Document:

Exhibit 10.2

EMPLOYMENT AGREEMENT

 

This Agreement is made,
entered into, and effective this 31st day of December, 2007 (the “Effective
Date”) between Green Bankshares, Inc. (the
“Company”) and Kenneth R. Vaught (“Vaughtt”).

 

RECITALS

EMPLOYMENT

 

	
  A.

  	
   

  	
  The Company is a
  Tennessee corporation and serves as the bank holding company for GreenBank.

  
	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Vaught is willing and
  desires to accept or continue employment on the terms, covenants, and
  conditions set forth below.

  

 

 

THEREFORE, in
consideration of the parties’ mutual covenants and promises, all of which the
parties acknowledge are sufficient to support this Agreement, the Company and
Vaught agree as follows:

 

1.                                       Employment. The Company employs Vaught and Vaught
accepts such employment with the Company, subject to the terms and conditions
of this Agreement. Vaught will be employed as President and Chief Operating
Officer for the Company and will perform all duties and services incident to such position and such other duties and
services as delegated to Vaught by the Board of Directors. Vaught’s employment
shall be at-will and may be terminated by either party with or without
cause, subject to the terms and conditions of this Agreement.

 

2.                                       Term of Agreement. The initial term of this Agreement shall
commence on the Effective Date and continue through December 31, 2010,
subject, however, to prior termination and the survival of certain covenants as provided in this Agreement.
Additionally, on the expiration of the initial term or any subsequent
renewal term, this Agreement shall be automatically renewed and extended for successive periods of three (3) years
each, unless either party notifies the other of a termination at least
ninety (90) days prior to the end of the then current term.

 

3.                                       Compensation and Benefits.

 

	
  A.

  	
   

  	
  Salary. The Company
  will pay Vaught, and Vaught agrees to accept from the Company in payment for Vaught’s services under this
  Agreement, an initial salary of $237,000.00 per year, payable in
  accordance with the the Company’s normal payroll
  practices with such employment taxes and other customary withholdings as required with respect to compensation paid by
  a corporation to an employee. The salary set forth in this
  Section is subject to the discretion of the Board of Directors and may
  be modified from time to time by the Board of Directors, but shall not be
  reduced below the initial level specified in this Agreement

  
	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Bonus.
  In addition to Vaught’s salary, Vaught will be eligible for an annual bonus to be paid at the discretion of
  the Board of Directors based on the Board of Directors’ assessment of various
  performance measures, including, but not limited to, the Company’s return on
  assets, return on equity, and net income. Vaught shall have the option to
  take all or a portion of the bonus in restricted stock. Any bonus paid under this Section shall be paid no
  later than March 15 of the year following the year in which the
  bonus is earned.

  
	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Director’s Fees. In
  addition to his compensation as President and Chief Operating Officer, Vaught shall also receive director’s
  fees for his service on the Company’s Board of Directors. Such fees and service on the Company’s Board of
  Directors will be subject to the discretion of the Board of Directors
  in accordance with its legal authority and the Company’s bylaws and other
  governing documents.

  
	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Life
  Insurance. The Company will provide Vaught with a tem life insurance policy with $500,000 worth of coverage,
  payable to a beneficiary designated by Vaught. The provision of life insurance pursuant to this Agreement is subject
  to Vaught’s insurability and the terms of the applicable life
  insurance policy

  

 

 

 

 

1

 

 

 

E.                                 Benefits. During his employment with the Company, Vaught shall
have the right to participate in any and all
employee benefit programs maintained by the Company for its employees,
subject to the terms and conditions of such programs. Such employee benefit programs may include, without
limitation, medical benefits, health
insurance coverage, Executive Bonus Plan, incentive stock option plan, profit
sharing plan, qualified salary deferral plan, educational benefits plan and/or pension plan. The Company may modify or terminate
such programs from time to time.

 

4.                                       Expenses. The Company agrees
that it will reimburse Vaught in accordance with the terms of its policies and
procedures for any and all necessary, customary, and usual expenses incurred by Vaught in the course of his employment
with the Company.

 

5.                                       Vacation and
Holidays. Beginning January 1, 2008, Vaught shall be allowed
to take up to four (4) weeks
of paid vacation each calendar year. Unused vacation time may not be carried forward from year to year. Any legal holidays on
which the Company is closed shall not count as paid vacation time. Vaught shall
schedule his vacation such that he is absent from his duties for an
uninterrupted period of not less than one week each year.

