Exhibit 10.48
AMENDMENT NO. 2 TO NOTE PURCHASE AGREEMENT AND
LIMITED CONSENT
THIS AMENDMENT NO. 2 TO NOTE PURCHASE AGREEMENT AND LIMITED CONSENT (this
“Amendment”) is entered into as of March 18, 2010, by and among KMG Chemicals,
Inc., a Texas corporation (“KMG Chemicals”), KMG-Bernuth, Inc., a Delaware
corporation (“KMG-Bernuth”), KMG Electronic Chemicals, Inc., a Texas corporation
(“KMG ECI” and, together with KMG Chemicals and KMG-Bernuth, collectively, the
“Companies” and each, individually, a “Company”), and the undersigned holders of
Notes (as hereinafter defined).
Recitals
A. The Companies entered into a Note Purchase Agreement dated as of December 31,
2007 (as amended by Amendment No. 1 to Note Purchase Agreement dated as of
March 6, 2009, and as the same may be further amended, restated, supplemented or
otherwise modified from time to time, the “Note Agreement”), with the several
Purchasers (as defined in the Note Agreement) listed in the Purchaser Schedule
attached thereto, pursuant to which the Companies issued and sold to such
Purchasers the Companies’ 7.43% Senior Secured Notes due December 31, 2014, in
the aggregate principal amount of $20,000,000 (together with any such promissory
notes that may have been issued in substitution or exchange therefor prior to
the date hereof, the “Notes”).
B. The Companies have requested that the holders of Notes consent to an increase
in the maximum principal amount of the Credit Agreement Obligations (as defined
in the Note Agreement) from $70,000,000 to $85,000,000, as set forth in this
Amendment, and the undersigned holders of Notes, subject to the terms and
conditions set forth herein, are willing to consent to such increase.
C. The Companies desire to make certain amendments and modifications to the Note
Agreement, as set forth in this Amendment, and the undersigned holders of Notes,
subject to the terms and conditions set forth herein, are willing to agree to
such amendments and modifications.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein shall
have the respective meanings ascribed to them in the Note Agreement.
2. Amendments to Schedule B (Defined Terms).
(a) Schedule B of the Note Agreement is hereby amended by adding the following
new definitions in the appropriate alphabetical position therein:
“General Chemical Acquisition” means the Acquisition described in the General
Chemical Acquisition Agreement for a purchase price in an amount not to exceed
$25,500,000, subject to adjustment for inventory and proration as provided
therein.

 

 

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“General Chemical Acquisition Agreement” means that certain Asset Purchase
Agreement dated February 25, 2010, by and between General Chemical Performance
Products LLC and KMG ECI.
(b) The definition of “Permitted Acquisition” in Schedule B of the Note
Agreement is hereby amended by: (i) deleting the word “and” at the end of clause
(c) thereof; (ii) deleting the period (.) at the end of clause (d) thereof and
inserting a semicolon (;) and the word “and” at the end of clause (d) thereof;
and (iii) adding a new clause (e), to read in full as follows: “(e) the General
Chemical Acquisition.”
3. Amendment to Section 10.1(b) (Financial Covenants). Section 10.1(b) of the
Note Agreement is hereby amended by restating it in its entirety to read as
follows:
(b) a ratio of (i) Funded Debt to (ii) the sum of Funded Debt plus Equity
Owners’ Equity of not more than 50% from May 1, 2009 through the stated maturity
date of the Notes.
4. Limited Consent. Subject to the terms and conditions set forth herein, and in
reliance upon the representations and warranties of the Companies set forth
herein, the undersigned holders of Notes hereby consent to the execution,
delivery and performance of the Companies’ obligations under the Second
Amendment to Amended and Restated Credit Agreement, dated as of March 18, 2010
(the “Credit Agreement Amendment”), among the Companies and the Lender Parties,
including the increase in the maximum principal amount of the Credit Agreement
Obligations from $70,000,000 to $85,000,000 effected thereby, to the extent that
such Credit Agreement Amendment would otherwise violate Section 10.13(f) of the
Note Agreement. This consent shall not be a precedent for any subsequent
requested waiver of (or consent under) this or any other covenant or other
provision of the Note Agreement.
5. Representations and Warranties of the Companies. Each Company hereby
represents and warrants that it is a corporation duly organized and validly
existing in good standing under the laws of its jurisdiction of incorporation,
and is duly qualified as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably expected to have a
Material Adverse Effect. Each Company has the corporate power and authority to
execute and deliver this Amendment and to perform its obligations under this
Amendment and the Note Agreement as amended hereby. The execution and delivery
by each Company of this Amendment and the performance by each such Company of
its obligations under this Amendment and the Note Agreement as amended hereby
have been duly authorized by all necessary corporate action on the part of each
Company. Each Company has duly executed and delivered this Amendment, and this
Amendment and the Note Agreement as amended hereby constitute the legal, valid
and binding obligations of each Company, enforceable against each such Company
in accordance with its terms.

