EXHIBIT
10.18


 


EMPLOYMENT
AGREEMENT


 


AGREEMENT, dated
effective as of March 8, 2004 (“Effective Date”), between KMG CHEMICALS, INC., a Texas corporation (the “Company”),
with an office at 10611 Harwin,
Suite 402, Houston, Texas 77036 and J. NEAL BUTLER (“Executive”), with an
address at 787 Windover Road, Alexander City, Alabama 35010.


 


WITNESSETH:


 


WHEREAS, the Company
wishes to employ the Executive to perform executive duties for the Company and
its subsidiaries, and the Executive wishes to accept such employment, all on
the terms and conditions set forth below;


 


AGREEMENT:


 


NOW, THEREFORE, in
consideration of the mutual obligations herein set forth, the parties agree as
follows:


 


1.                                       Employment.  The Company hereby employs the Executive
under this Agreement as of the Effective Date to serve as Vice President and
Chief Operating Officer of the Company and its subsidiary, KMG-Bernuth, Inc.,
and the Executive hereby accepts such employment, on the terms and conditions
set forth in this Agreement.


 


2.                                       Term
of Employment.  The term of
employment under this Agreement shall be for the period commencing on
March 8, 2004, and ending March 8, 2005, subject to earlier
termination as provided herein.  The term
of employment under this Agreement shall be automatically extended for an
additional one (1) year period at the end of the initial term of employment and
at the end of any renewal term of employment unless the Company gives notice at
least sixty (60) days prior to the end of the employment period that the
Executive’s employment under this Agreement shall not be so extended.


 


3.                                       Duties.


 


(a)                                  The
Executive shall continue to perform such duties of an executive nature for the
Company and its subsidiaries as may be assigned to him from time to time by the
President of the Company and that are customarily performed by an executive
holding positions similar to that of the Executive.  The Executive shall serve the Company and its
subsidiaries faithfully and to the best of his ability and shall devote his
full business time and attention to the affairs of the Company and its
subsidiaries, subject to reasonable absences for vacation and illness in
accordance with then current Company policy. 
The Executive shall be subject at all times to the direction and control
of the President.  The Executive shall
give the President periodic reports on and keep him informed on a current basis
concerning the business affairs of the Company and its subsidiaries.


 


(b)                                 The
headquarters for the performance of the Executive’s duties during the term of
this Agreement shall be the principal executive offices of the Company in
Houston, Texas, subject to such reasonable travel as the performance of the
Executive’s duties in the business of the Company or its subsidiaries may
require.


 
















 


(c)                                  During
the term of this Agreement the Executive shall, if elected, serve as a member
of the Board of Directors and/or Executive Committee of the Company or its
subsidiaries and such other committees to which the Executive may be appointed.


 


4.                                       Compensation.


 


(a)                                  As
compensation for all of the duties to be performed by the Executive hereunder,
the Company shall pay the Executive:


 


(i)                                     A
base salary, payable in accordance with the Company’s normal payroll practices,
at a rate per annum equal to $175,000 (“Base Salary”), or such greater amount
as shall be approved by the Company in its sole discretion from time to time;


 


(ii)                                  incentive
compensation pursuant to an incentive compensation plan for Company executives
(“Executive Incentive Plan”) as such plan shall be in effect from time to time;
and


 


(iii)                               one
(1) option to purchase 150,000 shares of the common stock of the Company
subject to vesting and the other terms and conditions set forth in such Stock
Options.


 


(b)                                 The
Company shall have the unrestricted right to modify, amend, terminate or change
the Executive Incentive Plan at any time during the term of this Agreement,
provided, that during the term of employment the Company shall provide the
Executive with the opportunity to receive an award of incentive compensation
targeted at fifty percent (50%) of Base Salary when performance goals
established by the Company are met; provided, further, that the actual award
will vary in the sole discretion of the Company above and below the targeted
percentage of Base Salary as achievement of the performance goals varies above
and below the goals and the maximum award payable will be seventy-five percent
(75%) of Base Salary in any given fiscal year. 
The Executive acknowledges and agrees that the exercise price, vesting,
and all other terms and conditions of the Stock Options to be granted under
paragraph 4(a)(iii)(B) shall be established by the Company in its sole
discretion at the time of grant.


