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                               KMG CHEMICALS, INC.
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN


         This Supplemental Executive Retirement Plan for eligible executives of
KMG Chemicals, Inc. and its subsidiaries, has been adopted by the Board to be
applicable on and after August 1, 2001. The purpose of this Plan is to provide
supplemental retirement benefits to certain Employees in addition to the
benefits that may be provided to those Employees under other retirement plans
maintained by an Employer. This Plan is also designed to retain executive level
personnel.

         This Plan is intended to constitute a non-qualified, unfunded deferred
compensation plan for a select group of management employees under Title I of
ERISA. All benefits payable under this Plan shall be paid from the general
assets of the Employer.

                                    ARTICLE 1
                                   DEFINITIONS

1.01     "ADMINISTRATIVE COMMITTEE" shall mean the person or persons appointed
         by the Board to administer and supervise the Plan as provided in
         Article IV. In the absence of such appointment, the Compensation
         Committee of the Board shall serve as the Administrative Committee.

1.02     "BENEFICIARY" shall mean the beneficiary designated by a Participant in
         the time and manner determined by the Administrative Committee. If the
         Participant fails to designate a beneficiary, or if his beneficiary
         predeceased him, his beneficiary shall be his spouse or, if none, his
         children in equal shares. If no beneficiary survives the Participant,
         his beneficiary shall be his estate.

1.03     "BOARD" shall mean the Board of Directors of KMG Chemicals, Inc.
         ("KMG").

1.04     "CODE" shall mean the Internal Revenue Code of 1986, as amended from
         time to time.

1.05     "COMPENSATION" shall mean the base salary only of the Employee and,
         without limitation, shall not include (i) cash incentive bonuses
         payable under any executive or other Employee incentive plan, (ii)
         other forms of incentive bonuses (including lump-sum merit, performance
         pay, mid-term and long-term incentive, and key employee bonuses); and
         (iii) amounts deferred under any deferred compensation plan.

1.06     "COMPENSATION COMMITTEE" shall mean the Compensation Committee of the
         Board.

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1.07     "CREDITED SERVICE" shall mean the number of years and months of a
         Participant's most recent period of consecutive employment with the
         Employer ending on the date the Participant retires or otherwise
         terminates his employment with the Employer. Solely for purposes of
         determining the amount of a Participant's Supplemental Pension Benefit,
         a Participant's Credited Service shall also include, (i) with respect
         to Executive Officers, service as the Compensation Committee, in its
         sole discretion, shall determine; and (ii) with respect to all other
         Participants, service as the Chief Executive Officer, in his sole
         discretion, shall determine.

1.08     "EFFECTIVE DATE" shall mean August 1, 2001.

1.09     "EMPLOYEE" shall mean an individual employed by the Employer.

1.10     "EMPLOYER" shall mean KMG Chemicals, Inc. or any predecessor or
         successor by merger, purchase or otherwise, and any subsidiary of KMG
         Chemicals, Inc.

1.11     "EQUIVALENT ACTUARIAL VALUE" shall mean the equivalent value when
         computed on the basis of such rates, tables and factors as the
         Compensation Committee shall determine upon the advice of an actuary
         appointed by the Compensation Committee.

1.12     "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
         as amended from time to time.

1.13     "EXECUTIVE OFFICER" shall mean the officers of KMG as shall be
         designated by the Compensation Committee from time to time.

1.14     "FINAL AVERAGE COMPENSATION" shall mean a Participant's average annual
         Compensation during the three consecutive calendar years of his
         employment with the Employer immediately preceding his retirement or
         other termination of employment.

1.15     "NORMAL RETIREMENT DATE" shall mean the first day of the calendar month
         coincident with or immediately following the earlier of the date the
         Participant: (i) attains age 65 and completes ten years of Credited
         Service or (ii) attains age 60 and completes 30 years of Credited
         Service.

1.16     "PARTICIPANT" shall mean any person participating in the Plan as
         provided in Article II of this Plan.


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1.17     "PARTICIPANT'S BENEFIT PERCENTAGE" shall mean one-twentieth (1/20) of
         the percentage established from time to time by the Compensation
         Committee.

1.18     "PENSION PLAN" shall mean any defined benefit plans which meet the
         requirements of a qualified plan under Section 401(a) of the Code which
         may be maintained from time to time by the Employer. The term Pension
         Plan shall also include any defined benefit plan which meets the
         requirements of a qualified plan under Section 401(a) of the Code which
         is (or was) maintained by a Participant's prior employer if any service
         with such prior employer is deemed Credited Service under Section 1.06.

