BALCHEM CORP
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>ex10_3.txt
<TEXT>

Exhibit 10.3


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                              BANK OF AMERICA, N.A.

                                       AND

                               BALCHEM CORPORATION




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                                 LOAN AGREEMENT

                   ===========================================



                              DATED: MARCH 16, 2007




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<PAGE>

                                TABLE OF CONTENTS
                                -----------------

DEFINITIONS ..............................................................  2

ARTICLE I   REPRESENTATIONS AND WARRANTIES................................  6

            SECTION 101.  REPRESENTATIONS AND WARRANTIES
                          OF THE COMPANY..................................  6

ARTICLE II  THE LOANS; CONDITIONS PRECEDENT TO THE HOLDER'S OBLIGATIONS
            HEREUNDER.....................................................  8

            SECTION 201  THE LOANS........................................  8

            SECTION 202.  CONDITIONS......................................  8

ARTICLE III COVENANTS OF THE COMPANY...................................... 10

            SECTION 301. AFFIRMATIVE COVENANTS OF THE
                          COMPANY WITH THE HOLDER......................... 10

            SECTION 302. NEGATIVE COVENANTS OF THE COMPANY
                          WITH THE HOLDER................................. 13

ARTICLE IV  EVENTS OF DEFAULT............................................. 15

            SECTION 401. EVENTS OF DEFAULT DEFINED........................ 15

            SECTION 402. JURY TRIAL WAIVER................................ 17

            SECTION 403. RIGHT OF SET OFF................................. 17

            SECTION 404. EXPENSES INCURRED IN CONNECTION
                          WITH ENFORCEMENT................................ 18

            SECTION 405. EFFECT OF UNENFORCEABILITY....................... 18

ARTICLE V   GENERAL CONDITIONS............................................ 19

            SECTION 501. GENERAL CONDITIONS OF THE LOAN AGREEMENT......... 19


EXHIBIT "A"  FORM OF LINE OF CREDIT LOAN NOTE

EXHIBIT "B"  FORM OF TERM LOAN NOTE

SCHEDULE 101(F)  PENDING LITIGATION

SCHEDULE 101(J)  WHOLLY-OWNED SUBSIDIARIES


<PAGE>

                                 LOAN AGREEMENT

      THIS LOAN  AGREEMENT  dated March 16, 2007 (the "Loan  Agreement")  by and
between BANK OF AMERICA,  N.A., a national  banking  association  organized  and
existing under the laws of the United  States,  and having an office at Peter D.
Kiernan Plaza, Albany, New York 12207 (the "Holder") and BALCHEM CORPORATION,  a
corporation  organized and existing  under the laws of the State of Maryland and
having an address of P.O. Box 600, 52 Sunrise Road, New Hampton,  New York 10958
(the "Company");

                              W I T N E S S E T H :

      WHEREAS,  the Company has  requested  that the Holder make  certain  loans
(hereinbelow  defined)  to the  Company  and the  Holder has agreed to make said
Loans subject to the terms set forth herein; and

      NOW, THEREFORE,  for good and valuable consideration,  the receipt whereof
is hereby acknowledged, the Holder and the Company agree as follows:


                                       1
<PAGE>

                                   DEFINITIONS

DEFINITIONS OF TERMS.

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

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

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

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

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

      "DEFAULT RATE" shall have the meaning assigned to such term in the Notes.

      "EBIDTA"  means  earnings  before   interest,   taxes,   depreciation  and
amortization  and other non-cash  charges  (including  any non-cash  stock-based
compensation expense which are required to be reported per FAS 123 R.)

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

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

      "EVIDENCE OF OWNERSHIP" means stock of a corporation, membership interests
of a limited liability company,  partnership  interests (general and limited) of
partnerships and any other interest in a Subsidiary which involves any rights of
ownership.

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

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


                                       2
<PAGE>

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

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

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

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

      "INTERNATIONAL  SUBSIDIARY"  means any  Subsidiary  organized  outside the
United States.

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

      "LINE  OF  CREDIT  LOAN"  means  the  loan  in  the  principal  amount  of
$6,000,000.00  from the Holder to the Company as evidenced by the Line of Credit
Loan Note.