 


5.                                       Expenses.  The Company shall reimburse the Executive for
any out-of-pocket expenses reasonably incurred by the Executive in the
performance of his duties to the Company upon receipt of appropriate vouchers
therefor, in accordance with the Company’s current practices as such practices
may be changed from time to time by the Company.


 


6.                                       Relocation
Expenses.  The Company shall pay the
Executive’s following relocation expenses:


 


(a)                                  All
normal and customary closing costs on Executive’s new residence that by local
custom are normally paid by the buyer and which relate to the purchase, but not
the financing of, a residence.


 


(b)                                 Payment
for insurance, packing, shipment, unloading and unpacking of the normal
household goods from Executive’s residence and storage payments for a period
not to exceed thirty days from the date of delivery in the event it is
impossible to move into the Executive’ new home.


 


(c)                                  Payment
equal to two months base salary for coverage of normal incidental expenses
associated with the establishment of a new home.


 


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(d)                                 All
expenses as applicable shall be grossed up for tax purposes and the Company
shall pay Executive an amount reasonably necessary to keep Executive whole with
respect to tax liabilities incurred during the relocation.


 


7.                                       Benefits.  The Executive shall be entitled to four weeks
paid vacation in calendar year 2004 and five weeks paid vacation in subsequent
calendar years during the term of his employment.  The Executive shall be entitled to
participate in all Company group health (including family major medical plans),
life insurance, pension, profit-sharing, stock purchase or stock option plan,
annuity or other benefit programs that may, from time to time, be available to
employees of the Company generally, subject to eligibility, vesting
requirements and other terms and conditions from time to time in effect in
respect of such benefit programs; provided, however, that nothing herein shall
require the Company at any time to create or continue any such plan, program or
arrangement;.


 


8.                                       Copyright,
Patents, Trademarks.  All right,
title and interest, of every kind whatsoever, in the United States and
throughout the world, in


 


(i) any work,
including the copyright thereof (for the full terms and extensions thereof in
every jurisdiction), created by the Executive at any time during the term
hereof and all material embodiments of the work subject to such rights; and


 


(ii) all
inventions, ideas, discoveries, designs and improvements, patentable or not,
made or conceived by the Executive at any time during the term of his
employment under this Agreement, shall be and remain the sole property of the
Company without the payment to the Executive or any other person of any further
consideration, and each such work shall, for United States copyright law
(“Copyright Law”) purposes, be deemed created by the Executive pursuant to his
duties under this Agreement and within the scope of his employment and shall be
deemed a work made for hire; and the Executive agrees to assign, at the
Company’s expense, and the Executive does hereby assign, all of his right,
title and interest in and to all such works, copyrights, materials, inventions,
ideas, discoveries, designs and improvements, patentable or not, and any
copyrights, letters patent, trademarks, trade secrets, and similar rights, and
the applications therefore, which may exist or be issued with respect
thereto.  For the purposes of this
paragraph 7, “works” shall include all materials created during the term
hereof, whether or not ever used by or submitted to the Company, including,
without limitation, any work which may be the subject matter of copyright under
the Copyright Law of the United States. 
In addition to its other rights, the Company may copyright any such work
in its name in the United States in accordance with the requirements of the
United States Copyright Law and the Universal Copyright Convention and any
other Convention or treaty to which the United States is or may become a party.


 


(b)                                 Whenever
the Company shall so request, whether during or after the term of this
Agreement, the Executive shall execute, acknowledge and deliver all
applications, assignments or other instruments; make or cause to be made all
rightful oaths; testify in all legal proceedings; communicate all known facts
which relate to such works, copyrights, inventions, ideas, discoveries, designs
and improvements; perform all lawful acts and otherwise render all such
assistance as the Company may deem necessary to apply for, obtain, register,
enforce and maintain any copyrights, letters patent and trademark registrations
of the United States or any foreign jurisdiction or under the Universal
Copyright Convention (or any other convention or treaty to which the United
States is or may become a party), or otherwise to protect the Company’s
interests therein, including any which the Company shall deem necessary in
connection with any proceeding or litigation involving the same.  The Company shall reimburse the Executive for
all reasonable out-of-pocket costs incurred by the Executive in testifying at the
Company’s request or in rendering any other assistance


 


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requested by the Company
pursuant to this subparagraph 7(b).  All
registration and filing fees and similar expense shall be paid by the Company.