 

6.                                       Vaught’s Devotion to
Business. Vaught shall devote his entire professional and business-related
time and energy to performing his duties faithfully under this Agreement and shall hold no other
paying job. Vaught agrees he will not engage in any other activity that has an adverse impact on the
fulfillment of his obligations under this Agreement or that takes any business opportunity away from the
Company.

 

7.                                       Option to Terminate Contract for
Permanent Disability of Vaught. Notwithstanding anything
in this Agreement to the contrary, the Company has the option to terminate this
Agreement in the event that, during
the term of this Agreement, Vaught becomes permanently disabled as the
term “permanently disabled” is defined in this section. The Company may
exercise such option by giving written notice to Vaught of its intention to
terminate this Agreement pursuant to this section.
After the Company gives such notice, this Agreement and the term of this Agreement
shall cease and come to an end on the last day of the month in which the notice
isdelivered with the same force and effect as if such last day of the month
were originally set forth as the Agreement’s
termination date. For the purposes of this Agreement, Vaught shall be deemed
to be permanently disabled if, because of ill health, physical or mental
disability, or for other causes beyond his control, he has failed to perform
his duties under this Agreement for thirteen (13) consecutive weeks, or if he
has failed to perform his duties for a total period of one hundred (100) days,
either consecutive or not, during any twelve-month period. Within ten (10) business days of termination, the Company shall
pay to Vaught a sum equal to one month of his then current salary, plus
an amount equal to the last annual bonus paid to him should Vaught’s disability
occur before any annual bonus is paid under this Agreement. Nothing in this
section, however, should be construed as inconsistent with, or relieve any
obligation that the Company may have under, the Americans with Disabilities Act
or similar state or local law.

 

8.                                       Termination.

 

A. Termination for Cause. The
Company shall have the right at any time to terminate Vaught’s employment
and this Agreement immediately for cause, which shall include any of the following reasons:

 

	
  (i)

  	
   

  	
  At the option of the
  Company, at any time after Vaught shall suffer a permanent disability as
  defined in Section 7 above, subject, however, to the terms of
  Section 7;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  Upon the death of
  Vaught;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  In
  the event that the Vaught breaches this Agreement in any material way and fails to cure such breach within
  ten (10) days of receiving written notice from the Company regarding
  such breach;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  In the event that
  Vaught fails to perform his duties in a manner thatthe Company requires so
  long as the Company has given Vaught written notice of his failure to perform
  his duties and provided him with at least thirty (30) days to improve
  performance to an acceptable level;

  

 

 

 

 

2

 

	
  (v)

  	
   

  	
  In the event that
  Vaught commits an act of gross negligence that causes harm to the Company;

  
	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  In the event that
  Vaught is convicted of, or pleads guilty (including a plea of nole contendere) to, a criminal act
  which is a felony or which is a misdemeanor involving moral turpitude;

  
	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  Excessive absenteeism;
  and

  
	
   

  	
   

  	
   

  
	
  (viii)

  	
   

  	
  Any misrepresentation
  or breach of the covenants and warranties contained in this Agreement.

  

 

 

In the
event the Company terminates Vaught’s employment for cause in accordance with
this Agreement, the Company shall have no further obligations to pay Vaught
except his accrued and unpaid salary through the termination date. Vaught shallnot be entitled to receive payment for any accrued
vacation time or any unpaid bonus, or
any deferred compensation benefits in the event that the Company terminates
Vaught’s employment for cause in accordance with this Agreement.

 

B.                  Termination Without Cause. The Company shall
have the right at any time to terminate Vaught’s employment and
this Agreement without cause during the term of this Agreement. Vaught shall
have the right to terminate his employment by giving the Company sixty (60) days prior written
notice. In the event Vaught terminates his employment by giving such prior
written notice, the Company shall have no further obligation to pay Vaught
except his accrued and unpaid salary through
the termination date and Vaught shall not be entitled to receive payment for
any accrued vacation time or any unpaid bonus. In the event the Company terminates Vaught’s employment without cause, the
Company shall have no further obligations
to pay Vaught except for a lump sum payment equal to one year of salary
plus an amount that is the average of the previous two years bonus. All payments under this section shall be made no
earlier than six (6) months following the date of termination.

