Exhibit 4.3
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BALCHEM CORPORATION
TO
FLEET NATIONAL BANK
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SECURITY AGREEMENT
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DATED JUNE 1, 2001
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THIS SECURITY AGREEMENT (A) AFFECTS TANGIBLE AND INTANGIBLE PERSONAL PROPERTY,
(B) CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS, (C) IS INTENDED TO CONSTITUTE A
SECURITY AGREEMENT UNDER THE UNIFORM COMMERCIAL CODE AND (D) SECURES AN
OBLIGATION UNDER WHICH THE INTEREST RATE MAY VARY FROM TIME TO TIME.
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") dated June 1, 2001 from
BALCHEM CORPORATION, a business corporation organized and existing under the
laws of the State of Maryland and having an address of X.X. Xxx 000, Xxxxx Xxxx,
Xxx Xxxx 00000 (the "Company"), to FLEET NATIONAL BANK, a national banking
association organized and existing under the laws of the United States having an
address of 00 Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000 (the "Holder");
W I T N E S S E T H:
WHEREAS, the Holder will make the Loans (as herein defined) to the Company,
the repayment of which is evidenced the Notes (as herein defined) from the
Company in favor of the Holder; and
WHEREAS, as security for the payment of principal, premium, if any and
interest on the Notes, the Company intends to grant the Holder a security
interest in certain of the assets of the Company as hereinafter set forth;
NOW, THEREFORE, THIS SECURITY AGREEMENT FURTHER WITNESSETH:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS OF TERMS. The following words and terms if used in
this document shall have the following meanings unless the context or use
indicates another or different meaning or intent and the singular shall include
the plural and the plural shall include the singular, as the context may
require:
"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 Notes by
the Company to the Holder.
"COLLATERAL" shall have the definition assigned to such term in Section
2.01 hereof.
"COMPANY" means Balchem Corporation, a Maryland corporation having an
address of X.X. Xxx 000, Xxxxx Xxxx, Xxx Xxxx 00000 and its permitted successors
and permitted assigns.
"CORPORATE GUARANTOR" means BCP Ingredients, Inc., a Delaware corporation,
and its successors and permitted assigns.
"CORPORATE GUARANTOR SECURITY AGREEMENT" means the security agreement dated
the Closing Date from the Corporate Guarantor in favor of the Holder as security
for the Notes, as said security agreement may be modified, amended,
supplemented, consolidated, spread or assumed from time to time.
"DEFAULT RATE" shall have the meaning assigned to such term in the Notes.
"ENVIRONMENTAL COMPLIANCE AGREEMENT" means the environmental compliance
agreement dated the date hereof from the Company and the Corporate Guarantor in
favor of the Holder, as said environmental compliance agreement may be amended
or supplemented from time to time.
"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
5.01 hereof.
"FINANCING DOCUMENTS" means the Notes, the Security Agreement, the
Guaranty, the Corporate Guarantor Security Agreement, the Loan Agreement, the
Swap Agreement, the Environmental Compliance Agreement and any other document
now or hereafter executed by the Company or the Corporate Guarantor by or in
favor of the Holder which affects the rights of the Holder in or to the
Collateral, in whole or in part, or 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.
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"GUARANTY" means the guaranty dated the Closing Date from the Corporate
Guarantor in favor of the Holder, as said Guaranty may be modified, amended or
supplemented from time to time.
"HOLDER" means Fleet National Bank as the original owner of the Notes, and
any subsequent owner at the time in question of the Notes.
"INDEBTEDNESS" shall have the definition assigned to such term in Section
2.01 hereof.
"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 Bank 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 $3,000,000.00 from the Company in favor of the Holder
as said note may be amended, modified, supplemented, consolidated or extended
from time to time.
"LOANS" means, collectively, the Term Loan and the Line of Credit Loan.
"LOAN AGREEMENT" means the 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.
"NET PROCEEDS" means so much of the gross proceeds with respect to which
that term is used as remain after payment of all expenses, costs and taxes
(including attorneys' fees) incurred in obtaining such gross proceeds.
"NOTE" means, collectively, the Term Loan Note and the Line of Credit Loan
Note, as each of said notes may be amended, modified, supplemented, consolidated
or extended.
"NOTE PAYMENT DATE" means each date on which interest or both principal and
interest shall be payable on the Notes according to its terms so long as such
shall be outstanding.
"PERMITTED ENCUMBRANCES" means (A) Liens for taxes which are not delinquent
or which are being contested in good faith, mechanic's and materialmen's Liens
and other statutory Liens with respect to obligations which are not overdue or
which are being contested in good faith, and Liens resulting from deposits to
secure the payments of workmen's compensation or other social security or to
secure the performance of bids or contracts in the ordinary course of business,
(ii) capitalized lease or purchase money security interest obligations in the
ordinary course of business or assumed as part of a permitted acquisition, (iii)
reservations, exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions, leases and other similar title exceptions affecting
real estate, (iv) Liens having as aggregate dollar value not in excess of
$100,000 or (v) Liens in favor of the Bank.
"PERSON" means an individual, partnership, corporation, limited liability
company, trust or unincorporated organization, and a government or agency or
political subdivision thereof.
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"PLAN" means any plan defined in Section 4021(a) of ERISA in respect of
which the Company or any Subsidiary thereof is an "employer" or a "substantial
employer" as defined in Sections 3(5) and 4001(a)(2) of ERISA, respectively.
"PRINCIPAL BALANCE" means the aggregate 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.
"SECURITY AGREEMENT" means this security agreement dated the Closing Date
from the Company in favor of the Holder as security for the Notes, as said
security agreement may be modified, amended, supplemented, consolidated, spread
or assumed from time to time.
"STATE" means the State of New York.
