Document:

Amended and Restated Loan Agreement dated February 6, 2006

     

    
      EXHIBIT
        10.2

      

      

      

      

      

      

      
        
          

        

      

      
 

      

      BANK
        OF
        AMERICA, N.A.

      

      

      AND

      

      

      BALCHEM
        CORPORATION

       

      
        	 
	
                 

                AMENDED
                  AND RESTATED LOAN AGREEMENT

                 

              

      

      
 

      DATED
        FEBRUARY 6, 2006

      

      

      

      
        
          

        

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      TABLE OF CONTENTS

      

      

        

          
            	
                    DEFINITIONS

                  	
                    2

                  
	
                        DEFINITIONS
                      OF TERMS.

                  	
                    2

                  
	
                    ARTICLE
                      I

                  	
                    5

                  
	
                        REPRESENTATIONS
                      AND WARRANTIES

                  	
                    5

                  
	
                            SECTION
                      101. REPRESENTATIONS AND WARRANTIES OF THE
                      COMPANY.

                  	
                    5

                  
	
                    ARTICLE
                      II

                  	
                    7

                  
	
                        THE
                      LOANS; CONDITIONS PRECEDENT TO THE HOLDER’S OBLIGATIONS
                      HEREUNDER

                  	
                    7

                  
	
                            SECTION
                      202. CONDITIONS.

                  	
                    7

                  
	
                    ARTICLE
                      III

                  	
                    9

                  
	
                        COVENANTS
                      OF THE COMPANY

                  	
                    9

                  
	
                            SECTION
                      301. AFFIRMATIVE COVENANTS OF THE COMPANY WITH THE
                      HOLDER.

                  	
                    9

                  
	
                            SECTION
                      302. NEGATIVE COVENANTS OF THE COMPANY WITH THE
                      HOLDER.

                  	
                    11

                  
	
                    ARTICLE
                      IV

                  	
                    13

                  
	
                        EVENTS
                      OF DEFAULT

                  	
                    13

                  
	
                            SECTION
                      401. EVENTS OF DEFAULT DEFINED.

                  	
                    13

                  
	
                            SECTION
                      402. JURY TRIAL WAIVER.

                  	
                    14

                  
	
                            SECTION
                      403. RIGHT OF SET OFF.

                  	
                    15

                  
	
                            SECTION
                      404. EXPENSES INCURRED IN CONNECTION WITH
                      ENFORCEMENT.

                  	
                    15

                  
	
                            SECTION
                      405. EFFECT OF UNENFORCEABILITY.

                  	
                    15

                  
	
                    ARTICLE
                      V

                  	
                    16

                  
	
                        GENERAL
                      CONDITIONS

                  	
                    16

                  
	
                            SECTION
                      501. GENERAL CONDITIONS OF THE LOAN
                      AGREEMENT.

                  	
                    16

                  
	 	 
	
                    EXHIBIT
“A”            
                       FORM
                      OF LINE OF CREDIT LOAN NOTE 

                  
	
                    EXHIBIT
“B”            
 
                      FORM OF TERM LOAN NOTE

                  
	
                    SCHEDULE
                      101 (F)         
                       PENDING LITIGATION 

                  
	
                    SCHEDULE
                      101 (J)        WHOLLY
                      OWNED SUBSIDIARIES

                  

          

        

        

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

      LOAN
        AGREEMENT

      

      THIS
        AMENDED AND RESTATED LOAN AGREEMENT dated FEBRUARY 6, 2006 (the “Loan
        Agreement”) by and between BANK OF AMERICA, N.A. (as successor by merger to
        Fleet National Bank), a national banking association organized and existing
        under the laws of the United States, and having an office at Peter D. Kiernan
        Plaza, Albany, New York 12201 (the “Holder”); and BALCHEM CORPORATION, a
        corporation organized and existing under the laws of the State of Maryland
        and
        having an address of P.O. Box 600, 52 Sunrise Park Road, New Hampton, New
        York
        10958 (the “Company”);

      

      

      W
        I T N E
        S S E T H :

      

      

      WHEREAS,
        the Holder and the Company have executed and delivered a certain loan agreement
        dated as of June 1, 2001 (as amended from time to time, the “Loan Agreement”);
        and

      

      WHEREAS,
        the parties desire to amend and restate the Loan Agreement in its entirety
        in
        the manner hereinafter set forth; and

      

      NOW,
        THEREFORE, for good and valuable consideration, the receipt whereof is hereby
        acknowledged, the Holder and the Company agree that the Loan Agreement is
        and
        shall be amended and restated in its entirety as follows:

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      DEFINITIONS

      

      

      DEFINITIONS
        OF TERMS.

      

      The
        following words and terms as used in this document shall have the following
        meanings unless the context or use indicates another or different meaning
        or
        intent:

      

      “CLOSING”
        means the closing with respect to the execution and delivery of the Notes
        by the
        Company to the Holder.

      

      “CLOSING
        DATE” means the date of the execution and delivery of the Note by the Company to
        the Holder.

      

      “CORPORATE
        GUARANTORS” means BCP Ingredients, Inc., a Delaware corporation, Balchem
        Minerals Corporation and any future Corporate Guarantor as described in Section
        301 (Y) hereof, and their respective successors and permitted
        assigns.

      

      “COMPANY”
        means Balchem Corporation, a Maryland corporation having an address of P.O.
        Box
        600, 52 Sunrise Park Road, New Hampton, New York 10958 and its permitted
        successors and permitted assigns.

      

      “DEFAULT
        RATE” shall have the meaning assigned to such term in the Note.

      

      “ERISA”
        means the Employee Retirement Income Security Act of 1974, as the same may
        from
        time to time be amended or supplemented, and all regulations promulgated
        thereunder.

      

      “EVENT
        OF
        DEFAULT” shall have the meaning assigned to such term in Section 401
        hereof.

      

      “FINANCING
        DOCUMENTS” means this Loan Agreement, the Notes, the Guaranties, and any other
        document now or hereafter executed by the Company or by a Corporate Guarantor
        by
        or in favor of the Holder which evidences, secures or guarantees any sum
        due
        under the Notes or any of the other Financing Documents.

      

      “GAAP”
        means generally accepted accounting principles as then in effect, which shall
        include the official interpretations thereof by the Financial Accounting
        Standards Board, consistently applied.

      

      “GOVERNMENTAL
        AUTHORITY” means the United States, the State and any political subdivision
        thereof, and any agency, department, commission, court, board, bureau or
        instrumentality of any of them.

      

      “GUARANTY”
        OR “GUARANTIES” means any guaranty executed by a Guarantor in form and substance
        satisfactory to the Holder whereunder said Corporate Guarantor guarantees
        in
        full on a joint and several basis repayment of the Note and all other amounts
        due and owing to the Holder under the other Financing Documents, as said
        guaranty may be amended or supplemented from time to time.

      

      “HOLDER”
        means Bank of America, N.A. (successor by merger to Fleet National Bank)
        as the
        original owner of the Note, and any subsequent owner at the time in question
        of
        the Notes.

      
        
          
          

        

        
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      “INDEBTEDNESS”
        means, at a particular date, all indebtedness for money borrowed or for the
        deferred purchase price of property and shall include all capitalized
        leases.

      

      “LIEN”
        means any interest in Property securing an obligation owed to a Person whether
        such interest is based on the common law, statute or contract, and including
        but
        not limited to a security interest arising from a mortgage, pledge, conditional
        sale or trust receipt or a lease, consignment or bailment for security purposes.
        The term “Lien” includes but is not limited to mechanics’, materialmens’,
        warehousemens’ and carriers’ liens and other similar encumbrances. For the
        purposes hereof, a Person shall be deemed to be the owner of Property which
        it
        has acquired or holds subject to a conditional sale agreement or other
        arrangement pursuant to which title to the Property has been retained by
        or
        vested in some other Person for security purposes.

      

      “LINE
        OF
        CREDIT LOAN” means the loan in the principal amount of $3,000,000.00 from the
        Holder to the Company as evidenced by the Line of Credit Loan Note.

      

      “LINE
        OF
        CREDIT LOAN NOTE” means the amended and restated promissory note dated the
        Closing Date in the principal amount of $3,000,000.00 from the Company in
        favor
        of the Holder in the form attached hereto as Exhibit “A” and evidencing the Line
        of Credit Loan, as said amended and restated promissory note may be further
        amended, modified, supplemented, consolidated or extended from time to
        time.

      

      “LOAN
        AGREEMENT” means this amended and restated loan agreement dated the Closing
        Date, by and between the Holder and the Company, as said amended and restated
        loan agreement may be further modified, supplemented or amended from time
        to
        time.

      

      “LOANS”
        means collectively the Line of Credit Loan and the Term Loan.

      

      “MATURITY
        DATE” shall have the meaning assigned to such term in the Line of Credit Loan
        Note and/or the Term Loan Note, as applicable

      

      “NOTE
        PAYMENT DATE” means each date on which interest or both principal and interest
        shall be payable on the Notes according to their respective terms so long
        as
        such shall be outstanding.

      

      “NOTES”
        means, collectively, the Line of Credit Loan Note and the Term Loan
        Note

      

      “PERMITTED
        ENCUMBRANCES” means (i) Liens for taxes which are not delinquent or which are
        being contested in good faith, mechanic’s and materialmen’s Liens and other
        statutory Liens with respect to obligations which are not overdue or which
        are
        being contested in good faith, and Liens resulting from deposits to secure
        the
        payments of workmen’s compensation or other social security or to secure the
        performance of bids or contracts in the ordinary course of business, (ii)
        capitalized lease or purchase money security interest obligations in the
        ordinary course of business or assumed as part of a permitted acquisition,
        (iii)
        reservations, exceptions, encroachments, easements, rights of way, covenants,
        conditions, restrictions, leases and other similar title exceptions affecting
        real estate, (iv) Liens having as aggregate dollar value not in excess of
        $100,000 or (v) Liens in favor of the Bank.