 

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6. Conditions to Effectiveness. The parties hereto agree that this Amendment and
the consent and amendments to the Note Agreement contained herein shall become
effective, as of the date first written above (the “Effective Date”), upon the
satisfaction of each of the following conditions:
(a) Representations and Warranties. Each of the representations and warranties
made in this Amendment and the other Note Documents shall be true and correct on
and as of the Effective Date as if made on and as of such date, both before and
after giving effect to this Amendment.
(b) No Default or Event of Default. No Default or Event of Default shall exist,
both before and after giving effect to this Amendment.
(c) Execution and Delivery of this Amendment. The holders of Notes shall have
received a copy of this Amendment executed and delivered by the Companies and
the Required Holders.
(d) Credit Agreement Amendment. The holders of Notes shall have received a copy
of the Credit Agreement Amendment executed and delivered by the Companies and
the Lender Parties, which Credit Agreement Amendment shall be in form and
substance satisfactory to the Required Holders.
(e) Closing of the General Chemical Acquisition. The Closing (as defined in the
General Chemical Acquisition Agreement) shall have been completed in all
respects, the Purchase Price (as defined in the General Chemical Acquisition
Agreement) shall have been paid, all conditions to the Closing shall have been
satisfied or waived, and the documents delivered by the parties to the General
Chemical Acquisition Agreement shall be final and binding on the parties
thereto.
(f) Closing Certificates. The holders of Notes shall have received Closing
Certificates executed and delivered by the Companies, which Closing Certificates
shall be in form and substance satisfactory to the Required Holders.
(g) Security Documents. The Companies shall have executed and delivered to the
Collateral Agent, for the benefit of the holders of the Notes (with a copy
delivered to the holders of Notes), the following documents, in form and
substance satisfactory to the Collateral Agent and the Required Holders (which
documents shall be Security Documents):

  (i)  
Deed of Trust, Assignment of Rents, Security Agreement and Financing Statement
relating to real property in Hollister, California;
    (ii)  
First Amendment to Deed of Trust and Security Agreement relating to real
property owned by KMG ECI in Pueblo County, Colorado;
    (iii)  
First Amendment to Mortgage and Security Agreement relating to real property
owned by, KMG-Bernuth in Doniphan County, Kansas;

 

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  (iv)  
ALTA Loan Policy of Title Insurance relating to property in Hollister,
California;
    (v)  
ALTA Form 11 Endorsement to the Loan Policy of Title Insurance relating to real
property owned by KMG ECI in Pueblo County, Colorado; and
    (vi)  
ALTA Form 11 Endorsement to the Loan Policy of Title Insurance relating to real
property owned by KMG-Bernuth in Doniphan County, Kansas.

7. Miscellaneous.
(a) References to Note Agreement. Upon and after the date of this Amendment,
each reference to the Note Agreement in the Note Agreement, the Notes or any
other instrument or agreement entered into in connection therewith or otherwise
related thereto shall mean and be a reference to the Note Agreement as amended
by this Amendment.
(b) Ratification and Confirmation. Except as specifically amended herein, the
Note Agreement shall remain in full force and effect, and is hereby ratified and
confirmed.
(c) No Waiver. The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of any holder of Notes,
nor, except as expressly provided herein, constitute a waiver or amendment of
any provision of the Note Agreement, any Note or any other instrument or
agreement entered into in connection therewith or otherwise related thereto.
(d) Note Document. This Amendment is a Note Document and all of the provisions
of the Note Agreement that apply to Note Documents apply hereto.
(e) Expenses. Each Company agrees to pay promptly all expenses of the holders of
Notes related to this Amendment and all matters contemplated hereby, including,
without limitation, all fees and expenses of the holders’ special counsel.
(f) GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE
OF NEW YORK.
(g) Counterparts. This Amendment may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. Each counterpart may
consist of a number of copies hereof, each signed by less than all, but together
signed by all, the parties hereto. Delivery of this Amendment may be made by
telecopy or electronic transmission of a duly executed counterpart copy hereof;
provided that any such delivery by electronic transmission shall be effective
only if transmitted in .pdf format, .tif format or other format in which the
text is not readily modifiable by any recipient thereof.
[The remainder of this page is intentionally left blank; signature page follows]

 

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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be executed
and delivered by their duly authorized officers as of the date first above
written.

            KMG CHEMICALS, INC.
      By:   /s/ J. Neal Butler         Name:   J. Neal Butler        Title:  
President and Chief Executive Officer        KMG-BERNUTH, INC.
      By:   /s/ J. Neal Butler         Name:   J. Neal Butler        Title:  
President and Chief Executive Officer        KMG ELECTRONIC CHEMICALS, INC.
      By:   /s/ J. Neal Butler         Name:   J. Neal Butler        Title:  
President and Chief Executive Officer        THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
      By:   /s/ Brian N. Thomas         Name:   Brian N. Thomas        Title:  
Vice President     

Signature page to Amendment No. 2 to Note Purchase Agreement and Limited Consent