SYNTHETECH INC
AMENDMENT TO LOAN AGREEMENT AND NOTE
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>exhibit10-1_11625.txt
<DESCRIPTION>AMENDMENT TO LOAN AGREEMENT AND NOTE
<TEXT>
                                                                    EXHIBIT 10.1
                                                                    ------------

                      AMENDMENT TO LOAN AGREEMENT AND NOTE

     This amendment (the "Amendment"), dated as of the date specified below, is
by and between the borrower (the "Borrower") and the bank (the "Bank")
identified below.

                                    RECITALS

     A.   The Borrower and the Bank have executed a Loan Agreement (the
          "Agreement") dated September 27, 2001 and the Borrower has executed a
          Note (the "Note "), dated September 27, 2001, either or both which may
          have been amended from time to time, and the Borrower (and if
          applicable, certain third parties) have executed the collateral
          documents which may or may not be identified in the Agreement and
          certain other related documents (collectively the "Loan Documents "),
          setting forth the terms and conditions upon which the Borrower may
          obtain loans from the Bank from time to time in the original amount of
          $ 1,000,000.00, as may be amended from time to time.

     B.   The Borrower has requested that the Bank permit certain modifications
          to the Agreement and Note as described below.

     C.   The Bank has agreed to such modifications, but only upon the terms and
          conditions outlined in this Amendment.


                               TERMS OF AGREEMENT

     In consideration of the mutual covenants contained herein, and for other
good and valuable consideration, the Borrower and the Bank agree as follows:

[X] Extension of Maturity Date. If checked here, any references in the Agreement
or Note to the maturity date or date of final payment are hereby deleted and
replaced with "August 31, 2003".

[X] Change in Maximum Loan Amount. If checked here, all references in the
Agreement and in the Note (whether or not numerically) as the maximum loan
amount which may be borrowed from time to time are hereby deleted and replaced
with "$2,000,000.00", which evidences an additional $ N/A available to be
advanced subject to the terms and conditions of the Agreement and Note.

[ ] Change in Multiple Advance Termination Date. If checked here, all references
to ""as the termination date for multiple advances are hereby deleted and
replaced with N/A.

Change in Financial Covenant(s).

(i) If checked here, all references to "$     " in the Agreement as the minimum
Net Working Capital amount are hereby deleted and replaced with "$     " for the
period beginning      and thereafter.

(ii) If checked here, all references to "$     " in the Agreement as the minimum
Tangible Net Worth amount are hereby deleted and replaced with "$     " for the
period beginning      and thereafter.

(iii) If checked here, all references to "     " in the Agreement as the maximum
Debt to Worth Ratio are hereby deleted and replaced with "     " for the period
beginning      and thereafter.

(iv) If checked here, all references to "     " in the Agreement as the minimum
Current Ratio are hereby deleted and replaced with "     " for the period
beginning      and thereafter.

(v) If checked here, all references to "$     " in the Agreement as the maximum
Capital Expenditures amount are hereby deleted and replaced with "$     " for
the period beginning      and thereafter.

(vi) If checked here, all references to "     " in the Agreement as the minimum
Cash Flow Coverage Ratio are hereby deleted and replaced with "     " for the
period beginning       and thereafter.

(vii) If checked here, all references to "$     " in the Agreement as the
maximum Officers, Directors, Partners, and Management Salaries and Other
Compensation amount are hereby deleted and replaced with "$     " for the period
beginning       and thereafter.

[ ] Change in Payment Schedule. If checked here, effective upon the date of this
Amendment, any payment terms are amended as follows:

[ ] Change in Interest Rate. If checked here, effective upon the date of this
Amendment, interest payable under the Note is amended as follows:

The unpaid principal balance will bear interest at an annual rate equal to
plus the prime rate announced by the Bank. The interest rate hereunder will be
adjusted each time that the prime rate changes.

                                   Page 1 of 2
<PAGE>

[ ] Change in Late Payment Fee. If checked here, subject to applicable law, if
any payment is not made on or before its due date, the Bank may collect a
delinquency charge of     % of the unpaid amount. Collection of the late payment
fee shall not be deemed to be a waiver of the Bank's right to declare a default
hereunder.

