10958. The Company will forward such  communications,  unless of an
obviously inappropriate nature, to the intended recipient.

Code of Business Conduct and Ethics

         The Company has adopted a Code of Ethics for Senior Financial  Officers
that  applies to the  Company's  chief  executive  officer and senior  financial
officer. The Code requires that any waiver of any provision in the Code in favor
of members of the Board or in favor of executive  officers,  principal financial
or  accounting  officers,  or the  controller  (or  persons  performing  similar
functions)  may be made only by the  Board.  Any such  waiver  will be  publicly
disclosed  in a Current  Report on Form  8-K.  A copy of the Code of Ethics  for
Senior Financial Officers was filed as an exhibit to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2003.

         The Company has also adopted a Business Ethics Policy applicable to its
employees  and a further  Policy  Statement  which  confirms  that,  as and when
appropriate,  the  Business  Ethics  Policy  and the Code of Ethics  for  Senior
Financial Officers are applicable to the Company's directors and officers. Under
applicable  AMEX  rules,  any  waiver  of these  applicable  requirements  for a
director or  executive  officer of the Company is to be publicly  disclosed in a
Current Report on Form 8-K within five (5) days. This Business Ethics Policy and
further Policy Statement are available on the Company's website.

Compensation of Executive Officers

         The following table sets forth information  concerning the compensation
for services to the Company  during each of the fiscal years ended  December 31,
2005,  2004,  and 2003,  for Dino A. Rossi,  the  Company's  President and Chief
Executive Officer, and each other elected corporate officer of the Company whose
annual  salary and bonus  compensation  with respect to the 2005  calendar  year
exceeded $100,000 (the "Named Executive Officers"):

                                       10
<PAGE>
<TABLE>
<CAPTION>

                                      SUMMARY COMPENSATION TABLE

                                                                                Long Term
                                                                                Compensation
                                                 Annual Compensation            Awards
                                                 -------------------            ------------
                                                                                Securities
                                                                 Other Annual   Underlying    All Other
Name                            Year     Salary       Bonus      Compensation   Options       Compensation
-----------------------------------------------------------------------------------------------------------
<S>                             <C>    <C>          <C>          <C>              <C>         <C>
Dino A. Rossi                   2005   $ 313,500    $ 327,934    $ 4,622  (1)     60,000      $ 13,939  (4)
    President and CEO           2004   $ 285,000    $ 206,336    $ 6,075  (2)     49,500      $ 13,412  (5)
                                2003   $ 268,923    $       0    $ 5,074  (3)     45,000      $ 12,830  (6)

Francis J. Fitzpatrick          2005   $ 160,000    $  63,108    $ 7,200  (7)     45,000      $ 12,355 (10)
    Chief Financial             2004   $ 155,000    $  62,711    $ 7,431  (8)     40,500      $ 10,316 (11)
    Officer                     2003   $ 126,438    $       0    $ 6,000  (9)     33,750      $ 10,118 (12)

David F. Ludwig                 2005   $ 184,000    $  44,307    $ 4,856 (13)     36,000      $ 12,355 (16)
    Vice President/GM           2004   $ 175,615    $  58,850    $ 4,486 (14)     33,750      $ 11,828 (17)
    Specialty Products          2003   $ 157,615    $  50,000    $ 4,332 (15)     27,000      $ 11,300 (18)

Robert T. Miniger               2005   $ 149,500    $  55,440    $ 6,831 (19)     13,500      $ 11,792 (22)
    Vice President              2004   $ 144,808    $  39,785    $ 6,231 (20)     13,500      $  9,562 (23)
    Human Resources             2003   $ 128,942    $       0    $ 6,000 (21)     11,250      $ 10,051 (24)

Paul H. Richardson              2005   $ 150,000    $  55,557    $ 6,000 (25)     30,000      $ 11,623 (27)
    Vice President              2004   $ 126,000    $  39,732    $ 6,000 (26)     22,500      $  9,624 (28)
    R&D                         2003   $ 102,078    $  10,000    $     0           9,000      $  8,443 (29)

</TABLE>

(1)      Includes $4,622 in automobile lease payments made by the Company.
(2)      Includes $6,075 in automobile lease payments made by the Company.
(3)      Includes $5,074 in automobile lease payments made by the Company.
(4)      Includes  $1,584 in  life/disability  insurance  premium  payments  and
         $4,900 in 401(k) and $7,455 in profit sharing contributions made by the
         Company under the Company's combined 401(k)/profit sharing plan.
(5)      Includes  $1,584 in  life/disability  insurance  premium  payments  and
         $4,550 in 401(k) and $7,278 in profit sharing contributions made by the
         Company  to  Mr.   Rossi's   account  under  the   Company's   combined
         401(k)/profit sharing plan.
(6)      Includes 1,530 in life/disability insurance premium payments and $4,200
         in  401(k)  and  $7,100  in profit  sharing  contributions  made by the
         Company  to  Mr.   Rossi's   account  under  the   Company's   combined
         401(k)/profit sharing plan.
(7)      Includes $7,200 in automobile allowance payments by the Company.
(8)      Includes $7,431 in automobile allowance payments by the Company.
(9)      Includes $6,000 in automobile allowance payments by the Company.
(10)     Includes  $4,900 in 401(k) and $7,455 in profit  sharing  contributions
         made by the Company to Mr.  Fitzpatrick's  account  under the Company's
         combined 401(k)/profit sharing plan.
(11)     Includes  $4,550 in 401(k) and $5,766 in profit  sharing  contributions
         made by the Company to Mr.  Fitzpatrick's  account  under the Company's
         combined 401(k)/profit sharing plan.
(12)     Includes  $4,200 in 401(k) and $5,918 in profit  sharing  contributions
         made by the Company to Mr.  Fitzpatrick's  account  under the Company's
         combined 401(k)/profit sharing plan.
(13)     Includes $4,856 in automobile lease payments made by the Company.
(14)     Includes $4,486 in automobile lease payments made by the Company.
(15)     Includes $4,332 in automobile lease payments made by the Company.
(16)     Includes  $4,900 in 401(k) and $7,455 in profit  sharing  contributions
         made  by the  Company  to Mr.  Ludwig's  account  under  the  Company's
         combined 401(k)/profit sharing plan.
(17)     Includes  $4,550 in 401(k) and $7,278 in profit  sharing  contributions
         made  by the  Company  to Mr.  Ludwig's  account  under  the  Company's
         combined 401(k)/profit sharing plan.
(18)     Includes  $4,200 in 401(k) and $7,100 in profit  sharing  contributions
         made  by the  Company  to Mr.  Ludwig's  account  under  the  Company's
         combined 401(k)/profit sharing plan.
(19)     Includes $6,831 in automobile allowance payments made by the Company.

                                       11
<PAGE>

(20)     Includes $6,231 in automobile allowance payments made by the Company.

(21)     Includes $6,000 in automobile allowance payments made by the Company.

(22)     Includes  $4,900 in 401(k) and $6,892 in profit  sharing  contributions
         made by the  Company  to Mr.  Miniger's  account  under  the  Company's
         combined 401(k)/profit sharing plan.

(23)     Includes  $4,200 in 401(k) and $5,362 in profit  sharing  contributions
         made by the  Company  to Mr.  Miniger's  account  under  the  Company's
         combined 401(k)/profit sharing plan.

