Document:

exv10w12

Exhibit 10.12

2010

Coventry Health Care, Inc.

Executive Management Incentive Plan

Section 1. Purpose

The purpose of this Plan is to advance the interests of the Company and its shareholders by
attracting and retaining key employees, and by stimulating the efforts of such employees to
contribute to the continued success and growth of the business of the Company. This Plan is
governed by the terms and conditions of the Coventry Health Care, Inc. 2004 Incentive Plan (“2004
Incentive Plan”) and awards hereunder shall be “Performance Awards” to Covered Officers as defined
in Sections 8 and 9 of the Incentive Plan.

Section 2. Definitions

	(a)	 	“Base Salary” shall mean a Participant’s annualized base salary.
	 
	(b)	 	“Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time
and any proposed, temporary or final Treasury Regulations.
	 
	(c)	 	“Committee” shall mean the Compensation and Benefits Committee of the Board of Directors of
the Company. Each member of the Committee shall be an “outside director” within the meaning
of Section 162(m) of the Code.
	 
	(d)	 	“Company” shall mean Coventry Health Care, Inc. and any of its subsidiaries or affiliates,
whether established now or in the future.
	 
	(e)	 	“Incentive Awards” shall have the meaning set forth in Section 4 herein.
	 
	(f)	 	“Participants” shall mean the Chief Executive Officer (CEO), and any other executive officer
of the Company designated by the Committee, as provided for herein, to participate with
respect to a Performance Period in the Plan.
	 
	(g)	 	“Performance Period” shall mean each consecutive twelve-month period commencing on January 1
of each year during the term of this plan and coinciding with the Company’s fiscal year.
	 
	(h)	 	“Performance Measurement” shall mean one or more pre-established, objective financial metrics
as selected by the Committee and defined in Section 4 herein.
	 
	(i)	 	“Performance Threshold” shall mean a specified, pre-established level of achievement of one
of the Company’s Performance Measurements.
	 
	(j)	 	“Plan” shall mean the Coventry Health Care Inc., Executive Management Incentive Plan.
	 
	(k)	 	“Target Award” shall mean a percentage of Base Salary, which may be greater or less than
100%, as determined by the Committee with respect to each Performance Period.

Section 3. Administration

The Plan shall be administered by the Committee. The Committee shall have full power and authority,
subject to all the applicable provisions of the Plan and applicable law, to (i) establish, amend,
suspend or waive such rules and regulations and appoint such agents as it deems necessary or
advisable for the proper administration of the Plan, (ii) construe, interpret and administer the
Plan and any instrument or agreement relating to the Plan, and (iii) make all other determinations
and take all other actions necessary or advisable for the administration of the Plan. Unless
otherwise expressly provided in the Plan, each determination made and each action taken by the
Committee pursuant to the Plan or any instrument or agreement relating to the Plan (x) shall be
within the sole discretion of the Committee, (y) may be made at any time and (z) shall be final,
binding and conclusive for all purposes on all persons, including, but not limited to Participants
and their legal representatives and beneficiaries, and employees of the Company.

 

 

Section 4. Awards

(a) Determination of Target Award and Eligible Employees. At any time ending on or before the
90th calendar day during each Performance Period, the Committee shall designate all
Participants and their Target Awards for such Performance Period, and establish one or more
Performance Measurements. Following the close of each Performance Period and prior to payment to
any Participant under the Plan, the Committee must confirm that the Performance Threshold(s) used
for the basis of the payout, has been met.

(b) Incentive Awards. The Committee will grant Incentive Awards under the Plan (an “Incentive
Award”). The Committee shall determine the proportion of Incentive Award that shall be paid in cash
and/or Company stock. Award payments in shares of Company stock shall be valued at the closing
sale price on the New York Stock Exchange on the day prior to the date of grant. Incentive Awards
shall be “qualified performance-based compensation” within the meaning of Section 162(m) of the
Code and shall be granted in accordance with the following:

Pre-Established Formula. In the event that the Company’s actual Performance Measurement for a
Performance Period is equal to or exceeds the designated Performance Threshold for the
Performance Period, then each Participant shall receive an Incentive Award for that
Performance Period in an amount not to exceed 1% of operating earnings.

(c) Performance Measurement. The specific performance measurement for employees who are
covered under the Plan shall be based upon achievement of one or more of the following financial
objectives:

	•	 	Net Earnings Per Share
	 
	•	 	Revenue Growth
	 
	•	 	Operating Earnings
	 
	•	 	Membership Growth
	 
	•	 	Return on Equity
	 
	•	 	Earnings Growth

(d) Performance Measurement Weighting. Designated Participants will also have their award modified
based on Business/Division results and achievement of individual performance goals.

Section 5. General Provisions

(a) Discretionary Reduction. The Committee shall retain sole and full discretion to reduce by
any amount the Incentive Award otherwise payable to any Participant under this Plan.

(b) Continued Employment. No Incentive Award shall be paid to a Participant who is not actively
employed by the Company at the time the Incentive Award otherwise would be paid except in the case
of retirement, death or permanent disability. If a Participant retires before the end of a
Performance Period or after the end of a Performance Period but before an Incentive Award is paid,
the Committee may, in its discretion, determine that the Participant shall be paid a pro rated
portion of the Incentive Award that the Participant would have received. If a Participant dies or
becomes permanently and totally disabled before the end of a Performance Period or after the end of
a Performance Period but before an Incentive Award is paid, the Committee may, in its discretion,
determine that the Participant (or, in the case of death, the Participant’s estate) shall be paid a
pro rated portion of the Incentive Award that the Participant would have received. The Committee
shall determine the Participant’s date of disability per Company policy and practice.

(c) Tax Withholding. The Company shall have the right to deduct from all amounts paid pursuant to
the Plan any taxes required by law to be withheld with respect to Incentive Award payments. Any
amounts so withheld shall be treated as paid to the Participant (or the Participant’s beneficiary
or estate, if applicable) for all purposes of the Plan.

(d) No Rights to Awards. No employee shall have any claim to be granted any Incentive Award under
the Plan, and there is no obligation for uniformity of treatment of Participants or their
beneficiaries under the Plan.

(e) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the
Company from adopting or continuing in effect other or additional compensation arrangements, and
such arrangements may be either generally applicable or applicable only in specific cases.

(f) Term. This plan shall expire on the date of the annual shareholders meeting that occurs in the
fifth year following the date it is approved by the shareholders of the Company, unless re-approved
by stockholders on or before such date.Exhibit 10.39

Exhibit
10.39

AMENDED AND RESTATED CREDIT AGREEMENT

DATED AS OF DECEMBER 31, 2007

KMG CHEMICALS, INC.,

KMG-BERNUTH, INC., and

KMG ELECTRONIC CHEMICALS, INC.,

AS BORROWERS,

WACHOVIA BANK, NATIONAL ASSOCIATION,

AS AGENT AND COLLATERAL AGENT,

and

THE LENDERS IDENTIFIED HEREIN

 

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Article I
	 	 	1	 
	1. DEFINITIONS AND GENERAL PROVISIONS
	 	 	1	 
	1.1 Intercreditor Agreement
	 	 	1	 
	1.2 Defined Terms
	 	 	2	 
	1.3 Accounting Terms
	 	 	35	 
	1.4 UCC Terms
	 	 	35	 
	1.5 Construction of Terms
	 	 	35	 
	1.6 Computation of Time Periods
	 	 	35	 
	1.7 Computation of ABR Margin, LIBOR Margin, Unused Fee Percentage and Financial Covenants
	 	 	36	 
	1.8 Reference to Borrowers and Borrower Parties
	 	 	36	 
	1.9 Reference to Lenders and Lender Parties
	 	 	36	 
	1.10 Joint and Several Liability of Borrowers
	 	 	37	 
	1.11 Lender Party Swap Documents
	 	 	39	 
	1.12 Lien Granted For Lender Party Swap Obligations
	 	 	39	 
	Article II
	 	 	39	 
	2. THE REVOLVING LOAN
	 	 	39	 
	2.1 General Terms
	 	 	39	 
	2.2 Disbursement of the Revolving Loan
	 	 	40	 
	2.3 The Revolving Notes
	 	 	40	 
	2.4 Interest Rate
	 	 	40	 
	2.5 Payments of Principal and Interest
	 	 	41	 
	2.6 Use of Proceeds of Revolving Loan
	 	 	41	 
	Article III
	 	 	42	 
	3. THE SWING LINE LOAN
	 	 	42	 
	3.1 General Terms
	 	 	42	 
	3.2 Disbursement of the Swing Line Loan
	 	 	42	 
	3.3 The Swing Line Note
	 	 	43	 
	3.4 Interest Rate
	 	 	43	 
	3.5 Payments of Principal and Interest
	 	 	43	 
	3.6 Use of Proceeds of Swing Line Loan
	 	 	44	 
	3.7 Failure to Purchase Pro Rata Share of Swing Line Loan Advances
	 	 	44	 
	Article IV
	 	 	44	 
	4. LETTERS OF CREDIT
	 	 	44	 
	4.1 Issuance of Letters of Credit
	 	 	44	 
	4.2 Reimbursement and Other Payments
	 	 	44	 
	4.3 Additional Remedies
	 	 	45	 
	4.4 No Liability of Issuing Lender
	 	 	46	 
	4.5 Indemnification
	 	 	46	 
	4.6 Pro Rata Participation, Drawing and Reimbursement With Respect to Letters of Credit
	 	 	46	 
	4.7 Failure to Purchase Pro Rata Share of Letter of Credit Advances
	 	 	47	 
	4.8 Letter of Credit Reports
	 	 	47	 

 

i

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Article V
	 	 	47	 
	5. THE TERM LOAN
	 	 	47	 
	5.1 General Terms
	 	 	47	 
	5.2 The Term Notes
	 	 	47	 
	5.3 Interest Rate
	 	 	48	 
	5.4 Payments of Principal and Interest
	 	 	48	 
	5.5 Use of Proceeds of Term Loan
	 	 	49	 
	Article VI
	 	 	49	 
	6. PAYMENTS, ADDITIONAL COSTS, ETC.
	 	 	49	 
	6.1 Payment to Agent
	 	 	49	 
	6.2 Late Payments
	 	 	49	 
	6.3 Prepayment
	 	 	49	 
	6.4 Default Rate
	 	 	50	 
	6.5 No Setoff or Deduction
	 	 	50	 
	6.6 Payment on Non-Business Day; Payment Computations
	 	 	50	 
	6.7 Indemnification
	 	 	51	 
	6.8 360-Day Year
	 	 	51	 
	6.9 No Requirement to Actually Obtain Funds
	 	 	51	 
	6.10 Usury Limitation
	 	 	51	 
	6.11 Ratable Sharing
	 	 	51	 
	Article VII
	 	 	52	 
	7. CONDITIONS PRECEDENT
	 	 	52	 
	7.1 Documents Required for the Closing
	 	 	52	 
	7.2 Certain Events Required for Closing and for all Advances
	 	 	54	 
	7.3 Legal Matters
	 	 	55	 
	7.4 Election to Make Advances Prior to Satisfaction of Conditions Precedent
	 	 	55	 
	Article VIII
	 	 	56	 
	8. COLLATERAL SECURITY
	 	 	56	 
	8.1 Grant of Lien
	 	 	56	 
	8.2 Maintenance of Lien
	 	 	56	 
	Article IX
	 	 	56	 
	9. REPRESENTATIONS AND WARRANTIES
	 	 	56	 
	9.1 Existence
	 	 	57	 
	9.2 Authority
	 	 	57	 
	9.3 Equity Owners and Equity Agreements
	 	 	57	 
	9.4 Name
	 	 	57	 
	9.5 Material Contracts
	 	 	57	 
	9.6 Consents or Approvals
	 	 	57	 
	9.7 Violations or Actions Pending
	 	 	58	 
	9.8 Affiliates
	 	 	58	 
	9.9 Existing Indebtedness
	 	 	58	 
	9.10 Defaults Under Material Contracts
	 	 	58	 
	9.11 Tax Returns
	 	 	58	 
	9.12 Financial Statements
	 	 	59	 
	9.13 Good and Marketable Title
	 	 	59	 
	9.14 Real Property Locations
	 	 	59	 
	9.15 Solvency
	 	 	59	 

