Amended And Restated Promissory Note Dated February 6, 2006

EXHIBIT 10.4



AMENDED AND RESTATED PROMISSORY NOTE

(Revolving Line of Credit)





$3,000,000.00 February 6, 2006
Albany, New York




FOR VALUE RECEIVED, the undersigned, 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 Park Road, New Hampton, New York 10958 (herein called the "Company"), hereby promises to pay to the order of BANK OF AMERICA, N.A. (successor by merger to Fleet National Bank), a national banking association organized and existing under the laws of the United States of America, its successors and assigns (herein called the "Payee" or the "Bank"), at such Payee's office at Peter D. Kiernan Plaza, Albany, New York 12207, or such other location as the Payee shall designate in writing from time to time, the unpaid amount of all sums that have been advanced to or for the benefit of the Company in accordance with the terms hereof in an amount not to exceed the principal sum of Three Million and no/100 Dollars ($3,000,000.00) , less the face amount of all commercial letters of credit and standby letters of credit issued by the Lender at the request of the Borrower during the term hereof, which aggregate face amount of said letters of credit cannot exceed Three Million Dollars ($3,000,000.00) at any one time outstanding, together with interest on the disbursed, unpaid principal, or, if less, the aggregate unpaid principal amount due hereunder, together with interest at the rate specified below until paid in full. The records of the Payee maintained in the ordinary course of business shall be prima facie evidence of the existence and amounts of the Company's obligations recorded therein. All computations of interest under this Note shall be made on the basis of a three hundred sixty (360) day year and the actual number of days elapsed.



DEFINITIONS . As used herein, the following terms shall have the following meanings:



"Adjusted Libor Rate" - Means a rate per annum subject to adjustment approximately each one month, two months, three months or six months, as applicable equal to the Libor Rate plus one percent (1.00%).



"Business Day" - In respect of any date that is specified in this Note to be subject to adjustment in accordance with applicable Following Business Day Convention, a day which commercial banks settle payment in London if the payment obligation is calculated by reference to any Libor Rate.



"Default Rate" - A per annum rate to two percent (2%) above the rate of interest otherwise applicable to the Note.



"Election Notice" - The Loan Portion and the Libor Interest Rate Period notice to be delivered by the Company to the Bank from time to time in the form of Exhibit "A" attached hereto, in which the Company shall irrevocably indicate a Loan Portion and a Libor Interest Rate Period. The Election Notice shall also serve as a request by the Company for a Loan advance from the Bank.



"Event of Default" - Any of those events defined as an Event of Default under the Loan Agreement.





"Following Business Day Convention" - The convention for adjusting any relevant date if it would otherwise fall on a day that is not a Business Day. The term " Business Day" when used in conjunction with the term "Following Business Day Convention" and a date, shall mean that an adjustment will be made if that date would otherwise fall on a day that is not a Business Day so that the date will be the first following day that is a Business Day.



"Libor Interest Rate Period" - The one month, two month or three month, as applicable, (or slightly longer or shorter) period during which the Adjusted Libor Rate is in effect provided, however, that in no event shall any Interest Rate Election Period extend beyond the Maturity Date of this Loan.



"Libor Rate" - Means, the interest rate determined by the following formula (all amounts in the calculation will be determined by the Bank as of the first day of the Libor Interest Rate Period):



Libor Rate= London Inter-Bank Offered Rate
(1.00-Reserve Percentage)



"Loan" - - The Loan of up to $3,000,000.00 by the Lender to the Company that is the subject of this Note.



"Loan Agreement" - Means the amended and restated loan agreement dated the date hereof by and between the Company and the Bank, as such may be further amended or supplemented from time to time.



"Loan Portion" - Each advance of Loan proceeds by the Bank to the Company, each of which advances will be treated separately for the purposes of computing interest. Each such advance shall accrue interest at the Adjusted Libor Rate.