     Effectiveness of Prior Documents. Except as specifically amended hereby,
the Agreement, the Note and the other Loan Documents shall remain in full force
and effect in accordance with their respective terms. All warranties and
representations contained in the Agreement and the other Loan Documents are
hereby reconfirmed as of the date hereof. All collateral previously provided to
secure the Agreement and/or Note continues as security, and all guaranties
guaranteeing obligations under the Loan Documents remain in full force and
effect. This is an amendment, not a novation.

     Preconditions to Effectiveness. This Amendment shall only become effective
upon execution by the Borrower and the Bank, and approval by any other third
party required by the Bank.

     No Waiver of Defaults; Warranties. This Amendment shall not be construed as
or be deemed to be a waiver by the Bank of existing defaults by the Borrower,
whether known or undiscovered. All agreements, representations and warranties
made herein shall survive the execution of this Amendment.

     Counterparts. This Amendment may be signed in any number of counterparts,
each of which shall be considered an original, but when taken together shall
constitute one document.

     Authorization. The Borrower represents and warrants that the execution,
delivery and performance of this Amendment and the documents referenced herein
are within the authority of the Borrower and have been duly authorized by all
necessary action.

     Attachments. All documents attached hereto, including any appendices,
schedules, riders, and exhibits to this Amendment, are hereby expressly
incorporated herein by reference.


Dated as of: July 18, 2002
                                  Synthetech, Inc.
                                  Borrower Name (Organization)

                                  an  Oregon Corporation

                                  By:___________________________________________

                                  Name and Title: M. Sreenivasan, President/CEO

                                  By:___________________________________________

                                  Name and Title: Gary Weber, Vice President/CFO

Agreed to:

U.S. Bank N.A.(Bank)

By: __________________________________

Name and Title: Wayne H. Tyler, Offier



                                   Page 2 of 2
<PAGE>

     ADDENDUM TO                                          AMENDMENT TO LOAN
                               AGREEMENT AND NOTE

This Addendum is made part of the Amendment to Loan Agreement and Note (the
"Amendment ") made and entered into by and between the undersigned borrower (the
"Borrower ") and the undersigned bank (the "Bank ") as of the date identified
below. The following provisions are hereby added to the Amendment, (or to the
extent such provisions already exist, are hereby modified) as follows:


Borrower to maintain a Fixed Charge Coverage ratio of 1.20 to 1.00.

"Fixed Charge Coverage" means (a) EBITDA (EBITDA for a given period means net
income, plus interest expense, plus income tax expense, plus depreciation
expense plus amortization expense) minus cash taxes, cash dividends and Unfunded
Capital Expenditures for the previous four (4) rolling quarters and/or fiscal
period divided by (b) the sum of all required principal payments (on short and
long term debt and capital leases), and interest expense over the last four
rolling quarters and /or fiscal period.

"Unfunded (a/k/a, Unfinanced) Capital Expenditures" means the sum of all
purchases of capital assets or acquisitions of other companies less the sum of
all new financing amounts received or assumed to acquire capital assets or
acquisitions of other companies for the period specified.









Dated as of: JULY 18, 2002

                                  SYNTHETECH, INC.
                                  Borrower Name (Organization)
                                  An Oregon corporation

                                  By____________________________________________
                                  Name and Title:  M. Sreenivasan, President/CEO

                                  By____________________________________________
                                  Name and Title: Gary Weber, Vice-President/CFO

Agreed to:

U.S. Bank N.A.
--------------
(Bank)


By:________________________
   Wayne H. Tyler, Officer

<PAGE>

                           BUSINESS SECURITY AGREEMENT

This Business Security Agreement ("Agreement" is made and entered into by the
undersigned borrower, guarantor and/or other obligor/pledgor (the "Debtor") in
favor of U.S. BANK N. A. , 555 SW OAK, PORTLAND, OR 97204 (the "Bank") as of the
date set forth on the last page of this Agreement.


                          ARTICLE I. SECURITY INTEREST

1.1 Grant of Security Interest. Debtor hereby grants a security interest in and
collaterally assigns the Collateral (defined below) to Bank to secure all of
Debtor's Obligations (defined below) to Bank. The intent of the parties hereto
is that the Collateral secures all Obligations of Debtor to Bank, whether or not
such Obligations exist under this Agreement or any other agreements, whether now
or hereafter existing, between Debtor and Bank or in favor of Bank, including,
without limitation, any note, any loan or security agreement, any lease, any
mortgage, deed of trust or other pledge of an interest in real or personal
property, any guaranty, any letter of credit or banker's acceptance, any
agreement for any other services or credit extended by Bank to Debtor even
though not specifically enumerated herein, and any other agreement with Bank
(together and individually, the "Loan Documents").