      

      “PERSON”
        means an individual, partnership, corporation, limited liability company,
        trust
        or unincorporated organization, and a government or agency or political
        subdivision thereof.

      
        
          
          

        

        
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      “PLAN”
        means any plan defined in Section 4021(a) of ERISA in respect of which the
        Company or any Subsidiary thereof is an “employer” or a “substantial employer”
as defined in Sections 3(5) and 4001(a)(2) of ERISA, respectively.

      

      “PRINCIPAL
        BALANCE” means the outstanding principal balance of the Notes from time to
        time.

      

      “PROPERTY”
        means any interest in any kind of property or asset, whether real, personal
        or
        mixed, or tangible or intangible.

      

      “REPORTABLE
        EVENT” means any reportable event as defined in ERISA.

      

      “REQUIREMENT”
        or “LOCAL REQUIREMENT” means any law, ordinance, order, judgment, decree, rule,
        regulation, permit, license, authorization, certificate or approval of a
        Governmental Authority or a Local Authority respectively.

      

      “STATE”
        means the State of New York.

      

      “SUBSIDIARY”
        means, with respect to any Person (the “parent”)
        at any
        date, any corporation, limited liability company, partnership, association
        or
        other entity the accounts of which would be consolidated with those of the
        parent in the parent’s consolidated financial statements if such financial
        statements were prepared in accordance with GAAP as of such date, as well
        as any
        other corporation, limited liability company, partnership, association or
        other
        entity (a) of which securities or other ownership interests representing
        more than 50% of the equity or more than 50% of the ordinary voting power
        or, in
        the case of a partnership, more than 50% of the general partnership interests
        are, as of such date, owned, controlled or held, or (b) that is, as of such
        date, otherwise Controlled, by the parent or one or more subsidiaries of
        the
        parent or by the parent and one or more subsidiaries of the parent.

      

      “TERM
        LOAN” means the loan in the amount of $10,000,000.00 from the Holder to the
        Company and evidenced by the Term Loan Note.

      

      “TERM
        LOAN NOTE” means the promissory note dated the Closing Date in the principal
        amount of $10,000,000.00 from the Company in favor of the Holder in the form
        attached hereto as Exhibit “B” and evidencing the Term Loan, as said promissory
        note may be further amended, modified, supplemented, consolidated or extended
        from time to time.

      

      “WHOLLY
        OWNED SUBSIDIARY” means as to any Person, any other Person all of the Capital
        Securities of which (other than directors’ qualifying shares required by law) is
        owned by such Person directly and/or through other Wholly Owned
        Subsidiaries.

      

      

      
        
          
          

        

        
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      ARTICLE
        I

      

      REPRESENTATIONS
        AND WARRANTIES

      

      

      SECTION
        101. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

      

      The
        Company represents and warrants that:

      

      (A)    It
        is a
        corporation duly incorporated, validly existing and in good standing under
        the
        laws of the State of Maryland, possesses full corporate power and corporate
        capacity to consummate the transactions contemplated hereby and is authorized
        to
        conduct business in all jurisdictions wherein the nature of its activities
        requires such except where the failure to do so would not have a material
        adverse effect upon the Company and its Subsidiaries taken as a
        whole;

      

      (B)     No
        approval or other action by any Governmental Authority is required in connection
        with the execution or performance by the Company of the Financing
        Documents;

      

      (C)     The
        consolidated financial statements of the Company, if any, heretofore delivered
        to the Holder have been prepared in accordance with GAAP, and fairly present
        in
        all material respects the respective consolidated financial conditions of
        the
        subjects thereof as of the respective dates thereof, except, in the case
        of
        interim financial statements, for the absence of footnotes and year-end audit
        adjustments;

      

      (D)     The
        Financing Documents and all other documents to be executed by the Company
        in
        connection therewith, when executed and delivered by the respective parties
        thereto, will constitute valid and binding obligations of the Company. The
        execution and delivery by the Company of the Financing Documents and the
        performance of the Financing Documents by the Company (1) have been authorized
        by all necessary corporate action and (2) do not and will not conflict with,
        or
        result in any breach of, or constitute a default under the Company’s articles of
        incorporation or by-laws or any indenture, mortgage, deed of trust, bank
        loan or
        credit agreement or any other agreement or instrument to which the Company
        is a
        party or by which the Company or any of its Property may be bound for which
        a
        valid consent has not been secured except where the failure to do so would
        not
        have a material adverse effect upon the Company and its Subsidiaries taken
        as a
        whole, or result in the creation of any Lien (other than that created by
        Permitted Encumbrances) upon or with respect to any Property of the
        Company;

      

      (E)     There
        has
        been no material adverse change in the business, Property or financial
        condition, taken as a whole, of the Company and its Subsidiaries from that
        shown
        on the most recent financial statements delivered heretofore to the
        Holder;

      

      (F)     Except
        as
        disclosed in Schedule 101 (F) hereto, as of the date hereof, there are no
        actions, suits or proceedings at law or in equity, or before or by any
        Governmental Authority, pending or, to the knowledge of the Company, threatened
        against or affecting the Company or involving the validity or enforceability
        of
        the Financing Documents which are reasonably likely to materially adversely
        affect the financial condition of the Company, and to the Company’s knowledge it
        is not in default with respect to any material order, writ, judgment, decree
        or
        demand of any court or any Governmental Authority which default is reasonably
        likely to materially adversely affect the financial condition of the
        Company;

      
        
          
          

        

        
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      (G)     There
        is
        no default under the Financing Documents and no event has occurred and is
        continuing which with notice or the passage of time or either would constitute
        a
        default under any thereof;

      

      (H)     All
        material Federal, state, county, municipal and city income and other tax
        returns
        and other reports and documents required to have been filed by the Company
        have
        been filed and the Company has paid all fees and taxes indicated as due pursuant
        to such returns, reports and documents or pursuant to any assessments received
        by the Company except which are in, being contested in good faith, and the
        Company knows of no basis for any additional material assessment in respect
        of
        any such taxes which has not been or will not be reserved for in accordance
        with
        GAAP;

      

      (I)     No
        Reportable Event or Prohibited Transaction (as defined in Section 4975 of
        the
        Internal Revenue Code) has occurred and is continuing with respect to any
        Plan
        and the Company has not incurred any “accumulated funding deficiency” (as such
        term is defined in Section 302 of ERISA); and

      

      (J) L    isted
        on
        Schedule 101 (J) are all of the Wholly-owned Subsidiaries of the Company
        as of
        the date hereof.

      

      
        
          
          

        

        
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      ARTICLE
        II

      

      THE
        LOANS; CONDITIONS PRECEDENT TO THE HOLDER’S OBLIGATIONS
        HEREUNDER

      

      SECTION
        201.
        THE
        LOANS.

      

      (A) The
        Line
        of Credit Loan Upon
        the
        terms and conditions set forth herein, the Holder shall make the Line of
        Credit
        Loan to the Company. The proceeds of the Line of Credit Loan shall be utilized
        to fund general corporate endeavors, including the providing of working capital,
        funding capital expenditures and funding stock and asset acquisitions. The
        Company may apply from time to time for the issuances of commercial letters
        of
        credit and standby letters of credit in furtherance of such purposes provided
        that the aggregate face amount of such commercial letters of credit and/or
        standby letters of credit does not exceed an amount equal to $3,000,000 less
        the
        outstanding principal balance of the Line of Credit Loan at the time of such
        request. The Line of Credit Loan shall bear interest and shall mature all
        as set
        forth in the Line of Credit Loan Note. The Line of Credit Loan shall be an
        unsecured facility.

      

      (B) The
        Term
        Loan Upon
        the
        terms and conditions set forth herein, the Holder shall make the Term Loan
        to
        the Company. The proceeds of the Term Loan shall be utilized to partially
        fund
        the acquisition by the Company of the outstanding capital stock of Chelated
        Minerals Corporation (the “Target Entity”). The Term Loan shall bear interest
        and shall mature all as set forth in the Term Loan Note. In consideration
        for
        the making of the Term Loan, the Company shall pay to the Holder on the Closing
        Date a facility fee equal to $37,500.00.

      

      (c) Payments The
        Company agrees that all fees due and payable hereunder and under the Notes
        (including but not limited to, all payments of principal and accrued interest
        under the Notes and any fees due and payable with respect to outstanding
        commercial letters of credit or standby letters of credit) shall be paid
        through
        a debit against the Borrower’s account number 009428413878 maintained with the
        Holder, which direct debit is hereby authorized by the Company.

      

      SECTION
        202. CONDITIONS.