 

ii

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	9.16 ERISA
	 	 	59	 
	9.17 Priority of Liens
	 	 	59	 
	9.18 Patents, Copyrights, Etc.
	 	 	59	 
	9.19 Accuracy of Documents
	 	 	60	 
	9.20 Environmental Matters
	 	 	60	 
	9.21 Condemnation
	 	 	60	 
	9.22 Assigned Agreements
	 	 	60	 
	9.23 Full Disclosure
	 	 	60	 
	9.24 Regulated Industries
	 	 	61	 
	9.25 Insurance
	 	 	61	 
	9.26 Anti-Terrorism Laws
	 	 	61	 
	9.27 Securities Laws
	 	 	62	 
	9.28 Continuing Effectiveness
	 	 	62	 
	Article X
	 	 	62	 
	10. BORROWER’S COVENANTS
	 	 	62	 
	10.1 Affirmative Covenants
	 	 	62	 
	10.2 Negative Covenants
	 	 	66	 
	10.3 Financial Covenants
	 	 	68	 
	10.4 Insurance and Insurance Proceeds
	 	 	69	 
	10.5 Borrower’s General Covenants and Agreements Pertaining to the Collateral
	 	 	70	 
	10.6 Collection of Accounts; Segregation of Proceeds, Etc.
	 	 	72	 
	10.7 Collection Methods
	 	 	72	 
	10.8 Verification of Accounts
	 	 	72	 
	10.9 Notice Regarding Disputed Accounts
	 	 	72	 
	10.10 Records, Schedules and Assignments
	 	 	72	 
	10.11 Visitation
	 	 	72	 
	10.12 Use of Tangible Property
	 	 	73	 
	10.13 Collateral Evidenced by Instruments or Documents
	 	 	73	 
	10.14 Maintaining Bank Accounts
	 	 	73	 
	10.15 Filing Fees and Taxes
	 	 	74	 
	10.16 Assigned Agreements
	 	 	74	 
	10.17 Air Products APA Documents
	 	 	74	 
	10.18 Underlying Documentation
	 	 	74	 
	10.19 Further Assurances
	 	 	74	 
	10.20 Post-Closing Matters
	 	 	74	 
	Article XI
	 	 	75	 
	11. DEFAULT
	 	 	75	 
	11.1 Events of Default
	 	 	75	 
	11.2 No Advances After Default
	 	 	77	 
	11.3 Acceleration
	 	 	78	 
	11.4 General Remedies
	 	 	78	 
	11.5 Agent’s Additional Rights and Remedies
	 	 	78	 
	11.6 Right of Set-Off
	 	 	81	 
	11.7 No Limitation on Rights and Remedies
	 	 	81	 
	11.8 Repossession of the Collateral; Care and Custody of the Collateral, Etc.
	 	 	82	 

 

iii

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	11.9 Application of Proceeds
	 	 	82	 
	11.10 Attorney-in-Fact
	 	 	83	 
	11.11 Default Costs
	 	 	84	 
	Article XII
	 	 	84	 
	12. THE AGENT
	 	 	84	 
	12.1 Authorization and Action
	 	 	84	 
	12.2 Agent’s Notices, Etc.
	 	 	86	 
	12.3
Agent’s Reliance, Etc.
	 	 	86	 
	12.4 No Reliance on Agent’s Customer Identification Program
	 	 	87	 
	12.5 Wachovia and Affiliates
	 	 	87	 
	12.6 Lender Credit Decision
	 	 	87	 
	12.7 Indemnification
	 	 	87	 
	12.8 Successor Agent
	 	 	88	 
	12.9 No Third Party Beneficiary
	 	 	88	 
	Article XIII
	 	 	89	 
	13. MISCELLANEOUS
	 	 	89	 
	13.1 Termination of Collateral Agent’s Lien
	 	 	89	 
	13.2 Construction
	 	 	89	 
	13.3 Indemnity
	 	 	90	 
	13.4 Lender Party’s Consent
	 	 	90	 
	13.5 Enforcement and Waiver by Lender Party
	 	 	90	 
	13.6 No Representation, Assumption, or Duty
	 	 	90	 
	13.7 Expenses of Lender Parties
	 	 	90	 
	13.8 Attorneys’ Fees
	 	 	91	 
	13.9 Exclusiveness
	 	 	91	 
	13.10 WAIVER OF PUNITIVE DAMAGES
	 	 	91	 
	13.11 Waiver and Release by Borrower
	 	 	91	 
	13.12
Limitation on Waiver of Notice, Etc.
	 	 	91	 
	13.13 Additional Costs
	 	 	92	 
	13.14 Illegality and Impossibility
	 	 	92	 
	13.15 Assignments and Participations
	 	 	92	 
	13.16 Binding Effect, Assignment
	 	 	95	 
	13.17 Entire Agreement, Amendments
	 	 	95	 
	13.18 Severability
	 	 	95	 
	13.19 Headings
	 	 	95	 
	13.20 Counterparts
	 	 	95	 
	13.21 Seal
	 	 	95	 
	Article XIV
	 	 	95	 
	14. SUBMISSION TO JURISDICTION, GOVERNING LAW AND NOTICES
	 	 	95	 
	14.1 Notices
	 	 	95	 
	14.2 Governing Law
	 	 	97	 
	14.3 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL, ETC.
	 	 	97	 

 

iv

 

	 	 	 	 	 
	EXHIBIT A FORM OF ASSIGNMENT AND ACCEPTANCE
	 	 	 	 
	EXHIBIT B FORM OF COLLATERAL REPORT
	 	 	 	 
	EXHIBIT C FORM OF COMPLIANCE CERTIFICATE
	 	 	 	 
	EXHIBIT D LENDERS’ CREDIT PERCENTAGES
	 	 	 	 
	EXHIBIT E FORM OF NOTICE OF BORROWING
	 	 	 	 
	EXHIBIT F FORM OF NOTICE OF CONVERSION/CONTINUATION
	 	 	 	 
	EXHIBIT G FORM OF NOTICE OF FUNDING
	 	 	 	 
	EXHIBIT H PERMITTED LIENS
	 	 	 	 
	SCHEDULE 7.2(F) LITIGATION
	 	 	 	 
	SCHEDULE 9.3 LIST OF EQUITY OWNERS
	 	 	 	 
	SCHEDULE 9.4 LIST OF NAMES USED BY BORROWERS AND PERSONS ACQUIRED IN LAST SIX YEARS
	 	 	 	 
	SCHEDULE 9.5 MATERIAL CONTRACTS
	 	 	 	 
	SCHEDULE 9.8 AFFILIATES
	 	 	 	 
	SCHEDULE 9.14 LISTING OF REAL PROPERTY
	 	 	 	 
	SCHEDULE 9.18 INTELLECTUAL PROPERTY
	 	 	 	 
	SCHEDULE 9.20 ENVIRONMENTAL MATTERS
	 	 	 	 
	SCHEDULE 10.3(E) LISTING OF AGREEMENTS CURRENTLY IN EFFECT WITH AFFILIATES AND PERMITTED POST-CLOSING
	 	 	 	 
	SCHEDULE 10.20 POST-CLOSING MATTERS
	 	 	 	 

 

v

 

AMENDED AND RESTATED CREDIT AGREEMENT

THIS AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) dated as of December 31, 2007,
is made by and among KMG CHEMICALS, INC., a Texas corporation (“KMG Chemicals”), KMG-BERNUTH, INC.,
a Delaware corporation (“KMG-Bernuth”), KMG ELECTRONIC CHEMICALS, INC., a Texas corporation (“KMG
ECI”) (KMG Chemicals, KMG-Bernuth and KMG ECI hereinafter referred to as the “Borrowers”), WACHOVIA
BANK, NATIONAL ASSOCIATION, a national banking association, as Agent (the “Agent”) and as
Collateral Agent (the “Collateral Agent”), those lenders executing this Agreement as Lenders, and
such other lenders as may become a party hereto (collectively, the “Lenders”). As used herein,
capitalized words and phrases shall have the meanings ascribed thereto in Section 1.2 of this
Agreement.

W I T N E S S E T H:

WHEREAS, pursuant to the Existing Credit Agreement, Wachovia has previously extended certain
credit to KMG Chemicals and KMG-Bernuth; and

WHEREAS, Borrowers have requested that Lenders extend and continue to extend certain credit to
Borrowers, and Lenders are willing to do so on the condition that, among other things, Borrowers
amend and restate the terms of the Existing Credit Agreement pursuant to this Agreement; and

WHEREAS, subject to the terms and conditions of this Agreement, Lenders have agreed to extend
to Borrowers (i) a revolving loan of up to $35,000,000.00 (with a sub-limit for standby/trade
letters of credit in the amount of $10,000,000.00 and a sub-limit for a swing line loan of up to
$5,000,000.00); and (ii) a term loan of up to $35,000,000.00.

NOW, THEREFORE, in consideration of the promises herein contained, and each intending to be
legally bound hereby, the parties hereto agree that the Existing Credit Agreement is hereby amended
in its entirety as follows:

ARTICLE I

1. DEFINITIONS AND GENERAL PROVISIONS.

1.1 Intercreditor Agreement. Lender Parties acknowledge that concurrently with the
execution of this Agreement, Agent is entering into the Intercreditor Agreement which provides for,
among other things, the Agent acting as Collateral Agent under the Intercreditor Agreement, and
agree that by virtue of their execution of this Agreement, Lender Parties authorize Agent to enter
into the Intercreditor Agreement. Lender Parties agree that so long as the Intercreditor Agreement
remains in effect, any reference herein or in any other Loan Document to the Collateral Agent shall
mean Agent acting in its capacity as Collateral Agent, and upon termination of the Intercreditor
Agreement, any reference herein or in any other Loan Document to Collateral Agent shall mean Agent
hereunder.

 

 

 

1.2 Defined Terms. As used herein, the following terms shall have the meanings set forth
below (such meanings to be equally applicable to the singular and plural forms thereof):

“ABR Rate Borrowing” means a borrowing bearing interest based at a rate determined by
reference to the ABR Rate.

“ABR Rate” means the higher of (i) the rate of interest publicly announced by Wachovia
as its “prime rate”, subject to each increase or decrease in such prime rate, effective as of the
first day of the month after any such change occurs, or (ii) the federal funds effective rate from
time to time plus one-half of one percent (0.50%).

“ABR Margin” means (i) until the delivery of the first Compliance Certificate required
hereunder and the adjustment of the ABR Margin as provided herein, zero percent (0.00%), and (ii)
thereafter, a percentage based upon the ratio of Funded Debt to EBITDA of the Borrower Consolidated
Group, as follows:

	 	 	 	 	 
	Ratio of Funded Debt to EBITDA	 	ABR Margin	 
	 
	 	 	 	 
	Equal to or greater than 3.0 to 1.0
	 	 	0.75	%
	Equal to or greater than 2.5 to 1.0, but less than 3.0 to 1.0
	 	 	0.50	%
	Equal to or greater than 2.0 to 1.0, but less than 2.5 to 1.0
	 	 	0.25	%
	Equal to or greater than 1.5 to 1.0, but less than 2.0 to 1.0
	 	 	0.00	%
	Less than 1.5 to 1.0
	 	 	-0.25	%

“Acquisition” means any acquisition (whether in a single transaction or series of
related transactions) of (i) any going business, or all or substantially all of the assets of any
Person, whether through purchase, merger or otherwise; or (ii) Equity Interests of any Person of
five percent (5%) or more of the Equity Interests or Voting Power of such Person.

“Adjusted ABR Rate” means an interest rate equal to the sum of (i) the ABR Rate, plus
(ii) the ABR Margin.

“Adjusted LIBOR Market Index Rate” means an interest rate equal to the sum of (i) the
LIBOR Market Index Rate, plus (ii) the LIBOR Margin.

“Adjusted LIBOR Rate” means, for each respective LIBOR Rate Interest Period, an
interest rate equal to the sum of (i) the applicable LIBOR Rate, plus (ii) the LIBOR Margin.

“Advance” means each loan of money or credit made or extended to or for the benefit of
Borrower by any Lender Party pursuant to this Agreement.

“Affiliate” means, with respect to any applicable Person, (a) any officers or
directors of such Person, (b) any Subsidiary of such Person, or (c) any other Person that has a
relationship with the applicable Person whereby either of such Persons directly or indirectly
controls or is controlled by or is under common control with the other of such Persons. The term
“control” means the possession, directly or indirectly, of the power, whether or not exercised, to
direct or cause the direction of the management or policies of any Person, whether through
ownership of voting securities, by contract or otherwise.

 

2

 

“Agent” means Wachovia, in its capacity as Agent hereunder, its successors and
assigns, and unless the context may clearly require to the contrary, any reference to “Agent” in
any Loan Document shall mean the Agent in its capacity as the Agent for the Lenders.

“Agent’s Account” means the account of Agent as established pursuant to the terms of
this Agreement.

“Agreement” means this Amended and Restated Credit Agreement, as amended or
supplemented from time to time.

“Air Products APA” means that certain Asset Purchase Agreement dated as of October 19,
2007 by and between Air Products and Chemicals, Inc. and KMG Chemicals.

“Air Products APA Documents” means the Air Products APA and the other documents and
instruments executed by or in favor of any Member of the Borrower Consolidated Group in connection
therewith.

“ALTA” means the American Land Title Association.