1.2 "Collateral" means all of the following whether now owned or existing or
hereafter acquired by Debtor (or by Debtor with spouse), wherever located
(including all documents, general intangibles, additions and accessions, spare
and repair parts, special tools, replacements, returned or repossessed goods and
books and records relating to the following; and all proceeds, supporting
obligations and products of the following) [check all that apply]:

[ ] All accounts, instruments, documents, chattel paper, general intangibles,
contract rights, investment property (including any securities entitlements
and/or securities accounts held by Debtor), securities and certificates of
deposit, deposit accounts and letter of credit rights;

[ ] All inventory;

[ ] All equipment;

[ ] All fixtures; and

[X] Specific Collateral (the following, whether constituting equipment,
inventory, fixtures, or other collateral):

Accounts Receivables on hand and to be acquired.
--------------------------------------------------------------------------------

In the event the first four boxes are checked, Debtor acknowledges and agrees
that, in applying the law of any jurisdiction that at any time enacts all or
substantially all of the uniform provisions of Revised Article 9 of the Uniform
Commercial Code (1999 Official Text), the foregoing collateral description
covers all assets of Debtor. Bank may at any time and from time to time file
financing and continuation statements and amendments thereto reflecting the
same. Unless otherwise defined, the terms set forth in this Agreement shall have
the meanings set forth in the Uniform Commercial Code as adopted in the Loan
Documents and as amended from time to time. The defined terms hereunder shall be
interpreted in a manner most favorable to Bank.

1.3 "Obligation." means all Debtor's debts (except for consumer credit if Debtor
is a natural person), liabilities, obligations, covenants, warranties, and
duties to Bank (plus its affiliates including any credit card debt, but
specifically excluding any type of consumer credit), whether now or hereafter
existing or incurred, whether liquidated or unliquidated, whether absolute or
contingent, whether arising out of the Loan Documents or otherwise, and all
other debts and obligations due Bank under any lease, agricultural, real estate
or other financing transaction and regardless of whether such financing is
related in time or type to the financing provided at the time of grant of this
security interest, and regardless of whether such Obligations arise out of
existing or future credit granted by Bank to any Debtor, to any Debtor and
others, to others guaranteed, endorsed or otherwise secured by any Debtor or to
any debtor-in-possession or other successor-in-interest of any Debtor, and
including principal, interest, fees, expenses and charges relating to any of the
foregoing.

                      ARTICLE II. WARRANTIES AND COVENANTS

In addition to all other warranties and covenants of Debtor under the Loan
Documents which are expressly incorporated herein as part of this Agreement and
while any part of the credit granted Debtor under the Loan Documents is
available or any Obligations of Debtor to Bank are unpaid or outstanding, Debtor
continuously warrants and agrees as follows:

2.1 Debtor's Name, Location; Notice of Location Changes. Except as indicated in
the Article 9 Certificate executed by Debtor and made a part hereof, Debtor's
name and organizational structure has remained the same during the past five (5)
years. Debtor will continue to use only the name set forth with. Debtor's
signature unless Debtor gives Bank prior written notice of any change.
Furthermore, Debtor shall not do business under another name nor use any trade
name without giving ten (10) days prior written notice to Bank. Debtor will not
change its status or organizational structure without the prior written consent
of Bank. Debtor will not change its location or registration (if Debtor is a
registered organization) to another state without prior written notice to Bank.
The address appearing in the Article 9 Certificate is Debtor's chief executive
office (or residence if Debtor is a sole proprietor).

2.2 Status of Collateral. All Collateral is genuine and validly existing. Except
for items of insignificant value or as otherwise reflected in writing by Debtor
to Bank under a borrowing base or otherwise, (i) Collateral constituting
inventory, equipment and fixtures is in good condition, not obsolete and is
either currently saleable or usable; and (ii) Collateral constituting accounts,
contract rights, notes, chattel paper and other third-party obligations to pay
is fully enforceable in accordance with its terms and not subject to return,
dispute, setoff, credit allowance or adjustment, except for discounts for prompt
payment. Unless Debtor provides Bank with written notice to the contrary, Debtor
has no notice or knowledge of anything that would impair the ability of any
third-party obligor to pay any debt to Debtor when due.