      "LINE OF CREDIT  LOAN NOTE"  means the  promissory  note dated the Closing
Date in the principal amount of  $6,000,000.00  from the Company in favor of the
Holder in the form  attached  hereto as Exhibit "A" and  evidencing  the Line of
Credit Loan,  as said  promissory  note may be further  modified,  supplemented,
consolidated or extended from time to time.

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


                                       3
<PAGE>

      "LOANS" means collectively the Line of Credit Loan and the Term Loan.

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

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

      "NOTES"  means,  collectively,  the Line of Credit  Loan Note and the Term
Loan Note.

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

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

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

      "PLEDGE  AGREEMENT" or "PLEDGE  AGREEMENTS"  means any Pledge Agreement in
form and substance  satisfactory  to the Holder  executed by the holder(s) of an
International  Subsidiary at least sixty-five (65%) of the Evidence Of Ownership
of an  International  Subsidiary is pledged as security and  collateral  for the
repayment  of the Notes and all other  amounts due and owing to the Holder under
the other  Financing  Documents,  as said  Pledge  Agreement  may be  amended or
supplemented from time to time.

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

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


                                       4
<PAGE>

      "REPORTABLE EVENT" means any reportable event as defined in ERISA.

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

      "STATE" means the State of New York.

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

      "TERM LOAN" means the loan in the amount of $29,000,000.00 from the Holder
to the Company and evidenced by the Term Loan Note.

      "TERM LOAN NOTE" means the  promissory  note dated the Closing Date in the
principal  amount of  $29,000,000.00  from the Company in favor of the Holder in
the form attached  hereto as Exhibit "B" and  evidencing  the Term Loan, as said
promissory note may be amended, modified, supplemented, consolidated or extended
from time to time.

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


                                       5
<PAGE>

                                    ARTICLE I

                         REPRESENTATIONS AND WARRANTIES

SECTION 101. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants that:

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

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

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

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

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

      (F) Except as disclosed in Schedule 101(F) hereto,  as of the date hereof,
there are no actions,  suits or proceedings at law or in equity, or before or by
any  Governmental


                                       6
<PAGE>

Authority,  pending or, to the knowledge of the Company,  threatened  against or
affecting  the  Company or  involving  the  validity  or  enforceability  of the
Financing  Documents which are reasonably likely to materially  adversely affect
the financial  condition of the Company and, to the Company's  knowledge,  it is
not in default with respect to any material  order,  writ,  judgment,  decree or
demand of any court or any  Governmental  Authority  which default is reasonably
likely to materially adversely affect the financial condition of the Company;

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

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

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

      (J) All of the  Wholly-Owned  Subsidiaries of the Company as of the date
hereof are listed on Schedule 101(J).


                                       7
<PAGE>

                                   ARTICLE II

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

SECTION 201. THE LOANS.

      (A) The Line of  Credit  Loan.  Upon the terms  and  conditions  set forth
herein,  the  Holder  shall  make the Line of Credit  Loan to the  Company.  The
proceeds of the Line of Credit Loan shall be utilized to fund general  corporate
endeavors,   including  the  providing  of  working  capital,   funding  capital
expenditures  and funding  stock and asset  acquisitions.  The Company may apply
from time to time for the issuances of commercial  letters of credit and standby
letters of credit in  furtherance  of such purposes  provided that the aggregate
face  amount of such  commercial  letters of credit  and/or  standby  letters of
credit  does not  exceed  an amount  equal to  $6,000,000  less the  outstanding
principal  balance of the Line of Credit Loan at the time of such  request.  The
Line of Credit Loan shall bear interest and shall mature all as set forth in the
Line of Credit Loan Note. The Line of Credit Loan shall be an unsecured facility

      (B) The Term Loan.  Upon the terms and  conditions  set forth herein,  the
Holder  shall make the Term Loan to the  Company.  The proceeds of the Term Loan
shall be utilized to fund the  acquisition  by the Company of certain  assets of
Chinook Global Limited (the "Target Entity").  The Term Loan shall bear interest
and shall mature all as set forth in the Term Loan Note.  In  consideration  for
the making of the Term Loan,  the Company shall pay to the Holder on the Closing
Date a facility fee equal to $72,500.00.