“Amortization Expense” means the amortization expense of an applicable Person for the
applicable period (to the extent included in the computation of Net Income), according to Generally
Accepted Accounting Principles.

“Annualized Rolling Period” means the period from the date one year prior to the
applicable date through the applicable date.

“Anti-Terrorism Laws” means any laws relating to terrorism or money laundering,
including Executive Order No. 13224 and the USA Patriot Act.

“Asset Disposition” means any sale, assignment, transfer or other disposition of any
assets, business units or other properties (including any interests in property or securities),
excluding (i) sales of Inventory in the Ordinary Course of Business, and (ii) the sale or exchange
of used or obsolete Equipment to the extent (x) the proceeds of such sale are applied towards, or
such Equipment is exchanged for, similar replacement Equipment, or (y) such Equipment is no longer
useful for the operations in the Ordinary Course of Business.

“Assigned Agreements” means all leases, contracts, agreements, Documents, Instruments
and Chattel Paper included in the Collateral.

“Assigned Leases” means all leases presently existing or hereafter made, whether
written or verbal, or any letting of, or agreement for the use or occupancy of, any part of the
Mortgaged Property, and each modification, extension, renewal and guarantee thereof, including the
Rents.

“Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender and an Eligible Assignee, and accepted by Agent, in accordance with Section 13.15 and in
substantially the form of Exhibit “A” hereto.

 

3

 

“Assignment of Claims Act” means the Assignment of Claims Act, as amended (31 U.S.C.
Sections 3727 et. seq. and 41 U.S.C. Sections 15 et. seq.).

“Attorneys’ Fees” means attorneys’ fees actually incurred at ordinary and customary
rates.

“Available Amount” of any Letter of Credit means, at any time, the maximum amount
available to be drawn under such Letter of Credit at such time.

“Bankruptcy Law” means Title 11, U.S. Code, or any similar Laws of any Jurisdiction
for the relief of debtors, and “Bankruptcy” means the commencement of any case or other
action for relief under Bankruptcy Law.

“Borrower Consolidated Group” means Borrowers, KMEX, KMG Italia, and any other Person
who becomes a Borrower hereunder (each referred to singularly as a “Member of the Borrower
Consolidated Group”).

“Borrower Parties” means Borrowers and any other Person that hereafter becomes a party
to this Agreement, any other Loan Document or any Lender Party Swap Document, and which Person is
responsible in whole or in part for any of the Credit Agreement Obligations.

“Borrowers” means KMG Chemicals, KMG-Bernuth and KMG ECI.

“Borrower’s Interest” means all right, title and interest of Borrower of whatever
kind, nature or description.

“Borrower’s Representatives” means the president, chief executive officer, chief
financial officer, and controller of Borrower, and any other Person designated by Borrower as
Borrower’s Representatives under this Agreement.

“Borrowing” means any ABR Rate Borrowing, LIBOR Market Index Rate Borrowing, or LIBOR
Rate Borrowing.

“Borrowing Base” means, at any time, the amount computed on the Collateral Report most
recently delivered to, and accepted by, Bank in accordance with this Agreement and equal to the
aggregate of:

(A) eighty percent (80%) of Eligible Accounts, plus

(B) fifty percent (50%) of Eligible Inventory (but not more than $18,000,000.00).

“Business Day” means any day other than a Saturday, a Sunday, a legal holiday or a day
on which banking institutions are authorized or required by Law or other governmental action to
close in Charlotte, North Carolina or New York, New York; provided that in the case of LIBOR Rate
Borrowings such day is also a day on which dealings between banks are carried on in U.S. dollar
deposits in the London interbank market.

“Capital Expenditures” means the sum of (i) all expenditures made by a Person,
directly or indirectly for equipment, fixed assets, real property or improvements, or for
replacements or substitutions therefore or additions thereto, that should be, in accordance with
Generally
Accepted Accounting Principles, reflected as additions to property, plant or equipment on a balance
sheet of such Person or which have a useful life of more than one year plus (ii) the aggregate
principal amount of all Indebtedness (including Capitalized Leases) assumed or incurred in
connection with any such expenditures.

 

4

 

“Capitalized Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with Generally Accepted Accounting Principles.

“Cash Collateral Account” means the special cash collateral account established
pursuant to Section 4.3 of this Agreement.

“Cash Management Agreement” means any and all cash management or similar agreements
entered into or in effect between Borrower and an applicable Lender (and approved by Agent) during
the term of this Agreement.

“Casualty or Condemnation Event” means, with respect to any property of any Member of
the Borrower Consolidated Group, any loss of, damage to or condemnation or other taking of, such
property for which any Member of the Borrower Consolidated Group is entitled to receive, or
receives, insurance proceeds, condemnation proceeds or other similar proceeds or awards.

“Change in Control” means an event or series of events by which (A) (i) any Person or
group of Persons acting in concert or other group shall, as a result of a tender or exchange offer,
open market purchases, privately negotiated purchases or otherwise, have become, after the date
hereof, the “beneficial owner” (within the meaning of such term under Rule 13d-3 under the Exchange
Act) of Equity Interests of Borrower representing Voting Power having the right to elect at least
50% of the members of the Governing Body of Borrower; or (ii) the Governing Body of KMG Chemicals
shall cease to consist of a majority of the individuals who constituted the Governing Body of KMG
Chemicals as of the date hereof or who shall have become a member thereof subsequent to the date
hereof after having been nominated, or otherwise approved in writing, by at least a majority of
individuals who constitute the Governing Body of KMG Chemicals as of the date hereof; or (B)
Borrower shall cease to own at least 99% of the Equity Interests and Voting Power of KMEX and KMG
Italia.

“Closing” means the time and place of actual execution and delivery of this Agreement,
the Notes, and except as waived by Agent, the other documents, instruments, and things required by
Section 7.1 hereof.

“Closing Balance Sheet” means an unaudited balance sheet of the Borrower Consolidated
Group dated as of the time immediately following the Closing, such balance sheet to be calculated
based upon the most recent financial statements available to the Borrower, but on a pro-forma basis
after taking into account the transactions that are to occur on the date of Closing.

“Closing Certificates” means certificates of even date herewith, signed by a duly
authorized representative of each Borrower.

 

5

 

“Collateral” means all of the assets of Borrowers of every kind, nature and
description, wherever located, whether now owned or hereafter acquired (other than the Excluded
Collateral and interests in any Lender Party Swap Documents), and including the following:

(A) All amounts that may be owing from time to time by any Lender Party to Borrower in any
capacity, including, without limitation, any balance or share belonging to Borrower, of any Deposit
Accounts or other account with any Lender Party;

(B) The Pledged Collateral;

(C) The Mortgaged Property and the Mortgaged Property Documents;

(D) All of Borrowers’ assets which are or may be subject to Article 9 of the Uniform
Commercial Code, together with all replacements therefore, additions and accessions thereto, and
proceeds (including, but without limitation, insurance proceeds) and products thereof, including,
without limitation, the following:

(1) Accounts;

(2) Chattel Paper;

(3) Commercial Tort Claims;

(4) Deposit Accounts;

(5) Documents;

(6) Equipment;

(7) General Intangibles;

(8) Goods;

(9) Instruments;

(10) Intellectual Property Rights;

(11) Inventory;

(12) Investment Property;

(13) Letter-of-Credit Rights;

(14) Payment Intangibles;

(15) Software;

(16) Supporting Obligations;

(17) Rights as seller of Goods and rights to returned or repossessed Goods;

 

6

 

(18) All existing and future leases and use agreements of personal property entered
into by Borrower as lessor with other Persons as lessees, including without limitation the
right to receive and collect all rentals and other monies, including security deposits, at
any time payable under such leases and agreements;

(19) Any existing and future leases and use agreements of personal property entered
into by Borrower as lessee with other Persons as lessors, including without limitation the
leasehold interest of Borrower in such property, and all options to purchase such property
or to extend any such lease or agreement;

(20) Fixtures;

(21) All moneys of Borrower and all bank accounts, deposit accounts, lock boxes and
other accounts in which such moneys may at any time be on deposit or held and all
investments or securities in which such moneys may at any time be invested and all
certificates, instruments and documents from time to time representing or evidencing any of
the same;

(22) All claims of Borrower in any pending litigation and/or claims for any insurance
proceeds;

(23) All Records pertaining to any of the Collateral;

(E) Any and all other assets of any Borrower Party of any kind, nature, or description and
which are intended to serve as collateral for the Loans under any one or more of the Security
Documents; and

(F) All interest, dividends, Proceeds, products, rents, royalties, issues and profits of any
of the property described above, including, without limitation, all monies due and to become due
with respect to such property, together with all right to receive the same, and all notes,
certificates of deposit, checks and other instruments and property from time to time delivered to
or otherwise possessed by Lender Party for or on behalf of Borrower Party in substitution for or in
addition to any of said property.

“Collateral Agent” means Wachovia, in its capacity as Collateral Agent under the
Intercreditor Agreement, its successors and assigns, and unless the context may clearly require to
the contrary, any reference to “Collateral Agent” in any Loan Document shall mean the Collateral
Agent in its capacity as the Collateral Agent.

“Collateral Agent’s Lien” means the Liens granted to Collateral Agent by any Borrower
Party pursuant to this Agreement and the other Security Documents.

“Collateral Report” means a fully completed and duly executed Collateral Report and
Borrowing Base Certificate delivered by Borrowers to Agent and in the form attached hereto as
Exhibit “B”.

“Commitments” means the Revolving Loan Commitment, the Swing Line Loan Commitment, the
Term Loan Commitment, and the Letter of Credit Commitment.

 

7

 

“Compliance Certificate” means a fully completed and duly executed certificate
delivered by Borrowers to Agent and in the form attached hereto as Exhibit “C”.

“Consolidated Basis” means the consolidation of the assets, liabilities, income and
losses, as applicable, of the Borrower Consolidated Group; provided, however, that there shall be
excluded:

(A) KMEX if (i) the gross revenues of KMEX arising from sales to any Person other than
Borrowers for the trailing twelve (12) months exceeds $2,000,000.00, or (ii) the Equity Owner’s
Equity, as reflected on KMEX’s balance sheet, is more than $5,000,000.00; and

(B) KMG Italia if (i) the EBIDA of KMG Italia exceeds 15% of the EBIDA of the Borrower
Consolidated Group (including KMG Italia), or (ii) the Tangible Net Worth of KMG Italia exceeds 15%
of the Tangible Net Worth of the Borrower Consolidated Group (including KMG Italia).

“Credit Agreement Obligations” means the obligations (including obligations of
performance) and liabilities of any Borrower Party to any Lender Party under the Loan Documents or
any Lender Party Swap Documents of every kind and description whatsoever, direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter incurred, contracted or
arising, or acquired by any Lender Party from any source, joint or several, liquidated or
unliquidated, regardless of how they arise or by what agreement or instrument they may be evidenced
or whether they are evidenced by any agreement or instrument, and whether incurred as maker,
endorser, surety, guarantor, general partner, drawer, tort-feasor, indemnitor, account party with
respect to a letter of credit or otherwise, and arising out of or incurred in connection with the
Loans (but specifically excluding the Prudential Obligations), and any and all extensions and
renewals of any of the same, including but not limited to the obligation:

(A) To pay the principal of and interest on the Notes in accordance with the respective terms
thereof or hereof, including any and all extensions, modifications, and renewals thereof and
substitutions therefore;

(B) To pay, repay or reimburse the Lender Parties for all amounts owing hereunder or under any
of the other Loan Documents, including the Reimbursement Obligation and all Indemnified Losses and
Default Costs;

(C) To pay, repay or reimburse to Lender Parties the Lender Party Swap Obligations; and

(D) To reimburse Lender Parties, on demand, for all of Lender Parties’ expenses and costs,
including Attorneys’ Fees and expenses of Lender Parties’ counsel, in connection with the
preparation, administration, amendment, modification, or enforcement of this Agreement and the
other Loan Documents, including, without limitation, any proceeding brought or threatened to
enforce payment of any of the obligations referred to in the foregoing paragraphs (A), (B) and (C).

 

8

 

“Credit Percentage” means, with respect to each Lender, a percentage based on a
fraction, the numerator of which shall be the aggregate principal amount of Revolving Loan Advances
and Term Loan Advances outstanding at a particular time and owing to such Lender at such time, and
the denominator of which shall be the aggregate principal amount of all Revolving Loan Advances and
Term Loan Advances outstanding at such time and owing to all the Lenders at such time; provided
that in calculating such percentage, the aggregate principal amount of Swing Line Loan Advances
owing to the Swing Line Lender, the Available Amount of the Letters of Credit, and the aggregate
amount of Letter of Credit Advances owing to Issuing Lender shall, at such time, be considered to
be owed to the Revolving Loan Lenders that purchase (or are obligated to purchase) Swing Line Loan
Advances and Letter of Credit Advances from the Swing Line Lender and Issuing Lender under the
terms of this Agreement (the Credit Percentages of the Lenders as of the date hereof being as set
forth on the attached Exhibit “D”).

