Exhibit 10.6
--------------------------------------------------------------------------------
BCP INGREDIENTS, INC.
AND
BANK OF AMERICA, N.A.,
AS HOLDER
================================================
GUARANTY
================================================
DATED: March 16, 2007
--------------------------------------------------------------------------------
GUARANTY
THIS GUARANTY dated Xxxxx 00, 0000 (xxx "Xxxxxxxx") from BCP INGREDIENTS,
INC., a Delaware corporation having its principal office at x/x Xxxxxxx
Xxxxxxxxxxx, X.X. Xxx 000, 00 Xxxxxxx Xxxx Road, New Hampton, New York 10958
(the "Guarantor") to BANK OF AMERICA, NA. (successor by merger to Fleet National
Bank), a national banking association organized and existing under the laws of
the United States and having an xxxxxx xx Xxxxx Xxxxxxx Xxxxx, Xxxxxx, Xxx Xxxx
00000 (the "Holder").
W I T N E S S E T H:
WHEREAS, the Holder has extended a certain revolving line of credit loan
to Balchem Corporation (the "Company") (the "Line of Credit Loan") the repayment
of which is evidenced by a promissory note (revolving line of credit) dated the
date hereof in the principal amount of $6,000,000.00 (as modified or
supplemented or extended from time to time, the "Line of Credit Loan Note"); and
WHEREAS, the Holder has extended a certain term loan to the Company (the
"Term Loan" and collectively with the Line of Credit Loan, the "Loans") the
repayment of which is evidenced by a promissory note (term loan) dated the date
hereof in the principal amount of $29,000,000.00 (as modified or supplemented or
extended from time to time, the "Term Loan Note" and collectively with the Line
of Credit Loan Note, the "Notes"); and
WHEREAS, the Loans are being made pursuant to the provisions, terms and
conditions of a loan agreement dated the date hereof (as modified or
supplemented from time to time, the "Loan Agreement") by and between the Company
and the Holder; and
WHEREAS, the proceeds of the Loans will be made available to the Company
upon the terms and conditions set forth in the Loan Agreement; and
WHEREAS, in connection with the making of the Loans, the Company has
offered to have the Guarantor guaranty repayment of the Notes as set forth
herein; and
WHEREAS, the Guarantor specifically approves the terms of the Notes and
the other Financing Documents; and
WHEREAS, the Guarantor is willing to enter into this Guaranty in order to
induce the Holder to make the Loans and thereby achieve interest cost and other
savings to the Company;
NOW, THEREFORE, for good and valuable consideration, the receipt whereof
is hereby acknowledged, the parties agree as follows:
1
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR
The Guarantor does hereby represent and warrant to the Holder that:
SECTION 1.1. AUTHORITY OF THE GUARANTOR. The Guarantor represents and warrants
that it is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, 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 Guarantor.
SECTION 1.2. NO VIOLATION OF RESTRICTIONS. This Guaranty and all other documents
to be executed by the Guarantor in connection herewith, when executed and
delivered by the respective parties thereto, will constitute valid and binding
obligations of the Guarantor. The execution and delivery by the Guarantor of the
Financing Documents to which it is a party and the performance thereof by the
Guarantor (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 Guarantor'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 Guarantor is a party or by which the
Guarantor 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 Guarantor, or result in the creation of any Lien (other than
that created by the Financing Documents) upon or with respect to any Property of
the Guarantor.
SECTION 1.3. GOVERNMENTAL CONSENT. No approval or other action by any
Governmental Authority is required in connection with the execution or
performance by the Guarantor of the Guaranty.
SECTION 1.4. PENDING LITIGATION. 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 Guarantor, threatened against or
affecting the Guarantor which are reasonably likely to materially adversely
affect the financial condition of the Guarantor and of the Company taken as a
whole or involving the validity or enforceability of the Financing Documents to
which it is a party or the priority of the Liens thereof, and to the Guarantor'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.
SECTION 1.5. NO DEFAULTS. No event has occurred and no condition exists which,
upon the execution of this Guaranty, would constitute an Event of Default under
Article III hereof.
2
SECTION 1.6. TAXES. 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 Guarantor have been filed and the Guarantor has paid all fees
and taxes indicated as due pursuant to such returns, reports and documents or
pursuant to any assessments received by the Guarantor, and the Guarantor 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.