 


9.                                       Confidential
Information; Non-competition.


 


(a)                                  Company
and its affiliates shall disclose to Executive, or place Executive in a
position to have access to or develop, trade secrets or confidential
information of Company or its affiliates; and/or shall entrust Executive with
business opportunities of Company or its affiliates; and/or shall place
Executive in a position to develop business good will on behalf of Company or
its affiliates.  Executive recognizes and
acknowledges that Executive will have access to certain information of Company
and its affiliates and that such information is confidential and constitutes
valuable, special and unique property of Company or its affiliates.  Executive shall not at any time, either
during or subsequent to the term of employment with Company, disclose to
others, use, copy or permit to be copied, except in pursuance of Executive’s
duties for and on behalf of Company and its affiliates, successors, assigns or
nominees, any Confidential Information of Company or its affiliates (regardless
of whether developed by Executive) without the prior written consent of
Company.  The Executive may make
disclosure of Confidential Information if, and solely to the extent that, the
Executive is advised in writing by legal counsel prior to disclosure that such
disclosure is required by law or court order and a copy of such advice is
provided to the Company.  The term
“Confidential Information” means any secret or confidential information or
know-how and shall include, but shall not be limited to, the plans, customers,
costs, prices, uses, corporate opportunities, research, financial data,
evaluations, prospects, and applications of products and services, results of
investigations or studies owned or used by Company or its affiliates, and all
apparatus, products, processes, compositions, samples, formulas, computer
programs, computer hardware designs, computer firmware designs, and servicing,
marketing or manufacturing methods and techniques at any time used, developed,
investigated, made or sold by Company or its affiliates, before or during the
term of employment with Company, that are not generally available to the public
or that are maintained as confidential by Company or its affiliates.  Executive shall maintain in confidence any
Confidential Information of third parties received as a result of Executive’s
employment with Company in accordance with Company’s obligations to such third
parties and the policies established by Company.  Executive acknowledges that all books,
records, documents, manuals, computer data, notes, files, customer lists,
marketing studies and any other similar or dissimilar information or data,
whether or not containing Confidential Information, that are used by the
Executive or other employees or affiliates of the Company during Executive’s
term of employment are the exclusive property of the Company or its affiliates
and shall be delivered by Executive to Company on termination of Executive’s
term of employment for whatever reason, or at any earlier time requested by
Company.


 


(b)                                 As
part of the consideration for the compensation and benefits to be paid to
Executive hereunder; to protect the Confidential Information of Company and its
affiliates that has been and will in the future be disclosed or entrusted to Executive,
the business goodwill of Company and its affiliates that has been and will in
the future been developed in Executive, or the business opportunities that have
been and will in the future be disclosed or entrusted to Executive by Company
and its affiliates; and as an additional incentive for Company to enter into
this Agreement, Company and Executive agree to the non-competition obligations
hereunder.  During the term of employment
under this Agreement and for a period of one year thereafter, the Executive
shall not, without the Company’s prior written consent, directly or indirectly
engage or be interested in any business which is then competitive to the
business of the Company or the business of any of its subsidiaries in the
United States or Canada.  For the purpose
of this paragraph, the Executive will be considered to have been directly or
indirectly engaged or interested in a business if the Executive is engaged or
interested in such business as a stockholder, director, officer, employee,
agent, broker, partner, individual proprietor, lender, consultant, licensor,
independent contractor or otherwise, except that nothing herein will prevent
the Executive from owning or participating as a member of a group which owns
less than a five percent (5%) block of equity or debt securities of any company
traded on a national securities exchange or in


 


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any established
over-the-counter securities market.  For
the purpose of this paragraph, the term “any business then competitive” to the
business of the Company or its subsidiaries shall mean any business that
manufactures, sells or distributes chemicals that were manufactured, sold or
distributed by the Company or any of its affiliates during the one year immediately
preceding the termination of the Executive’s term of employment under this
Agreement, the Executive provided substantial executive services.