                                   Page 1 of 4
<PAGE>

2.3 Ownership; Maintenance of Collateral; Restrictions on Liens and
Dispositions. Debtor is the sole owner of the Collateral free of all liens,
claims, other encumbrances and security interests except as permitted in writing
by Bank. Debtor shall: (i) maintain the Collateral in good condition and repair
(reasonable wear and tear excepted), and not permit its value to be impaired;
(ii) not permit waste, removal or loss of identity of the Collateral; (iii) keep
the Collateral free from all liens, executions, attachments, claims,
encumbrances and security interests (other than Bank's paramount security
interest and those permitted in writing by Bank); (iv) defend the Collateral
against all claims and legal proceedings by persons other than Bank; (v) pay and
discharge when due all taxes, levies and other charges or fees upon the
Collateral except for payment of taxes contested by Debtor in good faith by
appropriate proceedings so long as no levy or lien has been imposed upon the
Collateral; (vi) not lease, sell or transfer the Collateral to any party nor
move it to any new location outside of the ordinary course of business; (vii)
not permit the Collateral, without the consent of Bank, to become a fixture or
an accession to other goods; (viii) not permit the Collateral to be used in
violation of any applicable law, regulation or policy of insurance; and, (ix) as
to the Collateral consisting of instruments and chattel paper, preserve Bank's
rights in it against all other parties. Notwithstanding the above, Debtor may
sell, lease or transfer inventory in the ordinary course of its business
provided that no sale, lease or transfer shall include any transfer or sale in
satisfaction (partial or complete) of a debt owed by Debtor; title will not pass
to buyer until Debtor physically delivers the goods to buyer or Debtor ships the
goods F.O.B. to buyer's destination; and sales and/or leases to Debtor's
affiliates shall be for fair market value, cash on delivery, with the proceeds
remitted to Bank.

2.4 Maintenance of Security Interest; Purchase Money Security Interests. Debtor
shall take any action requested by Bank to preserve the Collateral and to
establish the value of, the priority of, to perfect, to continue the perfection
of or to enforce Bank's interest in the Collateral and Bank's rights under this
Agreement; and shall pay all costs and expenses related thereto. Debtor shall
also cooperate with Bank in obtaining control (for purposes of perfection under
the Uniform Commercial Code) of Collateral consisting of deposit accounts,
investment property, letter of credit rights, electronic chattel paper and any
other collateral where Bank may obtain perfection through control. Debtor hereby
authorizes Bank to take any and all actions described above and in place of
Debtor with respect to the Collateral and hereby ratifies any such actions Bank
has taken prior to the date of this Agreement and hereafter, which actions may
include, without limitation, filing UCC financing statements and obtaining or
attempting to obtain control agreements from holders of the Collateral. Debtor
and Bank intend to maintain the full effect of any purchase money security
interest granted in favor of Bank notwithstanding the fact that the Collateral
so purchased is also pledged as security for other Obligations under the Loan
Documents.

2.5 Collateral Inspections; Modifications and Changes in Collateral. At
reasonable times, Bank may examine the Collateral and Debtor's records
pertaining to it, wherever located, and make copies of such records at Debtor's
expense; and Debtor shall assist Bank in so doing. Without Bank's prior written
consent, Debtor shall not alter, modify, discount, extend, renew or cancel any
Collateral, except for ordinary discounts for prompt payment on accounts,
physical modifications to the inventory occurring in the manufacturing process
or alterations to equipment which do not materially affect its value. Debtor
shall promptly notify Bank in writing of any material change in the condition of
the Collateral and of any change in location of the Collateral.

2.6 Collateral Records, Reports and Statements. Debtor shall keep accurate and
complete records respecting the Collateral in such form as Bank may approve. At
such times as Bank may require, Debtor shall furnish to Bank any
records/information Bank might require, including, without limitation, a
statement certified by Debtor and in such form and containing such information
as may be prescribed by Bank showing the current status and value of the
Collateral.

2.7 Chattel Paper, Instruments, Etc. Chattel paper, instruments, drafts, notes,
acceptances, and other documents which constitute Collateral shall be on forms
satisfactory to Bank. Debtor shall promptly mark chattel paper to indicate
conspicuously Bank's security interest therein, shall not deliver any chattel
paper or negotiable instruments to any other entity and, upon request, shall
deliver all original chattel paper, instruments, drafts, notes, acceptances and
other documents which constitute Collateral to Bank.