 

9.                   Termination After Change
in Control. If within eighteen (18) months following a Change in Control,
as defined in this Agreement, the Company or its successor terminates Vaught’s employment Without Cause or if Vaught
voluntarily resigns following a change in position, a reduction in title, or a significant reduction in the duties which he is
to perform for the Company or its successor, then Company or its
successor shall pay the Change in Control Benefit described in Section 9(B) below.

 

A.                                        Definition of Change in Control. The term Change in Control shall mean the
Effective Date of a change in the ownership
of the Company, a change in the effective control of the Company or a change in the ownership of a substantial
portion of the assets of the Company
as provided under Section 409A of the Internal Revenue Code of 1986, as amended from time to time, and any
Internal Revenue Service guidance and regulations issued in connection
with Section 409A of the Internal Revenue Code of 1986, as amended.

 

B.                                          Change in Control
Benefit. The term Change in Control Benefit shall mean a lump sum
payment equal to 2.99 times Vaught’s annual base salary and bonus for the year immediately preceding
termination. The Change in Control Benefit payment shall be made no earlier
than six (6) months following the date of termination. The Change in Control Benefit shall be in lieu of any
payments under Section 8(B) above. If the Change in Control Benefit
would create an excise tax under the excess parachute rules of Section 4999
of the Internal Revenue Code, the
Company shall pay to Vaught the amount of such excise tax and all federal and state income or other taxes with
respect to any such additional amount (the “Gross-Up”). If Vaught incurs any
additional tax liability as a result of
any Gross-Up payments under this Section, the Company shall provide an additional
payment to Vaught to offset any such tax liability.

 

 

 

3

 

10.                                 Return of Property. Upon termination of employment for any
reason, Vaught shall promptly return the Company’s property, including, but not
limited to, all documents, financial records,
customer records, or business records of any type, including electronically
stored records, that are related in
any manner to the past, present, or anticipated business of the Company, and
any information of a confidential or proprietary nature.

 

11.                                 Dispute Resolution. Except as provided in this Section 11,
any dispute, controversy or claim arising
out of or in relation to or connection to this Agreement, including without limitation
any dispute as to the construction, validity, interpretation, enforceability or
breach of this Agreement, including a claim
for indemnification under Section 12, shall be resolved either as provided by applicable law, or, at the option of
either party, by impartial binding arbitration. In the event that either the Company or Vaught demands arbitration,
Vaught and the Company agree that such arbitration shall be the exclusive,
final and binding forum for the ultimate resolution of such claims, subject to any rights of appeal that
either party may have under the Federal Arbitration Act and/or under applicable state law dealing with the
review of arbitration decisions.

 

(a)                                  Arbitration. Arbitration shall be
heard and determined by one arbitrator, who shall be impartial and who shall
be selected by mutual agreement of the parties; provided, however, that if the dispute involves
more than $1,000,000, then the arbitration shall be heard and determined by
three (3) arbitrators. If three (3) arbitrators are necessary as provided above, then (i) each side shall
appoint an arbitrator of its choice within thirty (30) days of the submission of a notice of
arbitration and (ii) the party-appointed arbitrators shall in turn appoint
a presiding arbitrator of the tribunal within thirty (30) days following
the appointment of the last party-appointed arbitrator. If any party fails or
refuses to appoint an arbitrator, the arbitration shall proceed with one (1) arbitrator.

 

(b)                                 Demand for Arbitration. In the event that Vaught or the Company
initially elects to file suit in any court,
the other party will have 60 days from the date that it is formally served with a summons and a copy of the suit to
notify the party filing the suit of the non-filing party’s demand for arbitration. In that case, the suit must be
dismissed by consent of the parties or
by the court on motion, and arbitration commenced with the arbitrators. In
situations where suit has not been filed, either Vaught or the Company may
initiate arbitration by serving a written
demand for arbitration upon the other party. Such a demand must be served within twelve months of the
events giving rise to the dispute. Any claim that is not timely made
will be deemed waived.