 


(c)                                  In
the event the Executive shall breach any provisions of this paragraph 8
(which provisions the Executive hereby acknowledges are reasonable and
equitable), the Company shall be entitled to terminate any payments then owing
to the Executive under this Agreement and/or to seek specific performance and
injunctive relief for such breach or threatened breach.  This termination of payments shall be in
addition to and not in substitution for any and all other rights of the Company
at law or in equity against the Executive arising out of any such breach.  The Executive acknowledges that his breach or
attempted or threatened breach of any provisions of this paragraph 8 would
cause irreparable injury to the Company not compensable in money damages and
that the Company shall be entitled, in addition to all other applicable
remedies, to obtain a temporary and a permanent injunction and a decree for
specific performance of paragraph 8 without being required to prove damages or
furnish any bond or other security.


 


(d)                                 Executive
understands that the restrictions set forth in this paragraph 8 may limit
Executive’s ability to engage in certain businesses anywhere in the world
during the period provided for above, but acknowledges that Executive will
receive sufficiently high remuneration and other benefits under this Agreement
to justify such restriction.  It is
expressly understood and agreed that Company and Executive consider the
restrictions contained in this paragraph 8 to be reasonable and necessary
to protect the Confidential Information of Company.  Nevertheless, if any of the aforesaid
restrictions are found by a court having jurisdiction to be unreasonable, or
overly broad as to geographic area or time, or otherwise unenforceable, the
parties intend for the restrictions therein set forth to be modified by such
court so as to be reasonable and enforceable and, as so modified by the court,
to be fully enforced.


 


10.                                 Termination.  The Executive’s employment under this
Agreement shall terminate under the following circumstances:


 


(a)                                  Death
or Disability.  The Executive’s
employment shall terminate upon the death or Disability of Executive.  For purposes of this Agreement, “Disability”
shall be the inability to perform executive-level services, combined with
eligibility to receive disability benefits under the standards used by the Company’s
long-term disability benefit plan.  In
the event Executive is a “Qualified Individual with a Disability,” as such term
is defined in the Americans with Disabilities Act, the Company shall not
terminate Executive’s employment hereunder if Executive is able to perform the
essential functions of Executive’s job with reasonable accommodation from the
Company.


 


(b)                                 With
“Cause”.  For purposes of this
Agreement, the Company shall have “Cause” to terminate Executive’s employment
hereunder upon the occurrence of any of the following:


 


(i) embezzlement,
theft or other misappropriation of any property of the Company or any of its
subsidiaries by Executive,


 


(ii) gross
negligence or willful misconduct by Executive resulting in substantial loss to
the Company or any of its subsidiaries or substantial damage to the reputation
of the Company or any of its subsidiaries,


 


(iii) any act by
Executive that results in a conviction of, or a pleading nolo contendere to, a
felony or other crime involving moral turpitude, fraud or misrepresentation,


 


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(iv) willful and
continued failure or neglect by Executive to substantially perform his assigned
duties for the Company or any of its subsidiaries,


 


(v) gross breach
of Executive’s fiduciary obligations to the Company or any of its subsidiaries,


 


(vi) any chemical
dependence which materially affects the performance of Executive’s duties and
responsibilities to the Company or any of its subsidiaries; provided, that in
the case of the misconduct set forth in clauses (iv) and (vi) above, such
misconduct shall continue for a period of five (5) days following written
notice thereof by the Company to Executive.


 


(c)                                  Without
“Cause”.  Notwithstanding any
provisions of this Agreement to the contrary, the Company may terminate Executive’s
employment hereunder for any reason other than those specified in the foregoing
paragraphs (a) and (b), or for no reason, at any time, effective upon delivery
of five (5) day’s notice by the Company.