1.19     "PLAN" shall mean this Supplemental Executive Retirement Plan of KMG.

1.20     "SAVINGS PLAN" shall mean any defined contribution plans which meet the
         requirements of a qualified plan under Section 401(a) of the Code which
         may be maintained from time to time by the Employer. The term Savings
         Plan shall also include any defined contribution plan which meets the
         requirements of a qualified plan under Section 401(a) of the Code which
         is (or was) maintained by a Participant's prior employer if any service
         with such prior employer is deemed Credited Service under Section 1.06.

1.21     "SOCIAL SECURITY BENEFIT" shall mean the annual old-age insurance
         benefit the Participant is entitled to receive under Title II of the
         Social Security Act as in effect on the date he retires or otherwise
         terminates his employment, or would be entitled to receive if he did
         not disqualify himself from receiving a Social Security Benefit by
         entering into covered employment or for any other reason. In the case
         of a Participant who retires or otherwise terminates employment with
         the Employer prior to being eligible for an unreduced old-age benefit
         under Title II of the Social Security Act, the Social Security Benefit
         shall be computed on the assumption that the Participant will continue
         to receive compensation at the same rate as in effect on his retirement
         or termination of employment until the date he could first retire with
         the right to an unreduced old-age benefit.

1.22     "SUPPLEMENTAL PENSION BENEFIT" shall mean the amount determined under
         Section 3.01 of the Plan.


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                                    ARTICLE 2
                                  PARTICIPATION

2.01     PARTICIPATION

         An Employee shall become a Participant in this Plan provided that he or
         she is: (i) an Executive Officer, or (ii) a United States-based
         executive selected by the Chief Executive Officer for participation in
         this Plan.

2.02     TERMINATION OF PARTICIPATION

         A Participant's participation in the Plan shall terminate on the date
         he or she terminates his employment with the Employer unless the
         Participant is entitled to a benefit under the Plan. If a Participant
         is entitled to a benefit under the Plan, his or her participation in
         the Plan shall terminate when the benefit is distributed to him.

                                    ARTICLE 3
                               AMOUNT AND PAYMENT
                        OF SUPPLEMENTAL PENSION BENEFITS

3.01     SUPPLEMENTAL PENSION BENEFIT

         A Participant who retires or otherwise terminates his employment on or
         after his Normal Retirement Date shall receive an annual benefit for
         ten years, equal to the excess, if any, of:

         (a)      the Participant's Benefit Percentage of the Participant's
                  Final Average Compensation multiplied by his years of Credited
                  Service up to a maximum of 20 years;

                  reduced by

         (b)      the sum of:

                  (i)      the annual amount of a single life annuity payable as
                           of the Participant's retirement or other termination
                           of employment which is of Equivalent Actuarial Value
                           to the Participant's accrued benefit under any
                           Pension Plan determined as of the Participant's
                           retirement or other termination of employment;


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                  (ii)     the annual amount of a single life annuity payable as
                           of the Participant's retirement or other termination
                           of employment which is of Equivalent Actuarial Value
                           to the value of the Participant's accounts under the
                           Savings Plan attributable to contributions made by
                           the Employer (other than pre-tax contributions to a
                           qualified cash or deferred arrangement under Section
                           401(k) of the Code made by the Employer on behalf of
                           the Participant) determined as of the Participant's
                           retirement or other termination of employment;

                  (iii)    the Equivalent Actuarial Value determined as of the
                           Participant's retirement or other termination of
                           employment of fifty percent (50%) the Participant's
                           annual Social Security Benefit; and

                  (iv)     the annual amount of a single life annuity payable as
                           of the Participant's retirement or other termination
                           of employment which is of Equivalent Actuarial Value
                           to the Employer-provided portion of any benefit
                           provided under any other nonqualified retirement plan
                           or program.

         The Participant's accrued benefit under the Pension Plan, the value of
         his accounts under the Savings Plan, the amount of his Social Security
         Benefit and any determination which may be required under Section
         3.01(b)(iv) of the Plan shall be determined as of the first day of the
         month coincident with or immediately following the Participant's
         retirement or other termination of employment.

3.02     EARLY RETIREMENT

         (a)      If a Participant who has not reached his Normal Retirement
                  Date but who, prior to his termination of employment from the
                  Employer, has reached his 60th birthday and has completed ten
                  years of Credited Service with the Employer, may, with the
                  consent of the Administrative Committee, retire from service
                  and receive an early retirement Supplemental Pension Benefit
                  following the Administrative Committee's approval of his
                  retirement.