 

(c)                                  Proceedings. Unless otherwise
expressly agreed in writing by the parties to the arbitration proceedings:

 

	
  (i)

  	
   

  	
  The arbitration
  proceedings shall be held in the Knox County, Tennessee, area, and at a site
  chosen by mutual agreement of the parties. If the parties cannot reach agreement on a location within thirty (30)
  days of the appointment of the last arbitrator, then at a site chosen
  by the arbitrators;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  The arbitrators shall
  be and remain at all times wholly independent and impartial;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  The arbitration proceedings
  shall be conducted in accordance with the Employment
  Arbitration Rules of the American Arbitration Association, as amended
  from time to time;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  Any procedural issues
  not determined under the arbitral rules selected pursuant to item (iii) above shall be determined by the law of the
  place of arbitration, other than
  those laws which would refer the matter to another jurisdi

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  The costs of the
  arbitration proceedings (including attorneys’ fees and costs) shall be borne
  in the manner determined by the arbitrators;

  

 

 

 

 

4

 

	
  (vi)

  	
   

  	
  The arbitrators may
  grant any remedy or relief that would have been available to the parties had
  the matter been heard in court;

  
	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  The
  decision of the arbitrators shall be reduced to writing; final and binding without the right of appeal;
  the sole and exclusive remedy regarding any claims, counterclaims, issues or
  accounting presented to the arbitrators; made and promptly paid in United States dollars free of any deduction or
  offset; and any costs or fees
  incident to enforcing the award shall to the maximum extent permitted
  by law, be charged against the party resisting such enforcement;

  
	
   

  	
   

  	
   

  
	
  (viii)

  	
   

  	
  The
  award shall include interest from the date of any breach or violation of this Agreement, as determined by the
  arbitral award, and from the date of the award until paid in full, at 6% per
  annum; and

  
	
   

  	
   

  	
   

  
	
  (ix)

  	
   

  	
  Judgment
  upon the award may be entered in any court having jurisdiction over the person or the assets of the
  party owing the judgment or application may be made to such court for a
  judicial acceptance of the award and an order of enforcement, as the case may
  be.

  

 

 

(d)               Acknowledgment of
Parties. The Company and Vaught understand and acknowledge that
this Agreement means that neither can pursue an action against the other in a court of law regarding any
employment dispute, except for claims involving workers’ compensation benefits
or unemployment benefits, and except as set forth elsewhere in this Agreement, in the event that either party notifies
the other of its demand for
arbitration under this Agreement. The Company and Vaught understand and agree
that this Section 11, concerning
arbitration, shall not include any controversies or claims related to any agreements or provisions (including
provisions in this Agreement) respecting confidentiality, proprietary
information, non-competition, non-solicitation, trade secrets, or breaches of fiduciary obligations by Vaught, which
shall not be subject to arbitration.

 

(e)                Consultation. Vaught has been
advised of his right to consult with an attorney prior to entering into this Agreement.

 

12.                                 Indemnification. Vaught shall be
indemnified and held harmless from any and all claims, damages and losses of whatsoever kind,
including without limitation court costs and reasonable attorneys fees through
appeal, resulting from any and all legal actions when he is either a party,
witness or a participant brought against the Company, its subsidiary companies,
Vaught, another employee or director of the
Company, or any other third party when such action relates to or arises from
Vaught’s employment with the Company or this Agreement. Vaught will also be
protected through any indemnity, insurance
or other similar programs that cover the outside Board members or other
employees of the Company.

 

13.                                 Warranties and
Representations. To induce the Company to enter into this Agreement, Vaught warrants
and  represents to the Company that he is
not under any obligation, contractual or otherwise, that would prohibit or
contravene in any way his acceptance of employment or continued employment
with the Company and the performance of his obligations under this Agreement.

 

14.                                 Contract Terms To Be
Exclusive. This Agreement contains the sole and entire agreement between the parties and shall supersede
any and all other agreements between the parties with respect to the subject matter of this Agreement. The parties acknowledge
and agree that neither of them has
made any representation with respect to the subject matter of this Agreement or
any representations including the
execution and delivery of this Agreement except such representations as
are specifically set forth in this Agreement.

 

15.                                 Waiver or Modification Ineffective Unless
in Writing. No
waiver or modification of this Agreement or
of any covenant, condition, or limitation contained in this Agreement shall be valid
unless in writing and duly executed by the party to be charged with it, and
that no evidence of any waiver or modification shall be offered or received in
evidence in any proceeding or litigation
between the parties unless such waiver or  modification is in writing and duly executed. The
parties agree that the provisions of this Section may not be waived except
as set forth in this Section.