"SUBSIDIARY" shall mean for any Person (i) any for-profit entity more than
fifty percent (50%) of the capital stock of which is owned or controlled,
directly or indirectly, by such Person or any Subsidiary and whose accounts are
required to be consolidated with those of said Person in accordance with GAAP
and (ii) any non-profit entity which is controlled, directly or indirectly, by
such Person.
"SWAP AGREEMENT" means any swap master agreement entered into by the
Company and the Holder in connection with the Term Loan Note, together with any
amendments or supplements thereto or replacements or substitutions thereof.
"TERM LOAN" means the loan in the principal amount of $13,500,000.00 from
the Bank to the Company as evidenced by the Term Loan Note.
"TERM LOAN NOTE" means the note dated the Closing Date in the principal
amount of $13,500,000.00 from the Company in favor of the Holder as said note
may be amended, modified, supplemented, consolidated or extended from time to
time.
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ARTICLE II
SECURITY AGREEMENT;
GRANTING CLAUSES; GENERAL COVENANTS
SECTION 2.01. GRANTING CLAUSES. The Company, in consideration of the making of
the Loans by the Holder and for other good and valuable consideration, receipt
of which is hereby acknowledged, and in order to secure (1) the payment of the
principal of, premium, if any, and interest on the Term Loan Note, issued in the
original amount of Thirteen Million Five Hundred Thousand Dollars ($13,500,000)
according to its tenor and effect (2) the payment of the principal of, premium,
if any, and interest on the Line of Credit Loan Note, issued in the original
amount not to exceed Three Million Dollars ($3,000,000) according to its tenor
and effect, (3) the payment of all other sums required to be paid hereunder and
under the other Financing Documents and (4) the performance and observance by
the Company of all of the covenants, agreements, representations and warranties
herein and in the other Financing Documents (collectively, the "Indebtedness");
and in order to secure the Indebtedness; hereby warrant, assign, mortgage,
hypothecate, pledge, and grant a security interest in, set over and confirm unto
the Holder and its respective successors and assigns, all of the estate, right,
title and interest of the Company in, to and under any and all of the following
described property (the "Collateral") whether now owned or held or hereafter
acquired:
(A) All right, title and interest of the Company in all articles of
personal property and all appurtenances, wherever located, and now or
hereinafter owned by the Company, including, but not limited to, all equipment,
materials, furnishings, and machinery, (excluding, however, pipes, screens,
heating, lighting, plumbing, ventilation, air conditioning systems and other
fixtures appurtenant to or affixed to real property) together with any and all
products of any of the above, all substitutions, replacements, additions or
accessories therefor;
(B) All of the Company's now owned and hereafter acquired or arising
accounts (also known as accounts receivable) inventory, supplies, returned and
repossessed goods, instruments, contract rights, chattel paper, choses in action
and general intangibles, including, but not limited to, all corporate names,
trademarks, trade names, goodwill, patents, and copyrights, but excluding
corporate stock in any of the Company's Subsidiaries and contract rights which
by their terms are not assignable absent the consent of a third party;
(C) Any and all moneys and securities from time to time held by the Holder
under the terms of the Security Agreement and/or the Loan Agreement, and any and
all other Property of every name and nature, from time to time hereinafter by
delivery or by writing of any kind conveyed, mortgaged, pledged, assigned or
transferred as and for additional security hereunder by the Company or by anyone
on its behalf or with its written consent in favor of the Holder;
(D) All right, title and interest of the Company in the Swap Agreement and
each transaction entered into thereunder (including, without limitation, all
amounts payable or deliverable thereunder);
(E) All proceeds of and any unearned premiums on any insurance policies
covering the foregoing, including, without limitation, the right to receive and
apply the proceeds of any insurance or judgments, or settlements made in lieu
thereof, for damage to any of the foregoing;
(F) The right, in the name and on behalf of the Company, to appear in and
defend any action or proceeding brought with respect to the above or any part
thereof and to commence any action or proceeding to protect the interest of the
Holder with respect thereto;
(G) All other proceeds of the conversion, whether voluntary or involuntary,
of the above or any other Property or rights encumbered or conveyed hereby into
cash or liquidated claims, including, without limitation, all hazard insurance,
Condemnation and other awards relating to the Collateral; and
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(H) All extensions, additions, substitutions and accessions with respect to
any of the foregoing.
TO HAVE AND TO HOLD the foregoing Collateral unto the Holder and its
successors and assigns forever subject to Section 6.05 hereof.
SECTION 2.02. SECURITY AGREEMENT. The Collateral includes all rights and
interest, whether tangible or intangible in nature, of the Company in the
Collateral. This Security Agreement shall constitute a security agreement under
the Uniform Commercial Code of the State so that the Holder shall have and may
enforce a security interest in any or all of the Collateral, such security
interest to attach at the earliest moment permitted by law and also to include
and attach to all additions and accessions thereto, all substitutions and
replacements therefor, all proceeds thereof, including insurance and
Condemnation proceeds, and all contract rights, rental or lease payments and
general intangibles of the Company obtained in connection with or relating to
the Collateral as well as any and all items of Property in the foregoing
classifications which are hereafter acquired. The Company shall, at the request
of the Holder, deliver to the Holder, any and all further instruments which the
Holder shall require in order to further secure and perfect the Lien of the
Security Agreement. Pursuant to the Uniform Commercial Code of the State, the
Company hereby authorizes the Holder to execute and file UCC Financing
Statements and continuation statements, at the expense of the Company, without
the necessity of the Company's signature as debtor if the Holder shall determine
that such are necessary or advisable in order to perfect its security interest
in any of the Collateral covered by this Security Agreement, and shall pay to
the Holder, on demand, any reasonable expenses incurred by the Holder in
connection with the preparation, execution and filing of such statements and any
continuation statements that may be filed by the Holder without the necessity of
the Company's signature as debtor.
