AMENDED AND RESTATED LOAN AGREEMENT
EXHIBIT
10.2
BANK
OF
AMERICA, N.A.
AND
BALCHEM
CORPORATION
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AMENDED
AND RESTATED LOAN AGREEMENT
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DATED
FEBRUARY 6, 2006
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i
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 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 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
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 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 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.
2
“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.
3
“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.
4
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.
6
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.
8
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;
9
(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
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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.
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
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.
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
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
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:
Xxxxxx
Xxxxxxxx LLC
00
Xxxxxxxx Xxxxx
Xxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention:
Xxxxx X. Xxxxxxxxxx, 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/
Xxxxx Xxxxxxxxxxx
|
|
|
Xxxxx
Xxxxxxxxxxx, Chief Financial
|
||
|
Officer
|
||
|
BANK
OF AMERICA, N.A.
|
||
|
By:
|
/s/
Xxxxx X. Xxxxxxxx
|
|
|
Xxxxx
X. Xxxxxxxx, Vice President
|
||
FORM
OF
LINE OF CREDIT LOAN NOTE
A-1
FORM
OF
TERM LOAN NOTE
B-1
PENDING
LITIGATION
101(F)-1
WHOLLY-OWNED
SUBSIDIARIES
Balchem
Minerals Corporation
BCP
Ingredients, Inc.
101(J)-1
