Exhibit 10.24

 

FIFTH AMENDMENT TO TERM LOAN AGREEMENT

 

THIS FIFTH AMENDMENT TO TERM LOAN AGREEMENT (this “Amendment” or “Fifth
Amendment to Loan Agreement”) is entered into by and between KMG-BERNUTH, INC.,
a Delaware corporation (hereinafter referred to as “Borrower”) and WACHOVIA
BANK, NATIONAL ASSOCIATION, a national banking association, successor by merger
to SouthTrust Bank, an Alabama banking corporation, successor by conversion to
SouthTrust Bank, National Association (hereinafter referred to as “Bank”) as of
the 7th day of June, 2005.

 

W I T N E S S E T H:

 

WHEREAS, Borrower and Bank are parties to that certain Term Loan Agreement dated
as of June 26, 1998, as amended by that certain First Amendment to Term Loan
Agreement dated as of December 30, 2002, by that certain Second Amendment to
Term Loan Agreement dated as of December 5, 2003, by that certain Third
Amendment to Term Loan Agreement dated as of June 8, 2004, and by that certain
Fourth Amendment to Term Loan Agreement dated as of July 31, 2004 (as so amended
and as hereby amended, the “Loan Agreement”), whereby Borrower became indebted
to Bank for a Term Loan in the original principal amount of $6,000,000.00 and
thereafter amended to a principal amount of $5,050,000.00 and a Term Loan No. 2
in the principal amount of $6,000,000.00 and thereafter amended to a principal
amount of $8,600,000.00 (all of the foregoing capitalized terms together with
all other capitalized terms used herein shall have the respective meanings
assigned thereto in the Loan Agreement, unless otherwise specifically defined
herein); and

 

WHEREAS, upon request of the Borrower, the Bank has agreed to certain additional
amendments to the Loan Agreement, without limitation, amendments to certain of
the financial covenants required by the Loan Agreement, which amendments are
specifically set forth below.

 

NOW, THEREFORE, in consideration of the sum of One and No/100 Dollar ($1.00) and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereby agree as follows:

 

1.                                       THE PARTIES HEREBY ACKNOWLEDGE THAT
SOUTHTRUST BANK HAS HERETOFORE MERGED INTO WACHOVIA BANK, NATIONAL ASSOCIATION,
AND, ACCORDINGLY, THE LOAN AGREEMENT IS HEREBY FURTHER AMENDED TO PROVIDE THAT
ANY AND ALL REFERENCES TO “SOUTHTRUST BANK”, “SOUTHTRUST BANK, NATIONAL
ASSOCIATION” IN THE LOAN AGREEMENT SHALL BE DEEMED TO BE “WACHOVIA BANK,
NATIONAL ASSOCIATION”.

 

2.                                       SECTION 1.1 OF THE LOAN AGREEMENT IS
HEREBY AMENDED BY ADDING THE FOLLOWING DEFINITIONS AS ADDITIONAL DEFINED TERMS:

 

“Basic Chemicals” means Basic Chemicals Company, LLC, a Delaware corporation.

 

“Basic Chemicals Debt” means any amount owing by Borrower to Basic Chemicals
pursuant to the Basic Chemicals Note.

 

“Basic Chemicals Loan Documents” means the Basic Chemicals Note and any and all
agreements, documents, and instruments of any kind executed or delivered in
connection with, or evidencing, securing, guaranteeing or otherwise relating to
the indebtedness owing by Borrower to Basic Chemicals under the Basic Chemicals
Note, together with all modifications and amendments at any time made to any
thereof.

 

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“Basic Chemicals Note” means the promissory note dated June 7, 2005, made by the
Borrower payable to Basic Chemicals in an original principal amount of
$10,000,000.00, and includes, provided that there shall have first been obtained
the prior written approval of the Bank, any amendment to such note and any
promissory note given in extension or renewal of, or in substitution for, such
note.