3
ARTICLE II
COVENANTS AND AGREEMENTS
SECTION 2.1. GUARANTY OF PAYMENT. (A) The Guarantor hereby irrevocably and
unconditionally guarantees to the Holder full and prompt payment of moneys
sufficient to pay, or to provide for the payment of: the outstanding principal
balance of the Notes together with premium if any, thereon and accrued and
unpaid interest thereon (the "Guaranteed Amount"). The Guarantor hereby
irrevocably and unconditionally agrees that, upon the occurrence of an Event of
Default and the acceleration of the principal balance of either or both of the
Notes then outstanding by the Holder, the Guarantor will, upon written demand by
the Holder, promptly pay such Guaranteed Amount.
(B) All payments by the Guarantor shall be paid in lawful money of the
United States of America in immediately available funds.
(C) Each and every default in payment of the principal of or interest on
the Notes shall give rise to a separate cause of action hereunder, and separate
suits may be brought hereunder by the Holder as each cause of action arises.
(D) The Guarantor shall pay to the Holder all reasonable costs and
expenses (including reasonable legal fees) incurred by the Holder in the
protection of any of its rights or in the pursuance of any of its remedies in
respect of this Guaranty.
SECTION 2.2. OBLIGATIONS UNCONDITIONAL. The obligations of the Guarantor under
this Guaranty shall be absolute and unconditional and shall remain in full force
and effect and, to the extent permitted by law, such obligations shall not be
affected, modified or impaired by any state of facts or the happening from time
to time of any event including, without limitation, any of the following,
whether or not with notice to or the consent of the Guarantor:
(A) the invalidity, irregularity, illegality or unenforceability of, or
any defect in, (1) the Notes, (2) the other Financing Documents or (3) any
collateral security for any thereof;
(B) any present or future law or order of any government (de jure or de
facto) or of any agency thereof purporting to reduce, amend or otherwise affect
the Notes or any other obligation of the Company or any other obligor or to vary
any terms of payment;
(C) any claim of immunity on behalf of the Company or any other obligor or
with respect to any Property of the Company or any other obligor;
(D) the waiver, compromise, settlement, release or termination of any or
all of the obligations, covenants or agreements of (1) the Company under the
Notes or any of the other Financing Documents, (2) a co-guarantor of the Notes;
4
(E) the failure to give notice to the Guarantor of the occurrence of an
Event of Default under the Financing Documents;
(F) the transfer, assignment or mortgaging, or the purported or attempted
transfer, assignment or mortgaging, of all or any part of the interest of the
Company in the collateral or any failure of or defect in the title with respect
to the Company's interest in the collateral;
(G) the release, sale, exchange, surrender or other change in any security
for payment of the Notes;
(H) the extension of the time for payment of any principal of or interest
or premium on the Notes owing or payable on such Notes or under this Guaranty or
of the time for performance of any other obligations, covenants or agreements
under or arising out of the other Financing Documents;
(I) the modification or amendment (whether material or otherwise) of any
obligation, covenant set forth in the Notes or any other Financing Document;
(J) the taking of, or the omission to take, any of the actions referred to
in the Financing Documents;
(K) any failure, omission or delay on the part of the Holder or any other
Person to enforce, assert or exercise any right, power or remedy conferred on
the Holder or such other Person in this Guaranty or the other Financing
Documents;
(L) the voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all the assets, marshaling of assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition with creditors or
readjustment of, or other similar proceedings affecting the Company or any of
the assets of any of them, or any contest of the validity of the Financing
Documents, in any such proceedings;
(M) any event or action that would, in the absence of this Section 2.2,
result in the release or discharge of the Guarantor from the performance or
observance of any obligation, covenant or agreement contained in this Guaranty;
(N) the default or failure of the Guarantor fully to perform any of its
obligations set forth in this Guaranty; or
(O) any other circumstances which might otherwise constitute a legal or
equitable discharge or defense of a surety or a guarantor.
SECTION 2.3. WAIVERS BY THE GUARANTOR. The Guarantor hereby waives with respect
to the Notes, the other Financing Documents, the Guaranty and the indebtedness
evidenced thereby, the following: diligence; presentment; demand for payment;
any right
5
to require a proceeding first against the Company or any other such Person;
protest; notice of dishonor or nonpayment of any such liabilities and any other
notice and all demands whatsoever. The Guarantor hereby waives notice from the
Holder and the Company (A) of the execution and delivery of the Notes, and (B)
of acceptance of, or notice and proof of reliance on, the benefits of this
Guaranty.
SECTION 2.4. DISCHARGE OF THE GUARANTOR'S OBLIGATIONS AND TERMINATION OF THIS
GUARANTY. This Guaranty shall terminate and the obligations of the Guarantor
created hereunder shall be discharged when all amounts due under the Financing
Documents have been paid in full except as set forth below. On the date of such
discharge, the Guarantor shall be released from any and all conditions, terms,
covenants or restrictions created or placed upon them by this Guaranty and the
Guarantor shall not have any further obligation or liability hereunder.