SECTION 2.03. INFORMATION UNDER UNIFORM COMMERCIAL CODE. The following
information is stated in order to facilitate filings under the Uniform
Commercial Code of the State: The Secured Party is Fleet National Bank, having
an office at X.X. Xxx 0000, Xxxxxxxx, Xxxxxxxxxxx 00000-0000, CT EH 4151MT. The
Debtor is Balchem Corporation having its principal office at X.X. Xxx 000, Xxxxx
Xxxx, Xxx Xxxx 00000.
SECTION 2.04. PERFORMANCE OF COVENANTS. The Company hereby covenants that it
will faithfully observe and perform, or cause to be observed and performed, at
all times any and all covenants, undertakings, stipulations and provisions on
its part to be observed or performed contained in the Security Agreement.
SECTION 2.05. PRIORITY OF LIEN OF SECURITY AGREEMENT; DISCHARGE OF LIENS AND
ENCUMBRANCES. (A) The Company hereby covenants that the Company has the right to
grant a security interest in and Lien on the Collateral, and Company will
warrant and defend title to the Collateral against all claims and demands.
(B) The Company shall not permit or create or suffer to be permitted or
created any Lien, except for Permitted Encumbrances, upon the Collateral or any
part thereof.
(C) To the extent the Company is permitted under the provisions of any of
the Financing Documents to dispose of items of Collateral, the same shall be
deemed upon such disposition to be free and clear of all Liens granted to the
Holder, and the Holder agrees at the cost and expense of the Company to execute
UCC release statements so as to reflect of record the release of said items from
the Lien of this Security Agreement or other appropriate evidence of the release
of such Liens as the Company may reasonably request.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES AND COVENANTS.
SECTION 3.01. REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE COMPANY. The
Company represents and warrants as follows:
(A) (1) The Company has good title to the Collateral, subject only to
Permitted Encumbrances and (2) this Security Agreement is and will remain a
valid and enforceable Lien on the Collateral, except as items of Collateral are
disposed of as permitted by the Financing Documents.
(B) The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Maryland and possesses full
corporate power and corporate capacity to enter into the Security Agreement and
the other Financing Documents and to mortgage and pledge the Collateral in the
manner and to the extent herein set forth, and the Security Agreement and the
other Financing Documents constitute valid and enforceable obligations according
to their terms 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 principles.
(C) Neither the execution and delivery of the Security Agreement and the
other Financing Documents, the consummation of the transactions contemplated
hereby and thereby nor the fulfillment of or compliance with the provisions
hereof or thereof will conflict with or result in a breach of any of the terms,
conditions or provisions of the articles of incorporation or by-laws of the
Company or of any order, judgment, law, restriction, agreement or instrument to
which the Company is a party of by which it is bound except to the extent the
foregoing would not have a material adverse effect upon the business, operations
or financial condition of the Company (and with respect to such orders,
judgments, laws, restrictions, agreements and instruments, its Subsidiaries
taken as a whole) or materially and adversely effect the Lien on the Collateral
granted hereunder, or result in the creation or imposition of any Lien (except
Permitted Encumbrances) of any nature upon any of the Property of the Company
under the terms of any such instrument or agreement.
(D) The chief executive office and other places of business of the Company,
the Collateral and the books and records relating to the Collateral are, and
have been during the four month period prior to the date hereof (or in the case
of a new business, from the date of commencement of said business), located at
the address(es) set forth in Schedule 3.01 hereto and the Company will not
change the same, or merge or consolidate with any person or change its name,
without prior written notice to the Holder.
(E) In its discretion, the Holder may at any time and from time to time,
after an Event of Default has occurred and is continuing, in its name or the
Company's or otherwise, notify any account debtor or obligor of any account
contact, document, instrument, chattel paper or general intangible included in
the Collateral to make payment to the Holder.
(F) In its discretion, the Holder may, at any time and from time to time,
after an Event of Default has occurred and is continuing, demand, xxx for,
collect or receive any money or property at any time payable or receivable on
account of or in exchange for, or make any compromise or settlement deemed
desirable to the Holder with respect to, any Collateral, and/or extend the time
of payment, arrange for payment in installments, or otherwise modify the terms
of, or release, any Collateral or obligations, all without notice to or consent
by the Company and without otherwise discharging or affecting the obligations,
the Collateral or the security interest granted herein.
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ARTICLE IV
MAINTENANCE, MODIFICATION, TAXES AND INSURANCE
SECTION 4.01. MAINTENANCE AND MODIFICATIONS OF COLLATERAL. The Company agrees
that during the period that the Notes are outstanding it will (1) keep the
tangible Collateral in good condition and repair and preserve the same against
waste, loss and damage, ordinary wear and tear excepted, and (2) make all
necessary repairs and replacements to the tangible Collateral or any part
thereof (whether ordinary or extraordinary, structural or nonstructural,
foreseen or unforeseen), in each instance where the failure to do so would have
a material adverse effect upon the Company and its Subsidiaries taken as a whole
or materially diminish the value of the Collateral (as defined in the Loan
Agreement) taken as a whole.
SECTION 4.02. TAXES, ASSESSMENTS AND UTILITY CHARGES. (A) Except as otherwise
permitted by the Financing Documents, the Company shall pay or cause to be paid,
as the same respectively become due, (1) all material taxes and governmental
charges of any kind whatsoever which may at any time be lawfully assessed or
levied against or with respect to the Collateral, (2) all utility and other
charges, including "service charges", incurred or imposed for the operation,
maintenance, use, occupancy, upkeep and improvement of the Collateral, and (3)
all assessments and charges of any kind whatsoever lawfully made by any
Governmental Authority for public improvements, provided that, with respect to
special assessments or other governmental charges that may lawfully be paid in
installments over a period of years, the Company shall be obligated hereunder to
pay only such installments as are required to be paid during all periods that
sums payable by the Company hereunder are due and owing.
