Exhibit 10.3
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BANK OF AMERICA, N.A.
AND
BALCHEM CORPORATION
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LOAN AGREEMENT
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DATED: MARCH 16, 2007
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TABLE OF CONTENTS
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DEFINITIONS .............................................................. 2
ARTICLE I REPRESENTATIONS AND WARRANTIES................................ 6
SECTION 101. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY.................................. 6
ARTICLE II THE LOANS; CONDITIONS PRECEDENT TO THE HOLDER'S OBLIGATIONS
HEREUNDER..................................................... 8
SECTION 201 THE LOANS........................................ 8
SECTION 202. CONDITIONS...................................... 8
ARTICLE III COVENANTS OF THE COMPANY...................................... 10
SECTION 301. AFFIRMATIVE COVENANTS OF THE
COMPANY WITH THE HOLDER......................... 10
SECTION 302. NEGATIVE COVENANTS OF THE COMPANY
WITH THE HOLDER................................. 13
ARTICLE IV EVENTS OF DEFAULT............................................. 15
SECTION 401. EVENTS OF DEFAULT DEFINED........................ 15
SECTION 402. JURY TRIAL WAIVER................................ 17
SECTION 403. RIGHT OF SET OFF................................. 17
SECTION 404. EXPENSES INCURRED IN CONNECTION
WITH ENFORCEMENT................................ 18
SECTION 405. EFFECT OF UNENFORCEABILITY....................... 18
ARTICLE V GENERAL CONDITIONS............................................ 19
SECTION 501. GENERAL CONDITIONS OF THE LOAN AGREEMENT......... 19
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
LOAN AGREEMENT
THIS LOAN AGREEMENT dated March 16, 2007 (the "Loan Agreement") by and
between BANK OF AMERICA, N.A., a national banking association organized and
existing under the laws of the United States, and having an office at Xxxxx X.
Xxxxxxx Xxxxx, Xxxxxx, Xxx Xxxx 00000 (the "Holder") and BALCHEM CORPORATION, a
corporation organized and existing under the laws of the State of Maryland and
having an address of X.X. Xxx 000, 00 Xxxxxxx Xxxx, Xxx Xxxxxxx, Xxx Xxxx 00000
(the "Company");
W I T N E S S E T H :
WHEREAS, the Company has requested that the Holder make certain loans
(hereinbelow defined) to the Company and the Holder has agreed to make said
Loans subject to the terms set forth herein; and
NOW, THEREFORE, for good and valuable consideration, the receipt whereof
is hereby acknowledged, the Holder and the Company agree as follows:
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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(T) hereof, and their respective successors and
permitted assigns.
"COMPANY" means Balchem Corporation, a Maryland corporation having an
address of X.X. Xxx 000, 00 Xxxxxxx Xxxx Xxxx, Xxx Xxxxxxx, Xxx Xxxx 00000 and
its permitted successors and permitted assigns.
"DEFAULT RATE" shall have the meaning assigned to such term in the Notes.
"EBIDTA" means earnings before interest, taxes, depreciation and
amortization and other non-cash charges (including any non-cash stock-based
compensation expense which are required to be reported per FAS 123 R.)
"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.
"EVIDENCE OF OWNERSHIP" means stock of a corporation, membership interests
of a limited liability company, partnership interests (general and limited) of
partnerships and any other interest in a Subsidiary which involves any rights of
ownership.
"FINANCING DOCUMENTS" means this Loan Agreement, the Notes, the
Guaranties, the Pledge Agreements 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
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.
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"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 Notes
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 Notes, and any subsequent owner at
the time in question of the Notes.
"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.
"INTERNATIONAL SUBSIDIARY" means any Subsidiary organized outside the
United States.
"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
$6,000,000.00 from the Holder to the Company as evidenced by the Line of Credit
Loan Note.
"LINE OF CREDIT LOAN NOTE" means the promissory note dated the Closing
Date in the principal amount of $6,000,000.00 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 promissory note may be further modified, supplemented,
consolidated or extended from time to time.
"LOAN AGREEMENT" means this loan agreement dated the Closing Date, by and
between the Holder and the Company, as said loan agreement may be modified,
supplemented or amended from time to time.
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"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, principal 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.
"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.
"PLEDGE AGREEMENT" or "PLEDGE AGREEMENTS" means any Pledge Agreement in
form and substance satisfactory to the Holder executed by the holder(s) of an
International Subsidiary at least sixty-five (65%) of the Evidence Of Ownership
of an International Subsidiary is pledged as security and collateral for the
repayment of the Notes and all other amounts due and owing to the Holder under
the other Financing Documents, as said Pledge Agreement may be amended or
supplemented from time to time.
"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.