 


(d)                                 Voluntary
Resignation.  Executive may terminate
his employment hereunder at any time during the Term subject only to the
requirement that Executive shall provide the Company with a minimum of sixty
(60) days prior written notice (a “Voluntary Resignation”).


 


(e)                                  With
“Good Reason”.  Notwithstanding any
provision of this Agreement to the contrary, Executive may terminate his
employment hereunder for Good Reason, subject to the requirement that Executive
shall provide the Company with a minimum of sixty (60) days prior written
notice and subject to the requirement that such notice is given within
thirty (30) days (plus the applicable cure period, if any) after the
occurrence of the events constituting a Good Reason.  For purposes of this Agreement, Executive
shall have “Good Reason” to terminate his employment hereunder upon the
occurrence, without Executive’s written consent, of any of the following:


 


(i) a failure by
the Company to pay to Executive any amounts due to Executive (including but not
limited to Base Salary and incentive compensation payable under the Company’s
Executive Incentive Compensation Plan), which failure is not cured within
thirty (30) days following receipt by the Company of written notice from
Executive of such failure,


 


(ii) demotion of
Executive from his position as Chief Financial Officer of the Company or a
change in his management reporting relationship such that he no longer reports
to the Chief Executive Officer of the Company,


 


(iii)  a relocation of the headquarters for the
performance of the Executive’s duties during the term of this Agreement more
than fifty miles outside the limits of Houston, Texas, or


 


(iv) any other
material breach by the Company of this Agreement that remains uncured for
thirty (30) days after written notice thereof by Executive to the Company.


 


11.                                 Compensation
upon Termination.  Executive shall be
entitled to the following compensation from Company, in lieu of all
compensation or other sums or benefits owed or payable to Executive under
paragraph 4 of this Agreement, upon the termination of Executive’s
employment during the term of this Agreement.


 


(a)                                  Death
or Disability.  In the event of the
death or Disability of Executive during the term of this Agreement, except for
amounts of Base Salary and accrued vacation time earned by Executive as


 


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of the date of
termination but not yet paid by the Company, the Company shall have no
obligation to make payments to Executive or his estate for the periods after
the date Executive’s employment with the Company terminates on account of death
or Disability.


 


(b)                                 With
Cause.  In the event that Executive’s
employment is terminated by the Company for Cause, except for the amounts of
Base Salary and accrued vacation time earned by Executive as of the date of
termination but not yet paid by the Company, the Company shall have no
obligation to make payments to Executive for the periods before or after the
date Executive’s employment with the Company terminates for Cause.


 


(c)                                  Without
Cause.  In the event that Executive’s
employment is terminated by the Company without Cause at any time during the
term of this Agreement, Executive shall be entitled to receive (A) if the
termination was not within one year after a Change of Control,


 


(i) the amounts of
Base Salary and accrued vacation time earned by Executive as of the date of
termination but not yet paid by the Company,


 


(ii) an amount
equal to two times the Base Salary then in effect in a lump sum 45 days after
the date of termination, and


 


(iii) the Stock
Options that are vested as of the date of termination may be exercised within
two years of such termination as provided therein; or


 


(B)  if the termination was within one year after
a Change of Control


 


(i) the amounts of
Base Salary and accrued vacation time earned by Executive as of the date of
termination but not yet paid by the Company,


 


(ii) an amount
equal to two times the Base Salary then in effect in a lump sum 45 days after
the date of termination, and


 


(iii) the
Stock Options shall be deemed fully vested as of the date of termination and
may be exercised within two years of such termination as provided therein.


 


(d)                                 Voluntary
Resignation.


 


(i)                                     Without
Good Reason.  In the event that
Executive’s employment is terminated by Executive as a Voluntary Resignation pursuant
to paragraph 9(d), except for amounts of Base Salary and accrued vacation time
earned by Executive as of the date of termination but not yet paid by the
Company, the Company shall have no obligation to make payments to Executive for
the periods after the date Executive’s employment with the Company terminates
on account of Voluntary Resignation.