“Current Maturities of Long-Term Indebtedness” means all payments in respect of
Long-Term Indebtedness that are required to be made within one year from the date of determination,
whether or not the obligation to make such payments would constitute a current Liability of the
applicable Person under Generally Accepted Accounting Principles, excluding, however, any such
payment required to be made on the ultimate maturity date of such Indebtedness.

“Default” means the occurrence of an event described in Section 11.1 hereof regardless
of whether there shall have occurred any passage of time or giving of notice that would be
necessary in order to constitute such event as an Event of Default.

“Default Costs” means all Indemnified Losses incurred by any Lender Party by reason of
a Default.

“Defaulting Lender” means any Lender that has failed to make any Advance or purchase
its Pro Rata Share of any Swing Line Loan Advance or Letter of Credit Advance as and when required
under the terms of this Agreement.

“Default Rate” means a variable per annum rate of interest equal to the lesser of (1)
two percent (2%) in excess of the highest Interest Rate otherwise payable on any Loan hereunder, or
(2) the maximum rate allowed by applicable Laws.

“Deposit Accounts” means all bank accounts and other deposit accounts and lock boxes
included in the Collateral or established for the benefit of any Lender Party pursuant to the terms
of any of the Loan Documents.

“Depreciation Expense” means the depreciation expense of an applicable Person for the
applicable period (to the extent included in the computation of Net Income), according to Generally
Accepted Accounting Principles.

“Dividends” means dividends and other distributions to the Equity Owners of any
applicable Person on account of owing an Equity Interest.

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

 

9

 

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

“Eligible Account” means, at any time, an Account of Borrower that conforms and
continues to conform to the following conditions:

(A) The Account is part of the Collateral and Collateral Agent’s Lien has been perfected in
accordance with applicable Laws;

(B) All representations and warranties of Borrower contained in the Loan Documents with
respect to such Account are true and correct in all material respects;

(C) The Account arose from a bona fide outright sale of Goods by Borrower or from services
performed by Borrower in the Ordinary Course of Business, and such Goods have been shipped to the
appropriate Account Debtor or its designees (or the sale has otherwise been consummated), or the
services have been fully performed for the appropriate Account Debtor;

(D) The Account is based upon an enforceable order or contract, written or oral, for Goods
shipped or held for services performed and the same were shipped, held, or performed in accordance
with such order or contract;

(E) The title of Borrower to the Account is absolute and is not subject to any Lien except
Collateral Agent’s Lien;

(F) The amount shown on the books of Borrower and on any invoice or statement delivered to
Agent is owing to Borrower, less any partial payment that has been made thereon by any Person;

(G) The Account shall be eligible only to the extent that it is not subject to any claim of
reduction, counterclaim, set off, recoupment, or any claim for credits, allowances, or adjustments
by the Account Debtor because of return, inferior, or damaged goods or unsatisfactory services, or
for any other reason;

(H) The Account Debtor has not returned or refused to retain, or otherwise notified Borrower
of any dispute concerning, or claimed nonconformity of, any of the Goods or services from the sale
of which the Account arose;

(I) (i) With respect to any Account generated from other than sales of animal health
pesticides or agricultural chemicals, the Account is due and payable not more than thirty (30) days
from the date of the invoice therefor and is not more than sixty (60) days past due; and (ii) with
respect to any Account generated from sales of animal health pesticides or agricultural chemicals,
the Account is due and payable not more than ninety (90) days from the date of the invoice therefor
and is not more than sixty (60) days past due.

 

10

 

(J) The Account does not arise out of a contract with, or order from, a Account Debtor that,
by its terms, forbids or makes void or unenforceable the assignment by Borrower to Agent of the
Account arising with respect thereto;

(K) Borrower has not received any note, trade acceptance, draft or other instrument with
respect to, or in payment of, the Account nor any Chattel Paper with respect to the Goods giving
rise to the Account, unless, if any such instrument or Chattel Paper has been received, Borrower
immediately notifies Agent and endorses or assigns and delivers the same to Agent;

(L) Borrower has not received any notice of the death of the Account Debtor or a partner
thereof; nor of the dissolution, termination of existence, insolvency, business failure,
appointment of a receiver for any part of the property of, assignment for the benefit of creditors
by, or the filing of a petition in bankruptcy, or the commencement of any proceeding under any
Bankruptcy or insolvency laws by or against, the Account Debtor. Upon receipt by Borrower of any
such notice, it will immediately give Agent written advice thereof;

(M) The Account Debtor is not a foreign entity;

(N) The Account Debtor is not an Affiliate of Borrower;

(O) If ten percent (10%) or more of the Accounts from the Account Debtor do not qualify as
Eligible Accounts hereunder (unless the failure to qualify is solely because of clause (P)
immediately following), none of such Account Debtor’s Accounts qualify as Eligible Accounts;

(P) To the extent that the total Eligible Accounts of (i) any Account Debtor other than Intel
represent more than ten percent (10%) of the Eligible Accounts of Borrower at any time, or (ii)
Intel represent more than twenty-five percent (25%) of the Eligible Accounts of Borrower at any
time, such excess shall be deemed to not qualify as Eligible Accounts; and

(Q) Agent has not deemed such Account ineligible because of uncertainty about the
creditworthiness of the Account Debtor or because Agent otherwise considers the collateral value
thereof to Agent to be impaired or its ability to realize such value to be insecure.

In the event of any dispute under the foregoing criteria about whether an Account is or has ceased
to be an Eligible Account, the decision of Agent, to be made in Agent’s discretion, shall control.

“Eligible Assignee” means (i) a Lender (or any other Person that has a relationship
with the applicable Lender whereby Lender directly or indirectly controls or is controlled by or is
under common control with such other Persons); (ii) a commercial bank organized under the laws of
the United States, or any State thereof, and having combined capital and surplus of at least
$250,000,000.00; (iii) a savings and loan association or savings bank organized under the laws of
the United States, or any State thereof, and having combined capital and surplus of at least
$250,000,000.00; (iv) a finance company, insurance company or other financial institution or fund
(whether a corporation, partnership, trust or other entity) organized under the laws of the United
States, or any State thereof, that is engaged in making, purchasing or otherwise investing
in commercial loans in the ordinary course of its business and having combined capital and surplus
of at least $250,000,000.00; and (v) any other Person approved by Agent and Borrower, such approval
not to be unreasonably withheld or delayed provided that Borrower’s consent shall not be required
during the continuance of any Default); provided, however, that in no event shall any Person
constitute an Eligible Assignee if an assignment to such Person is prohibited by applicable Laws.

 

11

 

“Eligible Inventory” means the Inventory of Borrower which is either raw materials,
finished goods or work in process, valued at the lesser of cost (as established on the FIFO method
of accounting) or fair market value, provided, however, that Agent may consider any of the
following classes of inventory not to be Eligible Inventory:

(A) Inventory which is not part of the Collateral, or which is part of the Collateral but with
respect to which Collateral Agent’s Lien has not been perfected in accordance with applicable Laws.

(B) Inventory with respect to which any representation or warranty contained in any of the
Loan Documents has been breached.

(C) Inventory consisting of “perishable agricultural commodities” within the meaning of the
Perishable Agricultural Commodities Act of 1930, as amended, and the regulations thereunder, or on
which a Lien has arisen or may arise in favor of agricultural producers under comparable state or
local laws;

(D) Inventory located on leaseholds if the value of Inventory at any particular leasehold
location is more than $500,000.00, if the lessor has not entered into a consent and agreement
providing Agent with the right to receive notice of default, the right to repossess such Inventory
at any time, and such other rights as may be required by Agent;

(E) Inventory to which the title of Borrower is not absolute, or which is subject to any prior
Lien, except Collateral Agent’s Lien;

(F) Inventory that is obsolete, unusable or otherwise unavailable for sale;

(G) Inventory consisting of promotional, marketing, packaging or shipping materials and
supplies;

(H) Inventory that fails to meet, in all material respects, all standards imposed by any
governmental agency, or department or division thereof, having regulatory authority over such
Inventory or its use and sale;

(I) Inventory that is subject to any licensing, patent, royalty, trademark, trade name or
copyright agreement with any Third Person from whom Borrower has received notice of a dispute in
respect of any such agreement;

(J) Inventory located outside the United States (except as may be approved by Agent in its
discretion);

 

12

 

(K) Inventory with a value at any particular location of more than $500,000.00 that is not in
the possession of or under the sole control of Borrower, unless all Persons exercising dominion or
control over such Inventory shall have entered into such agreements as may be required by Agent,
including agreements providing for the right of Agent to repossess such Inventory at any time and
such other rights as may be required by Agent;

(L) Inventory in transit (unless otherwise determined to be eligible by Agent in its
discretion after a request for such determination from Borrower); and

(M) Inventory returned or repossessed by Account Debtors other than Inventory that is
resalable in Borrower’s Ordinary Course of Business.

Additionally, Agent may exclude from Eligible Inventory all or a proportionate part of any
particular portion of Borrower’s Inventory which Agent deems ineligible because its market value
has declined or because Agent otherwise considers the collateral value thereof to Agent to be
impaired or its ability to realize such value to be insecure.

“Environmental Laws” means all Laws of any Jurisdiction relating to the governance or
protection of the environment, including without limitation, the Comprehensive Environmental
Response Compensation and Liability Act of 1980 (“CERCLA”), as amended (42 U.S.C. Sections 9601,
et seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 1801, et seq.), the Resource Conservation and Recovery Act (“RCRA”), as
amended (42 U.S.C. Sections 6901, et seq.), the Clean Water Act, as amended (42
U.S.C. Sections 7401, et seq.), the Toxic Substances Control Act, as amended (15
U.S.C. Sections 2601, et seq.).

“Equity Agreements” means any and all agreements of whatever kind by, between and
among Borrower and the Equity Owners of Borrower, and relating to Borrower’s Equity Interests.

“Equity Interests” means any and all ownership or other equitable interests in the
applicable Person, including any interest represented by any capital stock, membership interest,
partnership interest or similar interest, but specifically excluding any interest of any Person
solely as a creditor of the applicable Person.

“Equity Owner” means any Person owning an Equity Interest.

“Equity Owners’ Equity” means, at any time, the sum of the following accounts set
forth in a balance sheet of an applicable Person, adjusted to U.S. Dollars by means of applicable
foreign currency exchange rates and prepared in accordance with Generally Accepted Accounting
Principles:

(A) The par or stated value of all outstanding Equity Interests;

(B) Capital surplus; and

(C) Retained earnings.

 

13

 

“ERISA” means the Federal Employee Retirement Income Security Act of 1974, as amended
and in effect from time to time, and the regulations and published interpretations thereof.

“ERISA Affiliate” means any Person that would be deemed to be under “common control”
with, or a member of the same “controlled group” as, Borrower or any of its subsidiaries, within
the meaning of the Internal Revenue Code (as applicable to Plans) or ERISA.

“ERISA Event” means any of the following with respect to a Plan: (i) a Reportable
Event, (ii) a complete or partial withdrawal by Borrower or any ERISA Affiliate from a Plan that
results in liability under ERISA, or the receipt by Borrower or any ERISA Affiliate of notice from
a Multiemployer Plan that it is in reorganization or insolvency pursuant to ERISA or that it
intends to terminate or has terminated under ERISA, (iii) the distribution by Borrower or any ERISA
Affiliate under ERISA of a notice of intent to terminate any Plan or the taking of any action to
terminate any Plan, (iv) the commencement of proceedings by the PBGC under ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the receipt by Borrower
or any ERISA Affiliate of a notice from any Multiemployer Plan that such action has been taken by
the PBGC with respect to such Multiemployer Plan, (v) the institution of a proceeding by any
fiduciary of any Multiemployer Plan against Borrower or any ERISA Affiliate to enforce Section 515
of ERISA, which is not dismissed within thirty (30) days, (vi) the imposition upon Borrower or any
ERISA Affiliate of any liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under ERISA, or the imposition or threatened imposition of any Lien upon any assets of
Borrower or any ERISA Affiliate as a result of any alleged failure to comply with the Internal
Revenue Code or ERISA in respect of any Plan, (vii) the engaging in or otherwise becoming liable
for a nonexempt Prohibited Transaction by Borrower or any ERISA Affiliate, (viii) a violation of
the applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under
Section 401(a) of the Internal Revenue Code by any fiduciary of any Plan for which Borrower or any
of its ERISA Affiliates may be directly or indirectly liable, or (ix) the adoption of an amendment
to any Plan that, pursuant to the Internal Revenue Code or ERISA, would result in the loss of a
tax-exempt status of the trust of which such Plan is a part of, and Borrower or an ERISA Affiliate
fails to timely provide security to such Plan in accordance with the provisions of ERISA.