 

3.                                       SECTION 1.1 OF THE LOAN AGREEMENT IS
HEREBY AMENDED BY DELETING THE DEFINITION OF “COVERAGE RATIO” IN ITS ENTIRETY
AND SUBSTITUTING THE FOLLOWING NEW DEFINITION IN LIEU THEREOF:

 

“Coverage Ratio” means, for any period, the ratio of (i) the principal amount of
all borrowed debt and capitalized lease obligations of Borrower and Guarantor as
of the end of the applicable period, to (ii) the sum of EBITDA for the Borrower
and Guarantor for the preceding four (4) fiscal quarters.

 

4.                                       SECTION 6.1 OF THE LOAN AGREEMENT IS
HEREBY AMENDED BY DELETING SUBSECTION (F) THEREOF IN ITS ENTIRETY AND
SUBSTITUTING THE FOLLOWING NEW SUBSECTION (F) IN LIEU THEREOF:

 

(F)                                 The Borrower will maintain during the term
of this Agreement (determined on a consolidated basis with the Guarantor):

 

(1)                                  A Fixed Charge Coverage of not less than
1.25 to 1.0 at any time; such Fixed Charge Coverage to be measured quarterly
based on a rolling four-quarter basis.

 

(2)                                  A Coverage Ratio of not greater than:
(a) 3.0 to 1.0 as of July 31, 2005, and October 31, 2005; and (b) 2.75 to 1.0 as
of January 31, 2006, and at all times thereafter; said Coverage Ratio to be
measured quarterly based on a rolling four-quarter basis.

 

5.                                       SECTION 6.2 OF THE LOAN AGREEMENT IS
HEREBY AMENDED BY ADDING THERETO THE FOLLOWING NEW SUBSECTION (S):

 

(S)                                 The Borrower and the Guarantor (on a
consolidated basis) will not incur, create, assume, or permit to exist any
future Indebtedness in excess of, in the aggregate, $2,000,000.00 except:

 

(1)                                  Indebtedness owing to the Bank;

 

(2)                                  The Basic Chemicals Debt;

 

(3)                                  Indebtedness existing as of June 7, 2005;
and

 

(4)                                  Trade indebtedness incurred in the ordinary
course of business.

 

6.                                       SECTION 7.1 OF THE LOAN AGREEMENT IS
HEREBY AMENDED BY ADDING THERETO THE FOLLOWING NEW SUBSECTION (N) AS AN
ADDITIONAL EVENT OF DEFAULT:

 

(N)                               There shall occur any default under the Basic
Chemicals Note and/or any of the other Basic Chemicals Loan Documents.

 

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7.                                       THE LOAN AGREEMENT IS HEREBY AMENDED BY
DELETING EXHIBIT ”E” THERETO, WHICH PROVIDES THE FORM OF THE COMPLIANCE
CERTIFICATE, AND SUBSTITUTING IN LIEU THEREOF THE NEW EXHIBIT ”E” ATTACHED TO
THIS AMENDMENT.

 

8.                                       BORROWER REPRESENTS AND WARRANTS TO THE
BANK THAT AS OF THE DATE HEREOF:  (A) ALL REPRESENTATIONS AND WARRANTIES GIVEN
BY THE BORROWER IN ARTICLE V OF THE LOAN AGREEMENT ARE TRUE AND CORRECT, EXCEPT
TO THE EXTENT AFFECTED BY THIS AMENDMENT; AND (B) THE BORROWER IS IN FULL
COMPLIANCE WITH ALL OF THE COVENANTS OF THE BORROWER CONTAINED IN ARTICLE VI OF
THE LOAN AGREEMENT, EXCEPT TO THE EXTENT AFFECTED BY THIS AMENDMENT.  THE
BORROWER FURTHER REPRESENTS THAT THE BORROWER HAS FULL POWER AND AUTHORITY TO
ENTER INTO THIS AMENDMENT AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED
HEREBY, AND THE BORROWER AGREES TO PAY DIRECTLY, OR REIMBURSE THE BANK FOR, ALL
REASONABLE EXPENSES, INCLUDING THE REASONABLE FEES AND EXPENSES OF LEGAL
COUNSEL, INCURRED IN CONNECTION WITH THE PREPARATION OF THE DOCUMENTATION TO
EVIDENCE THIS AMENDMENT AND ANY DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR IN
FURTHERANCE HEREOF.