 


(ii)                                  With
Good Reason.  Notwithstanding any
provision of this Agreement to the contrary, if Executive’s employment with the
Company terminates on account of Voluntary Resignation for Good Reason,
Executive shall be entitled to receive (1) if the termination was not within
one year after a Change of Control, (a) the amounts of Base Salary and accrued
vacation time earned by Executive as of the date of termination but not yet
paid by the Company, (b) an amount equal to two times the Base Salary then in
effect in then in effect in a lump sum 45 days after the date of termination,
and (c) the Stock Options that are vested as of the date of termination may be
exercised within two years of such termination as provided therein; or (2)  if the termination was within one year after
a Change of


 


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Control, (a) the amounts
of Base Salary and accrued vacation time earned by Executive as of the date of
termination but not yet paid by the Company, (b) an amount equal to two times
the Base Salary then in effect in a lump sum 45 days after the date of
termination, and (c) the Stock Options shall be deemed fully vested as of the
date of termination and may be exercised within two years of such termination
as provided therein.


 


(e)                                  Change
of Control.  For purposes of this
Agreement, a “Change of Control” shall be deemed to exist upon the occurrence
of any of the following:


 


(i)                                     any
“person” as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (“Act”) (other than (i) the Company, (ii) any trustee or
other fiduciary holding securities under any employee benefit plan of the
Company, (iii) any company owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of the
common stock of the Company) is or becomes the “beneficial owner” (as defined
in Rule 13d-3 under the Act), directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power
of the Company’s then outstanding securities;


 


(ii)                                  a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; provided, however, that a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no person, not already the beneficial owner
of less than fifty percent (50%) of the combined voting power of the Company’s
then outstanding securities, acquires more than fifty percent (50%) of the
combined voting power of the Company’s then outstanding securities shall not
constitute a Change in Control of the Company; and provided, further, a merger
or consolidation in which the Company is the surviving entity (other than as a
wholly owned subsidiary or another entity) and in which the Board of the
Company after giving effect to the merger or consolidation is comprised of a
majority of members who are either (x) directors of the Company immediately
preceding the merger or consolidation, or (y) appointed to the Board of the
Company by the Company (or its Board) as an integral part of such merger or
consolidation, shall not constitute a Change in Control of the Company; or


 


(iii)                               the
consummation of a plan of complete liquidation of the Company or of a sale or
disposition by the Company of all or substantially all of the Company’s assets
other than (i) the sale or disposition of all or substantially all of the
assets of the Company to a person or persons who beneficially own, directly or
indirectly, more than fifty percent (50%) of the combined voting power of the
outstanding voting securities of the Company at the time of the sale or (ii)
pursuant to a dividend in kind or spin-off type transactions, directly or
indirectly, of such assets to the stockholders of the Company.


 


(f)                                    Mutual
Release.  Payment of the amounts
payable on the termination of the employment of the Executive under this
paragraph 10,  other than Base
Salary and accrued vacation time earned by Executive as of the date of
termination but not yet paid by the Company, shall  be conditioned upon the execution by the
Executive and the Company of a valid mutual release, pursuant  to which the Executive and the Company shall  each mutually 
release each other, to the maximum extent permitted  by law, from 
any and all claims either party may have against the other as of the
date of termination that relate to or arise out of the employment or
termination of employment of the Executive, except such claims arising under
this Agreement, any employee benefit  plan,
or any other written plan or agreement (a 
“Mutual Release”).


 