“Event of Default” means the occurrence of an event described in Section 11.1 hereof
provided that there shall have occurred any passage of time or giving of notice that would be
necessary in order to constitute such event as an Event of Default under Section 11.1.

“Excluded Collateral” (i) assets of Borrower to the extent the assignment thereof is
restricted by a contract or applicable Law and would not otherwise be permitted by Section 9-408 of
the UCC; (ii) Borrower’s Real Property located in Tuscaloosa, Alabama; (iii) Borrower’s Interest in
any leased Real Property; (iv) until such time as Borrower shall have executed and delivered the
Patent and Trademark Security Agreement as provided for in Section 9.18 of this Agreement,
Borrower’s patents, trademarks, trade names, service marks and copyrights, and all applications
therefor and licenses thereof (provided that no such assets shall be excluded to the extent that a
Lien in such assets may be perfected under the Uniform Commercial Code of an applicable state
Jurisdiction); and (v) the Equity Interests of KMEX and KMG Italia to the extent that the same are
not included as part of the Pledged Collateral.

 

14

 

“Executive Order No. 13224” means Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended,
amended or replaced.

“Existing Credit Agreement” means that certain Credit Agreement dated as of May 16,
2007 among KMG Chemicals, KMG-Bernuth and Wachovia, as amended from time to time.

“Existing Indebtedness” means Indebtedness of the Borrower Consolidated Group (i) as
reflected on the Most Recent Financial Statements or the Closing Balance Sheet, and which
Indebtedness is not being paid or defeased with the proceeds of the Loans at Closing; and (ii)
incurred in the Ordinary Course of Business of a Member of the Borrower Consolidated Group
subsequent to the date of the Most Recent Financial Statements, and which Indebtedness is not for
borrowed money.

“Existing Investments” means Investments of the Borrower Consolidated Group (i) as
reflected on the Most Recent Financial Statements or the Closing Balance Sheet; and (ii) made
subsequent to the date of the Most Recent Financial Statements, and which Investments would
otherwise be Permitted Investments.

“Extraordinary Receipt” means any consideration received by or paid to or for the
account of an applicable Person not in the Ordinary Course of Business, including, without
limitation, proceeds from dispositions of assets outside the Ordinary Course of Business, tax
refunds, pension plan reversions, proceeds of insurance (other than proceeds of business
interruption insurance to the extent such proceeds constitute compensation for lost earnings),
condemnation awards (and payments in lieu thereof) and indemnity payments.

“Federal Funds Rate” means, for any period, a fluctuating per annum interest rate
(rounded upwards, if necessary, to the nearest 1/100 of one percentage point) equal for each day
during such period to the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or if such rate is not so published for any day that is a Business Day,
the average of the quotations for such day on such transactions received by Agent from three
federal funds brokers of recognized standing selected by Agent.

“Fees” means the Letter of Credit Facility Fee, the Unused Fee, and the fees owing
under the Wachovia Fee Letter.

“Financial Statements” means the Most Recent Financial Statements and the income
statements, balance sheets and other financial statements required to be delivered by Borrowers in
accordance with this Agreement.

“Financing Statements” means the UCC-1 financing statements (including any amendments
and continuations) and UCC-3 financing statements required hereunder or under any other Security
Document.

“Fiscal Year” means a twelve-month period of time commencing on the first day of
August.

 

15

 

“Fiscal Year-End” means the end of each Fiscal Year.

“Fixed Charge Coverage” means the quotient which is obtained by dividing (i) the sum
of EBIDA for the 12-month period preceding the applicable date, plus the Lease and Rental Expense
for the 12-month period preceding the applicable date, less Dividends for the 12-month period
preceding the applicable date, by (ii) the sum of the Current Maturities of Long-Term Indebtedness
as of the applicable date, plus the Interest Expense and Lease and Rental Expense for the 12-month
period preceding the applicable date.

“Foreign Subsidiary” means a Subsidiary that is organized under the Laws of a
Jurisdiction other than the United States of America or any state thereof or the District of
Columbia.

“Funded Debt” means, as of an applicable time, without duplication, (a) all of the
Indebtedness of the applicable Person which is Indebtedness (i) for borrowed money, or (ii) in
respect of any Capitalized Lease or the deferred purchase price of property, whether or not
interest-bearing and whether or not, in accordance with Generally Accepted Accounting Principles,
classified as a current Liability or Long-Term Indebtedness at such date, and whether secured or
unsecured, excluding, however, (b) Indebtedness that is accounts payable and accrued expenses and
other similar current Liabilities incurred in such Person’s Ordinary Course of Business.

“Generally Accepted Accounting Principles” means generally accepted principles of
accounting in effect from time to time in the United States applied in a manner consistent with
those used in preparing such financial statements as have heretofore been furnished to Agent by the
applicable Person.

“Governing Body” means the board of directors of a Person (or any Person or group of
Persons exercising similar authority).

“Governmental Approvals” means all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and reports to, any Governmental Authority.

“Governmental Authority” means any nation or government and any political subdivision
thereof, and any entity exercising executive, legislative, judicial, regulatory, or administrative
functions of or pertaining thereto, which has or asserts jurisdiction over Lender Party, Borrower,
or any property of any of them.

“Hazardous Materials” and “Hazardous Substances” means “hazardous materials”
and “hazardous substances” as defined under any applicable Environmental Law.

“Improvements” means the “Improvements” as defined in the Mortgages.

“Income Tax Expense” means the income tax expense of an applicable Person for the
applicable period (to the extent included in the computation of Net Income), determined in
accordance with Generally Accepted Accounting Principles.

 

16

 

“Indebtedness” means, with respect to any Person, all items of indebtedness,
obligation or liability, whether matured or unmatured, liquidated or unliquidated, direct or
contingent, joint or several, including, but without limitation or duplication:

(A) All obligations of such Person for borrowed money;

(B) All obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made;

(C) All indebtedness guaranteed, directly or indirectly, in any manner, or endorsed (other
than for collection or deposit in the Ordinary Course of Business) or discounted with recourse;

(D) All indebtedness in effect guaranteed, directly or indirectly, through agreements,
contingent or otherwise:

(1) To purchase such indebtedness; or

(2) To purchase, sell or lease (as lessee or lessor) property, products, materials or
supplies or to purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such indebtedness or to assure the owner of the indebtedness against
loss; or

(3) To supply funds to or in any other manner invest in the debtor;

(E) All indebtedness secured by (or which the holder of such indebtedness has a right,
contingent or otherwise, to be secured by) any Lien upon property owned or acquired subject
thereto, whether or not the liabilities secured thereby have been assumed; and

(F) All indebtedness incurred as the lessee of goods or services under leases that, in
accordance with Generally Accepted Accounting Principles, should be reflected on the lessee’s
balance sheet.

“Indemnified Losses” means all damages, dues, penalties, fines, costs, amounts paid in
settlement, taxes, losses, expenses, and fees, including court costs and Attorneys’ Fees and
expenses.

“Intercreditor Agreement” means that certain Intercreditor and Collateral Agency
Agreement of even date herewith among Lenders, Agent, the Prudential Note Holders and Collateral
Agent, as amended from time to time.

“Interest Expense” means the interest expense of an applicable Person for the
applicable period (to the extent included in the computation of Net Income), determined in
accordance with Generally Accepted Accounting Principles.

“Interest Payment Due Date” means (i) with respect to any payment of interest accruing
at the Adjusted LIBOR Market Index Rate or the Adjusted ABR Rate, the last day of each calendar
month during the term of this Agreement; and (ii) with respect to any payment of
interest accruing on any LIBOR Rate Borrowing, the date of expiration of the applicable LIBOR Rate
Interest Period.

 

17

 

“Interest Rate” means the actual interest rate at which all or any portion of the
outstanding principal amount of a Note bears interest from time to time during the term of such
Note.

“Investment” means any loan or advance to any Person, any purchase or other
acquisition of any capital stock or other ownership or profit interest, warrants, rights, options,
obligations or other securities of such Person, any capital contribution to such Person or any
other investment in such Person.

“Issuing Lender” means Wachovia and any other Person that becomes the Issuing Lender
with respect to a Letter of Credit pursuant to the terms of this Agreement.

“Jurisdiction” means each and every nation or any political subdivision thereof.

“KMEX” means KMG de Mexico S.A. de C.V., organized under the Laws of Mexico.

“KMEX Plant” means the operating facility owned by KMEX and located in Matamoras,
Mexico.

“KMG-Bernuth” means KMG-Bernuth, Inc., a Delaware corporation.

“KMG Chemicals” means KMG Chemicals, Inc., a Texas corporation.

“KMG ECI” means KMG Electronic Chemicals, Inc., a Texas corporation.

“KMG Italia” means KMG Italia S.r.l., a company duly organized and existing under the
laws of Italy.

“Land” means the “Land” as defined in the Mortgages.

“Laws” means each and all laws, treaties, ordinances, statutes, rules, regulations,
orders, injunctions, writs or decrees of any Governmental Authority, or any court or similar entity
established by any Governmental Authority, whether now in effect or hereafter enacted.

“Lease and Rental Expense” means the lease and rental expense of an applicable Person
for the applicable period (to the extent included in the computation of Net Income), determined in
accordance with Generally Accepted Accounting Principles.

“Lender Parties” means Agent, Collateral Agent, Lenders, Swing Line Lender, Issuing
Lender and any Lender Party (or an Affiliate of a Lender Party) that is now or hereafter becomes a
party to any Lender Party Swap Document.

“Lender Party Swap Documents” means any Swap Documents entered into between any
Borrower Party and any Lender Party and relating to the Loans, and which Swap Documents are
approved by Agent.

 

18

 

“Lender Party Swap Obligations” means the obligations (including obligations of
performance) and liabilities of any Borrower Party to any Lender Party of every kind and
description whatsoever, direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter incurred, contracted or arising, or acquired by Lender Party from any source,
joint or several, liquidated or unliquidated, regardless of how they arise or by what agreement or
instrument they may be evidenced or whether they are evidenced by any agreement or instrument, and
whether incurred as counterparty, maker, endorser, surety, guarantor, general partner, drawer,
tort-feasor, indemnitor, account party with respect to a letter of credit or otherwise, and arising
out of, incurred pursuant to or in connection with any Lender Party Swap Document, and any and all
extensions and renewals of any of the same.

“Lenders” means those lenders executing this Agreement as Lenders, and any other
Person that shall become a Lender hereunder pursuant to the terms hereof.

“Letter of Credit” means each letter of credit issued pursuant to Section 4.1 of this
Agreement.

“Letter of Credit Advances” means all amounts owing to Issuing Lender under any Letter
of Credit Agreement, including, without limitation, all drafts paid by Issuing Lender under any
Letter of Credit and with respect to which and to the extent that Issuing Lender has not been
reimbursed, and all amounts owing to Lenders who purchase their Pro Rata Share of Letter of Credit
Advances in accordance with this Agreement.

“Letter of Credit Agreement” means this Agreement and any other agreement of Borrower
with Issuing Lender and relating to Borrower’s obligation to reimburse Issuing Lender with respect
to amounts paid under any Letter of Credit or the granting of a Lien to Agent to secure any such
obligation, together with any and all extensions, revisions, modifications or amendments at any
time made thereto.

“Letter of Credit Commitment” means the lesser of (i) Ten Million and 00/100 Dollars
($10,000,000.00); or (ii) the Unused Revolving Loan Commitment.

“Letter of Credit Facility Fee” means an annual fee payable by Borrowers to Issuing
Lender with respect to each Letter of Credit, in an amount equal to (i) the Stated Amount of such
Letter of Credit, multiplied by (ii) the LIBOR Margin at the time of issuance or renewal (as
applicable) of such Letter of Credit (but not less than $500.00), such fee to be payable upon the
issuance of such Letter of Credit and upon each anniversary date of the issuance of such Letter of
Credit, so long as the same is outstanding.

“Liabilities” means all Indebtedness that, in accordance with Generally Accepted
Accounting Principles, should be classified as liabilities on a balance sheet of a Person.