 

9.                                       EXCEPT AS MAY BE MODIFIED OR WAIVED BY
THE BANK, IN ITS SOLE DISCRETION, THE EFFECTIVENESS OF THIS AMENDMENT SHALL BE
SUBJECT TO FULL AND COMPLETE SATISFACTION OF THE FOLLOWING CONDITIONS:

 

(A)                                  PAYMENT OF FEES AND EXPENSES.  BANK SHALL
HAVE RECEIVED FROM BORROWER PAYMENT OF ANY LOAN FEE AND ANY AND ALL OTHER FEES
AND EXPENSES REQUIRED BY THE LOAN AGREEMENT, AS FURTHER AMENDED BY THIS
AMENDMENT, AND ANY OF THE OTHER LOAN DOCUMENTS THEN DUE.

 

(B)                                 BASIC CHEMICALS LOAN DOCUMENTS.  THE BANK
SHALL HAVE RECEIVED, REVIEWED AND APPROVED THE DULY EXECUTED BASIC CHEMICALS
NOTE AND ANY OTHER BASIC CHEMICALS LOAN DOCUMENTS.

 

(C)                                  ADDITIONAL DOCUMENTATION.  THE BANK SHALL
HAVE RECEIVED SUCH ADDITIONAL DOCUMENTATION AS MAY BE REQUESTED BY THE BANK, OR
ITS COUNSEL, TO SATISFY THE BANK THAT THIS AMENDMENT AND EACH OF THE DOCUMENTS
TO BE DELIVERED PURSUANT HERETO OR IN CONNECTION HEREWITH HAVE BEEN DULY
AUTHORIZED, EXECUTED AND DELIVERED ON BEHALF OF THE BORROWER AND CONSTITUTE THE
VALID AND BINDING OBLIGATIONS OF THE BORROWER.

 

10.                                 THE PARTIES HEREBY AGREE THAT (A) EXCEPT AS
HEREIN EXPRESSLY MODIFIED OR AS MAY BE MODIFIED OR AMENDED BY ANY DOCUMENT
EXECUTED CONCURRENTLY HEREWITH, ALL OF THE TERMS, CONDITIONS, OBLIGATIONS AND
PROVISIONS OF THE LOAN AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS SHALL BE
AND REMAIN IN FULL FORCE AND EFFECT, AND THE SAME ARE HEREBY RATIFIED AND
CONFIRMED IN ALL RESPECTS, EXCEPT THAT, TO THE EXTENT THAT THERE SHALL BE ANY
CONFLICT BETWEEN THE TERMS OF THIS AMENDMENT AND ANY OF THE TERMS OF ANY OF THE
OTHER LOAN DOCUMENTS NOT MODIFIED OR AMENDED CONCURRENTLY HEREWITH, THE TERMS
AND PROVISIONS OF THIS AMENDMENT SHALL GOVERN AND EACH OF SUCH OTHER LOAN
DOCUMENTS ARE DEEMED AUTOMATICALLY AMENDED AND MODIFIED WITHOUT ANY FURTHER
ACTION UPON THE EXECUTION AND DELIVERY OF THIS AMENDMENT; AND (B) ON AND AFTER
THE EFFECTIVE DATE OF THIS AMENDMENT, EACH REFERENCE IN THE LOAN AGREEMENT TO
“THIS AGREEMENT”, “HEREUNDER”, “HEREOF”, “HEREIN”, OR WORDS OF LIKE IMPORT
REFERRING TO THE LOAN AGREEMENT, AND EACH REFERENCE TO THE “AGREEMENT”, THE
“LOAN AGREEMENT”, THE “TERM LOAN AGREEMENT”, “THEREUNDER”, “THEREOF”, “THEREIN”,
OR WORDS OF LIKE IMPORT INTENDING TO REFER TO THE LOAN AGREEMENT IN ANY NOTE OR
ANY OF THE OTHER LOAN DOCUMENTS SHALL MEAN AND BE A REFERENCE TO THE LOAN
AGREEMENT, AS HEREBY AND HEREAFTER FURTHER AMENDED.