(24)     Includes $4,200 in profit sharing  contributions made by the Company to
         Mr.  Miniger's  account  under  the  Company's  combined  401(k)/profit
         sharing plan and $5,851 in relocation expenses.
(25)     Includes $6,000 in automobile allowance payments made by the Company.
(26)     Includes $6,000 in automobile allowance payments made by the Company.
(27)     Includes  $4,900 in 401(k) and $6,723 in profit  sharing  contributions
         made by the Company to Mr.  Richardson's  account  under the  Company's
         combined 401(k)/profit sharing plan.
(28)     Includes  $4,550 in 401(k) and $5,074 in profit  sharing  contributions
         made by the Company to Mr.  Richardson's  account  under the  Company's
         combined 401(k)/profit sharing plan.
(29)     Includes  $4,200 in 401(k) and $4,243 in profit  sharing  contributions
         made by the Company to Mr.  Richardson's  account  under the  Company's
         combined 401(k)/profit sharing plan.

Incentive Compensation Plan

         At the end of each calendar  year,  the  Compensation  Committee of the
Board of Directors approves an Incentive Compensation Program for the succeeding
calendar  year  (the  "ICP").  The  ICP  provides  for  the  awarding  of  bonus
compensation to executive  officers and certain other employees,  based upon the
level of achievement of specific goals established for the particular officer or
employee,  and for the  weighting of those goals to determine  the amount of the
bonus.  No bonuses  are  required  to be paid  under the ICP unless a  specified
minimum level of consolidated  net income before interest and taxes ("NIBIT") is
achieved. The Compensation Committee has established such minimum level of NIBIT
for 2006 based upon the Company's  estimated  results of operations for the 2005
calendar year.

         Pursuant to the terms of the employment  agreement  between the Company
and Dino A. Rossi,  its  President  and Chief  Executive  Officer,  Mr. Rossi is
entitled to annual discretionary bonuses of up to 100% of his base salary, based
upon the Company achieving operating and/or financial targets established by the
Board  of  Directors  or an  authorized  committee  thereof.  50% of such  bonus
compensation is determined  pursuant to the ICP. The Compensation  Committee has
established a minimum level of consolidated  net income for the 2006 fiscal year
to be  achieved  by the  Company in order for Mr.  Rossi to be  entitled  to the
portion of such bonus compensation not covered by the ICP.

Stock Plans

         In 1999,  the  Company  adopted  the  1999  Stock  Plan  for  officers,
directors,  directors  emeritus and employees of and  consultants to the Company
and its  subsidiaries.  The  1999  Stock  Plan  was  approved  by the  Company's
stockholders. Under the 1999 Stock Plan, the officers and other employees of the
Company  and any  present  or  future  parent  or  subsidiaries  of the  Company
(collectively,  "Related  Companies")  may be granted options to purchase Common
Stock of the  Company  which  qualify as  "incentive  stock  options"  ("ISO" or
"ISOs")  under Section  422(b) of the Internal  Revenue Code of 1986, as amended

                                       12
<PAGE>

(the "Code");  directors,  officers,  employees  and  directors  emeritus of and
consultants  to the  Company  and Related  Companies  may be granted  options to
purchase  Common Stock which do not qualify as ISOs  ("non-Qualified  Option" or
"Non-Qualified  Options");  and directors,  officers,  employees,  and directors
emeritus of and consultants to the Company and Related  Companies may be granted
the  right  to  make  direct   purchases   of  Common  Stock  from  the  Company
("Purchases").

         In April 2003, the Board of Directors of the Company adopted amendments
to the 1999 Stock Plan, which were subsequently  approved by the stockholders of
the Company at the Annual  Meeting of  Stockholders  on June 20, 2003, and which
amended  the 1999 Stock Plan by: (i)  increasing  the number of shares of Common
Stock  reserved for issuance under the 1999 Stock Plan by 900,000  shares,  to a
total of 1,800,000  shares of Common Stock; and (ii) confirming the right of the
Company to grant  awards of Common  Stock  ("Awards")  in  addition to the other
Stock Rights available under the 1999 Stock Plan, and providing certain language
changes relating thereto. Both ISOs and Non-Qualified Options are referred to in
this Proxy Statement  individually as an "Option" and collectively as "Options."
Options,   Purchases  and  Awards  are  referred  to  in  this  Proxy  Statement
collectively as "Stock Rights."

         All share amounts described in this section and elsewhere in this Proxy
Statement  have been adjusted to give effect to the December 2005  three-for-two
stock split effected by means of a stock dividend.

         The 1999 Stock Plan is  administered  by the Board of  Directors of the
Company or, if the Board of Directors so determines,  the Compensation Committee
thereof.  Subject  to the  terms of the  1999  Stock  Plan,  the  Board  (or the
Compensation  Committee, as the case may be), has the authority to determine the
persons to which Stock Rights shall be granted  (subject to certain  eligibility
requirements  for  grants of ISOs),  the  number of shares  covered by each such
grant,  the  exercise  or purchase  price per share,  the time or times at which
Stock  Rights shall be granted,  and other terms and  provisions  governing  the
Stock  Rights,  as well as the  restrictions,  if any,  applicable  to shares of
Common Stock issuable under Stock Rights. The exercise price per share specified
in the agreement  relating to each ISO granted under the 1999 Stock Plan may not
be less than the fair market value per share of Common Stock on the date of such
grant.  In  the  case  of an ISO  to be  granted  to an  employee  owning  stock
possessing  more than 10% of the total  combined  voting power of all classes of
stock of the Company or any Related  Company,  the price per share  specified in
the agreement  relating to such ISO may not be less than 110% of the fair market
value per share of Common Stock on the date of grant. In addition, each eligible
employee may be granted ISOs only to the extent that, in the aggregate under the
1999 Stock Plan and all  incentive  stock  option  plans of the  Company and any
Related Company,  such ISOs do not become exercisable for the first time by such
employee  during any calendar  year in a manner which would entitle the employee
to purchase, pursuant to the exercise of ISOs (whether under the 1999 Stock Plan
or any other plan),  more than $100,000 in fair market value  (determined at the
time the ISOs were  granted) of Common  Stock in that year.  The 1999 Stock Plan
requires that each Option shall expire on the date specified by the Compensation
Committee  or the  Board,  but not more than ten  years  from its date of grant.
However,  in the case of any ISO granted to an  employee or officer  owning more
than 10% of the  total  combined  voting  power of all  classes  of stock of the
Company or any Related Company, the ISO will expire no more than five years from
its date of grant.  In 2005,  options to purchase an aggregate of 438,165 shares
at a weighted  average exercise price of $19.56 per share were granted under the
1999 Stock Plan.  At December  31,

                                       13
<PAGE>

2005,  options to purchase an  aggregate of  1,279,444  shares were  outstanding
pursuant to the 1999 Stock Plan,  of which  options for an  aggregate of 621,694
shares were then exercisable.

         The 1999 Stock Plan replaced the Company's 1994 Incentive  Stock Option
Plan, as amended (the "ISO Plan"),  and its non-qualified 1994 Stock Option Plan
for Directors,  as amended (the "Non-Qualified  Plan"), both of which expired on
June  24,  1999.  Unexercised  options  granted  under  the  ISO  Plan  and  the
Non-Qualified  Plan prior to such termination are exercisable in accordance with
their respective terms until their respective expiration dates.