 

19

 

“LIBOR Margin” means (i) until the delivery of the first Compliance Certificate required
hereunder and the adjustment of the LIBOR Margin as provided herein, two and one-quarter percent
(2.25%), and (ii) thereafter, a percentage based upon the ratio of Funded Debt to EBITDA of the
Borrower Consolidated Group, as follows:

	 	 	 	 	 
	Ratio of Funded Debt to EBITDA	 	LIBOR Margin	 
	 
	 	 	 	 
	Equal to or greater than 3.0 to 1.0
	 	 	2.75	%
	Equal to or greater than 2.5 to 1.0, but less than 3.0 to 1.0
	 	 	2.50	%
	Equal to or greater than 2.0 to 1.0, but less than 2.5 to 1.0
	 	 	2.25	%
	Equal to or greater than 1.5 to 1.0, but less than 2.0 to 1.0
	 	 	2.00	%
	Less than 1.5 to 1.0
	 	 	1.75	%

“LIBOR Market Index Rate” means, for any day, the rate for 1 month U.S. dollar
deposits as reported on Reuters Screen LIBOR01 Page (or any successor page) as of approximately
11:00 a.m., London time, on such day, or if such day is not a London business day, then the
immediately preceding London business day (or if not so reported, then as determined by Agent from
another recognized source or interbank quotation).

“LIBOR Market Index Rate Borrowing” means a borrowing bearing interest based at a rate
determined by reference to the LIBOR Market Index Rate.

“LIBOR Rate” means, for the applicable LIBOR Rate Interest Period for each LIBOR Rate
Borrowing comprising part of the same borrowing (including conversions, extensions and renewals), a
per annum interest rate determined pursuant to the following formula:

	 	 	 	 	 	 
	 

	 	LIBOR Rate =	 	  London Interbank Offered Rate  	 
	 

	 	 	 	1 — LIBOR Reserve Percentage	 

“LIBOR Rate Borrowing” means a borrowing bearing interest based at a rate determined
by reference to the LIBOR Rate, each such borrowing to be in the principal amount of at least
$200,000.00 or any larger amount which is an even multiple of $100,000.00.

“LIBOR Rate Interest Period” means, as to each LIBOR Rate Borrowing, a period of one
month, two months or three months, as selected pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, commencing on the date of the borrowing (including continuations,
conversions and extensions thereof); provided, however, (i) if any LIBOR Rate Interest Period would
end on a day which is not a Business Day, such LIBOR Rate Interest Period shall be extended to the
next succeeding Business Day (except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day), (ii) no LIBOR Rate Interest
Period shall extend beyond the maturity date of the applicable Loan, and (iii) any LIBOR Rate
Interest Period with respect to a LIBOR Rate Borrowing that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day in the calendar
month at the end of such LIBOR Rate Interest Period) shall end on the last Business Day of the
relevant calendar month at the end of such LIBOR Rate Interest Period.

 

20

 

“LIBOR Reserve Percentage” means for any day, that percentage (expressed as a decimal)
which is in effect from time to time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended from time to time or any
successor regulation, as the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency
liabilities as that term is defined in Regulation D (or against any other category of liabilities
that includes deposits by reference to which the interest rate of LIBOR Rate Borrowings is
determined), whether or not Lender Party has any Eurocurrency liabilities subject to such reserve
requirement at that time. LIBOR Rate Borrowings shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements without benefits of credits
for proration, exceptions or offsets that may be available from time to time to Lender Party. The
LIBOR Rate shall be adjusted automatically on and as of the effective date of any change in the
LIBOR Reserve Percentage.

“Lien” means any mortgage, pledge, encumbrance, charge, security interest, lien,
assignment or other encumbrance, including any conditional sale agreement or other title retention
agreement.

“Liquid Assets” means, as of an applicable time, the following, so long as the same is
not subject to any Lien (other than Collateral Agent’s Lien) nor subject to any restriction on
transferability, whether imposed under applicable Law, by agreement, or otherwise: (i) marketable
direct obligations issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the United States, in each
case maturing within one year from the applicable time; (ii) certificates of deposit and time
deposits having maturities of six months or less from the applicable time and issued by any
commercial bank organized under the laws of the United States of America or any state thereof
having combined capital and surplus of not less than $500,000,000; (iii) commercial paper of an
issuer rated at least A-1 by Standard & Poor’s Ratings Services (“S&P”) or P-1 by Moody’s
Investor’s Service, Inc. (“Moody’s”), or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing ratings of commercial
paper issuers generally, and maturing within six months from the applicable time; (iv) securities
with maturities of one year or less from the applicable time and issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign government, the securities
of which state, commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody’s; (v) securities with
maturities of six months or less from the applicable time and backed by standby letters of credit
by Lender or any commercial bank satisfying the requirements of clause (ii) of this definition;
(vi) shares of money market mutual or similar funds which invest exclusively in assets satisfying
the requirements of clauses (i) through (iii) of this definition; and (vii) publicly traded
securities listed on a nationally recognized securities exchange in the United States.

“Loan Documents” means this Agreement, the Notes, the Security Documents, the Letter
of Credit Agreements, the Closing Certificates, and any and all other agreements, documents and
instruments of any kind executed or delivered in connection with, or evidencing, securing,
guaranteeing or relating to, the Loans, whether heretofore, simultaneously herewith or hereafter
delivered, together with any and all extensions, revisions, modifications or amendments at any time
made to any of the foregoing (but specifically excluding any Lender Party Swap Documents).

 

21

 

“Loans” means the Revolving Loan, the Swing Line Loan, the Term Loan, and the Letters
of Credit.

“London Interbank Offered Rate” means, for any LIBOR Rate Borrowing for any LIBOR Rate
Interest Period therefor, either (a) the rate of interest per annum determined by Agent (rounded
upward to the nearest 1/100 of 1%) appearing on the Reuters Screen LIBOR01 (or any successor page)
as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London
time), on the second full Business Day preceding the first day of such LIBOR Rate Interest Period,
and in an amount approximately equal to the amount of the LIBOR Rate Borrowing and for a period
approximately equal to such LIBOR Rate Interest Period, (b) if such rate is for any reason not
available, the rate of interest per annum determined by Agent (rounded upward to the nearest 1/100
of 1%) appearing on Reuters Screen LIBO page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 A.M. (London time), on the second full Business Day preceding the
first day of such LIBOR Rate Interest Period, and in an amount approximately equal to the amount of
the LIBOR Rate Borrowing and for a period approximately equal to such LIBOR Rate Interest Period
(provided, however, if more than one rate is specified on Reuters Screen LIBO page, the applicable
rate shall be the arithmetic mean of all such rates (rounded upwards, if necessary to the nearest
1/100 of 1%)), or (c) if neither of such rates is for any reason available, the rate per annum
equal to the rate at which Agent or its designee is offered deposits in Dollars at or about 11:00
A.M. (London time), two Business Days prior to the beginning of such LIBOR Rate Interest Period in
the interbank eurodollar market where the eurodollar and exchange operations in respect of its
LIBOR Rate Borrowings are then being conducted for settlement in immediately available funds, for
delivery on the first day of such LIBOR Rate Interest Period for the number of days comprised
therein, and in an amount comparable to the amount of the LIBOR Rate Borrowing to be outstanding
during such LIBOR Rate Interest Period.

“Long-Term Indebtedness” means at any date any Indebtedness which matures (or the
maturity of which may at the option of the applicable Person be extended such that it matures) more
than one year after such date.

“Material Adverse Change” means the occurrence of an event giving rise to a Material
Adverse Effect.

“Material Adverse Effect” means a material adverse effect on (a) the business,
financial condition, operations or properties of any Borrower Party; (b) the rights and remedies of
Lender Party under any Loan Document, (c) the ability of any Borrower Party to perform its
obligations under any Loan Document to which it is or is to be a party, or (d) the priority of
Collateral Agent’s Lien.

“Material Contract” means any contract or agreement (other than contracts or
agreements with respect to Asset Acquisitions) to which Borrower is a party, by which Borrower or
its properties are bound, or to which Borrower is subject and which contract or agreement (i)
pursuant to its terms provides for payments or receipts by Borrower which might reasonably be
expected to exceed $5,000,000.00 during any Fiscal Year; or (ii) if on account of any breach or
termination thereof, would reasonably be expected to cause a Material Adverse Effect.

 

22

 

“Mortgaged Property” means the “Mortgaged Property” as defined in the Mortgages.

“Mortgaged Property Documents” means (i) the Assigned Leases; (ii) any and all other
agreements entered into by Borrower with any Person relating to the Mortgaged Property; (iii) any
and all Governmental Approvals with respect to the Mortgaged Property; and (iv) any and all
operating, service, supply, and maintenance contracts with respect to the Mortgaged Property.

“Mortgages” means (i) that certain Deed of Trust and Security Agreement of even date
herewith executed by KMG ECI in favor of Collateral Agent, with respect to the Mortgaged Property
located in Pueblo County, Colorado; and (ii) that certain Mortgage and Security Agreement of even
date herewith executed by KMG-Bernuth in favor of Collateral Agent, with respect to the Mortgaged
Property located in Doniphan County, Kansas, and includes any and all extensions, revisions,
modifications or amendments at any time made to any of the foregoing.

“Most Recent Financial Statements” means the audited balance sheet and income
statement of Borrowers dated as of July 31, 2007, as supplemented by management-prepared financial
statements dated as of each Quarter-End through the Quarter-End of October 31, 2007.

“Net Cash Proceeds” means (i) in the case of any Casualty or Condemnation Event, the
aggregate cash proceeds of insurance, condemnation awards and other compensation received by
Borrower in respect of such Casualty or Condemnation Event less (x) reasonable fees and expenses
incurred by Borrower in connection therewith, (y) contractually required repayments of Indebtedness
to the extent secured by Liens on the property subject to such Casualty or Condemnation Event, and
(z) any income or transfer taxes paid or payable by Borrower as a result of such Casualty or
Condemnation Event; and (ii) in the case of any Asset Disposition, the aggregate cash payments
received by Borrower in connection therewith, less (x) reasonable fees and expenses incurred by
Borrower in connection therewith, (y) Indebtedness to the extent the amount thereof is secured by a
Lien on the property that is the subject of such Asset Disposition and the transferee of (or holder
of the Lien on) such property requires that such Indebtedness be repaid as a condition to such
Asset Disposition, and (z) any income or transfer taxes paid or payable by Borrower as a result of
such Asset Disposition.

“Net Income” means the net income of an applicable Person for the applicable period as
determined in accordance with Generally Accepted Accounting Principles, but excluding for purposes
of determining any financial ratios under this Agreement, all Extraordinary Receipts and any Income
Tax Expense on such Extraordinary Receipts and any tax deductions or credits on account of such
Extraordinary Receipts.

“Notes” means the Revolving Notes, the Swing Line Note, and the Term Notes.

“Notice of Borrowing” means a notice from a Borrower’s Representative in form and
substance satisfactory to Agent (and, in the case of a Swing Line Loan Advance, in form and
substance satisfactory to Swing Line Lender), to be made by telephone and confirmed in writing,
specifying therein the information as may be reasonably required by Agent (and, in the case of a
Swing Line Loan Advance, as may be reasonably required by Swing Line Lender) with respect to any
borrowing under this Agreement, such Notice of Borrowing to be substantially in the form attached
hereto as Exhibit “E”.

 

23

 

“Notice of Conversion/Continuation” means a notice from a Borrower’s Representative in
form and substance satisfactory to Agent, such Notice of Conversion/Continuation to be
substantially in the form attached hereto as Exhibit “F”.

“Notice of Funding” means a notice from Agent to Revolving Loan Lenders, to be made by
telephone and confirmed in writing, specifying therein the information as may be reasonably
required by Revolving Loan Lenders with respect to any Revolving Loan Borrowing under this
Agreement, such Notice of Funding to be substantially in the form attached hereto as Exhibit
“G”.

“Notice of Issuance” means a notice from Borrower to Agent and Issuing Lender to be
made by telephone and confirmed in writing, specifying therein the information as may be reasonably
required by Agent and Issuing Lender with respect to the issuance of any Letter of Credit under
this Agreement.

“Ordinary Course of Business” means an action taken by a Person only if:

(A) Such action is consistent with the past practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person; and

(B) Such action is not required to be authorized by the Governing Body of such Person under
applicable Laws.

“Organizational Documents” means (i) the articles of incorporation and the bylaws of a
corporation, (ii) the partnership agreement and any statement of partnership of a general
partnership, (iii) the limited partnership agreement and the certificate of limited partnership of
a limited partnership, (iv) the articles of organization and the operating agreement of a limited
liability company, (v) any charter or similar document adopted or filed in connection with the
creation, formation, or organization of a Person, and (vi) any amendment to any of the foregoing.