(B) Notwithstanding the provisions of subsection (A) of this Section 4.02,
the Company may in good faith actively contest any such taxes, assessments and
other charges, provided that the Company shall have paid such taxes, assessments
and other charges if required by law to do so or provided that (1) the Company
first shall have notified the Holder in writing of such contest, (2) no Event of
Default exists hereunder or under the other Financing Documents and (3) the
Company shall have set aside reserves for any such taxes, assessments and other
charges in accordance with GAAP. Otherwise, such taxes, assessments or other
charges shall be paid promptly by the Company or, at the Company's option,
secured by the Company's posting a bond in form and substance satisfactory to
the Holder.
SECTION 4.03. INSURANCE REQUIRED. At all times that the Notes are outstanding,
the Company shall maintain insurance with respect to the Collateral against such
risks and for such amounts as are customarily insured against by businesses of
like size and type, paying, as the same become due and payable, all premiums
with respect thereto, including, but not necessarily limited to:
(A) Insurance protecting the interests of the Company as insured and the
Holder as mortgagee and loss payee, as their interests may appear, against loss
or damage to the Collateral by fire, lightning, vandalism, malicious mischief
and other perils and casualties normally insured against with a uniform extended
coverage endorsement, such insurance at all times when combined with that
maintained by the Corporate Guarantor to be in an amount not less than the
unpaid principal amount of the Notes outstanding; provided, however, that the
Company may insure all or a portion of the Collateral under a blanket insurance
policy or policies covering not only the Collateral or portions thereof but
other Property.
(B) To the extent applicable, workers' compensation insurance, disability
benefits insurance and such other forms of insurance which the Company is
required by law to provide, covering loss resulting from injury, sickness,
disability or death of employees of the Company.
(C) Insurance protecting the Company and the Holder against loss or losses
from liabilities imposed by law or assumed in any written contract and arising
from personal injury or death or damage to the property of others caused by any
accident or occurrence, with limits of not less than $2,000,000 per person per
accident or occurrence on account of personal injury, including death resulting
therefrom, and
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$2,000,000 per accident or occurrence on account of damage to the property of
others, excluding liability imposed upon the Company by any applicable workers'
compensation law, and a separate commercial umbrella liability policy in excess
of the basic coverage stated above protecting the Company and the Holder with a
limit of not less than $3,000,000.
(D) If requested by the Holder, customary policies of insurance against
loss or damage to any air conditioning, heating or ventilation system, steam
boilers or other high pressure machinery, if any in an amount satisfactory to
the Holder.
(E) Other insurance coverage required by any Governmental Authority in
connection with any Requirement.
SECTION 4.04. ADDITIONAL PROVISIONS RESPECTING INSURANCE. All insurance required
by Section 4.03 hereof shall be procured and maintained in financially sound and
generally recognized responsible insurance companies selected by the Company and
authorized to write such insurance in the State and satisfactory to the Holder.
The Company or companies issuing the policies required by Sections 4.03(A) shall
be rated "A" or better by A.M. Best Co., Inc. in the most recent edition of
Best's Key Rating Guide. Such insurance may be written with deductible amounts
comparable to those on similar policies carried by other companies engaged in
businesses similar in size, character and other respects to those in which the
Company is engaged. All policies evidencing the insurance required by Section
4.03 (A) hereof shall name the Company as insured and the Holder as mortgagee
and loss payee under a lender's loss payable endorsement, as their interests may
appear, and all policies evidencing the insurance required by Section 4.03
hereof shall provide for at least thirty (30) days' written notice to the
Company and the Holder prior to cancellation, lapse, reduction in policy limits
or material change in coverage thereof. The insurance required by Sections
4.03(A) and 4.03(D) hereof shall be fully paid for and shall contain a standard
non-contributory mortgagee endorsement in favor of the Holder as mortgagee and
loss payee. All insurance required hereunder shall be in form and content
reasonably satisfactory to the Holder. Certificates satisfactory in form and
substance to the Holder to evidence all insurance required hereby shall be
delivered to the Holder on or before the Closing Date. The Company shall deliver
to the Holder on or before the first Business Day of each calendar year
thereafter a certificate dated not earlier than the immediately preceding
December l reciting that there is in full force and effect, with a term covering
at least the next succeeding calendar year, insurance in the amounts and of the
types required by Sections 4.03 and 4.04 hereof. Prior to the expiration of any
such policy, the Company shall furnish to the Holder evidence that the policy
has been renewed or replaced or is no longer required hereby.
(B) All premiums with respect to the insurance required by Section 4.03
hereof shall be paid by the Company; provided, however, that if the premiums are
not timely paid, the Holder may pay such premiums and the Company shall pay
immediately upon demand all sums so expended by the Holder, together with
interest, to the extent permitted by law, at the Default Rate from the date on
which such payment was due until the date on which the payment is made.
(C) The Company shall give the Holder prompt notice of any material loss
covered by the insurance required in this Article, and any Net Proceeds of
insurance claims received by the Company shall promptly be paid over to the
Holder to be held by the Holder to the extent required and in accordance with
the provisions of Section 4.05 hereof.
(D) (1) The Company shall not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under Section 4.03 unless the Holder is included therein as a named insured with
loss payable to Holder under a standard non-contributory mortgage endorsement of
the above described character. The Company shall immediately notify the Holder
whenever any such separate insurance is taken out and shall promptly deliver to
the Holder the policy or policies of such insurance.
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(2) Each of the policies required pursuant to Section 4.03 hereof shall
waive any right of subrogation against any Person insured under such policy, and
shall waive any right of the insurers to any set-off or counterclaim or any
other deduction, whether by attachment or otherwise, in respect of any liability
of any Person insured under such policy.