SECTION 2.5. OTHER SECURITY. The Holder may pursue its rights and remedies under
this Guaranty notwithstanding (A) any other guaranty of or security for the
Notes or the obligations or liabilities of the Company under the other Financing
Documents and (B) any action taken or omitted to be taken by any other Holder or
any other Person to enforce any of the rights or remedies under such other
guaranty or with respect to any other security.
SECTION 2.6. NO SETOFF BY THE GUARANTOR. No setoff, counterclaim, reduction or
diminution of an obligation, or any defense of any kind or nature (other than
payment in full of the Guaranteed Amount) which the Guarantor has or may have
with respect to a claim under this Guaranty shall be available hereunder to the
Guarantor against the Holder.
SECTION 2.7. NATURE OF GUARANTY (A) The Guaranty is a guaranty of payment and
not of collection and the Guarantor hereby waives any right to require that any
action be brought against any other Person or to require that resort be had to
any security or to any balance of any kind or credit held by the Holder in favor
of the Company or any other Person prior to the Holder proceeding under the
Guaranty. If at any time any payment of the principal of, premium, if any, on or
interest on the Notes or any other amount payable by the Company and guaranteed
by the Guarantor pursuant to Section 2.1 hereof is rescinded or is otherwise
required to be restored or returned upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, the Guarantor's obligations
hereunder with respect to such payment shall be reinstated as though such
payment had been due but not made at such time.
(B) All of the rights and remedies of this Guaranty shall inure to the
benefit of the Holder.
SECTION 2.8. SUBORDINATION OF DEBT. During the term of the Guaranty the
Guarantor agrees with the Holder that upon the occurrence and continuance of an
Event of Default if the Holder so requests, any and all indebtedness of the
Company owed to the Guarantor shall be collected, enforced and received by the
Guarantor as trustee for the
6
Holder and paid over to the Holder on account of the indebtedness of the Company
to the Holder, but without reducing or affecting in any manner the liability of
the Guarantor under the other provisions of this Guaranty except to the extent
the principal amount of such outstanding indebtedness shall have been reduced by
such payment.
7
ARTICLE III
EVENTS OF DEFAULT
SECTION 3.1. DEFAULT REMEDIES. If an Event of Default exists, the Holder may
proceed to enforce the provisions hereof and to exercise any other rights,
powers and remedies available to the Holder. The Holder, in its sole discretion,
shall have the right to proceed first and directly against the Guarantor under
this Guaranty without proceeding against or exhausting any other remedies which
it may have and without resorting to any other security held by the Holder.
SECTION 3.2. REMEDIES; WAIVER AND NOTICE. (A) No remedy herein conferred upon or
reserved to the Holder is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Guaranty or now or hereafter
existing at law or in equity or by statute.
(B) No delay or omission to exercise any right or power accruing upon the
occurrence of any Event of Default hereunder shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right or power
may be exercised from time to time and as often as may be deemed expedient.
(C) In order to entitle the Holder to exercise any remedy reserved to it
in this Guaranty, it shall not be necessary to give any notice, other than such
notice as may be expressly required in this Guaranty.
(D) In the event any provision contained in this Guaranty should be
breached by any party and thereafter duly waived by the other party so empowered
to act, such waiver shall be limited to the particular breach so waived and
shall not be deemed to waive any other breach hereunder.
(E) No waiver, amendment, release or modification of this Guaranty shall
be established by conduct, custom or course of dealing.
SECTION 3.3. RIGHT OF SETOFF. The guarantor 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 Guarantor), the Holder may set
off the same or any part thereof and apply the same to any liability or
obligation of the Guarantor 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
8
OTHER PROPERTY OF THE GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.
SECTION 3.4. EXPENSES INCURRED IN CONNECTION WITH ENFORCEMENT. The Guarantor
shall pay on demand all reasonable expenses of the holder in connection with the
preparation, administration, default, collection, waiver or amendment of loan
terms, or in connection with the Holder's exercise, preservation or enforcement
of any of its rights, remedies or options hereunder, including, without
limitation, reasonable fees of outside legal counsel or the allocated costs of
in-house legal counsel, accounting, consulting, brokerage or other similar
professional fees or expenses, and any reasonable fees or expenses associated
with travel or other costs relating to any appraisals or examinations conducted
in connection with the Loans or any collateral therefore, 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.