      

      The
        Holder shall not be obligated hereunder to make the Loans unless the following
        conditions shall have been satisfied:

      

      (A)     The
        Holder shall have received on or before the Closing Date the following all,
        where applicable, in form and substance satisfactory to the Holder:

      

      (1)     the
        executed Notes,

      

      (2)     an
        executed counterpart of the Guaranties,

      

      (3)     an
        executed counterpart of this Loan Agreement,

      

      (4)     (a)
        the
        facility fee of the Holder described in Section 101 (B) hereof and (b) the
        Holder’s reasonable counsel fees,

      
        
          
          

        

        
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      (5)     opinion
        of counsel for the Company and the Corporate Guarantors in form and substance
        reasonably satisfactory to the Holder and its counsel; 

      

      (6)     stock
        purchase agreement with the Target Entity; and

      

      (7)     three
        year management projections for the Company (to include the operations of
        the
        Target Entity)

      

      (B)     The
        Holder’s counsel shall have received (and approved as appropriate) on or before
        the Closing Date copies of:

      

      (1)     With
        respect to the Company, an executed closing certificate together with a
        certified copy of the articles of incorporation as filed with the Maryland
        Secretary of State together with all amendments thereto, a good standing
        certificate issued by the Maryland Secretary of State, a certificate of
        authority to conduct business in New York State, a certified copy of the
        by-laws
        and an approval of the board of directors authorizing the execution and delivery
        and performance of the Financing Documents, and

      

      (2)     With
        respect to each of the Corporate Guarantors, an executed closing certificate
        together with a certified copy of the articles of incorporation as filed
        with
        the state of incorporation of such together with all amendments thereto,
        a good
        standing certificate issued by said state of incorporation, a certified copy
        of
        the by-laws and an approval of the board of directors and shareholders
        authorizing the execution and delivery and performance of the Financing
        Documents to which it is a party.

      
        
          
          

        

        
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      ARTICLE
        III

      

      COVENANTS
        OF THE COMPANY

      

      

      SECTION
        301. AFFIRMATIVE COVENANTS OF THE COMPANY WITH THE HOLDER.

      

      Until
        the
        Loans have been paid in full and all other monetary obligations then due
        of the
        Company under the Financing Documents have been satisfied, the Company covenants
        with the Holder as follows:

      

      (A)     It
        will
        pay all costs and expenses required to satisfy the conditions of this Loan
        Agreement; without limiting the generality of the foregoing, the Company
        will
        pay (from moneys advanced hereunder or otherwise):

      

      (1)     all
        taxes
        (other than the Holder’s income taxes), filing and recording expenses, including
        documentary stamp and intangible taxes, if any in respect of the transactions
        pursuant hereto;

      

      (2)     the
        fees
        and commissions, if any, lawfully due to brokers in connection with this
        transaction; and

      

      (3)     reasonable
        fees and expenses of counsel to the Holder;

      

      (B)     It
        will
        indemnify the Holder from claims of brokers arising by reason of the Company’s
        acts in connection with the execution and delivery hereof and of the other
        Financing Documents executed by it or the consummation of the transactions
        contemplated hereby or thereby and from expenses incurred by the Holder in
        connection with any such claims (including reasonable attorneys’ fees) and each
        of the Holder and the Company represent that it has not dealt with any broker
        in
        connection with the Loans nor is aware of such claims of brokers;

      

      (C)     It
        will
        promptly and reasonably respond to any reasonable inquiry made by the Holder
        with respect to the Notes or the other Financing Documents or the transactions
        contemplated thereby;

      

      (D)     It
        will
        notify the Holder of any material adverse change in the financial condition
        or
        business of the Company and furnish such other information concerning its
        financial condition and business as may be reasonably requested by the Holder
        from time to time;

      

      (E)     It
        will
        give written notice to the Holder within ten (10) days of becoming aware
        of any
        condition or event which constitutes an event of default beyond any applicable
        grace or cure period with respect to other outstanding Indebtedness of the
        Company in excess of $100,000;

      

      (F)     It
        will
        at all times keep adequate books and records, in accordance with GAAP so
        that at
        any time, and from time to time, its financial condition may be readily
        determined in all material respects; and, at Holder’s request, make and take
        away copies thereof;

      

      (K)     Intentionally
        Omitted;

      
        
          
          

        

        
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      (L)     It
        will
        promptly, and in any event within one hundred and twenty (120) days after
        the
        close of each fiscal year, furnish to the Holder reasonably detailed financial
        projections and business plan for the Company’s operations for the ensuing
        fiscal year;

      

      (M)    It
        will
        promptly, and in any event within ten (10) days of the filing thereof, furnish
        to the Holder a copy of the Company’s Form 10-K as filed with the U.S.
        Securities and Exchange Commission;

      

      (N)     It
        will
        promptly, and in any event within ninety (90) days after the close of each
        fiscal quarter, furnish to the Holder a copy of the Company’s Form 10-Q as filed
        with the U.S. Securities and Exchange Commission;

      

      (O)     It
        will
        maintain as of the close of each fiscal quarter on a consolidated basis for
        the
        Company and its Subsidiaries a minimum Current Ratio of: 1.25 to 1.00 based
        upon
        the Company’s financial statements for then most recently ended four (4) fiscal
        quarters. Such covenant is to be tested quarterly, beginning on
        December 31, 2005, and the “Current Ratio” shall be defined as the
        ratio of the Company’s current assets to current liabilities;

      

      (P)     It
        will
        maintain on a consolidated basis for the Company and its Subsidiaries a maximum
        Funded Debt Ratio of (i) for the period commencing as of the date hereof
        through
        September 30, 2008, 2.50 to 1.00 and (ii) for all periods thereafter, 2.00
        to
        1.00. Such covenant is to be tested quarterly based upon the Company’s financial
        statements for the then most recently ended four (4) fiscal quarters, beginning
        on December 31, 2005, and the “Funded Debt Ratio” shall be defined as that ratio
        of (i) the sum of the outstanding principal of all interest bearing
        Indebtedness, to (ii) earnings before interest, taxes, depreciation and
        amortization and any other non-cash charges (“EBITDA”);

      

      (Q)     It
        will
        maintain as of the close of each fiscal quarter on a consolidated basis for
        the
        Company and its Subsidiaries a minimum Fixed Charge Coverage Ratio of: 1.50
        to
        1.00. Such covenant is to be tested quarterly beginning on December 31, 2005
        based upon the Company’s financial statements for the then most recently ended
        four (4) fiscal quarters and the “Fixed Charge Coverage Ratio” shall be defined
        as the ratio of (i) earnings before interest, taxes, depreciation and
        amortization and any other non-cash charges less taxes paid less dividends
        paid
        less non-financed capital expenditures, to (ii) required payments of term
        debt
        principal, capital lease payments and interest;

      

      (R)     It
        will
        promptly, and in any event within ninety (90) days after the end of each
        fiscal
        quarter with respect to which as of such date there are amounts outstanding
        under the Note, deliver to Holder a compliance certificate executed by the
        Company stating that a review of the activities of the Company during such
        fiscal quarter has been made and that, to the best of its knowledge and belief,
        the Company has observed, performed and fulfilled each and every material
        obligation and covenant contained in the Financing Documents and is not in
        default under any of the same and demonstrating the calculation of all financial
        ratio covenants; 

      

      (S)     It
        will
        promptly inform the Holder of any pending or to the Company’s knowledge
        threatened litigation against the Company or affecting any of the Company’s
        property, if such litigation or potential litigation could reasonably be
        expected to have a material adverse effect on the Company’s consolidated
        financial condition or to cause an event of default;

      

      (T)     It
        will
        preserve and maintain its corporate existence, all rights, licenses, privileges,
        franchises, certificates and the like necessary for the operation of its
        business and the maintenance of its existence where the failure to maintain
        the
        same is reasonably expected to have a material adverse effect upon the Company,
        and promptly and properly comply with all laws, statutes, ordinances
        and

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      governmental
        regulations applicable to it or to any of its property, business operations
        and
        transactions where the failure to comply with the same is reasonably expected
        to
        have a material adverse effect upon the Company;

      

      (U)     It
        will
        maintain, with financially sound and reputable insurance companies or
        associations, workmen’s compensation insurance, liability insurance, and
        extended coverage and any other insurance of the kinds usually carried by
        companies engaged in business similar to that of the Company, in an amount
        not
        less than full replacement cost on its present and future properties normally
        covered by insurance (less reasonable deductibles), against such casualties,
        risks and contingencies as are customarily insured against, and at the Holder’s
        request, deliver to the Holder evidence of the maintenance of such
        insurance;

      

      (V)     It
        will
        promptly pay when due any and all material taxes, assessments and other
        governmental charges upon the Company or against any of the Company’s property,
        unless the same is being contested in good faith by appropriate proceedings
        and
        reserves consistent with GAAP have been established therefor; 

      

      (W)     It
        will
        maintain all of its tangible Property in good condition and repair, and make
        all
        necessary replacements thereof where the failure to do so would have a material
        adverse effect upon the Company;

      

      (X)     Other
        than employee payroll and other minor local business accounts, it will maintain
        with the Holder all of the Company’s deposit and cash management services. In
        addition, it will maintain with the Bank at all times aggregate minimum balances
        of $100,000 net of amounts necessary to offset service charges; and

      

      (Y)     It
        shall
        within thirty (30) days of any acquisition of or formation of any Wholly-Owned
        Subsidiary cause such entity to enter into a Guaranty.

      

      

      SECTION
        302. NEGATIVE COVENANTS OF THE COMPANY WITH THE
        HOLDER.