         The ISO Plan  provided for the grant of ISO's to officers and other key
employees.  Such  options  are  exercisable  at a price equal to the fair market
value of the Common Stock on the date of grant.  An aggregate of 871,875  shares
of Common Stock had been reserved for issuance upon exercise of options  granted
under the ISO Plan.  At December 31,  2005,  options to purchase an aggregate of
156,021 shares were outstanding pursuant to the ISO Plan, all of which were then
exercisable.  Options  granted  under  the ISO Plan may be  exercised,  upon and
subject to the vesting  thereof,  in whole or part, at any time and from time to
time, between the first and tenth anniversary of the date of grant.

         The ISO Plan also  provided  that if  options  granted  to an  employee
permit  the  employee  to  purchase  shares  having an  aggregate  market  value
(determined at the time of grant) in excess of $100,000 in any year in which the
option as it applies to such shares first becomes exercisable,  then the portion
of such  options in excess of such  $100,000  limitation  will not be  incentive
stock  options and will not be entitled to the  favorable  income tax  treatment
afforded to grantees of incentive stock options.

         The  Non-Qualified  Plan  provided  for the grant of stock  options  to
directors,  directors  emeritus  and  other  employees  and  consultants  of the
Company,  which options do not qualify as incentive stock options,  with options
to non-employee  directors and directors emeritus granted in accordance with the
earnings based formula set forth in the Non-Qualified  Plan. The option exercise
price was the reported  closing  price per share of the Common Stock on the date
of grant.  Such options  expire no later than ten years after the date of grant,
subject to earlier termination in the event the grantee ceases to be a director,
director  emeritus  or employee as the case may be. An  aggregate  of  1,017,000
shares of Common Stock had been  reserved for issuance  upon exercise of options
granted  under the  Non-Qualified  Plan.  At December  31,  2005,  there were no
options outstanding to purchase shares under the Non-Qualified Plan.

         On December 29, 2005, the Board of Directors of the Company  authorized
the  Company  to  enter  into   Restricted   Stock  Purchase   Agreements   (the
"Agreements") to purchase the Company's common stock with the five  non-employee
directors  of the  Company  pursuant  to the  Company's  1999 Stock  Plan.  This
Agreement   replaces   the  Stock  Option  Plan  that   non-employee   directors
participated in prior years.  Under the Agreements,  each non-employee  director
purchased  3,000 shares of the Company's  common stock at the purchase  price of
$.06-2/3 per share.  The  purchased  stock is subject to a repurchase  option in
favor  of the  Company  and to  restrictions  on  transfer  until  it  vests  in
accordance with the provisions of the Agreements.

                                       14
<PAGE>

                        OPTION GRANTS IN LAST FISCAL YEAR

         The following table sets forth certain  information  concerning options
granted to the Named Executive Officers during 2005:

<TABLE>
<CAPTION>

                                             Individual Grants
                          -------------------------------------------------
                          Number of
                          Shares       % of Total
                          Under-       Options
                          lying        Granted        Exercise               Grant Date
                          Options      To Employees     Price    Expiration  Present
Name                      Granted      In 2005        ($/Share)     Date     Value (1)

--------------------------------------------------------------------------------------
<S>                       <C>                 <C>    <C>         <C>        <C>
Dino A. Rossi             60,000 (2)           17%    $  20.71    9/16/15    $250,655
Francis J. Fitzpatrick    45,000 (3)           13%    $  20.71    9/16/15    $187,991
David F. Ludwig           36,000 (4)           10%    $  20.71    9/16/15    $150,393
Robert T. Miniger         13,500 (5)            4%    $  20.71    9/16/15     $56,397
Paul H. Richardson        15,000 (6)            4%    $  19.78    6/24/15     $58,114
Paul H. Richardson        15,000 (7)            4%    $  20.71    9/16/15     $62,664

</TABLE>

--------

(1)      The value of options  granted is  estimated  on the date of grant using
         the  Black-Scholes  option-pricing  model with the  following  weighted
         average assumptions used for grants:  dividend yield of 0.33%; expected
         volatility of 23%;  risk-free rate of return of 4.0%,  expected life of
         3.35 years, and expected total grant forfeitures of 8.0%.
(2)      Of such options,  options for 12,000 shares (20%), 24,000 shares (40%),
         and 24,000  shares (40%) vest on September  16,  2006,  2007,  and 2008
         respectively.
(3)      Of such options,  options for 9,000 shares (20%),  18,000 shares (40%),
         and 18,000  shares (40%) vest on September  16,  2006,  2007,  and 2008
         respectively.
(4)      Of such options,  options for 7,200 shares (20%),  14,400 shares (40%),
         and 14,400  shares (40%) vest on September  16,  2006,  2007,  and 2008
         respectively.
(5)      Of such options,  options for 2,700 shares  (20%),  5,400 shares (40%),
         and 5,400  shares  (40%) vest on September  16,  2006,  2007,  and 2008
         respectively.
(6)      Of such options,  options for 3,000 shares  (20%),  6,000 shares (40%),
         and  6,000  shares  (40%)  vest  on  June  24,  2006,  2007,  and  2008
         respectively.
(7)      Of such options,  options for 3,000 shares  (20%),  6,000 shares (40%),
         and 6,000  shares  (40%) vest on September  16,  2006,  2007,  and 2008
         respectively.


AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

         The  following  table sets  forth  information  with  respect to option
exercises  during the year ended  December  31, 2005 and the number and value of
options outstanding at December 31, 2005 held by the Named Executive Officers:

                                       15
<PAGE>
<TABLE>
<CAPTION>

                                                 Number of Shares
                                                 Underlying
                                                 Unexercised            Value of
                           Shares                Options at             Unexercised
                           Acquired              December 31,2005       In-the-Money
                           On         Value      Exercisable("E")/      Options at
Name                       Exercise   Realized   Unexcercisable("U")    December 31, 2005(1)
----                       --------   --------   -------------------    --------------------
<S>                        <C>        <C>        <C>                    <C>
Dino A. Rossi              0          $0         282,150(E)/117,600(U)  $3,629,620(E)/440,868(U)
Francis J. Fitzpatrick     0          0           92,475(E)/ 90,900(U)     968,328(E)/348,777(U)
David F. Ludwig            37,800     337,076     25,650(E)/ 73,800(U)     228,357(E)/286,272(U)
Robert T. Miniger          40,806     333,284     15,894(E)/ 28,800(U)     145,836(E)/116,259(U)
Paul H. Richardson         0          0           15,075(E)/ 51,600(U)     134,459(E)/157,244(U)

</TABLE>

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

(1)      Value as of December 31, 2005 was  determined  by  multiplying  the net
         difference  between the closing  price on that date, as reported on the
         American Stock Exchange, and the exercise price by the number of shares
         underlying the unexercised-in-the-money options.