 

 

 

5

 

16.                                 Choice of Law and
Venue. This Agreement shall be construed and interpreted in accordance with the laws of the State of
Tennessee, without applying the conflict of laws rules of such state. In
addition, the parties consent to the jurisdiction of the State of Tennessee for
any lawsuit arising under this Agreement.
The parties also agree that the venue for any lawsuit arising under this
Agreement shall be in Greene County, Tennessee.

 

17.                                 Waiver of Breach. Failure to insist
upon strict compliance with any of the terms, covenants, or conditions of this
Agreement, shall not be deemed a waiver of such terms, covenants, or
conditions, nor shall any waiver or relinquishment of such right or power hereunder at any time
or times be deemed a waiver or relinquishment of such right or power at any other time or times.

 

18.                                 Severability. The invalidity or
unenforceability of any provision of this Agreement shall in no way effect the validity or
enforceability of any other provision. Furthermore, to the extent this Agreement is inconsistent with federal or
state law, this Agreement shall be deemed amended to the extent
necessary to make it consistent and in compliance with such laws.

 

19.                                 Binding Effect or Successors/Assignability.
The Company
reserves the right to assign this Agreement to its successors and assigns.
Vaught may not assign this Agreement.

 

20.                                 Free Will. The undersigned
parties have read and understood the foregoing provisions

and are entering this
Agreement on their own free will.

 

 

6

 

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

 

 

 

 

GREEN
BANKSHARES, INC.

 

 

 

	
  By:

  	
  /s/ Terry
  Leaonard

  	
   

  
	
  Title:

  	
  Chairman of
  Commensation Commttiee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Kenneth R.
  Vaught

  	
   

  
	
   

  	
  Kenneth R.
  Vaughtt

  	
   

  

 

 

 

 

 

7Exhibit 10.37

 

TRANSITION SERVICES AGREEMENT

 

This TRANSITION SERVICES AGREEMENT (this “Agreement”)
effective as of January 1, 2008, is entered into by and between AIR PRODUCTS AND CHEMICALS, INC., a Delaware corporation (“Air
Products”), and KMG CHEMICALS, INC., a Delaware
corporation (“KMG”).

 

BACKGROUND

 

A.                                      Air Products
and KMG are parties to an Asset Purchase Agreement dated as of October 19,
2007 (the “Purchase Agreement”), pursuant to which KMG is acquiring the
Transferred Assets, as are more fully described therein.  Parent has assigned all of its rights under
the Purchase Agreement to its wholly-owned subsidiary, KMG Electronic Chemicals, Inc.

 

B.                                        KMG wishes Air
Products to supply certain administrative and other services to KMG (or its
affiliates) pursuant to the terms of this Agreement during the periods referred
to herein to facilitate an orderly transition of the Transferred Assets to KMG.

 

C.                                        Air Products is
willing to provide those services requested by KMG (or its affiliates) through
employees of Air Products or its affiliates, all in accordance with the terms
and provisions set forth in this Agreement.

 

D.                                       Capitalized
terms used herein but not otherwise defined shall have the meanings assigned to
them in the Purchase Agreement.

 

NOW, THEREFORE, Air Products
and KMG, in consideration of the mutual covenants set forth below and for good
and valuable consideration, the sufficiency of which is hereby acknowledged,
and intending to be legally bound, do hereby agree as follows:

 

TERMS

 

1.                                          Furnishing and
Cancellation of Services. In exchange for good and valuable
consideration, including the consideration payable by KMG to Air Products set
forth in Schedule A hereto, Air Products will furnish to KMG (or KMG’s
affiliates) from Air Products’ staff (as appropriate), or cause certain of its
affiliates to furnish to KMG (or KMG’s affiliates) from the staffs of Air
Products’ affiliates (as appropriate), such services specifically identified in
and in accordance with Schedule A (the “Services”), as and when KMG (or KMG’s
affiliates) shall from time to time reasonably request and are from time to
time available to Air Products from its staff, or the staffs of its affiliates.
 In addition, the parties hereto agree
that they will further define and delineate the scope of such Services in more
detail than what was originally set forth in Schedule A, as appropriate.  KMG agrees to purchase the Services in
accordance with the terms of this Agreement. 
KMG may cancel any of the Services at any time on thirty (30) days
prior written notice.