      

      Until
        the
        Loans have been paid in full and all other monetary obligations of the Company
        then due under the Financing Documents have been satisfied, the Company
        covenants with the Holder as follows: 

      

      (A)     Neither
        it nor its Subsidiaries shall (i) mortgage, assign, hypothecate, grant a
        security interest in, or encumber any of its assets, except for Permitted
        Encumbrances or (ii) enter into any agreement with any Person whereunder
        the
        Company covenants not to mortgage, assign, hypothecate, grant a security
        in or
        encumber its assets;

      

      (B)     Neither
        it
        nor its Subsidiaries shall endorse, guarantee, or otherwise become surety
        for or
        contingently liable upon the obligations of any Person (provided, however,
        that
        the foregoing shall not apply to guaranties by the Company of obligations
        of any
        Subsidiary, guaranties by a Subsidiary of obligations of the Company, guaranties
        by a Subsidiary of obligations of another Subsidiary, security deposits,
        bonds
        or performance guaranties in the ordinary course of business or endorsements
        of
        negotiable instruments by the Company in the ordinary course of
        business);

      

      (C)     Neither
        it
        nor its Subsidiaries shall sell, assign, lease, exchange or otherwise dispose
        of
        any of its assets used or useful in its business valued at more than Five
        Hundred Thousand and no/100

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      Dollars
        ($500,000.00) in aggregate in any fiscal year, except inventory or obsolete
        or
        unused equipment in the ordinary course of business;

      

      (D)     Neither
        it nor its Subsidiaries shall sell any of its assets to any other Person
        with
        the understanding or agreement that such assets shall be leased back to the
        Company;

      

      (E)     Neither
        it nor its Subsidiaries shall make any loans or advances in excess of
        $250,000.00 in aggregate principal amount outstanding (combined with the
        Company’s Subsidiaries) except for loans or advances to employees in the
        ordinary course of business, or sell any of its accounts receivables with
        or
        without recourse;

      

      (F)     Neither
        it nor its Subsidiaries shall change its fiscal year or methods of
        accounting;

      

      (G)     Neither
        it nor its Subsidiaries shall hereafter incur or assume any Indebtedness
        for
        borrowed money in excess of $1,000,000.00 aggregate principal amount (combined
        with the Company’s Subsidiaries) except for loans between the Company and its
        Subsidiaries, loans between Subsidiaries, the contingent purchase price or
        purchase price adjustments related to permitted acquisitions described in
        subparagraph (I) below and except for indebtedness due the Holder;

      

      (H)    It
        shall
        not assign or transfer, or attempt to so do, any of its rights, powers, duties
        or obligations arising pursuant to this Loan Agreement;

      

      (I)     Neither
        it nor its Subsidiaries shall reorganize, merge or consolidate with, or acquire,
        directly or indirectly, all or substantially all of the assets, property
        or
        stock of any company, person or other entity, sell all or substantially all
        of
        its assets or approve a sale of all or substantially all of its stock or
        make
        any other substantial change in its capitalization (each of the foregoing
        hereinafter referred to as a “Transaction”), without the express written consent
        of the Holder, which consent shall not be unreasonably withheld; provided,
        however, that the Company may effect changes in its authorized capital stock
        or
        issuances of capital stock or enter into transactions between the Company
        and
        its Subsidiaries or between such Subsidiaries absent the prior written consent
        of the Holder. Additionally, the Company may enter into a Transaction absent
        the
        prior written consent of the Holder provided that all of the following criteria
        are met: (i) any business being acquired must be engaged in a similar or
        substantially related line of business to that of the Company or any of its
        Subsidiaries, (ii) the Transaction (if initiated by the Company) in question
        must not be hostile, (iii) the Company must be in full compliance with all
        covenants hereunder both prior to and immediately following (on a pro-forma
        basis) and (iv) the total consideration for such Transaction does not exceed
        $20,000,000;

      

      (J)     Neither
        it nor its Subsidiaries shall directly or indirectly, engage in any business
        other than that currently engaged in by the Company and business related
        or
        analogous thereto (after giving effect to any Transactions consented to by
        the
        Holder in accordance with Section 302 (I) hereof) or business covered by
        any
        other Transactions permitted under subparagraph (I) of this Section 302,
        discontinue any of its existing lines of business which materially contribute
        to
        the Company’s operations, or substantially alter its method of doing
        business.

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        IV

      

      EVENTS
        OF DEFAULT

      

      

      SECTION
        401. EVENTS OF DEFAULT DEFINED.

      

      The
        following shall constitute Events of Default hereunder and the terms “Event of
        Default” or “Default” shall mean, whenever they are used in the Loan Agreement,
        any one or more of the following events:

      

      (A)     If
        the
        Company fails to comply with any of the covenants or agreements made, or
        to be
        observed, by it in the Loan Agreement, other than a covenant or agreement
        specified in subsection (B) below, and such failure shall have continued
        for a
        period of fifteen (15) days after written notice of non-compliance from the
        Holder to the Company, provided that if such default cannot reasonably be
        cured
        within said 15-day period, and the Company shall have commenced action to
        cure
        the breach of covenant, condition or agreement within said 15-day period
        and
        thereafter diligently and expeditiously proceeds to cure the same, such 15-day
        period shall be extended for so long as the Company shall require in the
        exercise of due diligence to cure such default, it being agreed that no such
        extension shall be for a period in excess of forty-five (45) days in the
        aggregate from the date of such written notice.

      

      (B)     If
        the
        Company fails to provide to the Holder the information required by subsections
        (K), (L), (M), (N) or (R) of Section 301 hereof and such failure shall have
        continued for a period of ten (10) days after written notice of non-compliance
        from the Holder to the Company.

      

      (C)     Notwithstanding
        the foregoing subsection (A) above, the following shall be immediate Events
        of
        Default for which there shall be no cure period under this Section:

      

      (1)     if
        a
        default by the Company occurs in the due and punctual payment of any amounts
        specified to be paid herein or under the other Financing Documents (other
        than
        any amounts payable on the Maturity Date or any earlier date on which the
        entire
        Principal Balance together with all accrued but unpaid interest and all other
        sums evidenced by the Financing Documents shall be due and payable in full)
        and
        such default continues for ten (10) days;

      

      (2)     if
        the
        Company fails to pay any amount due on the Maturity Date or any earlier date
        on
        which the entire Principal Balance together with all accrued but unpaid interest
        and all other sums evidenced by the Financing Documents shall be due and
        payable
        in full;

      

      (3)     if
        the
        Company fails to comply with the provisions of subsections (O), (P) or (Q)
        of
        Section 301 hereof or any provision set forth in Section 302
        hereof;

      

      (4)     if
        at any
        time any material representation or warranty made by the Company herein or
        in
        any other instrument or document delivered by the Company or a Corporate
        Guarantor to the Holder in connection with the Loans shall be incorrect in
        a
        material manner;

      

      (5)     if
        at any
        time any insurance policy required to be maintained pursuant to any of the
        Financing Documents shall be canceled, terminated or lapse and shall not
        have
        been replaced prior to the effective date of such cancellation, termination
        or
        lapse by a policy covering the same matters

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      as
        the
        lapsed policy, which new policy shall comply with all requirements in the
        Financing Documents relating to such type of insurance; 

      

      (6)     if
        the
        Company or a Corporate Guarantor shall assign or convey or attempt to assign
        or
        convey any of its rights, duties or obligations under the Loan Agreement
        or the
        other Financing Documents; 

      

      (7)     if
        by
        order of a court of competent jurisdiction a custodian, trustee, receiver
        or
        liquidator of the Company or a Corporate Guarantor, shall be appointed and
        such
        order shall not be discharged or dismissed or stayed within sixty (60) days
        after such appointment; 

      

      (8)     (1)
        the
        dissolution or winding-up of the Company or a Corporate Guarantor; (2) the
        filing by the Company or a Corporate Guarantor of a voluntary petition under
        Title 11 of the United States Code or any other federal or state bankruptcy
        statute; (3) the failure by the Company or a Corporate Guarantor within sixty
        (60) days to lift any execution, garnishment or attachment of such consequence
        as will impair the Company’s or such Corporate Guarantor’s, as the case may be,
        ability to carry out its obligations hereunder and under the other Financing
        Documents to which it is a party; (4) the commencement of a case under Title
        11
        of the United States Code against the Company or a Corporate Guarantor as
        the
        debtor or commencement under any other federal or state bankruptcy statute
        of a
        case, action or proceeding against any of the foregoing and continuation
        of such
        case, action or proceeding without dismissal or stay for a period of sixty
        (60)
        days; (5) the filing, grant or entry of any order for relief by a court of
        competent jurisdiction under Title 11 of the United States Code or any other
        federal or state bankruptcy statute with respect to the debts of the Company
        or
        a Corporate Guarantor; or (6) in connection with any insolvency or bankruptcy
        case, action or proceeding, appointment by final order, judgment or decree
        of a
        court of competent jurisdiction of a receiver or trustee of the whole or
        a
        substantial portion of the Company or a Corporate Guarantor unless such order,
        judgment or decree is vacated, dismissed or dissolved within sixty (60) days
        of
        its issuance; 

      

      (9)     if
        any
        final judgment or a series of final judgments for the payment of money in
        excess
        of $250,000 in the aggregate not covered by insurance shall be rendered against
        the Company or a Corporate Guarantor and the Company or such Corporate
        Guarantor, as the case may be, shall not discharge the same or cause it to
        be
        discharged within sixty (60) days from the entry thereof, or shall not appeal
        therefrom or from the order, decree or process upon which or pursuant to
        which
        said judgment was granted, based or entered, and secure a stay of execution
        pending such appeal; or

      

      (10)     if
        the
        Company or a Corporate Guarantor shall default beyond any applicable grace
        or
        cure period under any other agreement or document other than the Financing
        Documents now or hereafter in effect with the Holder.

      

      SECTION
        402. JURY TRIAL WAIVER.