2.8 United States Government Contracts. If any accounts or contract rights arose
out of contracts with the United States or any of its departments, agencies or
instrumentalities, Debtor shall promptly notify Bank and execute any writings
required by Bank so that all money due or to become due under such contracts
shall be assigned to Bank under the Federal Assignment of Claims Act.

2.9 Environmental Matters. Except as disclosed in a written schedule attached to
this Agreement (if no schedule is attached, there are no exceptions), there
exists no uncorrected violation by Debtor of any federal, state or local laws
(including statutes, regulations, ordinances or other governmental restrictions
and requirements) relating to the discharge of air pollutants, water pollutants
or process waste water or otherwise relating to the environment or Hazardous
Substances as hereinafter defined, whether such laws currently exist or are
enacted in the future (collectively "Environmental Laws"). The term "Hazardous
Substances" shall mean any hazardous or toxic wastes, chemicals or other
substances, the generation, possession or existence of which is prohibited or
governed by any Environmental Laws. Debtor is not subject to any judgment,
decree, order or citation, or a party to (or threatened with) any litigation or
administrative proceeding, which asserts that Debtor (i) has violated any
Environmental Laws; (ii) is required to clean up, remove or take remedial or
other action with respect to any Hazardous Substances (collectively "Remedial
Action"); or (iii) is required to pay all or a portion of the cost of any
Remedial Action, as a potentially responsible party. There are not now, nor to
Debtor's knowledge after reasonable investigation have there ever been, any
Hazardous Substances (or tanks or other facilities for the storage of Hazardous
Substances) stored, deposited, recycled or disposed of on, under or at any real
estate owned or occupied by Debtor during the periods that Debtor owned or
occupied such real estate, which if present on the real estate or in soils or
ground water, could require Remedial Action. To Debtor's knowledge, there are no
proposed or pending changes in Environmental Laws which would adversely affect
Debtor or its business, and there are no conditions existing currently or likely
to exist while the Loan Documents are in effect which would subject Debtor to
Remedial Action or other liability. Debtor currently complies with and will
continue to timely comply with all applicable Environmental Laws; and will
provide Bank, immediately upon receipt, copies of any correspondence, notice,
complaint, order or other document from any source asserting or alleging any
circumstance or condition which requires or may require a financial contribution
by Debtor or Remedial Action or other response by or on the part of Debtor under
Environmental Laws, or which seeks damages or civil, criminal or punitive
penalties from Debtor for an alleged violation of Environmental Laws.

2.10 Insurance. Debtor will maintain insurance to such extent, covering such
risks and with such insurers as is usual and customary for businesses operating
similar properties, and as is satisfactory to Bank, including insurance for fire
and other risks insured against by extended or comprehensive coverage, public
liability insurance and workers' compensation insurance; and will designate Bank
as loss payee with a "Lender's Loss Payable" endorsement on any casualty
policies and take such other action as Bank may reasonably request to ensure
that Bank will receive (subject to no other interests) the insurance proceeds of
the Collateral. Debtor hereby assigns all insurance proceeds to and irrevocably
directs, while any Obligations remain unpaid, any insurer to pay to Bank the
proceeds of all such

                                   Page 2 of 4
<PAGE>

insurance and any premium refund; and authorizes Bank to endorse Debtor's name
to effect the same, to make, adjust or settle, in Debtor's name, any claim on
any insurance policy relating to the Collateral; and, at the option of Bank, to
apply such proceeds and refunds to the Obligations or to restoration of the
Collateral, returning any excess to Debtor. In the event of any failure of the
Debtor to obtain or maintain any insurance required hereunder, the Bank shall
have the authority, but not the obligation, to obtain any such insurance
coverage, and the Debtor shall immediately reimburse the Bank for the cost
thereof, together with interest on such amount at the highest rate of interest
then accruing on any of the Obligations.


                            ARTICLE III. COLLECTIONS


3.1 Deposit with Bank. At any time Bank may require that all proceeds of
Collateral received by Debtor shall be held by Debtor upon an express trust for
Bank, shall not be commingled with any other funds or property of Debtor and
shall be turned over to Bank in precisely the form received (but endorsed by
Debtor, if necessary for collection) not later than the business day following
the day of their receipt. All proceeds of Collateral received by Bank directly
or from Debtor shall be applied against the Obligations in such order and at
such times as Bank shall determine.