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12.                                 Arbitration.  The parties will attempt to promptly resolve
any dispute or controversy arising out of or relating to this Agreement or termination
of the Executive by the Company.  Any
negotiations pursuant to this paragraph 11 are confidential and will be treated
as compromise and settlement negotiations for all purposes.  If the parties are unable to reach a
settlement amicably, the dispute will be submitted to binding arbitration
before a single arbitrator in accordance with the Employment Dispute Resolution
Rules of the American Arbitration Association. 
The arbitrator will be instructed and empowered to take reasonable steps
to expedite the arbitration and the arbitrator’s judgment will be final and
binding upon the parties subject solely to challenge on the grounds of fraud or
gross misconduct.  The parties agree that
the arbitrator shall not be empowered to award punitive or exemplary damages
each party hereby irrevocably waives any such damages.  The arbitration will be held in Harris
County, Texas.  Judgment upon any verdict
in arbitration may be entered in any court of competent jurisdiction and the
parties hereby consent to the jurisdiction of, and proper venue in, the federal
and state courts located in Harris County, Texas.  Each party will bear its own costs in
connection with the arbitration and the costs of the arbitrator will be borne by
the party who the arbitrator determines did not prevail in the matter.  Unless otherwise expressly set forth in this
Agreement, the procedures specified in this paragraph 11 will be the sole and
exclusive procedures for the resolution of disputes and controversies between
the parties arising out of or relating to this Agreement.  Notwithstanding the foregoing, a party may
seek a preliminary injunction or other provisional judicial relief if in such
party’s judgment such action is necessary to avoid irreparable damage or to
preserve the status quo.


 


13.                                 Miscellaneous.


 


(a)                                  Any
notice required or permitted under this Agreement shall be in writing and shall
be deemed given when delivered personally or three days after being sent by
first-class registered or certified mail, return receipt requested, to the
party for which intended at its or his address set forth at the beginning of
this Agreement (which, in the case of the Company, shall be sent “Attention:
President”) or to such other address as either party may hereafter specify by
similar notice to the other.


 


(b)                                 This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas governing contracts made and to be performed in Texas.


 


(c)                                  This
Agreement supersedes all prior agreements between the parties, written or oral,
and cannot be amended or modified except by a writing signed by both
parties.  It may be executed in one or
more counterpart copies, each of which shall be deemed an original, but all of
which shall constitute the same instrument.


 


(d)                                 This
Agreement, which is personal in nature, may not be assigned by either party
without the prior written consent of the other party, but the Executive may,
upon reasonable prior notice to the Company, assign his right to receive any
payment previously due and owing provided, that, such assignment shall be
subject to all claims and defenses of the Company against the Executive.


 


(e)                                  This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective heirs, executors, administrators, personal representatives,
successors and permitted assigns.  The
term “personal representative” as used in this Agreement with respect to an
individual shall mean such individual’s guardian, committee, executor,
administrator or other legal representative duly empowered to act on his behalf
following his death or legal incapacity.


 


(f)                                    Captions
used in this Agreement are for convenience of reference only and shall not be
deemed a part of this Agreement nor used in the construction of its
meaning.  Exhibits attached to this
Agreement shall be deemed as fully a part of this Agreement as if set forth in
full herein.


 


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(g)                                 The
Company may setoff any amounts owed by it or its subsidiaries to the Executive
(or to the personal representative of the Executive’s estate), including but
not limited to amounts owed hereunder, against amounts owed by the Executive or
his estate to the Company or any of its subsidiaries under a promissory note or
for any loans or advances made by the Company or its subsidiaries to the
Executive, including but not limited to loans or advances of compensation
hereunder.


 


(h)                                 This
Agreement has a term co-extensive with the term of employment provided in
paragraph 2.  Termination shall not
affect any right or obligation of any party which is accrued or vested prior to
such termination.  Without limiting the
scope of the preceding sentence, the provisions of paragraphs 8 and 11 shall
survive the termination of the employment relationship and/or of this
Agreement.


 


(i)                                     If
any provision of this Agreement shall be deemed invalid or unenforceable as
written it shall be construed, to the greatest extent possible, in a manner
which shall render it valid and enforceable and any limitations on the scope or
duration of any such provision necessary to make it valid and enforceable shall
be deemed to be part thereof; no invalidity or unenforceability shall affect
any other portion of this Agreement unless the provision deemed to be so
invalid or unenforceable is a material element of this Agreement, taken as a
whole.


 


10
















 


IN WITNESS WHEREOF, the
parties have executed this Agreement effective as of the day and year first
above written.


 


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  KMG CHEMICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David L. Hatcher

  	
   

  
	
   

  	
   

  	
  David L. Hatcher,
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ J. Neal Butler

  	
   

  
	
   

  	
  J. Neal Butler