         (b)      The early retirement Supplemental Pension Benefit shall be a
                  deferred Supplemental Pension Benefit beginning on the
                  Participant's Normal Retirement Date and shall be equal to his
                  Supplemental Pension Benefit determined under Section 3.01.
                  However, the Participant may elect to receive an early
                  retirement Supplemental Pension Benefit beginning on the first
                  day of any calendar month before his Normal Retirement Date


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                  and after the Administrative Committee's approval of his
                  retirement. In that case, the Participant's Supplemental
                  Pension Benefit shall be determined in accordance with the
                  provisions of Section 3.01; provided, however, that the amount
                  determined under Section 3.01(a) shall be reduced by
                  five-twelfths of one percent for each month by which the date
                  the Participant's early retirement Supplemental Pension
                  Benefit precedes his Normal Retirement Date.

3.03     DISABILITY

         (a)      A Participant who has completed at least ten years of Credited
                  Service with the Employer and who ceases to be employed by the
                  Employer on account of disability as defined in the Employer's
                  long-term disability plan shall continue to be credited with
                  Credited Service but only if he is eligible for and
                  continuously receiving disability benefits under the
                  Employer's long-term disability plan. There shall also be
                  included in his Credited Service any applicable waiting period
                  for disability benefits under the Employer's long-term
                  disability plan; provided that after expiration of such period
                  the Participant becomes entitled to such disability benefits.
                  Upon attaining age 65 the Participant shall be entitled to a
                  disability Supplemental Pension Benefit in an amount provided
                  in paragraph (b) below. A Participant's disability
                  Supplemental Pension Benefit shall commence on the
                  Participant's Normal Retirement Date or, if later, the first
                  day of the month on or immediately after the date he ceases,
                  because of retirement or otherwise, to be eligible for
                  payments under the Employer's long-term disability plan.

         (b)      The Participant's disability Supplemental Pension Benefit
                  shall be determined under Section 3.01 as in effect on the
                  date the Participant's disability Supplemental Pension Benefit
                  commences, based on his Final Average Compensation at the time
                  he ceased employment on account of disability, and his
                  Credited Service as modified by paragraph (a) above.

         (c)      If the Participant's disability benefits under the Employer's
                  long-term disability plan are discontinued prior to his Normal
                  Retirement Date and he is not restored to service with the
                  Employer, he shall be entitled to retire and receive an early
                  Supplemental Pension Benefit under Section 3.02 as of the
                  first day of the calendar month immediately after such
                  discontinuance if at the date he ceased to be disabled he had
                  completed ten years of Credited Service with the Employer and
                  he had attained age 60. The Participant's Supplemental Pension
                  Benefit shall be computed on the basis of his Final Average
                  Compensation at the time he ceased


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                  employment on account of disability, his Credited Service as
                  modified by paragraph (a) above at the date he ceases to be
                  disabled, and the benefit formula in effect on the date he
                  ceases to be disabled.

3.04     DEATH BENEFITS

         (a)      If a Participant eligible for a Supplemental Pension Benefit
                  dies prior to his termination of employment with the Employer,
                  or after he terminates his employment with the Employer but
                  before payment of his Supplemental Pension Benefit begins, his
                  Beneficiary shall receive a Supplemental Pension Benefit. The
                  Supplemental Pension Benefit shall be paid in equal monthly
                  installments beginning the first day of the month following
                  the Participant's death and shall be equal to the excess of:

                  (i)      the amount determined under Section 3.01(a) as of the
                           date of his death, reduced by

                  (ii)     the amount determined under Section 3.01(b) as of the
                           date of his death.

                  The Supplemental Pension Benefit shall be paid for a period of
                  120 months. If the Participant's Beneficiary dies prior to
                  receiving 120 monthly payments, any remaining payments shall
                  be made to the Beneficiary's estate.

         (b)      If a Participant dies after payment of his Supplemental
                  Pension Benefit begins, his Beneficiary shall receive the
                  benefit, if any, provided in the event of the Participant's
                  death under the optional form of benefit in which the
                  Participant's Supplemental Pension Benefit was paid.

3.05     PAYMENT OF BENEFITS

         (a)      Unless the Participant elects an optional form of payment
                  under Section 3.05(b), a Participant's Supplemental Pension
                  Benefit shall be paid to him in monthly installments ending
                  with the last monthly payment before his death.