 

2.                                          Personnel
Providing Services.  The
selection of the personnel who will furnish 

 

 

the Services shall be made by Air Products in its
sole discretion.  All personnel providing
Services and the supervisors of such personnel will be granted access to KMG’s
sites as reasonably necessary or appropriate for them to fulfill their
obligations hereunder; provided however, that no person shall be required to
remain at a site if conditions at such site present a hazard to such person’s
health or safety.  In no event shall Air
Products or its affiliates be required to hire additional individuals or to
retain any specific individual in its employ to provide Services hereunder.  The Services shall be performed to the same
standard of care as if they were being performed for Air Products and by
individuals possessing the same qualifications as Air Products would require if
such Services were being performed for Air Products prior to the Closing.

 

3.                                     Fees for
Services. The fees or basis for the fees for the Services
are set forth in Schedule A. Air Products shall invoice KMG monthly for all
Services as to which a fee applies, and KMG shall pay each such invoice within
fifteen (15) days of the date of such invoice. 
Any invoice that is not so paid will accrue interest from the sixteenth
(16th) day after the invoice date until the date of payment at a
rate equal to one and three fourths percent (1 3⁄4%) over the published prime
lending rate from time to time in effect at The Chase Manhattan Bank in New York,
New York, U.S.A.

 

4.                                     Additional
Services. If KMG or KMG’s affiliates reasonably determine
that additional transition services of the type previously provided by Air
Products to the Business are necessary to complete the transition, Air Products
agrees to provide such services to KMG (or KMG’s affiliates).  If any additional services will be added to
this Agreement (“Additional Services”), representatives of Air Products
and KMG (or KMG’s affiliates) will meet in good faith to discuss, negotiate and
agree upon the terms and conditions (including cost) upon which such Additional
Services will be provided.  Any such
Additional Services mutually agreed to and the fees thereof shall be effective
as of the date of execution of an amendment to this Agreement by duly
authorized representatives of the parties hereto.

 

5.                                     Term and
Termination of Agreement.  This
Agreement shall commence on and as of the date hereof and shall terminate on
the close of business on the date which is twelve (12) months after the Closing
Date or such other date (with respect to any particular Service) in accordance
with the requirements of Schedule A, unless sooner terminated in accordance
with any other express provision of this Agreement or by written agreement of
the parties.

 

6.                                     Force Majeure.

 

                                              (a)                               Air Products
will be excused from performing hereunder and will not be liable in damages or
otherwise when and to the extent its performance is delayed or prevented by any
circumstance beyond its reasonable control and not due to its negligence (a “Force
Majeure”), including, without limitation, the following:  fires; floods; earthquakes; storms; unusual
weather conditions; explosions; accidents; breakdowns of machinery or
equipment; inability to obtain equipment, fuel or other materials; lack of
transportation or distribution facilities; labor shortages, slowdowns, strikes,
lockouts or other disputes; riots or other civil disturbances; or voluntary or
involuntary compliance with any law, order, regulation, official recommendation
or request of any governmental authority.

 

 

                                              (b)                              If the
performance of any obligation hereunder is sought to be excused by reason of a
Force Majeure, Air Products shall promptly notify KMG in writing of the Force
Majeure, the anticipated extent of the delayed or prevented performance and the
steps it will take to remedy the situation. 
Air Products shall use commercially reasonable efforts to cure or remedy
such cause of non-performance in a timely manner; provided
however, that it shall not be required to make any concession or
grant any demand or request to settle any strike or other labor dispute.  In no event will Air Products be obligated to
procure individuals from other sources to enable it to perform its obligations
hereunder.

 

7.                                     Limitation of
Liability; Indemnity.

 

                                              (a)                               Determination
of the suitability of any Services furnished hereunder for the use contemplated
by KMG is the sole responsibility of KMG, and Air Products will have no
responsibility in connection therewith. 
KMG assumes all risk and liability for loss, damage or injury to persons
or property arising out of such Services however used, and Air Products shall
in no event be liable to KMG or those claiming by, through or under KMG
(including employees, agents, customers, subtenants, contractors and other
invitees) for any damage, including, without limitation, personal or property
damage, suffered by any of them, directly or indirectly, as a result of any
Services provided hereunder, regardless of whether due or alleged to be due to
the negligence of Air Products, except for damages to the extent such damage is
occasioned by Air Products’ gross negligence or willful misconduct.  Notwithstanding the foregoing, Air Products
shall indemnify KMG for any and all losses arising from or related to any damage
caused by Air Products’ gross negligence or willful misconduct.