“Permitted Acquisition” means:

(A) The Acquisition being made pursuant to the Air Products APA Documents;

(B) Any Acquisition if the total consideration paid or payable is less than $15,000,000.00 and
if (i) Borrower gives Agent not less than ten (10) days prior written notice of such Acquisition;
(ii) no later than thirty (30) days after the Acquisition, Borrower shall have executed and
delivered such documentation (if any) as may be required by Agent so that Collateral Agent shall
have a first Lien with respect to any assets acquired in connection with such Acquisition (other
than real property); and (iii) no Default shall have occurred and be continuing at the time of the
consummation of such Acquisition or would exist immediately after such Acquisition;

 

24

 

(C) Any Acquisition made by any Borrower if the total consideration paid or payable is equal
to or greater than $15,000,000.00 and if (i) Borrower gives Agent not less than thirty (30) days
prior written notice of such Acquisition, which written notice shall be accompanied by a pro-forma
compliance certificate demonstrating that, on a pro-forma basis, after giving effect to the
Acquisition, such Acquisition would not give rise to a Default as of the consummation of the
Acquisition, or during the one-year period following the consummation of such Acquisition; (ii)
Agent consents to such Acquisition (and in granting or denying such consent, Agent may consider,
among other things, whether (x) the business acquired is a Permitted Line of Business; (y)
immediately after the Acquisition, the business so acquired (and the assets constituting such
business) shall be owned and operated by Borrower; (z) immediately after the Acquisition, Borrower
shall have executed and delivered such documentation (if any) as may be required by Agent so that
Collateral Agent shall have a first Lien with respect to any assets acquired in connection with
such Acquisition (other than real property with a value of less than $1,000,000.00); and provided
that in any event Agent may withhold such consent if any Default shall have occurred and be
continuing at the time of the consummation of such Acquisition or would exist immediately after
such Acquisition; and

(D) Any Acquisition made by any Member of the Borrower Consolidated Group (other than a
Borrower), whether in a single transaction or a series of related transactions, if the total
consideration paid or payable is equal to or greater than $15,000,000.00 and if (i) Borrower gives
Agent not less than thirty (30) days prior written notice of such Acquisition, which written notice
shall be accompanied by a pro-forma compliance certificate demonstrating that, on a pro-forma
basis, after giving effect to the Acquisition, such Acquisition would not give rise to a Default as
of the consummation of the Acquisition, or during the one-year period following the consummation of
such Acquisition; and (ii) Agent consents to such Acquisition (and in granting or denying such
consent, Agent may consider, among other things, whether the business acquired is a Permitted Line
of Business); and provided that in any event Agent may withhold such consent if any Default shall
have occurred and be continuing at the time of the consummation of such Acquisition or would exist
immediately after such Acquisition.

“Permitted Indebtedness” means:

(A) The Credit Agreement Obligations;

(B) The Prudential Obligations;

(C) The Existing Indebtedness;

(D) Any Indebtedness arising under any Swap Document entered into as a result of the
compliance with any affirmative covenant of any Borrower Party set forth in any Loan Document;

(E) Indebtedness incurred in the Ordinary Course of Business of the Borrower Consolidated
Group and not incurred through the borrowing of money, provided that such Indebtedness is either
Unsecured Indebtedness or Indebtedness secured by a Permitted Lien;

(F) Indebtedness of any Member of the Borrower Consolidated Group owed (i) to any Member of
the Borrower Consolidated Group (other than Borrower) and (ii) to
Borrower so long as the same constitutes a Permitted Investment by Borrower under clause (ii)
of clause (F) of the definition of Permitted Investment; and

 

25

 

(G) Indebtedness (other than Indebtedness specified in clauses (A) through (F) above) incurred
by any Member of the Borrower Consolidated Group in an aggregate amount not to exceed $15,000,000
at any time outstanding.

“Permitted Investments” means:

(A) Liquid Assets;

(B) Purchases and acquisitions of inventory, supplies, materials and equipment in the Ordinary
Course of Business;

(C) Investments consisting of loans and advances to employees for reasonable travel,
relocation and business expenses in the Ordinary Course of Business or prepaid expenses incurred in
the Ordinary Course of Business;

(D) Without duplication, Investments consisting of Permitted Indebtedness and Permitted
Acquisitions;

(E) Existing Investments;

(F) Investments made by a Member of the Borrower Consolidated Group (i) in Borrower and (ii)
in any Member of the Borrower Consolidated Group (other than Borrower), provided that the sum of
(x) the aggregate amount of Investments made pursuant to this clause (ii) plus (y) the aggregate
value of assets transferred to Members of the Borrower Consolidated Group (other than Borrower)
pursuant to clause (ii) of clause (G) of the definition of Permitted Transfers of Assets is equal
to or less than $5,000,000;

(G) Investments (other than Investments specified in clauses (A) through (F) above) in an
aggregate amount that shall not exceed $15,000,000.00; and

(H) Any other Investments that may be approved in writing by Agent from time to time
(including, without limitation, any approval of an investment policy established by Borrower).

“Permitted Liens” means:

(A) Collateral Agent’s Lien;

(B) Liens, if any, as reflected on the Title Insurance Policies;

(C) Those Liens identified on the attached Exhibit “H”;

 

26

 

(D) The following Liens, if the granting of such Lien or the attachment of such Lien to the
Collateral (i) does not otherwise constitute a Default under the terms of this Agreement, and (ii)
does not give rise to a Material Adverse Change:

(1) If the validity or amount thereof is being contested in good faith by appropriate
and lawful proceedings, so long as levy and execution thereon have been stayed and continue
to be stayed, and with respect to which adequate reserves or other appropriate provisions
are being maintained to the extent required by Generally Accepted Accounting Principles:

(a) Liens for taxes, assessments or charges due and payable and subject to
interest or penalty;

(b) Liens upon, and defects of title to, real or personal property, including
any attachment of personal or real property or other legal process prior to
adjudication of a dispute on the merits;

(c) Liens of mechanics, materialmen, warehousemen, carriers, or other like
Liens; and

(d) Adverse judgments on appeal;

(2) Pledges or deposits made in the Ordinary Course of Business to secure payment of
workmen’s compensation, or to participate in any fund in connection with workmen’s
compensation, unemployment insurance, old-age pensions or other social security programs;

(3) Good faith pledges or deposits made in the Ordinary Course of Business to secure
performance of bids, tenders, Contracts (other than for the repayment of borrowed money) or
leases, not in excess of ten percent (10%) of the aggregate amount due thereunder, or to
secure statutory obligations, or surety, appeal, indemnity, performance, payment, bid or
other similar bonds required in the Ordinary Course of Business; and

(4) Purchase money security interests granted in the Ordinary Course of Business to
secure not more than one hundred percent (100%) of the purchase price of assets; and

(E) Easements over the Mortgaged Property arising by reason of zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements, building restrictions and
other similar encumbrances on the use of real property which do not materially detract from the
value of such Mortgaged Property or interfere with the ordinary conduct of the business conducted
and proposed to be conducted at such Mortgaged Property.

“Permitted Line of Business” means the business engaged in by Borrower as of the date
of this Agreement, and businesses reasonably ancillary thereto.

 

27

 

“Permitted Transfers of Assets” means:

(A) Sales of Inventory in the Ordinary Course of Business;

(B) The sale or exchange of used or obsolete Equipment to the extent (i) the proceeds of such
sale are applied towards, or such Equipment is exchanged for, similar replacement Equipment, or
(ii) such Equipment is no longer necessary for the operations of Borrower in the Ordinary Course of
Business;

(C) The sale or disposition of assets outside the Ordinary Course of Business, provided that
(i) the aggregate value of assets sold or disposed of pursuant to this clause (C) in any Fiscal
Year shall not exceed $5,000,000.00, (ii) the aggregate value of assets sold or disposed of
pursuant to this clause (C) on or after the date of Closing shall not exceed $10,000,000.00, and
(iii) immediately prior to such sale or disposition, and after giving effect to such sale or
disposition, no Default or Event of Default would exist;

(D) Any transfer arising from the termination of any Swap Document, if such termination does
not give rise to a Default;

(E) Dividends if immediately prior and subsequent to the payment of any such Dividend, no
Default would exist;

(F) Any transfer of assets by a Member of the Borrower Consolidated Group (i) to Borrower, so
long as such transfer of assets would not otherwise give rise to a Default, and (ii) to a Member of
the Borrower Consolidated Group (other than Borrower), so long as such transfer of assets would not
otherwise give rise to a Default, provided that the sum of (x) the aggregate value of assets
transferred to Members of the Borrower Consolidated Group (other than Borrower) pursuant to this
clause (ii) plus (y) the amount of Investments made pursuant to clause (ii) of clause (F) of
Permitted Investments is equal to or less than $5,000,000; and

(G) The lease of a portion of the Mortgaged Property located in Doniphan County, Kansas,
pursuant to that certain Lease dated as of February 22, 2006 between KMG-Bernuth, as lessor, and
Boehringer Ingelheim Vetmedica, Inc., as lessee, as amended from time to time.

“Person” means any individual, corporation, partnership, limited partnership, limited
liability company, association, joint-stock company, trust, unincorporated organization, joint
venture, court or Governmental Authority.

“Petroleum Products” means “petroleum products” as defined under any applicable
Environmental Law.

“Place for Payment” means a place for payment as from time to time designated by
Agent, which place for payment currently is at the address of Agent as hereinafter provided for
with respect to notices.

“Plans” means all Single Employer Plans and Multiple Employer Plans, both as defined
in ERISA.

 

28

 

“Pledge Agreement” means that certain Amended and Restated Pledge Agreement of even
date herewith from Borrowers to Collateral Agent, together with any and all extensions, revisions,
modifications or amendments at any time made thereto.

“Pledged Collateral” means the “Pledged Collateral” as defined in the Pledge
Agreement.

“Principal Payment Due Date” means, with respect to any payment of principal on any
Loan (other than the Revolving Loan), the last day of each calendar month during the term of this
Agreement.

“Prohibited Transaction” means a “prohibited transaction” as defined in ERISA.

“Pro Rata” or “Pro Rata Share” of any amount means, with respect to any Lender
at any time (A) when referring to the Advances, the Loans or the Lenders, the product of such
amount times such Lender’s Credit Percentage; (B) when referring to Revolving Loan Advances,
Revolving Loan Borrowings, the Revolving Loan, or the Revolving Loan Lenders, the product of such
amount times such Revolving Loan Lender’s Revolving Loan Credit Percentage; (C) when referring to
Term Loan Advances, Term Loan Borrowings, the Term Loan, or the Term Loan Lenders, the product of
such amount times such Term Loan Lender’s Term Loan Credit Percentage; and (D) when referring to
Letter of Credit Advances or the Available Amount of the Letters of Credit, the product of such
amount times such Lender’s Revolving Loan Credit Percentage.

“Prudential Loan Documents” means the Prudential Term Note and the Prudential Note
Agreement.

“Prudential Note Holders” means the Noteholders under and as defined in the
Intercreditor Agreement.

“Prudential Note Agreement” means the Note Agreement under and as defined in the
Intercreditor Agreement.

“Prudential Obligations” means the “Note Agreement Obligations” as defined in the
Intercreditor Agreement, including, but not limited to, the Make Whole Amount (as defined in the
Prudential Loan Documents), if any.

“Prudential Term Note” means each of those certain 7.43% Senior Secured Notes of even
date herewith, given by Borrowers in favor of the Prudential Note Holders in the aggregate
principal amount of $20,000,000.00, and includes any amendment to or modification of any such note
and any promissory note given in extension or renewal of, or in substitution for, such note.

“Purchase Order” means a valid and binding order for goods to be purchased from
Borrower, which order shall be evidenced by an executed purchase order of the respective Account
Debtor.

“Quarter” means a period of time of three consecutive calendar months.

“Quarter-End” means the last day of each of January, April, July and October.

 

29

 

“Real Property” means the real property owned by Borrower or in which Borrower has a
leasehold interest, which Real Property is described on Schedule 10.13 of this Agreement.

“Records” means correspondence, memoranda, tapes, discs, microfilm, microfiche,
papers, books and other documents, or transcribed information of any type, whether expressed in
ordinary or machine language, and all filing cabinets and other containers in which any of the
foregoing is stored or maintained.

“Regulation “T”, Regulation “U”, and Regulation “X” means Regulation T, Regulation U,
and Regulation X, respectively, of the Board of Governors of the Federal Reserve System as now or
from time to time hereafter in effect and shall include any successor or other regulation or
official interpretation of said Board of Governors relating to the extension of credit by banks for
the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal
Reserve System.

“Reimbursement Obligation” means the obligation of Borrower to pay the amounts
required under Section 4.2 of this Agreement.

“Rents” means all the rents, issues, and profits now due and which may hereafter
become due under or by virtue of the Assigned Leases, together with all claims and rights to the
payment of money at any time arising in connection with any rejection or breach of any of the
Assigned Leases under Bankruptcy Law, including without limitation, all rights to recover damages
arising out of such breach or rejection, all rights to charges payable by a tenant or trustee in
respect of the leased premises following the entry of an order for relief under Bankruptcy Law in
respect of a tenant and all rentals and charges outstanding under the Assigned Leases as of the
date of entry of such order for relief.

“Reportable Event” means a “reportable event” as defined in ERISA, but excluding
events for which reporting has been waived.