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

SECTION 202. CONDITIONS.

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

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

            (1) the executed Notes,

            (2) an executed counterpart of the Guaranties,

            (3) an executed counterpart of this Loan Agreement,


                                       8
<PAGE>

            (4) an executed counterpart of the Pledge Agreement,

            (5) the stock or other Evidence Of Ownership which is the subject of
      the Pledge Agreements,

            (6) (a) the facility fee of the Holder  described in Section  201(B)
      hereof and (b) the Holder's reasonable counsel fees,

            (7) opinion of counsel for the Company, the Corporate Guarantors and
      any International Subsidiary in form and substance reasonably satisfactory
      to the Holder and its counsel; and

            (8) acquisition agreements with the Target Entity.

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

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

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


                                       9
<PAGE>

                                   ARTICLE III

                            COVENANTS OF THE COMPANY

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

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

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

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

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

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

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

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

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

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


                                       10
<PAGE>

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

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

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

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

      (J)  It  will  maintain  as of the  close  of  each  fiscal  quarter  on a
consolidated  basis for the Company and its Subsidiaries a minimum Current Ratio
of 1.25 to 1.00 based upon the Company's financial statements.  Such covenant is
to be tested  quarterly,  beginning on March 31, 2007,  and the "Current  Ratio"
shall be defined as the ratio of the current  assets to current  liabilities  of
the Company and its Subsidiaries;

      (K) It will  maintain  on a  consolidated  basis for the  Company  and its
Subsidiaries  a  maximum  Funded  Debt  Ratio  of 2.00 to 1.00  based  upon  the
Company's consolidated  financial statements for each fiscal quarter,  beginning
on March 31, 2007.  The "Funded Debt Ratio" shall be defined as the ratio of (i)
the sum of the outstanding  principal of all interest bearing  Indebtedness,  to
(ii) EBITDA, which for the purposes of this calculation,  shall be calculated on
the basis of the most recently ended four (4) fiscal quarters;

      (L)  It  will  maintain  as of the  close  of  each  fiscal  quarter  on a
consolidated  basis for the Company and its  Subsidiaries a minimum Fixed Charge
Coverage Ratio tested quarterly based upon the Company's  consolidated financial
statements for the then most recently ended four (4) fiscal  quarters of 1.50 to
1.00 for the quarter ending March 31, 2007, 1.25 to 1.00 for the quarters ending
June  30,  2007 and  September  30,  2007  and  1.50 to 1.00  for  each  quarter
thereafter. The term "Fixed Charge Coverage Ratio" shall be defined as the ratio
of (i) EBITDA  less taxes paid less  dividends  paid less  non-financed  capital
expenditures,  to (ii) required  payments of term debt principal,  capital lease
payments and interest incurred during the prior twelve (12) month period;

      (M) It will  promptly,  and in any event within ninety (90) days after the
end of each  fiscal  quarter  with  respect  to which as of such date  there are
amounts   outstanding  under  either  Note,   deliver  to  Holder  a  compliance
certificate  executed by the Company  stating that a review of the activities of
the Company  during such fiscal  quarter has been made and that,  to the best of
its knowledge and belief, the Company has observed,


                                       11
<PAGE>

performed  and  fulfilled  each  and  every  material  obligation  and  covenant
contained in the Financing Documents and is not in default under any of the same
and demonstrating the calculation of all financial ratio covenants;

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

      (O) It will  preserve and maintain its  corporate  existence,  all rights,
licenses,  privileges,  franchises,  certificates and the like necessary for the
operation of its business and the maintenance of its existence where the failure
to maintain the same is reasonably  expected to have a material  adverse  effect
upon the Company,  and promptly  and  properly  comply with all laws,  statutes,
ordinances  and  governmental  regulations  applicable  to it or to  any  of its
property,  business operations and transactions where the failure to comply with
the same is  reasonably  expected  to have a material  adverse  effect  upon the
Company;