         (b)      A Participant may elect to convert the Supplemental Pension
                  Benefit otherwise payable to him into an optional benefit of
                  Equivalent Actuarial Value as provided in one of the following
                  optional forms:


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                  OPTION 1 - JOINT AND 100% SURVIVOR ANNUITY: A modified
                  Supplemental Pension Benefit payable during the Participant's
                  life, and after his death payable during the life of, and to,
                  the Beneficiary named by him when he elects the option.

                  OPTION 2 - JOINT AND 50% SURVIVOR ANNUITY: A modified
                  Supplemental Pension Benefit payable during the Participant's
                  life, and after his death payable at one-half of the rate of
                  his modified Supplemental Pension Benefit during the life of,
                  and to, the Beneficiary named by him when he elected the
                  option.

                  OPTION 3 - TEN YEAR CERTAIN AND LIFE: A modified Supplemental
                  Pension Benefit payable during the Participant's life;
                  provided, however, if the Participant dies before receiving
                  120 monthly payments, the remaining balance of those 120
                  monthly payments shall be paid to the Beneficiary named by him
                  when he elected the option. If the Beneficiary does not
                  survive to the end of the 120-month period, a lump sum payment
                  of Equivalent Actuarial Value shall be paid to the estate of
                  the last to survive of the Participant and the Beneficiary.

                  OPTION 4 - SINGLE SUM: A single sum payment; provided,
                  however, that the Administrative Committee, in its sole
                  discretion and without any obligation to exercise reasonable
                  discretion, approves of such single sum payment. If the
                  Administrative Committee does not grant approval of a single
                  sum payment, the Participant shall make an election to receive
                  benefits in any one of the forms otherwise permitted in this
                  Section 3.05.

         (c)      The Participant shall make his election by filing the
                  appropriate form with the Administrative Committee no later
                  than December 31 of the calendar year which is at least one
                  calendar year prior to the calendar year in which the
                  Participant terminates his employment with the Employer. Any
                  election made under this Section may be revoked in writing by
                  the Participant provided his written revocation is received by
                  the Administrative Committee no later than December 31 of the
                  calendar year which is at least one calendar year prior to the
                  calendar year in which the Participant terminates his
                  employment with the Employer.


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3.06     CASH OUT OF SMALL BENEFITS

         Notwithstanding anything in this Plan to the contrary, if upon
         retirement, other termination of employment, or death:

         (a)      the single sum Equivalent Actuarial Value of the Participant's
                  Supplemental Pension Benefit is $30,000 or less; or

         (b)      the monthly Supplemental Pension Benefit payable to the
                  Participant is $500 or less;

         his Supplemental Pension Benefit may, in the discretion of the
         Administrative Committee, be paid in a single sum Equivalent Actuarial
         Value. Any payments to be made under this Section will be made as soon
         as practicable following the Participant's retirement, other
         termination of employment or death.

3.07     FORFEITURE

         Notwithstanding anything in this Plan to the contrary, if the
         Participant's employment with the Employer shall terminate prior to the
         attainment of Early Retirement or Normal Retirement Age as described
         above, and if such termination is not due to death or disability, all
         benefits that would otherwise be payable under this Plan shall be
         forfeited. If a Participant's employment with the Employer shall
         terminate prior to completion of five years of Credited Service with
         the Employer (exclusive of any Credited Service which relates to
         service with a prior employer), all benefits that would otherwise be
         payable under this Plan shall be forfeited. The application of this
         provision may be waived by the Chief Executive Officer; provided,
         however, that any waiver on behalf of an Executive Officer is subject
         to the consent of the Compensation Committee.

3.08     SOURCE OF BENEFITS

         Supplemental Pension Benefits shall be payable only from the general
         assets of the Employer.

3.09     RESTORATION TO SERVICE

         If a Participant who retired or whose employment was otherwise
         terminated is restored to employment with the Employer, any payments of
         a Supplemental Pension Benefit under this Plan shall cease. Upon his
         subsequent retirement or termination of employment with the Employer
         and his again becoming entitled


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         to receive a Supplemental Pension Benefit, his Supplemental Pension
         Benefit shall be recomputed in accordance with the provisions of this
         Article. Any recomputed Supplemental Pension Benefit shall be reduced
         by the Equivalent Actuarial Value of any Supplemental Pension Benefit
         payments the Participant has previously received.