      

      THE
        COMPANY AND THE HOLDER MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
        WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON,
        ARISING
        OUT OF, UNDER OR IN CONNECTION WITH THIS LOAN AGREEMENT OR ANY COURSE OF
        CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
        OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE
        OF
        DEALINGS, STATEMENTS OR ACTIONS OF THE HOLDER RELATING TO THE ADMINISTRATION
        OF
        THE LOANS OR ENFORCEMENT OF THE NOTES, AND AGREE

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      THAT
        NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH
        ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
        EXCEPT
        AS PROHIBITED BY LAW, THE COMPANY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO
        CLAIM
        OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
        DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE
        COMPANY CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE HOLDER
        HAS
        REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE HOLDER WOULD NOT, IN THE EVENT
        OF
        LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES
        A
        MATERIAL INDUCEMENT FOR THE HOLDER TO ACCEPT THE NOTES AND MAKE THE
        LOANS.

      

      

      SECTION
        403. RIGHT OF SET OFF.

      

      The
        Company hereby grants to the Holder, a continuing lien, security interest
        and
        right of setoff as security for all liabilities and obligations to the Holder,
        whether now existing or hereafter arising, upon and against all deposits,
        credits, collateral and property, now or hereafter in the possession, custody,
        safekeeping or control of the Holder or any entity under the control of Bank
        of
        America Corporation and its successors and assigns, or in transit to any
        of
        them. At any time, without demand or notice (any such notice being expressly
        waived by the Company), the Holder may set off the same or any part thereof
        and
        apply the same to any liability or obligation of the Company even though
        unmatured and regardless of the adequacy of any other collateral securing
        the
        Notes. ANY AND ALL RIGHTS TO REQUIRE THE HOLDER TO EXERCISE ITS RIGHTS OR
        REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE NOTES, PRIOR
        TO
        EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR
        OTHER
        PROPERTY OF THE COMPANY, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
        WAIVED.

      

      

      SECTION
        404. EXPENSES INCURRED IN CONNECTION WITH ENFORCEMENT.

      

      The
        Company shall pay on demand all reasonable expenses of the Holder in connection
        with the preparation, administration, default, collection, waiver or amendment
        of loan terms, or in connection with the Holder’s exercise, preservation or
        enforcement of any of its rights, remedies or options hereunder, including,
        without limitation, reasonable fees of outside legal counsel or the allocated
        costs of in-house legal counsel, accounting, consulting, brokerage or other
        similar professional fees or expenses, and any reasonable fees or expenses
        associated with travel or other costs relating to any appraisals or examinations
        conducted in connection with the loan or any collateral therefor, and the
        amount
        of all such expenses shall, until paid, bear interest at the rate applicable
        to
        principal hereunder (including any default rate) and be an obligation secured
        by
        any collateral.

      

      

      SECTION
        405. EFFECT OF UNENFORCEABILITY.

      

      Unenforceability
        for any reason of any provision of this Loan Agreement shall not limit or
        impair
        the operation or validity of any other provision of this Loan Agreement or
        any
        of the other Financing Documents.

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        V

      

      GENERAL
        CONDITIONS

      

      

      SECTION
        501. GENERAL CONDITIONS OF THE LOAN AGREEMENT.

      

      The
        following conditions shall be applicable throughout the term of the Loan
        Agreement:

      

      (A)     All
        computations of interest under the Notes shall be made on the basis of a
        three
        hundred sixty (360) day year and the actual number of days elapsed;

      

      (B)     (1)     The
        Holder may at any time pledge or assign all or any portion of its rights
        under
        the Notes and the other Financing Documents to any of the twelve (12) Federal
        Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C.
        Section 341. No such pledge or assignment or enforcement thereof shall release
        the Holder from its obligations under any of the Financing
        Documents. 

       

      (2)     The
        Holder shall have the unrestricted right at any time and from time to time,
        and
        to grant to one or more banks or other financial institutions (each, a
“Participant”) participating interests in the Holder’s obligation to lend
        hereunder and/or any or all of the loans held by the Holder hereunder. In
        the
        event of any such grant by the Holder of a participating interest to a
        Participant, whether or not upon notice to the Company, the Holder shall
        remain
        responsible for the performance of its obligations hereunder and the Company
        shall continue to deal solely and directly with the Holder in connection
        with
        the Holder’s rights and obligations hereunder. 

       

      (3)     The
        Holder shall have the unrestricted right at any time or from time to time,
        to
        assign all or any portion of its rights and obligations hereunder and under
        the
        other Financing Documents to one or more banks or other financial institutions
        (each, an “Assignee”), and the Company agrees that it shall execute, or cause to
        be executed, such documents, including without limitation, amendments to
        this
        Loan Agreement and to the other Financing Documents as the Holder shall deem
        necessary to effect the foregoing. In addition, at the request of the Holder
        and
        any such Assignee, the Company shall issue one or more new promissory notes,
        as
        applicable, to any such Assignee and, if the Holder has retained any of its
        rights and obligations hereunder following such assignment, to the Holder,
        which
        new promissory notes shall be issued in replacement of, but not in discharge
        of,
        the liability evidenced by the promissory note held by the Holder prior to
        such
        assignment and shall reflect the amount of the respective commitments and
        loans
        held by such Assignee and the Holder after giving effect to such assignment.
        Upon the execution and delivery of appropriate assignment documentation,
        amendments and any other documentation required by the Holder in connection
        with
        such assignment, and the payment by Assignee of the purchase price agreed
        to by
        the Holder, and such Assignee, such Assignee shall be a party to this Loan
        Agreement and shall have all of the rights and obligations of the Holder
        hereunder and under the other Financing Documents to the extent that such
        rights
        and obligations have been assigned by the Holder pursuant hereto and to the
        assignment documentation between the Holder and such Assignee, and the Holder
        shall be released from its obligations hereunder and thereunder to a
        corresponding extent.

       

      (4)     Provided
        no Event of Default has occurred and is continuing and except with respect
        to an
        assignment or transfer of the Line of Credit Loan mandated by a Governmental
        Authority, the Company shall have the right to approve the identity of any
        proposed Assignee or Participant pursuant to subsections (B) (2) and B (3)
        hereof which approval shall not be unreasonably withheld, delayed
        or

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      conditioned.
        Except as aforesaid, the right of the Holder to assign or grant a participation
        interest shall not require notice to or consent of the Company.

      

      (5)     The
        Holder may furnish any information concerning the Company in its possession
        from
        time to time to prospective Assignees and Participants, provided that the
        Holder
        shall require any such prospective Assignee or Participant to agree in writing
        for the benefit of the Company to maintain the confidentiality of such
        information. 

      

      (C)     All
        corporate proceedings taken in connection with the transactions provided
        for
        herein, all appraisals, agreements, contracts, certificates and other documents
        and instruments required by the Loan Agreement or the other Financing Documents
        and the persons responsible for the execution and preparation thereof, all
        sureties, guarantors, insurers, shall be satisfactory to the Holder, and
        all
        policies of insurance, agreements, certificates and other documents and
        instruments so required shall be genuine, valid, subsisting, binding and
        enforceable in all respects upon the parties thereto except as enforceability
        may be limited by bankruptcy, insolvency, reorganization or other laws relating
        to or affecting the enforcement of creditors’ rights generally and except as
        enforceability may be limited by general equitable principals, and the Holder’s
        counsel shall have received copies (or certified copies where appropriate
        in
        such counsel’s reasonable judgment) of all agreements, documents and instruments
        which they may request in connection therewith;

      

      (D)     Any
        condition of the Loan Agreement which requires the submission of evidence
        of the
        existence or nonexistence of a specified fact or facts implies as a condition
        the existence or nonexistence, as the case may be, of such fact or facts
        and the
        Holder shall, at all times, be free independently to establish such existence
        or
        nonexistence but need not do such;

      

      (E)     [Intentionally
        Omitted];

      

      (F)     [Intentionally
        Omitted];

      

      (G)     Neither
        this Loan Agreement nor any provision hereof may be changed, waived, discharged
        or terminated orally, but only by an instrument in writing signed by the
        party
        against whom enforcement of the change, waiver, discharge or termination
        is
        sought;

      

      (H)     The
        Company shall from time to time upon request of the Holder deliver to the
        Holder
        such other documents and instruments (including estoppel certificates) as
        the
        Holder shall reasonably request;

      

      (I)     All
        notices,
        certificates and other communications hereunder shall be in writing and shall
        be
        sufficiently given and shall be deemed given when (1) delivered to the
        applicable address stated below by registered or certified mail, return receipt
        requested, or by such other means as shall provide the sender with documentary
        evidence of such delivery or (2) delivery is refused by the Company or the
        Holder, as the case may be, as evidenced by the affidavit of the Person who
        attempted to effect such delivery. The addresses to which notices, certificates
        and other communications hereunder shall be delivered are as
        follows:

      

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      TO
        THE
        COMPANY:

      

      Balchem
        Corporation

      P.O.
        Box
        600

      52
        Sunrise Park Road

      New
        Hampton, New York 10958

      Attention:
        Dino A. Rossi, President

      

      

      TO
        THE
        HOLDER:

      

      Bank
        of
        America, N.A.

      Peter
        D.
        Kiernan Plaza

      Albany,
        New York 12207

      Attention:
        Corporate Banking Division

      

      WITH
        A
        COPY TO:

      

      Lemery
        Greisler LLC

      10
        Railroad Place

      Saratoga
        Springs, New York 12866

      Attention:
        James A. Carminucci, Esq.

      

      

      The
        Company and the Holder may, by notice given hereunder, designate any further
        or
        different addresses to which subsequent notices, certificates and other
        communications shall be sent;

      

      (J)     This
        Loan
        Agreement and the rights and obligations of the parties hereunder shall be
        construed and interpreted in accordance with the laws of the State of New
        York
        (the “Governing State”) (excluding the laws applicable to conflicts or choice of
        law).