EQUITY COMPENSATION PLAN INFORMATION

         The following table provides  information with respect to shares of the
Company's Common Stock that may be issued pursuant to Stock Rights granted under
the 1999 Stock Plan as of December 31, 2005, and also includes  shares of Common
Stock issuable  pursuant to  outstanding  options  previously  granted under the
Company's  ISO and  Non-Qualified  Plans,  which plans were replaced by the 1999
Stock  Plan.  These  plans are the  Company's  only  equity  compensation  plans
approved by security holders,  and there are no equity  compensation  plans that
have not been  approved by security  holders.  It should be noted that shares of
the  Company's  Common  Stock may be  allocated  to, or  purchased on behalf of,
participants  in the Company's  401(k)/Profit  Sharing Plan  (described  below).
Consistent with Securities and Exchange Commission  regulations governing equity
compensation plans,  information  relating to shares issuable or purchased under
the Company's 401(k)/Profit Sharing Plan is not included from the table below.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                            (a)                 (b)                 (c)
                                                             Number of shares
                                                                 Remaining
                                                               available for
                     Number of shares    Weighted-average     future issuance
                     to be issued upon  exercise price per     under equity
                        exercise of          share of       compensation plans
                        outstanding         outstanding      (excluding shares
                     options, warrants   options, warrants     reflected in
Plan Category           and rights          and rights          column (a))
--------------------------------------------------------------------------------
<S>                      <C>                  <C>                 <C>
Equity
compensation plans       1,435,465            $12.57              722,740
approved by
security holders
--------------------------------------------------------------------------------
Equity
compensation plans
not approved by
security holders             -                   -                   -
--------------------------------------------------------------------------------
Total                    1,435,465            $12.57              722,740
--------------------------------------------------------------------------------
</TABLE>

401(k)/Profit Sharing Plan

                                       16
<PAGE>

         Effective   January  1,  1998,  the  Company   terminated  its  defined
contribution  pension plan and amended its 401(k)  savings  plan.  Assets of the
terminated  defined  contribution  pension  plan were  merged  into an  enhanced
401(k)/profit  sharing  plan (the "New Plan"),  intended to be a qualified  plan
under  Section  401(a) of the  Internal  Revenue Code of 1986,  as amended,  and
subject to the  Employee  Retirement  Income  Security  Act of 1974,  as amended
("ERISA").  Employees of the Company are eligible to participate in the New Plan
once they attain age 18 and  complete  60 days of  continuous  service  with the
Company.  The New Plan provides that  participating  employees may make elective
contributions of up to 15% of pre-tax salary, subject to ERISA limitations,  and
for the Company to make matching contributions on a monthly basis equal in value
to 35% of each participant's elective contributions. Such matching contributions
are made in shares of the Company's Common Stock. The profit-sharing  portion of
the New Plan is discretionary and non-contributory. Profit sharing contributions
are  restricted to employees who have  completed  1,000 hours of service and are
employed on the last day of a plan year.  The Company  contributes  a minimum of
3.55% of an  eligible  participant's  taxable  compensation  (subject to certain
exclusions)  unless the  Company  announces a  different  rate.  Amounts in each
participant's  matching  contribution and profit sharing accounts are not vested
until  such  participant  has two years of  service,  at which time 100% of such
amounts vest. All amounts contributed to the New Plan are deposited into a trust
fund administered by the plan trustee. Participants have the right to direct how
their  accounts are invested  among a selection of mutual funds and/or  selected
trustee portfolios, and may transfer any portion of the matching contribution to
other  available   investment  choices.  Up  to  10%  of  participant   elective
contributions  and Company profit sharing  contributions  may be invested at the
participant's   election  in  the  Company's  Common  Stock.  On  retirement  or
termination of employment,  participants  are entitled to a distribution  of all
vested amounts and accrued income in their accounts.

     The Company made aggregate profit sharing contributions and matching 401(k)
savings  plan  contributions  of $326,000  and  $276,000 in 2005,  $301,000  and
$257,000 in 2004 and $307,000 and $273,000 in 2003, respectively.

Employment Agreement

         As of January 1, 2001, the Company entered into an Employment Agreement
with Dino A. Rossi (replacing his previous employment agreement), which provides
for Mr. Rossi to serve as the Company's  President and Chief Executive  Officer.
The Employment Agreement provides that following its initial term, which expired
on  December  31,  2001,  its term is deemed to be  automatically  extended  for
successive  one (1)  year  periods  ending  on each  successive  anniversary  of
December 31, 2001,  unless either party gives written  notice of  termination to
the other not less than  sixty  (60) days  prior to the end of the then  current
extension  period.  The  Employment  Agreement  provides  for a base  salary  of
$194,700,  which is  subject  to annual  increase  if  approved  by the Board of
Directors.  Mr. Rossi is also  eligible to receive a  discretionary  performance
bonus (as  determined by the Board of Directors) of up to 100% of annual salary,
based on a target  figure  consistent  with  operating  and/or  other  financial
targets  established by the Board of Directors,  for each fiscal year during the
term of the  Employment  Agreement.  Mr.  Rossi is  entitled to the use of a car
leased by the Company and to be reimbursed for a specified level of premiums for
life and disability  insurance.  The Employment  Agreement  provides that if the
Company  terminates his  employment  other than for cause (as defined) or in the
event  Mr.  Rossi  shall   terminate  his  employment   under  certain   limited
circumstances  effectively amounting to a constructive termination (as defined),
he will be

                                       17
<PAGE>

entitled to severance payments of 150% of his then current annual salary, and if
such  termination  by the  Company  occurs  within  two years  after a change of
control  event (as  defined)  involving  the  Company  he would be  entitled  to
severance  payments  equal to 200% of the sum of his then current  annual salary
plus the annual  bonus earned by him for the fiscal year  immediately  preceding
the year in which the change of control  event  occurred.  If Mr.  Rossi were to
terminate his  employment  prior to the second  anniversary  of such a change of
control event,  he would be entitled to severance  payments equal to 100% of his
then  current  annual  salary.  In the event of any  termination  by the Company
entitling Mr. Rossi to severance payments,  his theretofore granted but unvested
options to purchase  Common Stock of the Company would  immediately  vest and be
exercisable in accordance with their terms. Mr. Rossi's entitlement to severance
payments  would be subject to  reduction  to the extent  necessary to avoid such
payments being considered an "excess parachute  payment" for purposes of Section
280G of the Internal Revenue Code.  During the period of Mr. Rossi's  employment
(or, in the case of a voluntary termination by Mr. Rossi or a termination of his
employment by the Company for cause,  the balance of the term of the  Employment
Agreement before giving effect to such termination) and for a period of one year
thereafter,   the   Employment   Agreement   imposes   on  Mr.   Rossi   certain
non-competition and non-solicitation  obligations  regarding the Company and its
customers and its employees.

         The  Employment  Agreement  was  amended  as of  December  9, 2005 (the
"Amendment"),  to conform  certain  provisions  thereof  to Section  409A of the
Internal  Revenue Code,  which was enacted as part of the American Jobs Creation
Act of 2004,  and the proposed  regulations  issued by the  Treasury  Department
under Section 409A. The Amendment provides that certain payments to Mr. Rossi in
connection with the  termination of his employment  would not be due and payable
before six months after the applicable termination.  The six-month delay relates
to Mr. Rossi's status as a "key employee" (as defined under Section 409A and the
accompanying proposed regulations).