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

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

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

      (S) Other than employee  payroll and other minor local business  accounts,
it  will  maintain  with  the  Holder  all of the  Company's  deposit  and  cash
management  services.  In addition,  it will maintain with the Bank at all times
aggregate  minimum  balances of $100,000.00  net of amounts  necessary to offset
service charges; and

      (T) It shall within thirty (30) days of any acquisition of or formation of
any Wholly-Owned Subsidiary cause such entity to enter into a Guaranty unless it
is an  International  Subsidiary,  in which  event,  at least  sixty-five  (65%)
percent of the Evidence


                                       12
<PAGE>

Of Ownership of such International  Subsidiary must be pledged as collateral for
the Loans.

      (U) It  will  promptly  inform  the  Holder  of any  actual  or  potential
contingent liabilities.

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

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

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

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

      (C) Neither it nor its Subsidiaries shall sell, assign, lease, exchange or
otherwise  dispose of any of its assets used or useful in its business valued at
more than Five Hundred Thousand and no/100 Dollars ($500,000.00) in aggregate in
any fiscal  year,  except  inventory  or  obsolete  or unused  equipment  in the
ordinary course of business;

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

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

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

      (G) Neither it nor its  Subsidiaries  shall  hereafter incur or assume any
Indebtedness for borrowed money in excess of $1,000,000.00  aggregate  principal
amount


                                       13
<PAGE>

(combined with the Company's  Subsidiaries) except for loans between the Company
and its Subsidiaries,  loans between Subsidiaries, the contingent purchase price
or purchase price  adjustments  related to permitted  acquisitions  described in
subparagraph (I) below and except for indebtedness due the Holder;

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

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

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

      (K) Neither it nor its Subsidiaries  shall voluntarily  suspend business
for more than thirty (30) days during any twelve (12) consecutive month period.


                                       14
<PAGE>

                                   ARTICLE IV

                                EVENTS OF DEFAULT

SECTION 401. EVENTS OF DEFAULT DEFINED.

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

      (A) If  the  Company  fails  to  comply  with  any of the  covenants  or
agreements  made, or to be observed,  by it in the Loan Agreement,  other than a
covenant or agreement  specified in subsection (B) below, and such failure shall
have  continued  for a period  of  thirty  (30)  days  after  written  notice of
non-compliance  from the Holder to the  Company,  provided  that if such default
cannot reasonably be cured within said 30-day period, and the Company shall have
commenced  action to cure the breach of covenant,  condition or agreement within
said 30-day period and thereafter diligently and expeditiously  proceeds to cure
the same,  such 30-day period shall be extended for so long as the Company shall
require in the exercise of due diligence to cure such  default,  it being agreed
that no such extension  shall be for a period in excess of forty-five  (45) days
in the aggregate from the date of such written notice.

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

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

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

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

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


                                       15
<PAGE>

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

            (5) if at any time any  insurance  policy  required to be maintained
      pursuant to any of the Financing  Documents shall be canceled,  terminated
      or lapse and shall not have been replaced  prior to the effective  date of
      such  cancellation,  termination  or lapse by a policy  covering  the same
      matters  as the lapsed  policy,  which new policy  shall  comply  with all
      requirements  in  the  Financing   Documents  relating  to  such  type  of
      insurance;

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

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

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

            (9) if any final  judgment  or a series of final  judgments  for the
      payment of money in excess of  $250,000.00 in the aggregate not covered by
      insurance shall be rendered  against the Company or a Corporate  Guarantor
      and the


                                       16
<PAGE>

      Company  or such  Corporate  Guarantor,  as the  case  may be,  shall  not
      discharge  the same or cause it to be  discharged  within  sixty (60) days
      from the entry thereof,  or shall not appeal  therefrom or from the order,
      decree or  process  upon which or  pursuant  to which  said  judgment  was
      granted,  based or entered,  and secure a stay of  execution  pending such
      appeal; or

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

SECTION 402. JURY TRIAL WAIVER.

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

SECTION 403. RIGHT OF SETOFF.