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"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 $29,000,000.00 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 $29,000,000.00 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 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 the 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 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
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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;
(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 handing
deficiency" (as such term is defined in Section 302 of ERISA); and
(J) All of the Wholly-Owned Subsidiaries of the Company as of the date
hereof are listed on Schedule 101(J).
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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 $6,000,000 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 fund the acquisition by the Company of certain assets of
Chinook Global Limited (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 $72,500.00.
(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,
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(4) an executed counterpart of the Pledge Agreement,
(5) the stock or other Evidence Of Ownership which is the subject of
the Pledge Agreements,
(6) (a) the facility fee of the Holder described in Section 201(B)
hereof and (b) the Holder's reasonable counsel fees,
(7) opinion of counsel for the Company, the Corporate Guarantors and
any International Subsidiary in form and substance reasonably satisfactory
to the Holder and its counsel; and
(8) acquisition agreements with 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 and any
International Subsidiary, an executed closing certificate together with a
certified copy of the articles of incorporation as filed with the
jurisdiction of incorporation of such, together with all amendments
thereto, a good standing certificate issued by said jurisdiction 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;
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(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;
(G) 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;
(H) 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;
(I) 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;
(J) 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. Such covenant is
to be tested quarterly, beginning on March 31, 2007, and the "Current Ratio"
shall be defined as the ratio of the current assets to current liabilities of
the Company and its Subsidiaries;
(K) It will maintain on a consolidated basis for the Company and its
Subsidiaries a maximum Funded Debt Ratio of 2.00 to 1.00 based upon the
Company's consolidated financial statements for each fiscal quarter, beginning
on March 31, 2007. The "Funded Debt Ratio" shall be defined as the ratio of (i)
the sum of the outstanding principal of all interest bearing Indebtedness, to
(ii) EBITDA, which for the purposes of this calculation, shall be calculated on
the basis of the most recently ended four (4) fiscal quarters;
(L) 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 tested quarterly based upon the Company's consolidated financial
statements for the then most recently ended four (4) fiscal quarters of 1.50 to
1.00 for the quarter ending March 31, 2007, 1.25 to 1.00 for the quarters ending
June 30, 2007 and September 30, 2007 and 1.50 to 1.00 for each quarter
thereafter. The term "Fixed Charge Coverage Ratio" shall be defined as the ratio
of (i) EBITDA less taxes paid less dividends paid less non-financed capital
expenditures, to (ii) required payments of term debt principal, capital lease
payments and interest incurred during the prior twelve (12) month period;
(M) 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 either 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,
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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;
(N) 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;
(O) 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 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;
(P) 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;
(Q) 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;
(R) 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;
(S) 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 $100,000.00 net of amounts necessary to offset
service charges; and
(T) 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 unless it
is an International Subsidiary, in which event, at least sixty-five (65%)
percent of the Evidence
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Of Ownership of such International Subsidiary must be pledged as collateral for
the Loans.
(U) It will promptly inform the Holder of any actual or potential
contingent liabilities.
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 interest 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 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
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(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.
(K) Neither it nor its Subsidiaries shall voluntarily suspend business
for more than thirty (30) days during any twelve (12) consecutive month period.
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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 thirty (30) days after written notice of
non-compliance from the Holder to the Company, provided that if such default
cannot reasonably be cured within said 30-day period, and the Company shall have
commenced action to cure the breach of covenant, condition or agreement within
said 30-day period and thereafter diligently and expeditiously proceeds to cure
the same, such 30-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 (G), (H), (I) or (M) 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 (J), (K) or (L) of Section 301 hereof or any provision set
forth in Section 302 hereof;
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(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 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 I 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 II 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 $250,000.00 in the aggregate not covered by
insurance shall be rendered against the Company or a Corporate Guarantor
and the
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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 or any Person
affiliated with the Company, any Corporate Guarantor or any Subsidiary of
any of the foregoing 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 or any other Person.
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 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 SETOFF.
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
17
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 Loans 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.
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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 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 Notes 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
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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
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 and 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 and 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 to independently establish
such existence or nonexistence but need not do such;
(E) 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;
(F) 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;
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(G) 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:
TO THE COMPANY:
Balchem Corporation
X.X. Xxx 000
00 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx, President
TO THE HOLDER:
Bank of America, N.A.
Xxxxx X. Xxxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Corporate Banking Division
WITH A COPY TO:
Xxxxxxx & Xxxxxxx, LLP
00 Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, 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;
(H) 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 (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
21
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;
(I) 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;
(J) 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;
(K) 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 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;
(L) 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;
(M) 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;
(N) Waivers by Holder of any proof required hereunder does not imply or
constitute waiver of any other proof(s) or request(s);
(O) 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;
(P) 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.
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(Q) 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.
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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/Xxxxx Xxxxxxxxxxx
--------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Chief Financial Officer
BANK OF AMERICA, N.A.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
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