        Security Ownership of Certain Beneficial Owners and of Management

        The table  below sets forth as of April,  7 2006 the number of shares of
Common Stock  beneficially  owned by (i) each  director,  (ii) each of the Named
Executive  Officers  who is  currently  an  officer of the  Company,  (iii) each
beneficial owner of, or institutional  investment manager exercising  investment
discretion with respect to, 5% or more of the outstanding shares of Common Stock
known to the  Company  based  upon  filings  with the  Securities  and  Exchange
Commission,  and (iv) all directors  and executive  officers of the Company as a
group, and the percentage  ownership of the outstanding  Common Stock as of such
date held by each such holder and group:

Name and Address of                         Amount and Nature of      Percent of
Beneficial Owner                            Beneficial Ownership (1)   Class (2)
----------------                            ------------------------  ----------
 Ashford Capital Management, Inc.(3)                      1,187,781       10.3%
 Kayne Anderson Rudnick Investment
 Management, LLC (4)                                        677,724        5.9%
 Segall, Bryand & Hamill (5)                                674,319        5.8%
 Eagle Asset Management, Inc. (6)                           622,891        5.4%
 Dino A. Rossi (7)*                                         306,358        2.6%
 Francis J. Fitzpatrick (8)*                                 98,939          **

                                       18
<PAGE>

 Robert T. Miniger (9)*                                      44,896          **
 David F. Ludwig (10)*                                       37,325          **
 Kenneth P. Mitchell (11)*                                   35,352          **
 Edward L. McMillan (12)*                                    32,720          **
 Hoyt Ammidon, Jr. (13)*                                     29,840          **
 Elaine R. Wedral (14)*                                      24,248          **
 Paul H. Richardson (15)*                                    16,187          **
 John Y. Televantos(16)*                                      7,500          **
All directors and executive officers as a group (10         610,865        5.2%
persons) (17)


*     Such  person's  address is c/o the Company, P.O. Box 600, New Hampton, New
      York 10958.
**    Indicates less than 1%.
(1)      Beneficial  ownership is determined in accordance with the rules of the
         Securities  and  Exchange  Commission  ("SEC") and  generally  includes
         voting or investment  power with respect to  securities.  In accordance
         with SEC rules,  shares  which may be acquired  upon  exercise of stock
         options which are  currently  exercisable  or which become  exercisable
         within  60 days  after  the date of the  information  in the  table are
         deemed to be beneficially owned by the optionee. Except as indicated by
         footnote,  and subject to community property laws where applicable,  to
         the  Company's  knowledge,  the persons or entities  named in the table
         above are  believed  to have sole  voting  and  investment  power  with
         respect to all shares of Common  Stock shown as  beneficially  owned by
         them.
(2)      For purposes of calculating  the percentage of outstanding  shares held
         by each person named above,  any shares which such person has the right
         to  acquire  within 60 days  after the date of the  information  in the
         table  are  deemed  to be  outstanding,  but  not for  the  purpose  of
         calculating the percentage ownership of any other person.
(3)      Based upon  information  as of December 31, 2005 provided in a Schedule
         13G for such  entity  filed  with the SEC.  Such  entity's  address  as
         reported in its Schedule 13G is P.O. Box 4172, Wilmington, DE 19807.
(4)      Based upon  information  as of December 31, 2005  Schedule 13G for such
         entity  filed with the SEC.  Such  entity's  address as reported in its
         Schedule 13G is 1800 Avenue of the Stars,  2nd Floor,  Los Angeles,  CA
         90067.
(5)      Based upon  information  as of December 31, 2005 provided in a Schedule
         13G for such  entity  filed  with the SEC.  Such  entity's  address  as
         reported in its Schedule 13G is 10 S.Wacker Dr., Chicago, IL 60606.
(6)      Based upon  information  as of February 10, 2005 provided in a Schedule
         13G for such  entity  filed  with the SEC.  Such  entity's  address  as
         reported in its Schedule 13G is 880 Carillon Parkway,  St.  Petersburg,
         Fl. 33716.
(7)      Consists  of  282,150  shares  such  person  has the  right to  acquire
         pursuant to stock options,  8,233 shares held in such person's  Company
         401(k)/profit sharing plan account, and 15,975 shares held directly.
(8)      Consists of 92,475 shares such person has the right to acquire pursuant
         to stock  options,  and  6,464  shares  held in such  person's  Company
         401(k)/profit sharing plan account.
(9)      Consists of 15,894 shares such person has the right to acquire pursuant
         to  stock  options,,   1,896  shares  held  in  such  person's  Company
         401(k)/profit sharing plan account, and 27,106 shares held directly.
(10)     Consists of 25,650 shares such person has the right to acquire pursuant
         to  stock  options,,   4,175  shares  held  in  such  person's  Company
         401(k)/profit sharing plan account, and 7,500 shares held directly.

(11)     Consists of 25,340 shares such person has the right to acquire pursuant
         to stock options,,  4,500 shares of restricted  stock, and 5,512 shared
         held directly.
(12)     Consists of 27,590 shares such person has the right to acquire pursuant
         to stock  options,,  4,500 shares of restricted  stock,  and 630 shared
         held directly.
(13)     Consists of 25,340 shares such person has the right to acquire pursuant
         to stock options, and 4,500 shares of restricted stock.
(14)     Consists of 19,748 shares and 4,500 shares of restricted stock.
(15)     Consists of 15,075 shares such person has the right to acquire pursuant
         to stock  options,  and  1,112  shares  held in such  person's  Company
         401(k)/profit sharing plan account.

                                       19
<PAGE>

(16)     Consists of 3,000 shares such person has the right to acquire  pursuant
         to stock options, and 4,500 shares of restricted stock.
(17)     Consists of options to purchase  532,262  shares,  21,880 shares in the
         accounts of five executive  officers under the Company's  401(k)/profit
         sharing plan, and 56,723 shares held by individuals.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires the Company's directors and executive officers and holders of more than
10% of the  Company's  Common  Stock to file with the  Securities  and  Exchange
Commission initial reports of ownership and reports of any subsequent changes in
ownership of Common Stock and other equity  securities of the Company.  Specific
due dates for these reports have been established and the Company is required to
disclose any failure to file by these dates.

         Based  upon a review  of such  reports  furnished  to the  Company,  or
written representations that no reports were required, the Company believes that
during the fiscal year ended  December 31, 2005,  its officers and directors and
holders of more than 10% of the  Company's  Common Stock  complied  with Section
16(a) filing date  requirements  with respect to transactions  during such year,
except that David F. Ludwig,  the Company's Vice President and General  Manager,
Specialty  Products  filed  one Form 4,  reporting  the sale of 1,800  shares of
Common Stock in November 2005, one day late.


Report of the Compensation Committee of the Board of Directors

         This  Report  of  the  Compensation   Committee  shall  not  be  deemed
incorporated by reference by any general  statement  incorporating  by reference
this  Proxy  Statement  into any filing  under the  Securities  Act of 1933,  as
amended, or under the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.

         The  Compensation  Committee is currently  comprised of four directors,
Edward L.  McMillan,  Kenneth  P.  Mitchell,  John Y.  Televantos  and Elaine R.
Wedral. It is the  responsibility of the Compensation  Committee to recommend an
effective total  compensation  program for the Company's Chief Executive Officer
and other senior officers based on the Company's performance and consistent with
stockholders'  interests.  The Committee's duties entail reviewing the Company's
compensation practices and recommending compensation for such executives.