SECTION 4.05. APPLICATION OF NET PROCEEDS OF INSURANCE. The Net Proceeds of the
insurance carried pursuant to the provisions of Section 4.03 hereof shall be
applied as follows: (A) the Net Proceeds of the insurance required by Section
4.03(A) and 4.03(D) hereof shall, provided no Event of Default has occurred and
is continuing, be paid to the Company and applied toward the replacement or
restoration of the particular items for which a claim was made provided however
that in the event the Net Proceeds exceed $5,000,000 or exceed the Principal
Balance, the Net Proceeds shall, at the option of the Holder, be applied toward
payment of Debt Service Payments payable pursuant to the Notes and the payment
of the Company's obligations hereunder and (B) the Net Proceeds of the insurance
required by Section 4.03(B), 4.03(C) and 4.03(E) hereof shall be applied toward
extinguishment or satisfaction of the liability with respect to which such
insurance proceeds may be paid.
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ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
SECTION 5.01. EVENTS OF DEFAULT DEFINED. The following shall be "Events of
Default" under the Security Agreement and the terms "Event of Default" or
"default" shall mean, whenever they are used in the Security 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 Security 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 following written notice of
non-compliance from the Holder to the Company, provided that if such default
cannot reasonably be cured within said fifteen (15)-day period and the Company
shall have commenced action to cure the breach of covenant within said fifteen
(15)-day period and, thereafter, diligently and expeditiously proceeds to cure
the same, such fifteen (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) 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 any of 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 or secured by the
Financing Documents shall be due and payable in full) and such default
continues for ten (10) days;
(2) an Event of Default beyond any applicable grace or cure period
shall occur under the Loan Agreement;
SECTION 5.02. ACCELERATION; ANNULMENT OF ACCELERATION. (A) Upon the occurrence
of an Event of Default hereunder, the Holder may, by notice in writing delivered
to the Company declare the whole of the Indebtedness immediately due and
payable, whereupon the same shall become and be immediately due and payable,
anything in the Security Agreement or any other Financing Documents to the
contrary notwithstanding. In such event, there shall be due and payable the
total amount of Indebtedness plus all accrued but unpaid interest thereon and
all interest which will accrue thereon to the date of payment.
(B) At any time after the principal of the Notes shall have been so
declared to be due and payable and before the entry of final judgment or decree
in any suit, action or proceeding instituted on account of such default, or
before the completion of the enforcement of any other remedy under the Security
Agreement, the Holder may at its option annul such declaration and its
consequences. No such annulment shall extend to or affect any subsequent Event
of Default or impair any right consequent thereon.
SECTION 5.03. ENFORCEMENT OF REMEDIES. (A) Upon the occurrence and continuance
of any Event of Default, the Holder may proceed forthwith to protect and enforce
its rights under the Security Agreement, and the other Financing Documents by
such suits, actions or proceedings as it shall deem appropriate, including,
without limitation, an action to foreclose the Lien of the Security Agreement,
in which case the Collateral or any interest therein may be sold for cash or
credit in one or more interests and in any order or manner.
(B) The Holder may xxx for, enforce payment of and receive any amounts due
or becoming due from the Company for principal, premium, if any, interest or
otherwise under any of the provisions of the
11
Security Agreement or the other Financing Documents, without prejudice to any
other right or remedy of the Holder.
(C) Regardless of the happening of an Event of Default, the Holder may
institute and maintain such suits and proceedings as it may be advised shall be
necessary to prevent any impairment of the security under the Security Agreement
by any acts which may be unlawful or in violation of the Security Agreement, or
to preserve or protect the interests of the Holder.
(D) The Holder shall have the right to appear in and defend any action or
proceeding brought with respect to the Collateral and to bring any action or
proceeding, in the name and on behalf of the Company, which the Holder, in its
discretion, determines should be brought to protect their interests in the
Collateral.
(E) Upon the occurrence and continuance of any Event of Default hereunder,
the Company, upon demand of the Holder, shall forthwith surrender the possession
of, and it shall be lawful for the Holder, to take possession of, all or any
part of the Collateral, together with the books, papers and accounts of the
Company pertaining thereto, and to hold, operate and manage the same, and from
time to time to make all needed repairs and improvements as the Holder shall
deem wise; and the Holder may sell the Collateral or any part thereof, or lease
the Collateral or any part thereof in the name and for the account of the
Company, collect, receive and sequester the rents, revenues, earnings, income,
products and profits therefrom, and pay out of the same all proper costs and
expenses of taking, holding, leasing, selling and managing the Collateral, ___
including reimbursement for expenses reasonably and actually incurred by the
Holder and its agents and counsel, and any charges of the Holder hereunder, and
any taxes and other charges prior to the Lien of the Security Agreement which
the Holder may deem it wise to pay, and all expenses of such repairs and
improvements, and apply the remainder of the moneys so received in accordance
with the provisions of Section 5.05 hereof.
Whenever all monetary payments then due under the Notes and the other
Financing Documents shall have been paid and no Event of Default shall be
continuing, the Holder shall surrender possession to the Company; the same right
of entry, however, to exist upon any subsequent Event of Default.
(F) The Holder may exercise any and/or all of the rights and remedies
available to a secured party under the New York Uniform Commercial Code in such
order and in such manner as the Holder, in its sole discretion, may determine;
provided, however, that the expenses of retaking, holding, preparing for sale or
the like as provided thereunder shall include reasonable attorneys' fees and
other actual expenses of the Holder and shall be additionally secured by this
Security Agreement.
(G) Notwithstanding anything herein contained to the contrary, the Company
or anyone claiming through or under either of them (1) will not (a) at any time
insist upon, or plead, or in any manner whatever claim or take any benefit or
advantage of any stay or extension or moratorium law, any exemption from
execution or sale of the Collateral or any part thereof, wherever enacted, now
or at any time hereafter in force, which may affect the covenants and terms of
performance of the Security Agreement, (b) claim, take or insist upon any
benefit or advantage of any law now or hereafter in force providing for the
valuation or appraisal of the Collateral, or any part thereof, prior to any sale
or sales thereof which may be made pursuant to any provision hereof, or pursuant
to the decree, judgment or order of any court of competent jurisdiction, or (c)
after any such sale or sales, claim or exercise any right under any statute
heretofore or hereafter enacted to redeem the Property so sold or any part
thereof, (2) hereby expressly waive all benefit or advantage of any such law or
laws, and (3) covenant not to hinder, delay or impede the execution of any power
herein granted or delegated to the Holder, but to suffer and permit the
execution of every power as though no such law or laws had been made or enacted.