3.10     RECEIPT AND RELEASE

         Any final payment or distribution to a Participant or Beneficiary or
         their legal representative shall be in full satisfaction of all claims
         against the Plan, the Administrative Committee, the Compensation
         Committee, the Board and the Employer. The Administrative Committee
         may, in its sole discretion, require a Participant, or Beneficiary or
         their legal representative to execute a receipt and release, in such
         form as the Administrative Committee may determine, upon final payment
         of all claims or distributions under the Plan, or a receipt to the
         extent of any partial payment or distribution, as a condition of
         receiving such payment or distribution.

                                    ARTICLE 4
                               GENERAL PROVISIONS

4.01     ADMINISTRATION

         The administration of the Plan, the exclusive power to interpret it and
         to establish rules and regulations for its administration, and the
         responsibility for carrying out its provisions are vested in the
         Administrative Committee. Any interpretation of the Plan by the
         Administrative Committee or any administrative act by the
         Administrative Committee shall be final and binding on all Participants
         and Beneficiaries. The expenses of the Administrative Committee
         attributable to the administration of the Plan shall be paid directly
         by the Employer.

4.02     FUNDING

         (a)      Nothing contained in this Plan shall require the Employer to
                  segregate any monies from its general funds, or to create any
                  trusts, or to make any special deposits for any amounts to be
                  paid to any Participant, former Participant or Beneficiary.
                  Neither a Participant, former Participant or Beneficiary or
                  their heirs or personal representatives shall have any right,
                  title or interest in or to any of the funds of the Employer on
                  account of this Plan.


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         (b)      All Supplemental Pension Benefits payable in accordance with
                  this Plan, as well as any administrative costs relating to the
                  Plan, shall constitute a general unsecured obligation of the
                  Employer and shall be payable only from the general assets of
                  the Employer.

4.03     NO CONTRACT OF EMPLOYMENT

         The establishment of the Plan shall not be construed as conferring any
         legal rights upon any person for a continuation of employment, nor
         shall it interfere with the rights of the Employer to modify a
         Participant's compensation or to discharge any Participant and to treat
         him without regard to the effect which such treatment might have upon
         him as a Participant in the Plan.

4.04     WITHHOLDING TAXES

         The Employer shall have the right to deduct any required federal, state
         and local withholding taxes from each payment to be made under the
         Plan.

4.05     NONALIENATION

         Subject to any applicable law, no benefit under the Plan shall be
         subject in any manner to anticipation, alienation, sale, transfer,
         assignment, pledge, encumbrance or charge, and any attempt so to do
         shall be void, nor shall any such benefit be in any manner liable for
         or subject to garnishment, attachment, execution or levy, or liable for
         or subject to the debts, contracts, liabilities, engagements or torts
         of the Participant.

4.06     PAYMENT TO MINORS, OTHERS

         If the Administrative Committee finds that a Participant or other
         person entitled to a benefit under the Plan is unable to care for his
         affairs because of illness or accident or because he is a minor, the
         Administrative Committee may direct that any benefit due him be paid to
         his spouse, a child, a parent or other blood relative or a person with
         whom he resides, unless a claim has been made for the benefit by a duly
         appointed legal representative. Any payment made under the provisions
         of this Section shall be a complete discharge of the liabilities of the
         Plan for that benefit.

4.07     FURNISHING OF INFORMATION

         Prior to paying any benefit under this Plan, the Administrative
         Committee may require the Participant or Beneficiary to provide such
         information or material as


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         the Administrative Committee, in its sole discretion, shall deem
         necessary for it to make any determination it may be required to make
         under this Plan. The Administrative Committee may withhold payment of
         any benefit under this Plan until it receives all such information and
         material and is reasonably satisfied of its correctness and
         genuineness.

4.08     EFFECT ON OTHER PLANS

         Nothing in this Plan shall be deemed to affect the provisions of any
         Savings Plan or any other employee benefit plan as defined in Section
         3(3) of ERISA, or any employment contract maintained by or entered into
         by the Employer.

4.09     INDEMNIFICATION

         (a)      KMG shall indemnify the members of the Administrative
                  Committee, the Compensation Committee and/or any of their
                  delegates against the reasonable expenses, including
                  attorneys' fees, actually and appropriately incurred by them
                  in connection with the defense of any action, suit or
                  proceeding, or in connection with any appeal thereto, to which
                  they or any of them may be a party by reason of any action
                  taken or failure to act under or in connection with the Plan
                  (including any action or failure to act constituting
                  negligence) and against all amounts paid by them in settlement
                  thereof and against all amounts paid by them in satisfaction
                  of a judgment in any such action, suit or proceeding, except
                  in relation to matters as to which it shall be adjudged in a
                  suit of final adjudication that such member is liable for
                  gross negligence, fraud, deliberate dishonesty or willful
                  misconduct in the performance of his duties.