 

11.                                 THE UNDERSIGNED KMG CHEMICALS, INC. (THE
“GUARANTOR”), EXECUTES THIS AMENDMENT TO EXPRESSLY EVIDENCE ITS ASSENT TO ALL
THE TERMS OF THIS AMENDMENT, AND TO FURTHER ACKNOWLEDGE AND AGREE THAT THE
GUARANTY OF PAYMENT DATED AS OF JUNE 26, 1998 (THE “TERM LOAN GUARANTY”) AND THE
GUARANTY OF PAYMENT DATED AS OF DECEMBER 5, 2003, AS AMENDED BY THAT CERTAIN
FIRST AMENDMENT TO GUARANTY OF PAYMENT DATED AS OF JUNE 8, 2004 (AS SO AMENDED,
THE “TERM LOAN NO. 2 GUARANTY”) DELIVERED BY IT TO THE

 

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BANK (THE TERM LOAN GUARANTY AND THE TERM LOAN NO. 2 GUARANTY BEING HEREIN
REFERRED TO EACH SINGULARLY AS A “GUARANTY” AND COLLECTIVELY AS “GUARANTIES”)
REMAIN IN FULL FORCE AND EFFECT AND THAT THE “OBLIGATIONS” OF THE GUARANTOR AS
THE “GUARANTOR” UNDER EACH OF THE GUARANTIES SHALL INCLUDE, WITHOUT LIMITATION
EXCEPT TO THE EXTENT OTHERWISE PROVIDED IN ANY SUCH GUARANTY, ALL OBLIGATIONS OF
THE BORROWER UNDER THE LOAN AGREEMENT, AS AMENDED BY THIS AMENDMENT.

 

12.                                 THIS AMENDMENT MAY BE EXECUTED IN SEVERAL
COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL, AND ALL OF SUCH
COUNTERPARTS TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.  SIGNATURE
AND ACKNOWLEDGMENT PAGES, IF ANY, MAY BE DETACHED FROM THE COUNTERPARTS AND
ATTACHED TO A SINGLE COPY OF THIS DOCUMENT TO PHYSICALLY FORM ONE DOCUMENT.

 

SIGNATURES FOLLOW ON SEPARATE PAGES

 

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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their respective duly authorized officers effective as of the day
and year first above written.

 

 

BORROWER:

 

 

 

KMG-BERNUTH, INC.

 

 

 

 

 

By:

/s/ John V. Sobchak

 

Its:   Vice President and Chief Financial Officer

 

 

STATE OF TEXAS

)

 

COUNTY OF HARRIS

)

 

 

I, the undersigned, a Notary Public in and for said County in said State, hereby
certify that John V. Sobchak, whose name as Vice President and Chief Financial
Officer of KMG-Bernuth, Inc., a Delaware corporation, is signed to the foregoing
Fifth Amendment to Term Loan Agreement, and who is known to me, acknowledged
before me on this day that, being informed of the contents of said instrument,
he, as such officer and with full authority, executed the same voluntarily for
and as the act of said corporation.

 

Given under my hand and official seal this the                  day of
                          , 2005.

 

 

(SEAL)

 

 

 

Notary Public

 

My Commission Expires:

 

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BANK:

 

 

 

WACHOVIA BANK, NATIONAL ASSOCIATION

 

 

 

 

 

By:

/s/ Alan Drennen

 

Its:

Group Vice President

 

 

 

 

STATE OF ALABAMA

)

 

COUNTY OF JEFFERSON

)

 

 

I, the undersigned, a Notary Public in and for said County in said State, hereby
certify that                                                        , whose name
as                                                                      of
Wachovia Bank, National Association, a national banking association, is signed
to the foregoing Fifth Amendment to Term Loan Agreement, and who is known to me,
acknowledged before me on this day that, being informed of the contents of said
instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said banking association.