The Company for itself and all who may claim under it, waives, to the extent
that it lawfully may, all right to have the Collateral marshaled upon any
foreclosure hereof.
12
SECTION 5.04. APPOINTMENT OF RECEIVERS. Upon the occurrence and continuance of
an Event of Default hereunder and upon the filing of a suit or commencement of
other judicial proceedings to enforce the rights of the Holder under the
Security Agreement, the Holder shall be entitled, as a matter of right, without
notice and without regard to the adequacy of any security for the debt secured
hereby, to the appointment of a receiver or receivers of the Collateral and of
the revenues and receipts thereof, pending the conclusion of such proceedings
and any appeal therefrom, with such powers as the court making such appointment
shall confer. The receiver shall be entitled to occupational rent from an
owner/occupant and may upon non-payment of said rent evict the owner/occupant.
SECTION 5.05. APPLICATION OF MONEYS. The Net Proceeds received by the Holder or
pursuant to any right given or action taken under the provisions of this Article
V shall, during the continuance of an Event of Default hereunder, be applied (A)
first, to the payment of the fees, costs and expenses reasonably incurred by the
Holder to operate the Collateral and protect and enforce its rights hereunder
and under the other Financing Documents, including reasonable attorney's fees;
(B) second, to the payment of all installments of interest then due and payable
on the Notes; (C) third, to the payment of unpaid principal of and premium, if
any, on the Notes, whether or not then due and payable; (D) fourth, to the
payment of any sum or charge (other than principal or interest) evidenced or
secured by the Security Agreement and all interest payable thereon; (E) fifth,
to the payment of interest on principal amounts then due and payable under any
other Financing Document; and (F) sixth, the balance thereof to be applied in
reduction of principal amounts then due and payable under or any other Financing
Document, with any excess remaining to be paid to the Company.
SECTION 5.06. REMEDIES CUMULATIVE. No remedy herein conferred upon or reserved
to the Holder is intended to be exclusive of any other available remedy, but
each and every such remedy shall be cumulative and in addition to every other
remedy given under the Security Agreement or under any other Financing Document
now or hereafter existing at law or in equity. No delay or omission to exercise
any right or power accruing upon any default shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right and power
may be exercised from time to time and as often as may be deemed expedient. In
order to entitle the Holder to exercise any remedy reserved to it of them in
this Article V, it shall not be necessary to give any notice, other than such
notice as may be expressly required in the Security Agreement.
SECTION 5.07. TERMINATION OF PROCEEDINGS. In case any proceeding taken by the
Holder on account of any Event of Default shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Holder,
then the Holder and the Company shall be restored to their former positions and
rights hereunder, and all rights, remedies and powers of the Holder shall
continue as if no such proceeding had been taken.
SECTION 5.08. WAIVER AND NON-WAIVER OF EVENT OF DEFAULT. (A) The Holder may, in
its discretion, agree to waive, in writing, any Event of Default hereunder and
its consequences and annul any acceleration in accordance with Section 5.02
hereof. No such waiver shall extend to or affect any other existing or any
subsequent Event of Default.
(B) The failure of the Holder to insist upon strict performance of any term
hereof shall not be deemed to be a waiver of any term of the Security Agreement.
The Company shall not be relieved of the Company's obligations hereunder by
reason of (1) failure of the Holder to comply with any request of the Company to
take any action to foreclose the Security Agreement or otherwise enforce any of
the provisions hereof, (2) the release, regardless of consideration, of the
whole or any part of the Collateral, or (3) any agreement or stipulation by the
Holder extending the time of payment or otherwise modifying or supplementing the
terms of the Security Agreement or any of the other Financing Documents. The
Holder may resort for the payment of the Indebtedness to any other security held
by the Holder pursuant to the Financing Documents in such order and manner as
the Holder, in its discretion, may elect. The Holder may take action to recover
the Indebtedness, or any portion thereof, or to enforce any covenant hereof
without
13
prejudice to the right of the Holder thereafter to foreclose the Security
Agreement. The rights of the Holder under the Security Agreement shall be
separate, distinct and cumulative and none shall be given effect to the
exclusion of the others. No act of the Holder shall be construed as an election
to proceed under any one provision herein to the exclusion of any other
provision. No waiver of any right of the Holder shall be effective unless it is
in a writing signed by an officer of the Holder.
SECTION 5.09. REPAYMENT AND SECURING OF EXPENSES PAID BY THE HOLDER. In the
event the Holder shall pay any premiums on any policies of insurance required to
be maintained or procured by Section 4.03 hereof, or in the event the Holder
shall expend any funds for the payment of any unpaid taxes or assessments upon
the Collateral, or expend any funds in payment of any unpaid installments under
any applicable agreement for payments in lieu of taxes with any taxing entity or
pay or perform any other obligation of the Company under any of the Financing
Documents, then in any such event such payment shall be deemed to be secured by
the Security Agreement and shall be payable to the Holder in the manner provided
and with interest as provided herein, or if not so provided therein, shall be
payable on demand as an additional payment under the other Financing Documents
with interest at the rate of the Default Rate or the maximum amount permitted by
law, whichever is less.
SECTION 5.10. OTHER ACTIONS BY THE HOLDER. Regardless of the happening of an
Event of Default, the Holder may institute and maintain such suits and
proceedings as it shall deem necessary or expedient to prevent any impairment of
the security under the Security Agreement by any acts which may be unlawful or
in violation of the Security Agreement, or to preserve or protect the interests
of the Holder.