         Compensation Philosophy

         The  Company's  overall  compensation  philosophy  has  been  to  offer
competitive  salaries,   cash  incentives,   stock  options  and  benefit  plans
consistent with the Company's financial performance. Rewarding key employees who
contribute to the continued success of the Company plus equity participation are
key elements of the  Company's  compensation  policy.  The  Company's  executive
compensation  policy is to attract and retain key  executives  necessary for the
Company's  short and  long-term  success by  establishing  a direct link between
executive  compensation  and  the  performance  of  the  Company,  by  rewarding
individual  initiative  and the  achievement of annual  corporate  goals through
salary and cash bonus awards, and by providing equity awards to allow executives
to participate in enhanced stockholder value.

                                       20
<PAGE>

         In awarding salary increases and bonuses,  the  Compensation  Committee
relates various  elements of corporate  performance to the elements of executive
compensation.  The Compensation  Committee  considered  whether the compensation
package as a whole  adequately  compensated  the  applicable  executive  for the
Company's  performance during the past year and the executive's  contribution to
such performance.

         Base Salary

         Base  salary   represents   the  fixed   component  of  the   executive
compensation  program.  The  Company's  philosophy  regarding  base  salaries is
conservative,  maintaining  salaries at reasonably  competitive industry levels.
Determinations  of base salary levels are established  based on an annual review
of  marketplace  competitiveness  and on  the  Company's  existing  compensation
structure.  Periodic increases in base salary relate to individual contributions
to the Company's overall performance and industry competitive pay practices.  In
determining appropriate levels of base salary, the Compensation Committee relied
in part on industry compensation surveys.

         Bonus

         Bonuses represent the variable component of the executive  compensation
program that is tied to individual  achievement  and the Company's  performance.
The Company's policy is to base a meaningful  portion of its senior  executives'
cash  compensation  on bonus.  In  determining  bonuses,  the Company  considers
factors such as the individual's  contribution to the Company's  performance and
the relative performance of the Company during the year.

         Stock Options

         The  Compensation  Committee  believes that one  important  goal of the
executive compensation program should be to provide executives and key employees
-- who have  significant  responsibility  for the management,  growth and future
success of the Company -- with an opportunity  to increase  their  ownership and
potentially gain  financially  from Company stock price  increases.  The goal of
this  approach  is  that  the  interests  of the  stockholders,  executives  and
employees will be closely aligned.  Therefore,  executive officers and other key
employees  of the Company  have been  granted  stock  options from time to time,
giving  them a right to  purchase  shares  of the  Company's  Common  Stock at a
specified price in the future. Grants of options have been based primarily on an
employee's potential contribution to the Company's growth and financial results.
Options  generally  have been  granted  at the  prevailing  market  value of the
Company's  Common Stock and  accordingly  will only have value if the  Company's
stock price increases.  With limited exceptions,  grants of options to employees
have provided for vesting over three years and the  individual  must be employed
by the Company for such options to vest.

         2005 Compensation to Chief Executive Officer

         In  reviewing  and  recommending  Mr.  Rossi's  salary and bonus and in
awarding him stock options for fiscal year 2005 and for his future services, the
Compensation  Committee  followed  its  compensation  philosophy.   Mr.  Rossi's
employment  agreement  was  amended  and  restated  effective  January  1,  2001
following  the  expiration of his previous  employment  agreement.  Mr.  Rossi's
annual  salary was  $313,500 for 2005.  For the 2005 fiscal year,  Mr. Rossi was
paid a cash bonus of $327,934.  In 2005, Mr. Rossi was granted options under the
Company's  1999 Stock Plan to purchase  60,000  shares of the  Company's

                                       21
<PAGE>

Common Stock at an exercise price of $20.71,  the fair market value per share on
the date of grant.  The options will be exercisable in  installments of 20%, 40%
and 40% over three years on the first three  anniversaries of the date of grant.
The Compensation  Committee  recommended and the Board of Directors approved Mr.
Rossi's employment agreement and the above-described  option grant to secure the
long-term services of the Company's Chief Executive Officer and to further align
the Chief Executive Officer's compensation with stockholder interests.

                                         Edward L. McMillan
                                         Kenneth P. Mitchell
                                         John Y. Televantos
                                         Elaine R. Wedral

                                         being the members of the  Compensation
                                         Committee  of the Board of Directors


Compensation Committee Interlocks and Insider Participation

         Messrs. McMillan, Mitchell, Dr. Televantos, and Dr. Wedral each of whom
is a  director  of the  Company,  served  as  the  members  of the  Compensation
Committee  during  2005.  None of Messrs.  McMillan  or Mr.  Mitchell  or,  Drs.
Televantos or Wedral (i) were, during the last completed fiscal year, an officer
or employee of the Company, (ii) was formerly an officer of the Company or (iii)
had any  relationship  requiring  disclosure  by the  Company  under Item 404 of
Regulation S-K under the Securities Act of 1933, as amended,  which has not been
disclosed.


                             STOCK PERFORMANCE GRAPH

 The graph  below  sets forth the  cumulative  total  stockholder  return on the
Company's  Common  Stock  (referred to in the table as "BCP") for the five years
ended  December 31, 2005, the overall stock market return during such period for
shares comprising the Russell 2000(R) Index (which the Company believes includes
companies with market  capitalization  similar to that of the Company),  and the
overall  stock  market  return  during  such  period for shares  comprising  the
Standard & Poor's  500 Food  Group  Index,  in each case  assuming a  comparable
initial investment of $100 on December 31, 2000 and the subsequent  reinvestment
of dividends.  The Russell  2000(R) Index measures the performance of the shares
of the 2000 smallest  companies  included in the Russell 3000(R) Index. In light
of the Company's industry segments,  the Company does not believe that published
industry-specific indices are necessarily representative of stocks comparable to
the Company.  Nevertheless, the Company considers the Standard & Poor's 500 Food
Group Index to be  potentially  useful as a peer group index with respect to the
Company in light of the Company's  encapsulated / nutritional  products segment.
The  performance  of the  Company's  Common  Stock  shown on the graph  below is
historical only and not indicative of future performance.


         The graph below shall not be deemed  incorporated  by  reference in any
general  statement  incorporating  by reference  this Proxy  Statement  into any
filing under the  Securities  Act of 1933, as amended,  or under the  Securities
Exchange Act of 1934, as amended,  except to the extent the Company

                                       22
<PAGE>

specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.


                                 [GRAPH OMITTED]

                                         Russell              S&P Food
                         BCP          2000 (R) Index        Group Index
                      --------------------------------------------------
 12/31/00               $100.00           $100.00             $100.00
 12/31/01               $161.13           $102.49             $102.01
 12/31/02               $183.40           $ 81.49             $104.92
 12/31/03               $172.08           $120.00             $ 91.28
 12/31/04               $261.81           $142.00             $106.05
 12/31/05               $337.47           $148.46             $ 94.97


                      Stock Price         Value               Value
                      --------------------------------------------------
 12/31/00                $ 5.89         $1,894.30            234.4207
 12/31/01                $ 9.49         $1,941.39            239.1297
 12/31/02                $10.80         $1,543.73            245.9495
 12/31/03                $10.13         $2,273.20            213.9892
 12/31/04                $15.42         $2,689.86            248.6118
 12/31/05                $19.87         $2,812.35            222.6220



                                       23
<PAGE>

                         INDEPENDENT PUBLIC ACCOUNTANTS

Audit Committee Report

         The following  report of the Audit  Committee shall not be deemed to be
soliciting  material or to be filed with the Securities and Exchange  Commission
or incorporated by reference by any general statement incorporating by reference
this  Proxy  Statement  into any filing  under the  Securities  Act of 1933,  as
amended, or under the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically requests that the information be treated as
soliciting  material  or  that  the  Company   specifically   incorporates  this
information  by  reference,  and shall not  otherwise be deemed filed under such
Acts.