                      ARTICLE IV. RIGHTS AND DUTIES OF BANK


In addition to all other rights (including setoff) and duties of Bank under the
loan Documents which are expressly incorporated herein as a part of this
Agreement, the following provisions shall also apply:

4.1 Authority to Perform for Debtor. Debtor presently appoints any officer of
Bank as Debtor's attorney-in-fact (coupled with an interest and irrevocable
while any Obligations remain unpaid) to do any of the following upon default by
Debtor hereunder (notwithstanding any notice requirements or grace/cure periods
under this or other agreements between Debtor and Bank): (i) to file, endorse or
place the name of Debtor on any invoice or document of title relating to
accounts, drafts against customers, notices to customers, notes, acceptances,
assignments of government contracts, instruments, financing statements, checks,
drafts, money orders, insurance claims or payments or other documents evidencing
payment or a security interest relating to the Collateral; (ii) to receive, open
and dispose of all mail addressed to Debtor and to notify the Post Office
authorities to change the address for delivery of mail addressed to Debtor to an
address designated by Bank; (iii) to do all such other acts and things necessary
to carry out Debtor's duties under this Agreement and the other loan Documents;
and (iv) to perfect, protect and/or realize upon Bank's interest in the
Collateral. If the Collateral includes funds or property in depository accounts,
Debtor authorizes each of its depository institutions to remit to Bank, without
liability to Debtor, all of Debtor's funds on deposit with such institution upon
written direction by Bank after default by Debtor hereunder. All acts by Bank
are hereby ratified and approved, and Bank shall not be liable for any acts of
commission or omission, nor for any errors of judgment or mistakes of fact or
law.

4.2 Verification and Notification; Bank's Rights. Bank may verify Collateral in
any manner, and Debtor shall assist Bank in so doing. Upon the occurrence of a
default hereunder, Bank may at any time and Debtor shall, upon request of Bank,
notify the account debtors to make payment directly to Bank; and Bank may
enforce collection of, sell, settle, compromise, extend or renew the
indebtedness of such account debtors; all without notice to or the consent of
Debtor. Until account debtors are so notified, Debtor, as agent of Bank, shall
make collections on the Collateral. Bank may at any time notify any bailee
possessing Collateral to turn over the Collateral to Bank.

4.3 Collateral Preservation. Bank shall use reasonable care in the custody and
preservation of any Collateral in its physical possession but in determining
such standard of reasonable care, Debtor expressly acknowledges that Bank has no
duty to: (i) insure the Collateral against hazards; (ii) ensure that the
Collateral will not cause damage to property or injury to third parties; (iii)
protect it from seizure, theft or conversion by third parties, third parties'
claims or acts of God; (iv) give to Debtor any notices received by Bank
regarding the Collateral; (v) perfect or continue perfection of any security
interest in favor of Debtor; (vi) perform any services, complete any
work-in-process or take any other action in connection with the management or
maintenance of the Collateral; or (vii) sue or otherwise effect collection upon
any accounts even if Bank shall have made a demand for payment upon individual
account debtors. Notwithstanding any failure by Bank to use reasonable care in
preserving the Collateral, Debtor agrees that Bank shall not be liable for
consequential or special damages arising therefrom.


                        ARTICLE V. DEFAULTS AND REMEDIES


Bank may enforce its rights and remedies under this Agreement upon default. A
default shall occur if Debtor fails to comply with the terms of any loan
Documents (including this Agreement or any guaranty by Debtor), a demand for
payment is made under a demand loan, or any other obligor fails to comply with
the terms of any loan Documents for which Debtor has given Bank a guaranty or
pledge.