14
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. LIMITATION OF RIGHTS. With the exception of rights herein
expressly conferred, nothing expressed or mentioned in or to be implied from the
Security Agreement or the other Financing Documents is intended or shall be
construed to give to any Person, other than the parties hereto or thereto, and
their successors and assigns, any right, remedy or claim under or with respect
to the Security Agreement or any covenants, conditions and provisions herein
contained. The Security Agreement and all of the covenants, conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
parties hereto and their successors and assigns as herein provided.
SECTION 6.02. LAWS. If any law or ordinance is enacted or adopted which imposes
a tax, either directly or indirectly, on the Security Agreement, the Company
will pay, or cause to be paid, such tax, with interest and penalties thereon, if
any.
SECTION 6.03. REVENUE STAMPS. If at any time any Governmental Authority shall
require revenue or other stamps to be affixed to the Security Agreement, the
Company will pay, or cause to be paid, the same, with interest and penalties
thereon, if any.
SECTION 6.04. FURTHER ASSURANCE. The Company will execute and procure for the
Holder and cause to be done any further conveyances, instruments or acts of
further assurance as the Holder shall reasonably require to perfect the security
of the Holder in the Collateral intended now or hereafter to be covered by the
Security Agreement or otherwise for carrying out the intention of facilitating
the performance of the terms of the Security Agreement.
SECTION 6.05. SATISFACTION OF SECURITY AGREEMENT. Upon the payment in full of
all of the amounts due under the Notes and any monetary obligation then due and
payable under the other Financing Documents, and adequate provision has been
made for any indemnification or defense for any then-pending claims against the
Holder of the Holder which the Holder is then entitled to under the terms of any
of the Financing Documents, the Holder by acceptance of the Security Agreement,
agrees to execute and deliver, any and all instruments necessary and/or
appropriate to discharge the Lien of the Security Agreement of record and to
terminate UCC Financing Statements.
SECTION 6.06. SEVERABILITY. (A) If any provision of the Security Agreement
shall, for any reason, be held or shall, in fact, be inoperative or
unenforceable in any particular case, such circumstance shall not render the
provision in question inoperative or unenforceable in any other case or
circumstance or render any other provision herein contained inoperative or
unenforceable.
(B) The invalidity of any one or more phrases, sentences, clauses,
paragraphs or sections in the Security Agreement shall not affect the remaining
portions of the Security Agreement or any part thereof.
SECTION 6.07. NOTICES. All notices, certificates and other communications
hereunder shall be in writing and shall be sufficiently given and shall be
deemed given when (A) sent to the applicable address stated below by registered
or certified mail, return receipt requested, postage prepaid, or by such other
means (including, without limitation, overnight delivery) as shall provide the
sender with documentary evidence of such delivery, or (B) delivery is refused by
the addressee, as evidenced by the affidavit of the Person who attempted to
effect such delivery or such other evidence of such attempted delivery. The
addresses to which notices, certificates and other communications hereunder
shall be delivered are as follows:
15
TO THE COMPANY:
Balchem Corporation
X.X. Xxx 000
Xxxxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx, President
WITH A COPY TO:
Golenbock, Eiseman, Assor & Xxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
TO THE HOLDER:
Fleet National Bank
NY KP 0000
Xxxxx X. Xxxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Corporate Banking Division
WITH A COPY TO:
Xxxxxx XxxXxxxx 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.
SECTION 6.08. COUNTERPARTS. The Security Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 6.09. TABLE OF CONTENTS AND SECTION HEADINGS NOT CONTROLLING. The table
of contents and the headings of the several articles and sections of the
Security Agreement have been prepared for convenience of reference only and
shall not control, affect the meaning of or be taken as an interpretation of any
provision of the Security Agreement.
SECTION 6.10. AMENDMENT, ETC. Neither the Security Agreement nor any provisions
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.
SECTION 6.11. WAIVER OF NOTICE. Whenever in the Security Agreement the giving of
notice by mail or otherwise is required, the giving of such notice may be waived
in writing by the Person or Persons entitled to receive such notice.
16
SECTION 6.12. INDEMNIFICATION; SUBROGATION; WAIVER OF OFFSET.
(a) The Company shall indemnify, defend and hold the Holder harmless
against: (i) any and all claims for brokerage, leasing, finders or similar fees
which may be made relating to the Loans claiming to have dealt with the Company,
and (ii) against any and all liability, obligations, losses, damages, penalties,
claims, actions, suits, costs, and expenses (including its reasonable attorneys'
fees, together with reasonable appellate counsel fees, if any) of whatever kind
or nature which may be imposed on or incurred by the Holder at any time pursuant
either to a judgment or decree or other order entered into by a court or
administrative agency or to a settlement reasonably approved by the Company,
which judgment, decree, order or settlement relates in any way to or arises out
of the offer, sale or lease of the Collateral and/or the ownership, use, or
operation of any portion of the Collateral.
(b) If the Holder is made a party defendant to any litigation concerning
the loan which is the subject of the Notes, this Security Agreement, the
Collateral, or any part thereof, or any interest therein, or the occupancy
thereof, then the Company shall indemnify, defend and hold the Holder harmless
from all liability by reason of said litigation, including reasonable attorneys'
fees (together with reasonable appellate counsel fees, if any) and expenses
incurred by the Holder in any such litigation, whether or not any such
litigation is prosecuted to judgment. If the Holder commences an action against
the Company to enforce any of the terms hereof or to prosecute any breach by the
Company of any of the terms hereof or to recover any sum secured hereby and the
Holder prevails thereunder, the Company shall pay to the Holder such reasonable
attorneys' fees (together with reasonable appellate counsel fees, if any) and
expenses. The right to such attorneys fees (together with reasonable appellate
counsel fees, if any) and expenses shall be deemed to have accrued on the
commencement of such action, and shall be enforceable whether or not such action
is prosecuted to judgment. If an Event of Default occurs hereunder, the Holder
may employ an attorney or attorneys to protect its rights hereunder, and in the
event of such employment following any such Event of Default, the Company shall
pay the Holder reasonable attorneys' fees (together with reasonable appellate
counsel fees, if any) and expenses incurred by the Holder, whether or not an
action is actually commenced against the Company by reason of such breach.
