Exhibit 10.31
TERM NOTE NO. 2
$6,000,000.00
Date:
December 5, 2003
FOR VALUE RECEIVED, the undersigned KMG-BERNUTH, INC., a Delaware corporation
(hereinafter referred to as "Borrower"), promises to pay to the order of
SOUTHTRUST BANK, an Alabama banking corporation (hereinafter, together with any
holder of this Note, the "Bank"), at its main office in the City of Birmingham,
Alabama, or at such other address as the Bank may from time to time designate in
writing, the principal sum of Six Million and No/100 Dollars ($6,000,000.00) or
so much as may be advanced hereunder, together with interest thereon and other
agreed charges as provided herein.
I.
DEFINITIONS:
As used in this Note, the term:
(A)
"BUSINESS DAY" SHALL MEAN A DAY OF THE
YEAR, OTHER THAN SATURDAY OR SUNDAY, ON WHICH DEALINGS IN UNITED STATES DOLLARS
ARE CARRIED ON IN THE LONDON INTERBANK MARKET AND BANKS ARE OPEN FOR BUSINESS IN
LONDON AND BANKS (INCLUDING SOUTHTRUST BANK) IN BIRMINGHAM, ALABAMA, AND NEW
YORK, NEW YORK ARE NOT REQUIRED OR AUTHORIZED TO CLOSE.
(B)
"DEFAULT RATE" SHALL MEAN A VARIABLE PER
ANNUM RATE OF INTEREST EQUAL TO THE LESSER OF (I) TWO PERCENT (2%) IN EXCESS OF
THE INTEREST RATE OTHERWISE APPLICABLE HEREUNDER, OR (II) THE MAXIMUM RATE
ALLOWED BY APPLICABLE LAW.
(C)
"EVENT OF DEFAULT" SHALL HAVE THE MEANING
ATTRIBUTED TO SAID TERM IN SECTION VIII OF THIS NOTE.
(D)
"GUARANTOR" SHALL MEAN KMG CHEMICALS, INC.,
A TEXAS CORPORATION.
(E)
"GUARANTY" SHALL MEAN THE "TERM LOAN NO. 2
GUARANTY" AS DEFINED IN THE LOAN AGREEMENT.
(F)
"INTEREST RATE" SHALL MEAN THE ACTUAL
INTEREST RATE AT WHICH THE OUTSTANDING PRINCIPAL AMOUNT BEARS INTEREST FROM TIME
TO TIME DURING THE TERM OF THIS NOTE.
(G)
"LIBOR RATE" SHALL MEAN THE APPLICABLE
30-DAY LIBOR RATE, 60-DAY LIBOR RATE, OR 90-DAY LIBOR RATE FROM TIME TO TIME IN
EFFECT.
(H)
"LIBOR RATE COMMENCEMENT DATE" SHALL MEAN,
WITH RESPECT TO THE INITIAL LIBOR RATE INTEREST PERIOD, THE DATE OF THIS NOTE,
AND, WITH RESPECT TO EACH OTHER LIBOR RATE INTEREST PERIOD, THE PAYMENT DUE DATE
ON WHICH ANY RESPECTIVE LIBOR RATE INTEREST PERIOD SHALL COMMENCE.
(I)
"LIBOR RATE ELECTION NOTICE" SHALL MEAN
A WRITTEN (OR ORAL IF APPROVED BY BANK, IN ITS SOLE DISCRETION) NOTICE GIVEN TO
BANK BY BORROWER, NO LATER THAN TWO (2) BUSINESS DAYS PRIOR TO THE
commencement of any applicable LIBOR Rate Interest Period, providing for
Borrower's exercise of a LIBOR Rate Election Option and specifying the
applicable 30-Day LIBOR Rate, 60-Day LIBOR Rate, or 90-Day LIBOR Rate being
elected by Borrower and the LIBOR Rate Commencement Date of the corresponding
LIBOR Rate Interest Period during which such 30-Day LIBOR Rate, 60-Day LIBOR
Rate, or 90-Day LIBOR Rate so elected shall be charged.
(J)
"LIBOR RATE ELECTION OPTION" SHALL MEAN
ANY OPTION OF THE BORROWER AS HEREINAFTER SET FORTH IN PARAGRAPH (A) OF
SECTION III OF THIS NOTE TO ELECT FOR THE OUTSTANDING PRINCIPAL BALANCE TO BEAR
INTEREST AT THE 30-DAY LIBOR RATE, 60-DAY LIBOR RATE, OR 90-DAY LIBOR RATE
ELECTED