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 KMG):
(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.
(3)
A Borrowing Base such that the balance of
the Borrower's outstanding Revolving Loan will not, at any time, exceeding its
Borrowing Base.
5.
SECTION 6.2 OF THE LOAN AGREEMENT AS
AMENDED IS HEREBY AMENDED BY ADDING THERETO THE FOLLOWING NEW SUBSECTION (S):
(S)
The Borrower and KMG (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 AS
AMENDED IS HEREBY AMENDED BY ADDING THERETO THE FOLLOWING NEW SUBSECTION (L) AS
AN ADDITIONAL EVENT OF DEFAULT:
(L)
There shall occur any default under the
Basic Chemicals Note and/or any of the other Basic Chemicals Loan Documents.
7.
THE LOAN AGREEMENT AS AMENDED IS HEREBY
AMENDED BY DELETING EXHIBIT "K" THERETO, WHICH PROVIDES THE FORM OF THE
COMPLIANCE CERTIFICATE, AND SUBSTITUTING IN LIEU THEREOF THE NEW EXHIBIT "K"
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 AS AMENDED ARE TRUE AND
CORRECT, EXCEPT TO THE EXTENT AFFECTED BY THIS AMENDMENT; AND (B) THE BORROWER
IS IN FULL
3
COMPLIANCE WITH ALL OF THE COVENANTS OF THE BORROWER CONTAINED IN ARTICLE VI OF
THE LOAN AGREEMENT AS AMENDED, 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 OTHER 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