 

                                              (b)                              AIR
PRODUCTS SHALL NOT, UNDER ANY CIRCUMSTANCES, BE LIABLE TO KMG FOR ANY
INCIDENTAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND, INCLUDING,
WITHOUT LIMITATION, BUSINESS INTERRUPTION LOSSES OR THIRD-PARTY CLAIMS, WHETHER
CAUSED BY BREACH OF THIS AGREEMENT, NEGLIGENCE OR OTHERWISE.

 

                                              (c)                               KMG shall
indemnify Air Products and its affiliates and their respective officers,
directors, employees and agents (each an “Air Products Indemnitee”) against all
costs, judgments, claims, liabilities, damages, losses, penalties and expenses
(collectively “Damages”) suffered by any of them that pertain to the
performance of the Services (whether or not allegedly arising out of
negligence, tort, strict liability or otherwise), regardless of whether such
Damages are caused in whole or in part by the negligence of the Air Products
Indemnitee, or in connection with the defense of any action based on such
activities, including reasonable attorneys’ fees and expenses of investigation
(which fees and expenses shall be paid as incurred); provided
however, that such indemnity shall not apply for the benefit of an
Air Products Indemnitee if it is ultimately found through settlement or by
final, non-appealable order that such Air Products Indemnitee’s actions
constituted gross negligence or willful misconduct.  This indemnification shall apply
notwithstanding any limitations arising out of workers’ compensation or other
like statutes.

 

                                              (d)                              The provisions
of this Section 7 shall survive expiration, termination or 

 

 

cancellation of this Agreement and shall be
enforceable to the fullest extent permitted by law or in equity.

 

8.                                  Dispute
Resolution.

 

(a)                               As to any
controversy, claim or dispute between the parties arising out of or in
connection with the interpretation or performance of this Agreement, the
parties shall first negotiate in good faith to resolve such dispute.  If the parties are unable to resolve the dispute
to their mutual satisfaction within thirty (30) days after one party gives
written notice to such effect to the other, then either party may submit the
dispute to arbitration for final settlement, which arbitration shall be
conducted in accordance with the following procedures:

 

                                                                                           (i)                                     The arbitration
shall be held in accordance with the then-current CPR Rules for
Non-Administered Arbitration, by a single arbitrator to be selected by the CPR
International Institute for Conflict Prevention & Resolution (“CPR”)
from the CPR Panel of Neutrals.  The
arbitrator shall be qualified by education, experience and training to decide
the issues to be arbitrated.  The arbitration
shall be held in Houston, Texas, U.S.A.,  and shall be
conducted in the English language.  The
decision of the arbitrator shall be final, binding and conclusive upon the
parties.

 

                                                                                           (ii)                                  The arbitrator,
in its sole discretion, may order the taking of such evidence as it determines
is necessary to resolve the dispute.

 

                                                                                           (iii)                               Any arbitration
award rendered in accordance with this Section 8 shall be enforceable by a
party in any court having jurisdiction over the party against whom the award
has been rendered or at the place where assets of the party against whom the
awarded has been rendered are located.

 

                                                                                           (iv)                              Unless the
decision of the arbitrator shall otherwise direct, the parties shall bear
equally the costs and expenses of the arbitration and each party shall bear its
own costs and expenses of its own counsel, advisors and experts.

 

                                                                                           (v)                                 Either party may apply the arbitrator seeking
injunctive relief until the arbitration award is rendered or the controversy is
otherwise resolved.  Either party also
may, without waiving any remedy under this Agreement, seek from any court
having jurisdiction any interim or provisional relief that is necessary to
protect the rights or property of that party, pending the appointment of the
arbitrator (or pending the arbitrator’s determination of the merits of the
controversy), including without limitation any injunctive or other equitable
relief.

 

                                              (b)                              The parties
shall continue to perform their obligations under this Agreement during the
arbitration proceedings, and no undisputed payment due hereunder shall be
withheld on account of such proceedings if the propriety of payment itself is
the subject of the arbitration.