The Company hereby grants to the Holder a continuing lien, security interest and
right of setoff as security for all  liabilities  and obligations to the Holder,
whether  now  existing or  hereafter  arising,  upon and  against all  deposits,
credits,  collateral and property, now or hereafter in the possession,  custody,
safekeeping  or control of the Holder or any entity under the control of Bank of
America  Corporation  and its  successors  and assigns,  or in transit to any of
them.  At any time,  without  demand or notice (any such notice being  expressly
waived by the Company),  the Holder may set off the same or any part thereof and
apply  the same to any  liability  or  obligation  of the  Company  even  though
unmatured and  regardless of the adequacy of any other  collateral  securing the
Notes.  ANY AND


                                       17
<PAGE>

ALL RIGHTS TO REQUIRE THE HOLDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT
TO ANY OTHER COLLATERAL  WHICH SECURES THE NOTES,  PRIOR TO EXERCISING ITS RIGHT
OF SETOFF  WITH  RESPECT  TO SUCH  DEPOSITS,  CREDITS OR OTHER  PROPERTY  OF THE
COMPANY, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

SECTION 404. EXPENSES INCURRED IN CONNECTION WITH ENFORCEMENT.

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

SECTION 405. EFFECT OF UNENFORCEABILITY.

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


                                       18
<PAGE>

                                    ARTICLE V

                               GENERAL CONDITIONS

SECTION 501. GENERAL CONDITIONS OF THE LOAN AGREEMENT.

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

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

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

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

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


                                       19
<PAGE>

extent  that such  rights  and  obligations  have been  assigned  by the  Holder
pursuant hereto and to the assignment  documentation between the Holder and such
Assignee,  and the Holder shall be released from its  obligations  hereunder and
thereunder to a corresponding extent.

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

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

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

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

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

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


                                       20
<PAGE>

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

TO THE COMPANY:

Balchem Corporation
P.O. Box 600
52 Sunrise Park Road
New Hampton, New York 10958
Attention: Dino A. Rossi, President

TO THE HOLDER:

Bank of America, N.A.
Peter D. Kiernan Plaza
Albany, New York 12207
Attention: Corporate Banking Division

WITH A COPY TO:

Hiscock & Barclay, LLP
50 Beaver Street
Albany, New York  12207-2830
Attention: Edward J. Trombly, Esq.

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

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

            THE COMPANY  AGREES THAT ANY SUIT FOR THE  ENFORCEMENT  OF THIS LOAN
AGREEMENT  MAY BE BROUGHT IN THE COURTS OF THE  GOVERNING  STATE OR ANY  FEDERAL
COURT  SITTING  THEREIN AND CONSENTS TO THE  NONEXCLUSIVE  JURISDICTION  OF SUCH
COURT AND  SERVICE OF  PROCESS  IN ANY SUCH SUIT BEING MADE UPON THE  COMPANY BY
MAIL AT THE ADDRESS SET FORTH HEREIN. THE


                                       21
<PAGE>

COMPANY  HEREBY  WAIVES ANY OBJECTION  THAT IT MAY NOW OR HEREAFTER  HAVE TO THE
VENUE OF ANY SUCH  SUIT OR ANY SUCH  COURT OR THAT SUCH  SUIT IS  BROUGHT  IN AN
INCONVENIENT FORUM;

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

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

      (K) This Loan Agreement is intended by the parties as the final,  complete
and  exclusive  statement  of  the  transactions  evidenced  hereby.  All  prior
contemporaneous  promises,  agreements  and  understandings,   whether  oral  or
written,  are deemed to be  superceded  by this Loan  Agreement  and no party is
relying on any promise,  agreement or  understanding  not set forth in this Loan
Agreement;

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

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

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

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

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


                                       22
<PAGE>

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


                                       23
<PAGE>

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

                                         BALCHEM CORPORATION


                                         By: /s/Frank Fitzpatrick
                                             --------------------
                                               Name:  Frank Fitzpatrick
                                               Title: Chief Financial Officer

                                         BANK OF AMERICA, N.A.


                                         By: /s/ Karen D. Finnerty
                                             ---------------------
                                               Name:  Karen D. Finnerty
                                               Title: Vice President


                                       24
</TEXT>
</DOCUMENT>