9
ARTICLE IV
INTERPRETATION OF GUARANTY
SECTION 4.1. ACCOUNTING PRINCIPLES. Where the character or amount of any asset
or liability or item of income or expense is required to be determined or
consolidated or other accounting computation is required to be made for the
purposes of this Guaranty, this shall be done in accordance with generally
accepted accounting principles at the time in effect, to the extent applicable,
except where such principles are inconsistent with the requirements of this
Guaranty.
SECTION 4.2. DIRECTLY OR INDIRECTLY Where any provision in this Guaranty refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.
SECTION 4.3. GOVERNING LAW. This Guaranty and the rights and obligations of the
parties hereunder shall he 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 GUARANTOR AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS GUARANTY
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 GUARANTOR BY MAIL AT THE ADDRESS
SET FORTH HEREIN. THE GUARANTOR 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 4.4. DEFINITIONS. All defined terms used herein and not otherwise
defined herein being used herein shall have the same meanings as set forth in
the Loan Agreement. As used herein, all words of masculine gender shall mean and
include correlative words of feminine and neuter genders.
10
ARTICLE V
MISCELLANEOUS
SECTION 5.1. OBLIGATIONS ARISE ON DELIVERY OF THE NOTES. The obligations of the
Guarantor hereunder shall arise absolutely and unconditionally when the Notes
shall have been executed and delivered by the Company to the Holder.
SECTION 5.2. SURVIVAL. All warranties, representations, and covenants made by
the Guarantor herein shall be deemed to have been relied upon by the Holder and
shall survive the delivery to the Holder of this Guaranty regardless of any
investigation made by the Holder.
SECTION 5 SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon the
successors and permitted assigns of the Guarantor. The provisions of this
Guaranty are intended to be for the benefit of the Holder, its successors and
assigns.
SECTION 5.4. NOTICES. (A) All notices, certificates and other communications
under this Guaranty shall be in writing and shall be sufficiently given and
shall be deemed given when: (1) delivered to the applicable address stated in
subsection (B) hereof 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 Guarantor or the Holder, as the
case may be, as evidenced by the affidavit of the Person who attempted to effect
such delivery;
(B) The addresses to which communications under this Guaranty shall be
delivered are as follows:
TO THE GUARANTOR:
BCP Ingredients, Inc.
x/x Xxxxxxx Xxxxxxxxxxx
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
11
WITH A COPY TO:
Xxxxxxx & Xxxxxxx, LLP
00 Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
(C) The Guarantor and the Holder may by notice given hereunder designate
any further or different addresses to which subsequent notices, certificates and
other communication shall be sent.
SECTION 5.5. ENTIRE UNDERSTANDING; COUNTERPARTS. This Guaranty constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and may he executed simultaneously in several counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
SECTION 5.6. AMENDMENTS. No amendment, change, modification, alteration or
termination of this Guaranty shall be made except upon the written consent of
the Guarantor and the Holder.
SECTION 5.7. PARTIAL INVALIDITY. The invalidity or unenforceability of any one
or more phrases, sentences, clauses or sections in this Guaranty shall not
affect the validity or enforceability of the remaining portions of this Guaranty
or any part thereof.
SECTION 5.8. SECTION HEADINGS NOT CONTROLLING The headings of the several
sections of this Guaranty have been prepared for convenience of reference only
and shall not control, affect the meaning or be taken as an interpretation of
any provision of this Guaranty.
SECTION 5.9. JURY TRIAL WAIVER. THE GUARANTOR 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 GUARANTY OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE HOLDER
RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT OF THE NOTES, AND
AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS
PROHIBITED BY LAW, THE GUARANTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES
12
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE GUARANTOR 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 GUARANTY AND MAKE THE LOANS.
13
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the day
and year first above written.
BCP INGREDIENTS, INC.
By:/s/ Xxxxx Xxxxxxxxxxx
----------------------
Xxxxx Xxxxxxxxxxx
Treasurer
ACCEPTED:
BANK OF AMERICA, N.A. as Holder
By:/s/ Xxxxx X. Xxxxxxxx
----------------------
STATE OF NEW YORK )
) ss.:
COUNTY OF ORANGE )
On the 16th day of March, in the year 2007, before me, the undersigned, a
notary public in and for said state, personally appeared Xxxxx Xxxxxxxxxxx,
personally known to me or proven to me on the basis of satisfactory evidence, to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual or the person upon behalf of which
the individual acted, executed the instrument.
/s/ Xxxxxxxx X. Xxxxx
---------------------
Notary Public, State of New York
No. 01PE508519
Qualified in Xxxxxxxx County
Commission Expires 9/27/09
14