         The Board of Directors has appointed an Audit  Committee  consisting of
three  directors.  Each member of the Audit  Committee is independent as defined
under the American Stock Exchange's  listing  standards.  The Board of Directors
has  adopted  a  written   charter  with   respect  to  the  Audit   Committee's
responsibilities.  The Audit  Committee  oversees  the  Company's  internal  and
independent  auditors and assists the Board of Directors in  overseeing  matters
relating to the Company's financial reporting process.

         In fulfilling its  responsibilities,  the Audit Committee  reviewed and
discussed the audited  financial  statements  for the fiscal year ended December
31, 2005 with  management and discussed the audit with  McGladrey & Pullen,  LLP
("M&P"), the Company's independent auditors.  The Audit Committee also discussed
with the Company's  independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61  (Communications  with Audit Committees),
as amended.  This included a discussion of the independent auditors' judgment as
to  the  quality,  not  just  the  acceptability,  of the  Company's  accounting
principles  as  applied to the  Company's  financial  reporting,  and such other
matters that generally  accepted auditing standards require to be discussed with
the Audit  Committee.  The Audit  Committee  also  received from M&P the written
disclosures and letter  required by Independence  Standards Board Standard No. 1
(Independence   Discussion  with  Audit  Committees)  and  the  Audit  Committee
discussed with M&P and management M&P's independence.

         Management  is  responsible  for  maintaining  internal  controls  over
financial  reporting and assessing the  effectiveness  of internal  control over
financial  reporting.   The  independent  registered  public  accounting  firm's
responsibility  is to  express  an opinion  on  management's  assessment  and an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting  based on their audit.  In fulfilling its oversight  responsibilities,
the Audit  Committee  reviewed  the  Company's  assessment  process of  internal
controls  over  financial  reporting.  The  Audit  Committee  reviewed  with the
independent  registered  public  accounting firm any deficiencies  that had been
identified during their engagement.

         The Audit Committee also considered  whether the provision of non-audit
services  by M&P to the  Company  is  compatible  with M&P's  independence.  M&P
advised  the  Audit  Committee  that  M&P was and  continues  to be  independent
accountants with respect to the Company.

         Based upon the reviews and considerations  referred to above, the Audit
Committee  recommended  to the Board of Directors  (and the Board has  approved)
that the audited  financial  statements be included in the Annual Report on

                                       24
<PAGE>

Form 10-K for the year ended  December  31, 2005 for filing with the  Securities
and Exchange Commission.

         The Audit  Committee has also  recommended,  subject to approval by the
Board of Directors,  the selection of M&P as the Company's  independent auditors
for 2006.
                                            Hoyt Ammidon, Jr.
                                            Edward L. McMillan
                                            Kenneth P. Mitchell

                                            being the members of the Audit
                                            Committee of the Board of Directors

Selection of Auditors for Year 2005 and 2006

         The Audit  Committee of the Board of  Directors of the Company  engaged
McGladrey & Pullen LLP ("M&P") as the Company's  Independent  Registered  Public
Accounting  Firm for the fiscal year ending  December  31, 2005 and the Board of
Directors has selected M&P to serve as the  independent  auditors of the Company
for the year ending December 31, 2006. Representatives of such firm are expected
to be present at the Annual  Meeting.  They will have an  opportunity  to make a
statement  to the  stockholders  if they desire to do so and are  expected to be
available to respond to stockholder questions raised orally at the Meeting.

Resignation of KPMG as Auditors of the Company

         KPMG LLP  ("KPMG")  resigned as the  Company's  principal  accountants,
effective  August 18, 2004.  KPMG's audit reports on the Company's  consolidated
financial  statements as of and for the fiscal years ended December 31, 2002 and
2003 did not contain an adverse opinion or a disclaimer of opinion, and were not
qualified or modified as to uncertainty, audit scope, or accounting principles.

         During the Company's fiscal years ended December 31, 2002 and 2003, and
the subsequent  interim period from January 1, 2004 through August 18, 2004, the
date of KPMG's  resignation,  (i) there were no  disagreements  with KPMG on any
matter of accounting principles or practices, financial statement disclosure, or
auditing  scope or  procedure,  which  disagreements,  if not resolved to KPMG's
satisfaction,  would have caused KPMG to make reference to the subject matter of
the  disagreements  in  connection  with  its  report,  and (ii)  there  were no
"reportable  events" as such term is defined in Item  304(a)(1)(v) of Regulation
S-K.

         During the years ended  December 31, 2002 and 2003,  and the subsequent
interim period from January 1, 2004 through August 18, 2004, neither the Company
nor anyone  acting on the  Company's  behalf  consulted  M&P with respect to the
application  of  accounting  principles  to  a  specified  transaction,   either
completed  or proposed,  or the type of audit  opinion that might be rendered on
our financial statements, or any other matters or reportable events as set forth
in Items 304(a)(2)(i) and (ii) of Regulation S-K.


                                       25
<PAGE>

Independent Auditor Fees

         During  2005,  the  Company  retained  M&P to  audit  the  consolidated
financial  statements  for 2005.  In addition,  the Company also retained M&P to
provide  services  relating to Management's  Assessment of Internal  Controls as
required  by  Section  404 of the  Sarbanes-Oxley  Act,  as  well  as  with  the
preparation of the Company's tax returns and other audit-related and tax-related
services.  KPMG also provided  transitional audit related services for 2005. The
following  table shows the fees paid or accrued by the Company for the audit and
other professional services provided by M&P and KPMG for 2005 and 2004:


                                           2005            2004
                                           ----            ----
      Audit fees (1)                     $265,700 (4)    $226,800 (5)

      Audit-related fees (2)              39,900           12,500 (6)

      Tax fees (3)                        34,800           72,000 (7)

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

      Total fees                         $340,400        $311,300
                                         ============================


(1) Fees relating to audit of the annual consolidated  financial  statements and
quarterly reviews.

(2) Fees relating to employee benefit plan audit and acquisition due diligence.

(3) Fees for tax compliance and advisory services.

(4) Consists of $9,000 paid to KPMG and $256,700 to M&P.

(5) Consists of $34,800 paid to KPMG and $192,000 to M&P.

(6) Consists entirely of fees paid to KPMG.

(7) Consists of $46,000 paid to KPMG and $26,000 to M&P.


Policy on Pre-Approval of Audit and Non-Audit Services

         All  auditing  and  non-audit  services  provided to the Company by the
independent  accountants  are  pre-approved by the Audit Committee or in certain
instances by one or more of its members pursuant to delegated authority.  At the
beginning of each year, the Audit Committee reviews and approves all known audit
and  non-audit  services and fees to be provided by and paid to the  independent
accountants.  During the year, specific audit and non-audit services or fees not
previously  approved by the Audit Committee are approved in advance by the Audit
Committee  or in certain  instances  by one or more of its  members  pursuant to
delegated  authority.  In addition,  during the year the Chief Financial Officer
and the Audit Committee  monitor actual fees to the independent  accountants for
audit and non-audit services.

