Exhibit 10.44


 


AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT


 


THIS AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT (this “Amendment”) is entered into as of March 6, 2009, but
effective as of the Effective Date (as defined below), by and among KMG
CHEMICALS, INC., a Texas corporation (“KMG Chemicals”),
KMG-BERNUTH, INC., a Delaware corporation (“KMG-Bernuth”),
and KMG ELECTRONIC CHEMICALS, INC., a Texas corporation (“KMG ECI”
and, together with KMG Chemicals and KMG-Bernuth, collectively, the “Companies” and each, individually, a “Company”),
and the undersigned holders of Notes (as hereinafter defined).


 


Recitals


 


A.            The
Companies entered into a Note Purchase Agreement dated as of December 31,
2007 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the “Note Agreement”),
with the several Purchasers (as defined in the Note Agreement) listed in the
Purchaser Schedule attached thereto, pursuant to which the Companies issued and
sold to such Purchasers the Companies’ 7.43% Senior Secured Notes due December 31,
2014, in the aggregate principal amount of $20,000,000 (together with any such
promissory notes that may have been issued in substitution or exchange therefor
prior to the date hereof, the “Notes”).


 


B.            The
Companies desire to make certain amendments and modifications to the Note
Agreement, as set forth in this Amendment, and the undersigned holders of
Notes, subject to the terms and conditions set forth herein, are willing to
agree to such amendments and modifications.


 


NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:


 


1.             Definitions.  Capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to them in the Note
Agreement.


 


2.             Amendments to Schedule B (Defined Terms).


 


(a)           Schedule
B of the Note Agreement is hereby amended by restating the following
definitions to read in their entirety as follows:


 


“EBIDA”
means, with respect to an applicable Person for the applicable period, Net
Income, plus, to the extent deducted in determining Net Income, the sum
of (without duplication) Interest Expense, Amortization Expense, Depreciation
Expense, Extraordinary Expense and all other non-cash charges, all determined
in accordance with GAAP.


 


“EBITDA” means, with respect to an applicable Person for the
applicable period, Net Income, plus, to the extent deducted in
determining Net Income, the sum of (without duplication) Interest Expense,
Income Tax Expense, Amortization Expense, Depreciation Expense, Extraordinary
Expense and all other non-cash charges, all determined in accordance with GAAP.


 


(b)           Schedule
B of the Note Agreement is hereby amended by adding the following new
definition in the appropriate alphabetical position therein:


 

















 


“Extraordinary Expense” means any extraordinary, unusual or
non-recurring expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of Net Income for such period,
non-cash losses on sales of assets outside of the Ordinary Course of Business)
which shall have been approved by the Required Holders, minus, to the extent
included in the statement of such Net Income for such period, the amount of any
Extraordinary Receipts (including, whether or not otherwise includable as a
separate item in the statement of Net Income for such period, receipts on sales
of assets outside of the Ordinary Course of Business) which shall have been
approved by the Required Holders.


 


3.             Amendment to Section 10.1(c) (Financial
Covenants).  Section 10.1(c) of
the Note Agreement is hereby amended by restating it in its entirety to
read  as follows:


 


(c)           a ratio of Funded Debt to EBITDA of
not more than (i) from the date of this Amendment through January 31,
2009, 3.50 to 1.00, (ii) from February 1, 2009 through April 30,
2009, 3.25 to 1.00, and (iii) thereafter, 3.00 to 1.00.


 


4.             Representations and Warranties of the Company.  Each Company hereby represents and warrants
that it is a corporation duly organized and validly existing in good standing
under the laws of its jurisdiction of incorporation, and is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which
the failure to be so qualified or in good standing could not, individually or
in the aggregate, reasonably expected to have a Material Adverse Effect.  Each Company has the corporate power and authority
to execute and deliver this Amendment and to perform its obligations under this
Amendment and the Note Agreement as amended hereby.  The execution and delivery by each Company of
this Amendment and the performance by each such Company of its obligations
under this Amendment and the Note Agreement as amended hereby have been duly
authorized by all necessary corporate action on the part of each Company.  Each Company has duly executed and delivered
this Amendment, and this Amendment and the Note Agreement as amended hereby
constitute the legal, valid and binding obligations of each Company,
enforceable against each such Company in accordance with its terms.


 


5.             Conditions to Effectiveness.  This Amendment shall become effective, as of January 30,
2009 (the “Effective Date”), when the
undersigned holder(s) of Notes shall have received (i) counterpart(s) of
this Amendment and (ii) an executed copy of an amendment to the Amended
and Restated Credit Agreement, dated as of January 30, 2009, by and among
the Companies and Wachovia Bank, N.A., substantially the same as the amendments
to the Note Agreement as set forth in this Amendment, in form and substance
satisfactory to such holder(s), duly executed and delivered by each Company and
each of the other parties thereto.


 


6.             Miscellaneous.


 


(a)           References to Note Agreement.  Upon and after the date of this Amendment,
each reference to the Note Agreement in the Note Agreement, the Notes or any
other instrument or agreement entered into in connection therewith or otherwise
related thereto shall mean and be a reference to the Note Agreement as amended
by this Amendment.


 


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(b)           Ratification and Confirmation.  Except as specifically amended herein, the
Note Agreement shall remain in full force and effect, and is hereby ratified
and confirmed.


 


(c)           No Waiver.  The execution, delivery and effectiveness of
this Amendment shall not operate as a waiver of any right, power or remedy of
any holder of Notes, nor constitute a waiver of any provision of the Note
Agreement, any Note or any other instrument or agreement entered into in
connection therewith or otherwise related thereto.


 


(d)           Expenses.  Each Company agrees to pay promptly all
expenses of the holders of Notes related to this Amendment and all matters
contemplated hereby, including, without limitation, all fees and expenses of
the holders’ special counsel.


 


(e)           GOVERNING LAW.  THIS AMENDMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
BY, THE LAW OF THE STATE OF NEW YORK.


 


(f)            Counterparts.  This Amendment may be executed in
counterparts (including those transmitted by facsimile), each of which shall be
deemed an original and all of which taken together shall constitute one and the
same document.  Delivery of this
Amendment may be made by telecopy or electronic transmission of a duly executed
counterpart copy hereof; provided that any such delivery by electronic
transmission shall be effective only if transmitted in .pdf format, .tif format
or other format in which the text is not readily modifiable by any recipient
thereof.


 


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pages follow]


 


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


 


	
   

  	
  KMG CHEMICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
      /s/

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KMG-BERNUTH, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KMG ELECTRONIC
  CHEMICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE PRUDENTIAL
  INSURANCE COMPANY OF AMERICA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


Signature
page to Amendment No. 1 to Note Agreement