       

      THE
        COMPANY AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS LOAN AGREEMENT MAY
        BE
        BROUGHT IN THE COURTS OF THE GOVERNING STATE OR ANY FEDERAL COURT SITTING
        THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE
        OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE COMPANY BY MAIL AT THE ADDRESS
        SET FORTH HEREIN. THE COMPANY HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW
        OR
        HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH
        SUIT
        IS BROUGHT IN AN INCONVENIENT FORUM;

      

      (K)     This
        Loan
        Agreement may be executed in any number of counterparts all of which taken
        together shall constitute one and the same instrument and any of the parties
        or
        signatories hereto may execute this Loan Agreement by signing any such
        counterparts;

      

      (L)     The
        Holder shall at all times and at any time have the right, privilege and power
        to
        waive any of the obligations of the Company hereunder and such waiver shall
        not
        be deemed a modification of this Loan Agreement;

      

      (M)     This
        Loan
        Agreement is intended by the parties as the final, complete and exclusive
        statement of the transactions evidenced hereby. All prior contemporaneous
        promises, agreements and

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      understandings,
        whether oral or written, are deemed to be superceded by this Loan Agreement,
        and
        no party is relying on any promise, agreement or understanding not set forth
        in
        this Loan Agreement;

      

      (N)     Except
        to
        the extent otherwise specifically provided, the terms, covenants and conditions
        of this Loan Agreement are not intended to supersede the terms, covenants
        and
        conditions of the other Financing Documents, but shall be in addition thereto;
        no right or remedy conferred upon the Holder in this Loan Agreement is intended
        to be exclusive of any other right or remedy contained in this Loan Agreement
        or
        any of the other Financing Documents or now or hereafter available to the
        Holder
        at law, in equity, by statute or otherwise;

      

      (O)     Nothing
        contained in this Section shall be deemed to preclude the Holder from enforcing
        any of the other rights of the Holder, except as expressly prohibited by
        this
        Section;

      

      (P)     Waivers
        by
        Holder of any proof required hereunder does not imply or constitute waiver
        of
        any other proof(s) or request(s);

      

      (Q)     In
        the
        event any agreement contained herein should be breached by any party and
        thereafter such breach should be waived by any other party, such waiver shall
        be
        limited to the particular breach so waived and shall not be deemed to waive
        any
        other breach hereunder;

      

      (R)     Upon
        receipt of an affidavit of an officer of the Holder as to the loss, theft,
        destruction or mutilation of the Notes or any other security document which
        is
        not of public record, and, in the case of any such loss, theft, destruction
        or
        mutilation, upon surrender and cancellation of such Notes or other security
        document, the Company will issue, in lieu thereof, replacement Notes or other
        security document in the same principal amount thereof and otherwise of like
        tenor.

      

      (S)     The
        Table of
        Contents, titles and headings of the paragraphs of this Loan Agreement have
        been
        inserted for convenience of reference only and are not intended to summarize
        or
        otherwise describe the subject matter of such paragraphs and shall not be
        given
        any consideration in the construction of this Loan Agreement.

      

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties have caused this Loan Agreement to be executed
        in
        their respective names by their Authorized Representatives all as of the
        day and
        year first above written.

      

      

        
          	 	
                  BALCHEM
                    CORPORATION

                
	 	 	 
	 	 	 
	 	
                  By:

                	
                  /s/
                    Frank Fitzpatrick

                
	 	 	
                  Frank
                    Fitzpatrick, Chief Financial

                
	 	 	
                  Officer

                
	 	 	 
	 	 	 
	 	 	 
	 	
                  BANK
                    OF AMERICA, N.A.

                
	 	 	 
	 	 	 
	 	
                  By:

                	
                  /s/
                    Karen D. Finnerty

                
	 	 	
                  Karen
                    D. Finnerty, Vice President

                
	 	 	 

        

        

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
“A”

      

      FORM
        OF
        LINE OF CREDIT LOAN NOTE

      

      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

      EXHIBIT
“B”

      

      FORM
        OF
        TERM LOAN NOTE

      

      
        
          
          

        

        
          B-1

          
            

          

        

        
          
          

        

      

      SCHEDULE
        101 (F)

      

      PENDING
        LITIGATION

      

      

      
        
          
          

        

        
          101(F)-1

          
            

          

        

        
          
          

        

      

      SCHEDULE
        101 (J)

      

      WHOLLY-OWNED
        SUBSIDIARIES

      

      Balchem
        Minerals Corporation

      

      BCP
        Ingredients, Inc.

       

       

       

      101(J)-1Promissory Note dated February 6, 2006

    EXHIBIT
      10.3

    

    PROMISSORY
      NOTE

     

    

    
      	
              Albany,
                New York

            	
               February
                6, 2006

            
	
              $10,000,000.00

            	 

    

     

    BALCHEM
      CORPORATION, a Maryland corporation having an address of P. O. Box 600, 52
      Sunrise Park Road, New Hampton, New York 10958 (herein called the “Company”),
      hereby promises to pay to the order of BANK OF AMERICA, N.A. (successor by
      merger to Fleet National Bank) a national banking association having an office
      at 69 State Street, Albany, New York 12201 (the “Bank” or the “Holder”), or its
      successors or assigns, the principal sum of TEN MILLION AND NO/100 DOLLARS
      ($10,000,000.00), with interest thereon as set forth below.

    

    SECTION
      1. DEFINITION OF TERMS. The following words and terms as used in this Note
      shall
      have the following meanings unless the context or use indicates another or
      different meaning or intent:

    

    “Adjusted
      Libor Rate” - Means a rate per annum subject to adjustment approximately each
      one month, two months, three months or six months, as applicable equal to the
      Libor Rate plus one percent (1.00%).

    

    “Business
      Day” - In respect of any date that is specified in this Note to be subject to
      adjustment in accordance with applicable Following Business Day Convention,
      a
      day which commercial banks settle payment in London if the payment obligation
      is
      calculated by reference to any Libor Rate.

    

    “Default
      Rate” - A per annum rate to two percent (2%) above the rate of interest
      otherwise applicable to the Note.

    

    “Election
      Notice” - The Libor Interest Rate Period notice to be delivered by the Company
      to the Bank from time to time in the form of Exhibit “A” attached hereto, in
      which the Company shall irrevocably indicate a Libor Interest Rate
      Period.

    

    “Event
      of
      Default” - Any of those events defined as an Event of Default under the Loan
      Agreement.

    

    “Following
      Business Day Convention” - The convention for adjusting any relevant date if it
      would otherwise fall on a day that is not a Business Day. The term “Business
      Day” when used in conjunction with the term “Following Business Day Convention”
and a date, shall mean that an adjustment will be made if that date would
      otherwise fall on a day that is not a Business Day so that the date will be
      the
      first following day that is a Business Day.

    

    “Libor
      Interest Rate Period” - The one month, two month or three month, as applicable,
      (or slightly longer or shorter) period during which the Adjusted Libor Rate
      is
      in effect provided, however, that in no event shall any Interest Rate Election
      Period extend beyond the Maturity Date of this Loan.

    

    “Libor
      Rate” - Means, the interest rate determined by the following formula (all
      amounts in the calculation will be determined by the Bank as of the first day
      of
      the Libor Interest Rate Period):

    

    

    
      	
              Libor
                Rate=    
                

            	
              London
                Inter-Bank Offered Rate

            
	 	
                  
                (1.00-Reserve Percentage)

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    “Loan”
-
      The loan of $10,000,000.00 by the Lender to the Company that is the subject
      of
      this Note.

    

    “Loan
      Agreement” - Means the amended and restated loan agreement dated the date hereof
      by and between the Company and the Bank, as such may be further amended or
      supplemented from time to time.

    

    “London
      Inter-Bank Offered Rate” Means, for any applicable Libor Interest Rate Period,
      the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA
      LIBOR”), as published by Reuters (or other commercially available source
      providing quotations of BBA LIBOR as selected by the Bank from time to time)
      at
      approximately 11:00 a.m. London time two (2) London Banking Days before the
      commencement of the applicable Libor Rate Interest Period, for U.S. Dollar
      deposits (for delivery on the first day of such interest period) with a term
      equivalent to such Libor Rate Interest Period. If such rate is not available
      at
      such time for any reason, then the rate for that Libor Rate Interest Period
      will
      be determined by such alternate method as reasonably selected by the Bank.
      A
      "London Banking Day" is a day on which banks in London are open for business
      and
      dealing in offshore dollars.

    

    “Maturity
      Date” - March 1, 2009.

    

    “Prime
      Rate” - Means the rate of interest publicly announced from time to time by the
      Bank as its Prime Rate. The Prime Rate is set by the Bank based on various
      factors, including the Bank’s costs and desired return, general economic
      conditions and other factors, and is used as a reference point for pricing
      some
      loans. The Bank may price loans to its customers at, above, or below the Prime
      Rate. Any change in the Prime Rate shall take effect at the opening of business
      on the day specified in the public announcement of a change in the Bank’s Prime
      Rate.

    

    “Reserve
      Percentage” - Means the total of the maximum reserve percentages for determining
      the reserves to be maintained by member banks of the Federal Reserve System
      for
      Eurocurrency Liabilities, as defined in the Federal Reserve Board Regulation
      D,
      rounded upward to the nearest 1/100 of one percent. The percentage will be
      expressed as a decimal, and will include, but not be limited to, marginal,
      emergency, supplemental, special and other reserve percentages.