(c) A waiver of subrogation shall be obtained by the Company from its
insurance carrier and, consequently, the Company waives any and all right to
claim or recover against the Holder, its officers, employees, agents and
representatives, for loss of or damage to the Company, the Collateral, the
Company's property or the property of others under the Company's control from
any cause insured against or required to be insured against by the provisions of
this Security Agreement.
(d) All sums payable by the Company hereunder shall be paid without notice
(except as may otherwise be provided herein), demand, counterclaim, set-off,
deduction or defense and without abatement, suspension, deferment, diminution or
reduction, and the obligations and liabilities of the Company hereunder shall in
no way be released, discharged or otherwise affected by reason of: (i) any
damage to or destruction of or any condemnation or similar taking of the
Collateral or any part thereof; (ii) any restriction or prevention of or
interference with any use of the Collateral or any part thereof; (iii) any title
defect or encumbrance affecting the Collateral or any part thereof by title
superior or otherwise; (iv) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation, or other like proceeding
relating to the Holder, or any action taken with respect to this Security
Agreement by any trustee or receiver of the Holder, or by any court, in such
proceeding; or (v) any other occurrence whatsoever, whether similar or
dissimilar to the foregoing, whether or not the Company shall have notice or
knowledge of any of the foregoing. The Company waives all rights now or
hereafter conferred by statute or otherwise to any abatement, suspension,
deferment, diminution, or reduction of any sum secured hereby and payable by the
Company.
17
SECTION 6.13. LOST OR DAMAGED NOTES. 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 Holder will issue, in lieu
thereof, a replacement Notes or other security document in the same principal
amount thereof and otherwise of like tenor.
SECTION 6.14. COVENANT AGAINST USURY. All agreements between the Company and the
Holder are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the indebtedness
evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the
Holder for the use or the forbearance of the indebtedness evidenced hereby
exceed the maximum permissible under applicable law. As used herein, the term
"applicable law" shall mean the law in effect as of the date hereof provided,
however that in the event there is a change in the law which results in a higher
permissible rate of interest, then this Agreement shall be governed by such law
as of its effective date. In this regard, it is expressly agreed that it is the
intent of the Company and the Holder in the execution, delivery and acceptance
of this Agreement to contract in strict compliance with the laws of the State of
New York from time to time in effect. If, under or from any circumstances
whatsoever, fulfillment of any provision hereof or of any law of the Financing
Documents at the time of performance of such provision shall be due, shall
involve transcending the limit of such validity prescribed by applicable law,
then the obligation to be fulfilled shall automatically be reduced to the limits
of such validity, and if under or from circumstances whatsoever the Holder
should ever receive as interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied to the
reduction of the principal balance evidenced hereby and not to the payment of
interest. This provision shall control every other provision of all agreements
between the Company and the Holder.
SECTION 6.15. JURY TRIAL WAIVER. THE COMPANY AND THE HOLDER (BY ACCEPTANCE OF
THIS SECURITY AGREEMENT) 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 SECURITY 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 LOAN OR ENFORCEMENT OF THIS SECURITY AGREEMENT, 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 6.16. 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 FleetBoston Financial Corporation and its
successors and assigns, or in transit to any of them. At any time following the
occurrence and during the continuance of an Event of Default, 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
18
HOLDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES THE NOTE, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO
SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE COMPANY OR ANY GUARANTOR, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
SECTION 6.17. 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 the 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 6.18. CHOICE OF LAW. This Security 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 SECURITY
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.
SECTION 6.19. MERGER. This Security Agreement is intended by the parties as the
final, complete and exclusive statement of the transactions evidenced by this
Security Agreement. All prior contemporaneous promises, agreements and
understandings, whether oral or written, are deemed to be superceded by this
Security Agreement, and no party is relying on any promise, agreement or
understanding not set forth in this Security Agreement. This Security Agreement
may not be amended or modified except by a written instrument describing such
amendment or modification executed by the Company and the Holder.
19
IN WITNESS WHEREOF, the parties hereto have duly executed this Security
Agreement as of the day and year first above written.
BALCHEM CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
------------------------------------
Title: Controller and Assistant Secretary
-----------------------------------
FLEET NATIONAL BANK
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxxx, Vice President
STATE OF NEW YORK )
)ss.:
COUNTY OF NEW YORK )
On the 30 day of May, in the year 2001 before me personally came Xxxxx X.
Xxxxxxxxxxx, to me known, who, being by me duly sworn, did depose and say that
he/she/they reside(s) in _____________________; that he/she/they is(are) the
Controller & Assistant Secretary of BALCHEM CORPORATION, the corporation
described in and which executed the above instrument; and that he/she/they
signed his/her/their name(s) thereto by authority of the board of directors of
said corporation.
/s/ Xxxx X. Xxxxx
-----------------
Notary Public
STATE OF NEW YORK )
)ss.:
COUNTY OF NEW YORK )
On the 30 day of May, in the year 2001 before me personally came XXXXX
X. XXXXXXXX to me known, who, being by me duly sworn, did depose and say that
he/she/they reside(s) in _____________________; that he/she/they is(are) the
VICE PRESIDENT of FLEET NATIONAL BANK, the national banking association
described in and which executed the above instrument; and that he/she/they
signed his/her/their name(s) thereto by authority of the board of directors of
said corporation.
/s/ Xxxx X. Xxxxx
-----------------
Notary Public
SCHEDULE 3.01
0000 Xxxxx 000
Xxxxx Xxxx, Xxx Xxxx 00000
00 Xxxxxxx Xxxx
Xxxxxxx 00
Xxxxx Xxxx, Xxxxx Xxxxxxxx 00000
000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