 

9.                                  Remedies for
Default.

 

If a party:

 

 

(i)                                  defaults in the
payment of any indebtedness hereunder to the other party and fails to remedy
such breach within ten (10) days of written notice of such default from
the non-defaulting party; or

 

(ii)                               commits a
breach of any other provision of this Agreement in any material respect and
fails to remedy such breach within ten (10) days of written notice of such
breach from the non-defaulting party (or such longer period if a cure not
capable of being completed within such ten 
(10) day period has been commenced and is being diligently
pursued); or

 

(iii)                            voluntarily
files, or involuntarily has filed against it (which filing is undismissed
within sixty (60) days of such involuntary filing), any bankruptcy,
receivership, insolvency or reorganization proceeding;

 

then in any such event the
other party will have the right, in addition to any other rights and remedies
it may have hereunder, to suspend deliveries or receipts hereunder or to
terminate this Agreement if such delay or default substantially impairs the
value of the entire Agreement to the non-defaulting party.

 

10.                               Miscellaneous.

 

(a)                                The terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and the respective successors and permitted assigns.  Neither party may assign its rights or
obligations hereunder without the prior written consent of the other party,
which consent shall not be unreasonably withheld, conditioned or delayed;
provided however, that Air Products may assign, in whole or in part, any of its
rights and/or obligations hereunder to any affiliate of Air Products without
KMG’s consent and KMG may assign, in whole or in part, any of its rights and/or
obligations hereunder to any affiliate of KMG without Air Products’ consent. No
assignment will release the assigning party from any of its obligations
hereunder unless the other party expressly agrees to such release in writing.

 

(b)                               This Agreement
shall be governed by and construed in accordance with the laws of the State of Texas
without regard to its principles of conflict of laws.

 

(c)                                This Agreement
contains the entire understanding of the parties with respect to the subject
matter hereof. No supplement, modification or amendment of the Agreement shall
be binding unless in writing and executed by KMG and Air Products.

 

(d)                               This Agreement
may be signed in any number of counterparts, each of which for all purposes
shall be deemed to be an original and all of which together shall constitute
the same agreement.

 

(e)                                The headings of
the Sections of this Agreement are inserted as a matter of convenience and for
reference purposes only, are of no binding effect, and in no respect define,
limit or describe the scope of this Agreement or the intent of any Section hereof.

 

 

(f)                                  Nothing in this
Agreement, express or implied, is intended or shall be construed to confer upon
or give to any person, firm or corporation other than the parties hereto any
remedy or claim under or by reason of this Agreement or any term, covenant or
condition hereof, all of which shall be for the sole and exclusive benefit of
the parties hereto.

 

(g)                               All notices,
demands, requests and other communications required or permitted to be given
hereunder shall be deemed duly given on the date delivered by hand, mailed by
registered or certified mail, postage prepaid or sent by overnight courier and,
pending the designation of another address, addressed as follows:

 

If
to KMG:

 

KMG Chemicals, Inc.

10611 Harwin Drive, Suite 402

Houston, Texas 77036

Attention:
Roger C. Jackson

Facsimile: (713) 600-3150

 

with a copy to:

 

Haynes and Boone, LLP

1221 McKinney Street, Suite 2100

Houston, Texas 77002

Attention:  George G. Young III and William B. Nelson

Facsimile: (713) 236-5557

 

If
to Air Products:

 

                                                                                                Air Products
and Chemicals, Inc.

                                                                                                7201 Hamilton
Boulevard

                                                                                                Allentown,
Pennsylvania 18195-1501

                                                                                                Attention:  Corporate Secretary and General Counsel

                                                                                                Facsimile:
(610) 481-5765

 

with a copy to:

 

Corporate Secretary

 

                                                                                                (h)                                 The failure by
any party to exercise any of its rights hereunder or to enforce any of the
terms and conditions of this Agreement on any occasion shall not constitute or
be deemed a waiver of that party’s rights thereafter to exercise any rights
hereunder or to enforce each and every term and condition of this Agreement.

 

[signature page follows]

 

 

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

 

	
   

  	
  KMG CHEMICALS, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  
	
   

  
	
   

  	
  AIR PRODUCTS AND CHEMICALS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

Signature Page to
Transition Services Agreement (from Air Products to KMG)

 

 

Schedule to Transition Services Agreement

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