"London Inter-Bank Offered Rate" Means, for any applicable Libor Interest Rate Period, the rate per annum equal to the British Bankers Association LIBOR Rate ("BBA LIBOR"), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by the Bank from time to time) at approximately 11:00 a.m. London time two (2) London Banking Days before the commencement of the applicable Libor Rate Interest Period, for U.S. Dollar deposits (for delivery on the first day of such interest period) with a term equivalent to such Libor Rate Interest Period. If such rate is not available at such time for any reason, then the rate for that Libor Rate Interest Period will be determined by such alternate method as reasonably selected by the Bank. A "London Banking Day" is a day on which banks in London are open for business and dealing in offshore dollars.



"Maturity Date" - May 31, 2007.



"Prime Rate" - Means the rate of interest publicly announced from time to time by the Bank as its Prime Rate. The Prime Rate is set by the Bank based on various factors, including the Bank's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans. The Bank may price loans to its customers at, above, or below the Prime Rate. Any change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of a change in the Bank's Prime Rate.



"Reserve Percentage" - Means the total of the maximum reserve percentages for determining the reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency Liabilities, as defined in the Federal Reserve Board Regulation D, rounded upward to the nearest 1/100 of one





2



percent. The percentage will be expressed as a decimal, and will include, but not be limited to, marginal, emergency, supplemental, special and other reserve percentages.



ADVANCES . Advances under this Note shall be reflected on the records of the Payee. In absence of an Event of Default by the Company, as the Company makes repayments of principal, it shall be permitted to re-borrow hereunder until the Maturity Date. When requesting each advance of Loan proceeds from the Bank, the Company shall deliver to the Bank an Election Notice setting forth the Loan Portion, and indicating a Libor Interest Rate Period for such Loan Portion. The Interest Rate Election for each Loan Portion shall remain in effect until expiration of the Libor Interest Rate Period for that Loan Portion. Prior to the end of the Libor Interest Rate Period at issue, the Company shall deliver to the Bank a new Election Notice designating the new Libor Interest Rate Period to apply to the Loan Portion. In the event the Company fails to deliver an Election Notice to the Bank prior to the expiration of any Libor Interest Rate Period, the current Libor Interest Rate Period then in effect interest shall apply to that Loan Portion until the Company again designates a Libor Interest Rate Period. Once chosen, the Loan Portion and the Libor Interest Rate Period shall remain in effect until the expiration of the Libor Interest Rate Period. Notwithstanding anything to the contrary set forth herein, (i) there shall be no more than three (3) Loan Portions outstanding at any one time bearing interest at the Adjusted Libor Rate (ii) the Company's ability to elect to have the Adjusted Libor Rate apply to the Loan or a Loan Portion shall be conditioned upon the absence of an Event of Default that is then continuing and (iii) Bank shall not be obligated to honor an Election Notice in the event either (x) dollar deposits in the principal amount requested, and for the periods equal to the applicable Libor Interest Rate Period selected, are not available in the London inter-bank market or (y) the Libor Rate does not accurately reflect the cost of said requested principal amount, in which event the interest rate shall be determined by the Bank based upon a comparable Prime Rate based rate of interest until such time as said conditions no longer exist.



PAYMENTS . In the event the entire amount of any payment due hereunder is not paid within ten (10) days after the same is due a late fee equal to five percent (5%) of the required payment will be charged by the Payee provided, however, that such late fee shall not exceed $10,000.00 in the aggregate per incident and shall not exceed $10,000 in the aggregate upon the maturity or acceleration of the Principal Balance.



Accrued interest shall be payable on the first day of the month immediately succeeding the date of this Note, and on the first day of each succeeding month thereafter during the term of this note and all disbursed unpaid principal together with accrued interest will be paid in full no later than the Maturity Date. All payments shall be applied first to the payment of all fees, expenses and other amounts due to the Payee (excluding principal and interest), then to accrued interest, and the balance on account of outstanding principal; provided, however that after the occurrence of an Event of Default, payments will be applied to the obligations of the Company to the Payee as the Payee determines in its sole discretion. All payments shall be in lawful money of the United States in immediately available funds, without counterclaim or set off and free and clear of and without any deduction or withholding for, any taxes or ...