         (b)      In case any proceeding (including any governmental
                  investigation) shall be instituted involving any person in
                  respect of which indemnity may be sought pursuant to this
                  Section 4.09, such person (the "Indemnified Party") shall
                  promptly notify KMG in writing. No indemnification provided
                  for in Section 4.09(a) shall be available to any party who
                  shall fail to give notice as provided in this Section 4.09(b)
                  if KMG was unaware of the proceeding to which such notice
                  would have related and was prejudiced by the failure to give
                  such notice, but the failure to give such notice shall not
                  relieve KMG from any liability which it may have to the
                  Indemnified Party for contribution or otherwise than on
                  account of the provisions of Section 4.09(a). In case any such
                  proceeding shall be brought against any Indemnified Party and
                  it shall notify KMG of the commencement thereof, KMG shall be
                  entitled to participate therein and, to the extent that it
                  shall wish, to assume the defense thereof, with counsel


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                  satisfactory to such Indemnified Party and shall pay as
                  incurred the fees and disbursements of such counsel related to
                  such proceeding. In any such proceeding, any Indemnified Party
                  shall have the right to retain its own counsel at its own
                  expense. Notwithstanding the foregoing, KMG shall pay as
                  incurred the fees and expenses of the counsel retained by the
                  Indemnified Party in the event (i) KMG and the Indemnified
                  Party shall have mutually agreed to the retention of such
                  counsel or (ii) the named parties to any such proceeding
                  (including any impleaded parties) include both KMG and the
                  Indemnified Party and representation of both parties by the
                  same counsel would be inappropriate due to actual or potential
                  differing interests between them. It is understood that KMG
                  shall not, in connection with any proceeding or related
                  proceedings in the same jurisdiction, be liable for the
                  reasonable fees and expenses or more than one separate firm
                  for all such Indemnified Parties. Such firm shall be
                  designated in writing by KMG. KMG shall not be liable for any
                  settlement of any proceeding effected without its written
                  consent but if settled with such consent or if there be a
                  final judgment for the plaintiff, KMG agrees to indemnify the
                  Indemnified Party from and against any loss or liability by
                  reason of such settlement or judgment.

4.10     CLAIMS PROCEDURE

         The Administrative Committee shall provide adequate notice in writing
         to any Participant, former Participant or Beneficiary whose claim for
         benefits under this Plan has been denied, setting forth the specific
         reasons for such denial. A reasonable opportunity shall be afforded to
         any such Participant, former Participant or Beneficiary for a full and
         fair review by the Administrative Committee of its decision denying the
         claim. The Administrative Committee's decision on any such review shall
         be final and binding on the Participant, former Participant or
         Beneficiary and all other interested persons.

4.11     CONSTRUCTION

         (a)      The Plan is intended to constitute an unfunded deferred
                  compensation arrangement for a select group of management or
                  highly compensated employees and therefore exempt from the
                  requirements of Sections 201, 301 and 401 of ERISA. All rights
                  hereunder shall be governed by and construed in accordance
                  with the laws of the State of Texas to the extent such laws
                  are not pre-empted by ERISA or other federal law.

         (b)      The masculine pronoun shall mean the feminine wherever
                  appropriate.


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         (c)      The titles and headings of the Articles and Sections of the
                  Plan are for convenience only. In case of ambiguity or
                  inconsistency, the text, rather than the titles or headings,
                  shall control.

                                    ARTICLE 5
                            AMENDMENT OR TERMINATION

         The Chief Executive Officer may modify or amend the Plan at any time,
provided, however, that any material modification shall be subject to
Compensation Committee approval. The Board may suspend or terminate this Plan
for any reason at any time. No modification, amendment, suspension or
termination of the Plan shall reduce the right of a Participant or his
Beneficiary to receive benefits accrued under the Plan in respect of such
Participant as of the date of the modification, amendment, suspension or
termination unless the Participant or his Beneficiary, as the case may be,
agrees in writing to such modification, amendment, suspension or termination.

         IN WITNESS WHEREOF, the proper officer of KMG Chemicals, Inc. has
executed this instrument this 25th day of June, 2001.

                                        KMG CHEMICALS, INC.



                                        By: /s/ David L. Hatcher
                                            -------------------------------
                                                David L. Hatcher, President



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