 

Given under my hand and official seal this the                  day of
                        , 2005.

 

 

 

(SEAL)

 

 

 

Notary Public

 

My Commission Expires:

 

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GUARANTOR:

 

 

 

KMG CHEMICALS, INC.

 

 

 

 

 

By:

/s/ John V. Sobchak

 

Its:   Vice President and Chief Financial Officer

 

 

 

 

STATE OF TEXAS

)

 

COUNTY OF HARRIS

)

 

 

I, the undersigned, a Notary Public in and for said County in said State, hereby
certify that John V. Sobchak, whose name as Vice President and Chief Financial
Officer of KMG Chemicals, Inc., a Texas corporation, is signed to the foregoing
Fifth Amendment to Term Loan Agreement, and who is known to me, acknowledged
before me on this day that, being informed of the contents of said instrument,
he, as such officer and with full authority, executed the same voluntarily for
and as the act of said corporation.

 

Given under my hand and official seal this the                  day of
                          , 2005.

 

 

(SEAL)

 

 

 

Notary Public

 

My Commission Expires:

 

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EXHIBIT “E”

 

COMPLIANCE CERTIFICATE

 

To:

Wachovia Bank, National Association

 

420 North 20th Street (Zip Code 35203)

 

P.O. Box 2554 (Zip Code 35290)

 

Birmingham, Alabama

 

 

 

Date of This Report:                                            , 20      .

 

o         For the month ended                                               ,
20      .

 

o         For the fiscal year ended
                                            , 20      .

 

 

Gentlemen:

 

I, the undersigned officer of KMG-Bernuth, Inc., a Delaware corporation (the
“Borrower”), do hereby certify to you as follows:

 

(1)                                  I have individually reviewed the provisions
of the Term Loan Agreement between the Borrower and you, dated as of July 26,
1998 (as amended from time to time, the “Loan Agreement”), and I have caused to
be made under my supervision a review of the activities of the Borrower during
the above referenced period with a view toward determining whether the Borrower
has kept, observed, performed and fulfilled all of its obligations under the
Loan Agreement.  To the best of my knowledge, the Borrower has kept, observed,
performed and fulfilled each and every undertaking contained in the Loan
Agreement, and is not at this time in default in the observance or performance
of any of the terms or conditions of the Loan Agreement, and no Event of Default
has occurred and is continuing, and no event has occurred and is continuing,
that, with the giving of notice or the passage of time or both, would be an
Event of Default, except as follows:

 

 

 

(2)                                  I further certify to you that no material
adverse change has occurred in either the financial condition or the business of
the Borrower since the date of the Loan Agreement, and that all representations
and warranties set forth within Article V of the Loan Agreement are true and
correct in all respects as if made on and as of the date hereof, except as
follows:

 

 

 

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(3)                                  During the period noted above, the Borrower
has not changed its name, any of its places of business, principal executive
office, or been the surviving corporation in a merger, nor has it changed the
places where the Collateral is located except as itemized below:

 

 

 

(4)                                  The requirements of the financial covenants
for the Borrower set forth in Section 6.1(F) of the Loan Agreement (determined
on a consolidated basis with the Guarantor) are set forth below, together with
the calculation thereof for the above referenced period:

 

 

 

 

 

As Of

 

 

 

 

 

Reporting

 

 

 

Required

 

Date

 

 

 

 

 

 

 

Fixed Charge Coverage

 

 

 

 

 

 

 

 

 

 

 

EBITDA Coverage Ratio

 

 

 

 

 

 

(5)                                  Terms capitalized herein have the same
meaning as those in the Loan Agreement.

 

 

KMG-BERNUTH, INC.

 

 

 

 

 

By:

 

 

 

 

 

Its:

 

 

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