    

    All
      other
      capitalized terms used herein and not otherwise defined herein shall have the
      meanings assigned to such terms in the Loan Agreement (as hereinafter
      defined).

    

    SECTION
      2. INTEREST; PAYMENTS. (A) Subject to the provisions of Section 6 of this Note,
      commencing on the Closing Date and continuing thereafter up to and including
      the
      Maturity Date, interest (calculated on the Principal Balance hereof and based
      upon the actual number of days elapsed over a 360 day year) shall accrue at
      a
      rate per annum equal to the Adjusted Libor Rate and shall be payable monthly
      as
      set forth in Section 2(B) hereof. In the event the Principal Balance remains
      outstanding after the Maturity Date, interest (calculated on the Principal
      Balance hereof and based upon the actual number of days elapsed over a 360-day
      year) shall accrue at a rate per annum equal to the Default Rate.

    

    (B)     Commencing
      April 1, 2006 and continuing on the first calendar day of each
      calendar month thereafter during the term hereof up to but not including the
      Maturity Date, monthly payments of accrued interest hereunder together with
      equal monthly payments of principal in an amount equal to $250,000.00 shall
      be
      due and owing.

    

    (C)     In
      the event
      that any portion of any payment due hereunder is not made within ten (10) days
      of the date such payment became due, the Company shall pay to the Holder on
      demand a late payment charge equal to five percent (5%) of the portion of any
      such payment not paid within such ten (10) day

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    period
      provided, however, that such late payment charge shall not exceed $10,000.00
      in
      the aggregate per incident and shall not exceed $10,000 in the aggregate upon
      the maturity or acceleration of the Principal Balance.

    

    (D)     Notwithstanding
      anything to the contrary herein contained, on the Maturity Date, the entire
      outstanding principal amount hereof and all accumulated, accrued and unpaid
      interest thereon shall be due and payable.

    

    (E)     All
      payments received pursuant to this Note shall be applied first to the payment
      of
      all fees, expenses, and other amounts due to the Holder (excluding principal
      and
      interest), then to accrued, accumulated and unpaid interest, and the balance
      in
      reduction of the Principal Balance hereof, provided that should an Event of
      Default have occurred and be continuing, payments received hereunder shall
      be
      applied at the discretion of the Holder.

    

    (F)     All
      payments
      of interest and principal are to be made for the account of Bank of America,
      N.A., Peter D, Kiernan Plaza, Albany, New York 12207 or at such other place
      as
      the Holder may direct the Company by written notice. All payments shall be
      in
      lawful money of the United States in immediately available funds and are subject
      to the Following Business Day Convention with respect to date of
      payment.

    

    SECTION
      3. PREPAYMENT, MANDATORY REDEMPTION. (A) The Company may upon at least three
      (3)
      prior Business Days’ notice to the Holder (which notice shall be irrevocable)
      prepay the Principal Balance,
      and any
      such prepayment shall occur only on the last day of the Libor Interest Rate
      Period. Each prepayment of a LIBOR Rate Portion, whether voluntary, by reason
      of
      acceleration or otherwise, will be accompanied by the amount of accrued interest
      on the amount prepaid and a prepayment fee as described below. A “prepayment” is
      a payment of an amount on a date earlier than the scheduled payment date for
      such amounts as required by this Note. The prepayment fee will be the sum of
      fees calculated separately for each Prepaid Installment, as
      follows:

    

    (i)     The
      Bank
      will first determine the amount of interest which would have accrued each month
      for the Prepaid Installment had it remained outstanding until the applicable
      Original Payment Date, using the interest rate applicable to the Prepaid
      Installment under this Note.

    

    (ii)            The
      Bank
      will then subtract from each monthly interest amount determined in (i) above,
      the amount of interest which would accrue for that Prepaid Installment if it
      were reinvested from the date of prepayment through the Original Payment Date,
      using the Treasury Rate.

    

    (iii)     
      If
      (i)
      minus (ii) for the Prepaid Installment is greater than zero, the Bank will
      discount the monthly differences to the date of prepayment by the Treasury
      Rate.
      The Bank will then add together all of the discounted monthly differences for
      the Prepaid Installment.

    

    The
      following definitions will apply to the calculation of the prepayment
      fee:

    

    (i)             “Original
      Payment Dates” mean the dates on which the prepaid principal would have been
      paid if there had been no prepayment. If any of the principal would have been
      paid later than the end of the fixed rate interest period in effect at the
      time
      of prepayment, then the Original Payment Date for that amount will be the last
      day of the interest period.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    

      (ii)     “Prepayment
        Installment” means the amount of the prepaid principal which would have been
        paid on a single Original Payment Date.

       

    

    (iii)     “Treasury
      Rate” means the interest rate yield for U.S. Government Treasury Securities
      which the Bank determines could be obtained by reinvesting a specified Prepaid
      Installment in such securities from the date of prepayment through the Original
      Payment Date. The Bank may adjust the Treasury Rate to reflect the compounding,
      accrual basis, or other costs of the prepaid amount. Each of the rates is the
      Bank’s estimate only and the Bank is under no obligation to actually reinvest
      any prepayment. The rates will be based on information from either the Telerate
      or Reuters information services, The
      Wall Street Journal,
      or
      other information sources the Bank deems appropriate.

    

    If
      by
      reason of an Event of Default the Bank elects to declare this Note to be
      immediately due and payable, then any prepayment fee with respect to the
      resulting prepayment shall become due and payable in the same manner as though
      the Company had exercised a right of prepayment.

    

    SECTION
      4. LOAN AGREEMENT. The loan evidenced by this Note is being made pursuant to
      the
      terms, provisions and conditions of a certain amended and restated loan
      agreement dated the date hereof (as amended or supplemented from time to time,
      the “Loan Agreement”) by and between the Company and the Holder.

    

    SECTION
      5. DOCUMENTS. Reference is hereby made to the Loan Agreement and to all
      amendments and supplements thereto for the provisions, among others, with
      respect to the nature and extent of the rights, duties and obligations of the
      Company and the Holder and the terms upon which this Note is or may be
      secured.

    

    SECTION
      6. DEFAULT; ACCELERATION. The entire unpaid Principal Balance of this Note,
      together with all accrued and unpaid interest due hereon, may be declared
      immediately due and payable by the Holder upon the occurrence and during the
      continuance of an “Event of Default” as defined in the Loan Agreement provided,
      however, that from and after the date of any such declaration, the outstanding
      Principal Balance hereof and all accrued and unpaid interest thereon shall
      be
      due and payable, interest shall continue to accrue on the unpaid Principal
      Balance to the date of payment at a rate per annum equal to the Default
      Rate.

    

    SECTION
      7. COVENANT AGAINST USURY. All agreements between the Company and the Holder
      are
      hereby expressly limited so that in no contingency or event whatsoever, whether
      by reason of acceleration of maturity of the indebtedness evidenced hereby
      or
      otherwise, shall the amount paid or agreed to be paid to the Holder for the
      use
      or the forbearance of the indebtedness evidenced hereby exceed the maximum
      permissible under applicable law. As used herein, the term “applicable law”
shall mean the law in effect as of the date hereof provided, however that in
      the
      event there is a change in the law which results in a higher permissible rate
      of
      interest, then this Note shall be governed by such law as of its effective
      date.
      In this regard, it is expressly agreed that it is the intent of the Company
      and
      the Holder in the execution, delivery and acceptance of this Note to contract
      in
      strict compliance with the laws of the State of New York from time to time
      in
      effect. If, under or from any circumstances whatsoever, fulfillment of any
      provision hereof or of any law of the Financing Documents at the time of
      performance of such provision shall be due, shall involve transcending the
      limit
      of such validity prescribed by applicable law, then the obligation to be
      fulfilled shall automatically be reduced to the limits of such validity, and
      if
      under or from circumstances whatsoever the Holder should ever receive as
      interest an amount which would exceed the highest lawful

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    rate,
      such amount which would be excessive interest shall be applied to the reduction
      of the principal balance evidenced hereby and not to the payment of interest.
      This provision shall control every other provision of all agreements between
      the
      Company and the Guarantors and the Holder.

    

    SECTION
      8. WAIVER OF DILIGENCE, PRESENTMENT, DEMAND, ETC. The Company hereby waives
      with
      respect to this Note: diligence, presentment, demand for payment, filing of
      claims with a court in the event of bankruptcy of the Company or any other
      person or entity liable in respect to this Note, any right to require a
      proceeding first against the Company or any other such Person; protest, notice
      of dishonor or nonpayment of any such liabilities and any other notice and
      all
      demands whatsoever except as specifically set forth in this Note or any of
      the
      other Financing Documents.

    

    SECTION
      9. WAIVER, CHANGE, MODIFICATION OR DISCHARGE. The provisions of this Note may
      not be waived, changed, modified or discharged orally, but only by agreement
      in
      writing, signed by the party against whom any enforcement of any waiver, change,
      modification or discharge is sought. 

    

    SECTION
      10. TRANSFER AND ASSIGNMENT OF NOTE; PLEDGE OF RIGHTS; PARTICIPATION. (A) The
      Holder may at any time pledge all or any portion of its rights under this Note
      and the other Financing Documents to any of the twelve (12) Federal Reserve
      Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section
      341. No such pledge or enforcement thereof shall release the Holder from its
      obligations under any of the Financing Documents.

    

    (B)     The
      Holder shall have the unrestricted right at any time and from time to time,
      to
      grant to one or more banks or other financial institutions (each, a
“Participant”) participating interests in the Holder’s obligation to lend
      hereunder and/or any or all of the loans held by the Holder hereunder. In the
      event of any such grant by the Holder of a participating interest to a
      Participant, whether or not upon notice to the Company, the Holder shall remain
      responsible for the performance of its obligations hereunder and the Company
      shall continue to deal solely and directly with the Holder in connection with
      the Holder’s rights and obligations hereunder.