5.1 Cumulative Remedies; Notice; Waiver. In addition to the remedies for default
set forth in the loan Documents, Bank upon default shall have all other rights
and remedies for default provided by the Uniform Commercial Code, as well as any
other applicable law and this Agreement, INCLUDING, WITHOUT LIMITATION, THE
RIGHT TO REPOSSESS, RENDER UNUSABLE AND/OR DISPOSE OF THE COLLATERAL WITHOUT
JUDICIAL PROCESS. The rights and remedies specified herein are cumulative and
are not exclusive of any rights or remedies which Bank would otherwise have.
With respect to such rights and remedies:

(a) Assembling Collateral; Storage; Use of Debtor's Name/Other Property. Bank
may require Debtor to assemble the Collateral and to make it available to Bank
at any convenient place designated by Bank. Debtor recognizes that Bank will not
have an adequate remedy in Law if this obligation is breached and accordingly,
Debtor's obligation to assemble the Collateral shall be specifically
enforceable. Bank shall have the right to take immediate possession of said
Collateral and Debtor irrevocably authorizes Bank to enter any of the premises
wherever said Collateral shall be located, and to store, repair , maintain,
assemble, manufacture, advertise and sell, lease or dispose of (by public sale
or otherwise) the same on said premises until sold, all without charge or rent
to Bank. Bank is hereby granted an irrevocable license to use, without charge,
Debtor's equipment, inventory, labels, patents, copyrights, franchises, names,
trade secrets, trade names, trademarks and advertising matter and any property
of a similar nature; and Debtor's rights under all licenses and franchise
agreements shall inure to Bank's benefit. Further, Debtor releases Bank from
obtaining a bond or surety with respect to any repossession and/or disposition
of the Collateral.

(b) Notice of Disposition. Written notice, when required by law, sent to any
address of Debtor in this Agreement, at least five (5)

                                   Page 3 of 4
<PAGE>

calendar days (counting the day of sending) before the date of a proposed
disposition of the Collateral is reasonable notice but less notice may be
reasonable under the circumstances. Notification to account debtors by Bank
shall not be deemed a disposition of the Collateral. Notice of any record shall
be deemed delivered when the record has been (a) deposited in the United States
Mail, postage pre-paid, (b) received by overnight delivery service, (c) received
by telex, (d) received by telecopy, (e) received through the internet, or (f)
when personally delivered.

(c) Possession of Collateral/Commercial Reasonableness. Bank shall not, at any
time, be obligated to either take or retain possession or control of the
Collateral. With respect to Collateral in the possession or control of Bank,
Debtor and Bank agree that as a standard for determining commercial
reasonableness, Bank need not liquidate, collect, sell or otherwise dispose of
any of the Collateral if Bank believes, in good faith, that disposition of the
Collateral would not be commercially reasonable, would subject Bank to
third-party claims or liability, that other potential purchasers could be
attracted or that a better price could be obtained if Bank held the Collateral
for up to 2 years. Bank may sell Collateral without giving any warranties and
may specifically disclaim any warranties of title or the like. Furthermore, Bank
may sell the Collateral on credit (and reduce the Obligations only when payment
is received from the buyer), at wholesale and/or with or without an agent or
broker; and Bank need not complete, process, repair, clean-up or otherwise
prepare the Collateral prior to disposition. If the purchaser fails to pay for
the Collateral, Bank my resell the Collateral and Debtor shall be credited with
the cash proceeds of the sale. Bank may comply with any applicable state or
federal law requirements in connection with a disposition of the Collateral and
compliance will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.

(d) Waiver by Debtor. Bank has no obligation and Debtor waives any obligation to
attempt to satisfy the Obligations by collecting the obligations from any third
parties and Bank may release, modify or waive any collateral provided by any
third party to secure any of the Obligations, all without affecting Bank's
rights against Debtor. Debtor further waives any obligation on the part of Bank
to marshal any assets in favor of Debtor or in payment of the Obligations.
Notwithstanding any provisions in this Agreement or any other agreement between
Debtor and Bank, Debtor does not waive any statutory rights except to the extent
that the waiver thereof is permitted by law.

(e) Waiver by Bank. Bank may permit Debtor to attempt to remedy any default
without waiving its rights and remedies hereunder, and Bank may waive any
default without waiving any other subsequent or prior default by Debtor.
Furthermore, delay on the part of Bank in exercising any right, power or
privilege hereunder or at law shall not operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or privilege preclude other
exercise thereof or the exercise of any other right, power or privilege. No
waiver or suspension shall be deemed to have occurred unless Bank has expressly
agreed in writing specifying such waiver or suspension.


                            ARTICLE VI. MISCELLANEOUS


All other provisions in the Loan Documents are expressly incorporated as a part
of this Agreement.

All documents attached hereto, including any appendices, schedules, riders, and
exhibits to this Agreement, are hereby expressly incorporated by reference.