                                       26
<PAGE>

Quorum Required

         Maryland law and the Company's By-laws require the presence of a quorum
for the Meeting,  defined as the presence in person or by proxy of  stockholders
entitled to cast a majority of all the votes entitled to be cast at the Meeting.
Abstentions  and broker  non-votes  will be treated as "present" for purposes of
determining whether a quorum has been reached.

         Broker  non-votes  are  shares  held by brokers  or  nominees  that are
present in person or  represented  by proxy,  but are not voted on a  particular
matter because instructions have not been received from the beneficial owner and
the  broker  or  nominee  does  not  have   discretion   to  vote  without  such
instructions.  Brokers and nominees  generally do not have such  discretion when
the matter is deemed by the American Stock Exchange to be "non-routine."

         However,  the American Stock Exchange generally  considers the election
of directors to be a "routine" matter with respect to which brokers and nominees
could vote shares held by them in  street-name  in their  discretion  absent any
instructions received from the beneficial owners of such shares.

Voting Securities

         Stockholders  of record on April 7, 2006 (the  "Record  Date")  will be
eligible to vote at the Meeting. The voting securities of the Company consist of
its  Common  Stock,   $.06-2/3  par  value,  of  which  11,649,737  shares  were
outstanding  on the Record Date.  Each share of Common Stock  outstanding on the
Record Date will be entitled to one vote.

Stockholder Proposals for 2007 Annual Meeting

         From time to time, the  stockholders  of the Company may wish to submit
proposals  which  they  believe  should be voted upon by the  stockholders.  The
Securities  and Exchange  Commission  has adopted  regulations  which govern the
inclusion of such proposals in the Company's annual meeting proxy materials. All
such  proposals  must  be  submitted  to the  Secretary  of the  Company  at the
Company's  principal  executive offices no later than December 29, 2006 in order
to be considered for inclusion in the Company's year 2007 proxy materials.  With
respect to any stockholder proposal not submitted for inclusion in the Company's
year 2007 proxy materials,  the proxy for such meeting will confer discretionary
authority  to vote on such  proposal  unless  the  Company is  notified  of such
proposal not later than March 14, 2007 (45 days prior to the  anniversary of the
date this Proxy Statement is first being sent to stockholders).


Matters Not Determined at the Time of Solicitation

         The Board of  Directors  is not aware of any matters to come before the
Meeting  other than as  described  above.  If any matter other than as described
above  should come before the  Meeting,  then the persons  named in the enclosed
form of proxy will have discretionary authority to vote all proxies with respect
thereto in accordance with their judgment.


New Hampton, New York
----------

                                       27
<PAGE>


         The Annual  Report to  Stockholders  of the Company for the fiscal year
ended  December  31,  2005 is being  mailed to  stockholders  with  these  proxy
materials. The Annual Report does not form part of these proxy materials for the
solicitation of proxies.


                                                                       Exhibit A
Balchem Corporation

Charter of the  Corporate  Governance  &  Nominating  Committee  of the Board of
Directors

1. Consider and make  recommendations  to the Board  concerning the  appropriate
size,  function and needs of the Board,  taking into account that the Board as a
whole  shall  strive to have  competency  in the  following  areas:  i) industry
knowledge,  ii) accounting and finance, iii) business judgment,  iv) management,
v)  leadership,  vi)  international  markets,  vii) crisis  management,  and ix)
corporate governance, and other areas as defined from time to time.

2.  Determine the criteria for Board  membership,  including  desired skills and
attributes,  oversee searches and evaluate and recommend candidates for election
to the  Board.  Consideration  of  nominations  made  by  stockholders  will  be
processed as well.

3.  Evaluate  and  recommend  to the  Board  the  responsibilities  of the Board
committees,  including composition of committees, the structure, operations, and
the ability to delegate sub-committee.

4. Annually review and assess the adequacy of the Company's corporate governance
guidelines and recommend any changes to the Board for adoption.

5.  Annually  evaluate  its  own  performance  as  well as  oversee  the  annual
self-evaluation of the Board and Board Committees. This may also include setting
criteria and measurements for progress on the strategic function of the Board.

6.  Consider  matters  of  corporate  social   responsibility   and  matters  of
significance  in areas  related to corporate  public  affairs and the  company's
employees and stockholders.

7. Recruit and  evaluate new  candidates  for  nomination  by the full Board for
election as director.

8.   Prepare and update an orientation program for new Directors.

9.  Evaluate  the  performance  of  current  directors  in  connection  with the
expiration  of their term in office with a view to providing  advice to the full
Board as to  whether  the full  Board  should  nominate  any such  director  for
reelection.

10. Annually review and recommend policies on director  retirement age, with the
understanding  that only the full Board of Directors  shall  nominate a slate of
candidates for nomination for election by the  stockholders of the  Corporation,
or appoint any director upon the death,  resignation  or removal of an incumbent
director.

                                       28
<PAGE>

                                 REVOCABLE PROXY
                               BALCHEM CORPORATION

[X]  PLEASE MARK VOTES
     AS IN THIS EXAMPLE

                          PROXY SOLICITED ON BEHALF OF
                             THE BOARD OF DIRECTORS
                 FOR THE ANNUAL MEETING TO BE HELD JUNE 23, 2006

The undersigned hereby appoints Dino A. Rossi,  Francis J. Fitzpatrick and David
Ludwig,  and  each  of  them  individually,  as  attorneys  and  proxies  of the
undersigned,  with  full  power  of  substitution,  at  the  Annual  Meeting  of
Stockholders of Balchem  Corporation  scheduled to be held on June 23, 2006, and
at any  adjournments  thereof,  and to vote all  shares of  Common  Stock of the
Company which the  undersigned  is entitled to vote on all matters coming before
said meeting.

The undersigned  hereby revokes all proxies  heretofore given by the undersigned
to vote at said meeting or any adjournment thereof.


                         Please be sure to sign and date
                          this Proxy in the box below.


                        ---------------------------------
                                      Date


                        ---------------------------------
                             Stockholder sign above


                        ---------------------------------
                          Co-holder (if any) sign above



<PAGE>

--------------------------------------------------------------------------------
Election of Directors:                   For All    Withhold All      For All
                                                                      Except*
Election of two (2)
Class 2 Directors                          [ ]          [ ]             [ ]

Nominees for Election as Class
2 Directors: Edward L.
McMillan, and Kenneth P.
Mitchell


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

*INSTRUCTION:  To  withhold  authority  to vote  for any one or more  individual
nominee(s)  for  election to the Board of  Directors,  mark "For All Except" and
write the name of such nominee in the space provided below:

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

The proxies are directed to vote as  specified  and in their  discretion  on all
other matters  coming before the Annual  Meeting.  If no direction is made,  the
proxies will vote FOR the nominees for election as Directors named above.

The Board of Directors  recommends a vote FOR each named nominee for election as
a Director.

PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE MEETING. [ ]

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD USING THE ENCLOSED ENVELOPE.

Please sign  exactly as your name  appears on this proxy card.  When  signing as
attorney,  executor,  administrator,  trustee or guardian, please give your full
title.  If shares are held jointly,  each holder should sign. If the signer is a
corporation,  please sign full corporate name by duly authorized  officer.  If a
partnership  or a limited  liability  company,  please  sign in  partnership  or
limited liability company name by authorized persons.

                               PLEASE ACT PROMPTLY
                     SIGN, DATE & MAIL YOUR PROXY CARD TODAY