    

    The
      Holder shall have the unrestricted right at any time or from time to time,
      to
      assign all or any portion of its rights and obligations hereunder and under
      the
      other Financing Documents to one or more banks or other financial institutions
      (each, an “Assignee”), and the Company agrees that it shall execute, or cause to
      be executed, such documents, including without limitation, amendments to this
      Loan Agreement and to the other Financing Documents as the Holder shall deem
      necessary to effect the foregoing. In addition, at the request of the Holder
      and
      any such Assignee, the Company shall issue one or more new promissory notes,
      as
      applicable, to any such Assignee and, if the Holder has retained any of its
      rights and obligations hereunder following such assignment, to the Holder,
      which
      new promissory notes shall be issued in replacement of, but not in discharge
      of,
      the liability evidenced by the promissory note held by the Holder prior to
      such
      assignment and shall reflect the amount of the respective commitments and loans
      held by such Assignee and the Holder after giving effect to such assignment.
      Upon the execution and delivery of appropriate assignment documentation,
      amendments and any other documentation required by the Holder in connection
      with
      such assignment, and the payment by Assignee of the purchase price agreed to
      by
      the Holder, and such Assignee, such Assignee shall be a party to this Loan
      Agreement and shall have all of the rights and obligations of the Holder
      hereunder and under the other Financing Documents to the extent that such rights
      and obligations have been assigned by the Holder pursuant hereto and to the
      assignment documentation between the Holder and such Assignee, and the Holder
      shall be released from its obligations hereunder and thereunder to a
      corresponding extent.

    

    Provided
      no Event of Default has occurred and is continuing and except with respect
      to an
      assignment or transfer of the Loans mandated by a Governmental Authority, the
      Company shall have the

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    right
      to
      approve the identity of any Participant or Assignee pursuant to this subsection
      (B), which approval shall not be unreasonably withheld, delayed or conditioned.
      Except as aforesaid, the right of the Holder to assign or grant a participation
      interest shall not require notice to or consent of the Company.

    

    The
      Holder may furnish any information concerning the Company in its possession
      from
      time to time to prospective Assignees and Participants, provided that the Holder
      shall require any such prospective Assignee or Participant to agree in writing
      for the benefit of the Company to maintain the confidentiality of such
      information.

    

    SECTION
      11. JURY TRIAL WAIVER. THE COMPANY AND THE HOLDER (BY ACCEPTANCE OF THIS NOTE)
      MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO
      A
      TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR
      IN
      CONNECTION WITH THIS NOTE OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
      STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING,
      WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR
      ACTIONS OF THE HOLDER RELATING TO THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT
      OF THIS NOTE, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH
      ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
      WAIVED. EXCEPT AS PROHIBITED BY LAW, THE COMPANY HEREBY WAIVES ANY RIGHT IT
      MAY
      HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE
      OR
      CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
      DAMAGES. THE COMPANY CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
      THE
      HOLDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE HOLDER WOULD NOT,
      IN
      THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER
      CONSTITUTES A MATERIAL INDUCEMENT FOR THE HOLDER TO ACCEPT THIS NOTE AND MAKE
      THE LOAN.

    

    SECTION
      12. RIGHT OF SET OFF. The Company hereby grants to the Holder, a continuing
      lien, security interest and right of setoff as security for all liabilities
      and
      obligations to the Holder, whether now existing or hereafter arising, upon
      and
      against all deposits, credits, collateral and property, now or hereafter in
      the
      possession, custody, safekeeping or control of the Holder or any entity under
      the control of Bank of America Corporation and its successors and assigns,
      or in
      transit to any of them. At any time, without demand or notice (any such notice
      being expressly waived by the Company), the Holder may set off the same or
      any
      part thereof and apply the same to any liability or obligation of the Company
      even though unmatured and regardless of the adequacy of any other collateral
      securing this Note. ANY AND ALL RIGHTS TO REQUIRE THE HOLDER TO EXERCISE ITS
      RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THIS
      NOTE,
      PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
      OR OTHER PROPERTY OF THE COMPANY, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
      IRREVOCABLY WAIVED.

    

    SECTION
      13. EXPENSES INCURRED IN CONNECTION WITH ENFORCEMENT. The Company shall pay
      on
      demand all reasonable expenses of the Holder in connection with the preparation,
      administration, default, collection, waiver or amendment of loan terms, or
      in
      connection with the Holder’s exercise, preservation or enforcement of any of its
      rights, remedies or options hereunder, including, without limitation, reasonable
      fees of outside legal counsel or the allocated costs of in-house legal counsel,
      accounting, consulting, brokerage or other similar professional fees or
      expenses, and any reasonable fees or expenses associated with travel or other
      costs relating to any appraisals or examinations conducted in connection with
      the loan or any collateral therefor, and the amount of all such expenses shall,
      until paid, bear interest at the rate applicable to principal hereunder
      (including any default rate) and be an obligation secured by any
      collateral.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    SECTION
      14. CHOICE OF LAW. This Note and the rights and obligations of the parties
      hereunder shall be construed and interpreted in accordance with the laws of
      the
      State of New York (the “Governing State”) (excluding the laws applicable to
      conflicts or choice of law).

    

    THE
      COMPANY AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE MAY BE BROUGHT
      IN
      THE COURTS OF THE GOVERNING STATE OR ANY FEDERAL COURT SITTING THEREIN AND
      CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS
      IN ANY SUCH SUIT BEING MADE UPON THE COMPANY BY MAIL AT THE ADDRESS SET FORTH
      HEREIN. THE COMPANY HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
      HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS
      BROUGHT IN AN INCONVENIENT FORUM.

    

    SECTION
      15. MERGER. This Note is intended by the parties as the final, complete and
      exclusive statement of the transactions evidenced by this Note. All prior
      contemporaneous promises, agreements and understandings, whether oral or
      written, are deemed to be superceded by this Note, and no party is relying
      on
      any promise, agreement or understanding not set forth in this Note. This Note
      may not be amended or modified except by a written instrument describing such
      amendment or modification executed by the Company and the Holder.

    

    SECTION
      16. USE OR PROCEEDS. No portion of the proceeds of this Note shall be used,
      in
      whole or in part, for the purpose of purchasing or carrying any “margin stock”
as such term is defined in Regulation U of the Board of Governors of the Federal
      Reserve System.

    

    SECTION
      17. LOST OR DAMAGED NOTE. Upon receipt of an affidavit of an officer of the
      Holder as to the loss, theft, destruction or mutilation of this Note or any
      other security document which is not of public record, and, in the case of
      any
      such loss, theft, destruction or mutilation, upon surrender and cancellation
      of
      such Note or other security document, the Holder will issue, in lieu thereof,
      a
      replacement Note or other security document in the same principal amount thereof
      and otherwise of like tenor.

    

    

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has executed this instrument as of the day and
      year
      first above written.

    

    

    
      	 	
              BALCHEM
                CORPORATION

            
	 	 	 
	 	 	 
	 	
              By:

            	
              /s/
                Frank Fitzpatrick

            
	 	 	
              Frank
                Fitzpatrick, Chief Financial

            
	 	 	
              Officer

            

    

    

    

     

    
      
        	 STATE
                OF NEW YORK 	)

      

      
        	 	)ss.: 

      

      
        	
                COUNTY
                  OF ORANGE

              	
                )

              

      

    

    

    On
      the
      6th day of February, in the year 2006 before me personally came FRANK
      FITZPATRICK,
      to me
      known, who, being by me duly sworn, did depose and say that he/she/they
      reside(s) in New York; that he/she/they is(are) the CHIEF FINANCIAL OFFICER
      of
      BALCHEM CORPORATION, the corporation described in and which executed the above
      instrument; and that he/she/they signed his/her/their name(s) thereto by
      authority of the board of directors of said corporation.

    

    
      	 	
              /s/
                Matthew D. Houston

            
	 	
              Notary
                Public, State of New York

            

    

    

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

    EXHIBIT
      “A”

    

    FORM
      OF
      ELECTION NOTICE

    

    

    BORROWER:
      BALCHEM
      CORPORATION

    

    DATE:
      _________________

    

    

    All
      Capitalized terms carry the meanings as defined in the Promissory Note dated
      February ___, 2006 (the “Note”).

    

    This
      Notice serves as an irrevocable Election Notice required under the Note for
      the
      purpose of selecting a Libor Interest Rate Period for said Loan
      Portion.

    

    
      	
              Interest
                Rate Election

            	
              ADJUSTED
                LIBOR RATE**

            	 
	 	 	
              ___One
                Month

            	 
	 	 	
              ___Two
                Month

            	 
	 	 	
              ___Three
                Month

            	 
	 	 	
              ___Six
                Month

            	 

    

    

    

    Adjusted
      Libor Rate (if chosen):       _____________%

    

    Date
      of
      next Interest Rate Election Period:     _____________________

    Subject
      to confirmation and verification by Bank.

    

    

    
      	
              Authorized
                by:

            	
              BALCHEM
                CORPORATION

            	 
	 	 	 	 
	 	
              By:

            	 	 
	 	 	
              Authorized
                Representative

            	 

    

    

    _____________________

    **Libor
      Rate Election must be received no later than 12:00 noon (eastern standard time)
      on the London Banking Day preceding the first day of the end of the current
      Libor Interest Rate Period.

    
A-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]