IN WITNESS WHEREOF, the undersigned has/have executed this BUSINESS SECURITY
AGREEMENT as of JULY 18, 2002


(Individual Debtor)                SYNTHETECH, INC.
                                   ---------------------------------------------
                                   Debtor Name (Organization)

                     (SEAL)        a  OREGON Corporation
---------------------------          -------------------------------------------

Debtor Name        N/A             By
---------------------------           ------------------------------------------

                                   Name and Title  M. SREENIVASAN, PRESIDENT/CEO
                                                   -----------------------------

                     (SEAL)        By
---------------------------           ------------------------------------------

Debtor Name        N/A             Name and Title GARY WEBER, VICE PRESIDENT/CFO
---------------------------                       ------------------------------


                                  Page 4 of 4
<PAGE>

UCC FINANCING STATEMENT

FOLLOW INSTRUCTIONS (front and back) CAREFULLY

A. NAME & PHONE OF CONTACT AT FILER (optional)

B. SEND ACKNOWLEDGMENT TO: (Name and Address)

   U.S. Bank Commercial Loan Services
   Attn: COLLATERAL DEPARTMENT
   P.0. BOX 5308
   PORTLAND, OR 97228-5308         THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

1. DEBTOR'S EXACT FULL LEGAL NAME - insert one debtor name (1a or 1b) - do not
   abbreviate or combine names

     1a. ORGANIZATION'S NAME
         SYNTHETECH, INC.

OR   1b. INDIVIDUAL'S LAST NAME
         FIRST NAME
         MIDDLE NAME
         SUFFIX

     1c. MAILING ADDRESS     1290 INDUSTRIAL WAY
         CITY                ALBANY
         STATE               OR
         POSTAL CODE         97321
         COUNTRY             U.S.A.

     1d. TAX ID#: SSN OR EIN

         ADD'L INFO RE ORGANIZATION DEBTOR

     1e. TYPE OF ORGANIZATION CORPORATION

     1f: JURISDICTION OF ORGANIZATION    OREGON

     1g. ORGANIZATIONAL ID#, if any     224497-89
                                                     [ ] NONE

2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor name (2a
or 2b) - do not abbreviate or combine names

     2a. ORGANIZATION'S NAME

 OR  2b. INDIVIDUAL'S LAST NAME
         FIRST NAME
         MIDDLE NAME
         SUFFIX

     2c. MAILING ADDRESS
         CITY
         STATE
         POSTAL CODE
         COUNTRY             U.S.A.

     2d. TAX ID#: SSN OR EIN

         ADD'L INFO RE ORGANIZATION DEBTOR

     2e. TYPE OF ORGANIZATION

     2f: JURISDICTION OF ORGANIZATION

     2g. ORGANIZATIONAL ID#, if any
                                                     [ ] NONE

3. SECURED PARTY'S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) - Insert
only one secured party name (3a or 3b)

     3a. ORGANIZATION'S NAME U.S. BANK N.A.

OR   3b. INDIVIDUAL'S LAST NAME
         FIRST NAME
         MIDDLE NAME
         SUFFIX

     3c. MAILING ADDRESS     555  SW OAK STREET CLS, PD-OR-P7LD
         CITY                PORTLAND
         STATE               OR
         POSTAL CODE         97204
         COUNTRY             U.S.A.

4. This FINANCING STATEMENT covers the following collateral: ACCOUNTS
RECEIVABLES ON HAND AND TO BE ACQUIRED.

5. ALTERNATIVE DESIGNATION [if applicable]: [ ]LESSEE/LESSOR
[ ]CONSIGNEE/CONSIGNOR [ ]BAILEE/BAILOR [ ]SELLER/BUYER [ ]AG LIEN [ ]NON-UCC
FILING

6. [ ] This FINANCING STATEMENT is to be filed (for record) in the REAL
ESTATE RECORDS. Attach Addendum [if applicable]

7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)
[ADDITIONAL FEE] [Optional]      [x] All Debtors [ ] Debtor 1 [ ] Debtor 2

8. OPTIONAL FILER REFERENCE DATE 02-8741855333-LS

FILING OFFICE COPY- NATIONAL UCC FINANCING STATEMENT (FORM UCC1) (Rev- 07/29/98)

</TEXT>
</DOCUMENT>