“Required Endorsements” means any endorsements of any Title Insurance Policy
reasonably required by Collateral Agent.

“Required Lenders” means, at any time, Lenders (collectively) holding Credit
Percentages of at least sixty-six and two-thirds percent; provided, however, that in determining
the foregoing, a Defaulting Lender shall not be considered a Required Lender, and a Defaulting
Lender’s Credit Percentage shall be deemed to be zero percent (0%).

“Responsible Officer” means, individually and collectively, the president, chief
executive officer and chief financial officer of Borrower.

“Revolving Loan” means the loan which the Revolving Loan Lenders have agreed to
advance to Borrowers in accordance with the terms of Article 2 of this Agreement.

“Revolving Loan Advances” means all the Advances of the Revolving Loan.

“Revolving Loan Borrowing” means a borrowing consisting of simultaneous Revolving Loan
Advances made by the Revolving Loan Lenders.

 

30

 

“Revolving Loan Commitment” means (A) until April 30, 2008, Thirty-Five Million and
00/100 Dollars ($35,000,000.00); and (B) thereafter, the lesser of (i) Thirty-Five Million and
00/100 Dollars ($35,000,000.00), or (ii) the Borrowing Base.

“Revolving Loan Credit Percentage” means a percentage based on a fraction, the
numerator of which shall be the aggregate principal amount of Revolving Loan Advances outstanding
at a particular time and owing to a particular Revolving Loan Lender at such time, and the
denominator of which shall be the aggregate principal amount of all Revolving Loan Advances
outstanding at such time and owing to all the Revolving Loan Lenders at such time; provided that in
calculating such percentage, the aggregate principal amount of Swing Line Loan Advances owing to
the Swing Line Lender, the Available Amount of the Letters of Credit, and the aggregate amount of
Letter of Credit Advances owing to Issuing Lender shall, at such time, be considered to be owed to
the Revolving Loan Lenders that purchase (or are obligated to purchase) Swing Line Loan Advances
and Letter of Credit Advances from the Swing Line Lender and Issuing Lender under the terms of this
Agreement (the Revolving Loan Credit Percentages of the Revolving Loan Lenders as of the date
hereof being as set forth on the attached Exhibit “D”).

“Revolving Loan Lenders” means the Revolving Loan Lenders identified on Exhibit “D”
attached to this Agreement, and any other Person that becomes a Revolving Loan Lender pursuant to
the terms of this Agreement.

“Revolving Loan Maturity Date” means the date five (5) years from the date of this
Agreement (viz., December 31, 2012).

“Revolving Notes” means those certain Revolving Notes of even date herewith, given by
Borrowers in favor of the Revolving Loan Lenders in the aggregate principal amount of
$35,000,000.00, and includes any amendment to or modification of any such note and any promissory
note given in extension or renewal of, or in substitution for, such note.

“Secured Obligations” means, collectively, the Credit Agreement Obligations and the
Prudential Obligations.

“Security Documents” means all documents or instruments of any kind executed or
delivered in connection with the Loans, whether delivered prior to, at, or after the Closing,
wherein Collateral Agent is granted a Lien in any Borrower Party’s assets, and all documents and
instruments executed and delivered in connection with any of the foregoing, together with any and
all extensions, revisions, modifications or amendments at any time made to any of such documents or
instruments, including but not limited to this Agreement, the Mortgages, the Pledge Agreement and
the Financing Statements.

“Solid Wastes” means “solid wastes” as defined under any applicable Environmental Law.

 

31

 

“Solvent” and “Solvency” mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is greater than the total
amount of liabilities, including, without limitation, contingent liabilities, of such Person,
(b) the present fair salable value of the assets of such Person is not less than the amount that
will be required to pay
the probable liability of such Person on its debts as they become absolute and matured, (c) such
Person does not intend to, and does not believe that it will, incur debts or liabilities beyond
such Person’s ability to pay such debts and liabilities as they mature and (d) such Person is not
engaged in business or a transaction, and is not about to engage in business or a transaction, for
which such Person’s property would constitute an unreasonably small capital. The amount of
contingent liabilities at any time shall be computed as the amount that, in the light of all the
facts and circumstances existing at such time, represents the amount that is reasonably expected to
become an actual or matured liability.

“Subsidiary” means, as to any Person (the “first person”), another Person (the “second
person”) with respect to which such first person directly or indirectly through one or more
intermediaries, controls such second person (and a first person shall be deemed to have control if
such first person, directly or indirectly, has rights to exercise Voting Power to elect a majority
of the members of the Governing Body of the second person).

“Swap Documents” means (A) any agreement (including terms and conditions incorporated
by reference therein) which is a rate swap agreement, basis swap, forward rate agreement, commodity
swap, interest rate option, forward foreign exchange agreement, spot foreign exchange agreement,
rate cap agreement, rate floor agreement, rate collar agreement, currency swap agreement,
cross-currency rate swap agreement, currency option, any other similar agreement (including any
option to enter into any of the foregoing); (B) any combination of the foregoing; or (C) any master
agreement for any of the foregoing, as any of the foregoing may be amended or supplemented from
time to time.

“Swing Line Lender” means Wachovia.

“Swing Line Loan” means the loan which the Swing Line Lender has agreed to advance to
Borrower in accordance with the terms of Article 3 of this Agreement.

“Swing Line Loan Advances” means all the Advances of the Swing Line Loan.

“Swing Line Loan Commitment” means the lesser of (i) Five Million and 00/100 Dollars
($5,000,000.00), or (ii) the Unused Revolving Loan Commitment.

“Swing Line Loan Maturity Date” means the date one (1) Business Day prior to the
Revolving Loan Maturity Date.

“Swing Line Note” means that certain Swing Line Note of even date herewith, given by
Borrowers in favor of Swing Line Lender in the principal amount of $5,000,000.00, and includes any
amendment to or modification of such note and any promissory note given in extension or renewal of,
or in substitution for, such note.

“Tangible Net Worth” means, at any time with respect to an applicable Person, Equity
Owner’s Equity, less the sum of:

(A) Any surplus resulting from any write-up of assets subsequent to the date of Closing;

 

32

 

(B) Goodwill, including any amounts, however designated on a balance sheet of such Person,
representing the excess of the purchase price paid for assets or stock acquired over the value
assigned thereto;

(C) Patents, trademarks, trade names and copyrights;

(D) Any amount at which Equity Interests appear as an asset on a balance sheet of such Person;

(E) Loans and advances to Affiliates, stockholders, directors, officers or employees;

(F) Deferred expenses (to the extent included as an asset on a balance sheet);

(G) Investments in Affiliates of any nature; and

(H) Any other amount in respect of an intangible that, in accordance with Generally Accepted
Accounting Principles, should be classified as an asset on a balance sheet of the applicable
Person.

“Tangible Property” means all equipment, machinery, goods, furniture, furnishings,
fixtures, supplies, tools, materials, vehicles, books, records, and other tangible personal
property.

“Term Loan” means the loan which the Term Loan Lenders have agreed to advance to
Borrowers in accordance with the terms of Article 5 of this Agreement.

“Term Loan Advances” means all the Advances of the Term Loan.

“Term Loan Borrowing” means a borrowing consisting of simultaneous Term Loan Advances
made by the Term Loan Lenders.

“Term Loan Commitment” means Thirty-Five Million and 00/100 Dollars ($35,000,000.00).

“Term Loan Credit Percentage” means a percentage based on a fraction, the numerator of
which shall be the aggregate principal amount of Term Loan Advances outstanding at a particular
time and owing to a particular Term Loan Lender at such time, and the denominator of which shall be
the aggregate principal amount of all Term Loan Advances outstanding at such time and owing to all
the Term Loan Lenders at such time (the Term Loan Credit Percentages of the Term Loan Lenders as of
the date hereof being as set forth on the attached Exhibit “D”).

“Term Loan Maturity Date” means the date five (5) years from the date of this
Agreement (viz., December 31, 2012).

“Term Notes” means those certain Term Notes of even date herewith, given by Borrowers
to the Term Loan Lenders in the aggregate principal amount of $35,000,000.00, and includes any
amendment to or modification of any such note and any promissory note given in extension or renewal
of, or in substitution for, such note.

 

33

 

“Term Loan Lenders” means the Term Loan Lenders identified on Exhibit “D” attached to
this Agreement, and any other Person that becomes a Term Loan Lender pursuant to the terms of this
Agreement.

“Title Insurance Company” means a title insurance company acceptable to Agent in its
reasonable discretion and authorized under applicable Law to issue a Title Insurance Policy.

“Title Insurance Policies” means standard ALTA form title insurance policies with
respect to the Mortgaged Property and acceptable to Collateral Agent in its discretion, dated the
date of Closing, and issued by a Title Insurance Company to Collateral Agent upon the applicable
Mortgaged Property, subject only to those exceptions and matters of title acceptable to Collateral
Agent, in Collateral Agent’s discretion.

“Third Person” means a Person not a party to this Agreement.

“Transition Services Agreement” means any agreement between Borrower and Air Products
and Chemicals, Inc. relating to the provision of administrative and other services for the orderly
transition of the assets the subject of the Air Products APA Documents.

“Unfunded Pension Liability” means, with respect to any Plan or Multiemployer Plan of
any applicable Person as of an applicable date, the excess of its benefit liabilities under ERISA
over the current value of its assets, as determined by Agent.

“Unsecured Indebtedness” means Indebtedness not secured by any Lien.

“Unused Fee” means the fee payable by Borrowers to Agent for the account of the
Revolving Loan Lenders (based on each such Revolving Loan Lender’s Pro Rata Share of the Revolving
Loan Commitment at the applicable time) on each Quarter-End, as determined by Agent as of such
Quarter-End in an amount equal to (i) the daily average of the Unused Revolving Loan Commitment
during such Quarter, multiplied by (ii) a percentage based upon the ratio of Funded Debt to EBITDA
of the Borrower Consolidated Group, as set forth in the chart below, divided by (iii) four (4).

	 	 	 	 	 
	Ratio of Funded Debt to EBITDA	 	Unused Fee Percentage	 
	 
	 	 	 	 
	Equal to or greater than 3.0 to 1.0
	 	 	0.25	%
	Equal to or greater than 2.5 to 1.0, but
less than 3.0 to 1.0
	 	 	0.20	%
	Equal to or greater than 2.0 to 1.0, but
less than 2.5 to 1.0
	 	 	0.175	%
	Equal to or greater than 1.5 to 1.0, but
less than 2.0 to 1.0
	 	 	0.15	%
	Less than 1.5 to 1.0
	 	 	0.125	%

“Unused Revolving Loan Commitment” means, as determined by Agent at any time, an
amount equal to (i) the Revolving Loan Commitment, minus (ii) the outstanding Revolving Loan
Advances, minus (iii) the Available Amount of the Letters of Credit, minus (iii) any outstanding
Letter of Credit Advances.

 

34

 

“USA Patriot Act” means the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272
(2001), as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

“Voting Power” means, with respect to any Person, the right to vote for the election
of the Governing Body of such Person under ordinary circumstances.

“Wachovia” means Wachovia Bank, National Association, a national banking association,
its successors and assigns.

“Wachovia Fee Letter” means that certain letter dated November 15, 2007 from Wachovia
to KMG Chemicals and KMG-Bernuth, and providing for the payment of certain fees as more
particularly described therein.

“Without Notice” means without demand of performance or other demand, advertisement,
or notice of any kind to or upon the applicable Person, except as may be required under applicable
Laws or by express provision of any Loan Document.

1.3 Accounting Terms. Accounting terms used and not otherwise defined in this Agreement
have the meanings determined by, and all calculations with respect to accounting or financial
matters unless otherwise provided herein shall be computed in accordance with, Generally Accepted
Accounting Principles.

1.4 UCC Terms. As used herein, unless the context clearly requires to the contrary, terms
not specifically defined herein shall have the same respective meanings as are given to those terms
in the Uniform Commercial Code as presently adopted and in effect in (i) with respect to KMG
Chemicals and KMG ECI, the State of Texas, and (ii) with respect to KMG-Bernuth, the State of
Delaware (except in cases and with respect to Collateral when the perfection, the effect of
perfection or nonperfection, and the priority of a Lien in the Collateral is governed by another
Jurisdiction, in which case such terms shall have the meanings attributed to those terms under such
other Jurisdiction).

1.5 Construction of Terms. Whenever used in this Agreement, the singular number shall
include the plural and the plural the singular, pronouns of one gender shall include all genders,
use of the terms “herein”, “hereof”, and “hereunder” shall be deemed to be references to this
Agreement in its entirety unless otherwise specifically provided, and the word “discretion” means
in the sole and absolute discretion of the applicable Person(s).

1.6 Computation of Time Periods. For purposes of computation of periods of time
hereunder, the word “from” means “from and including”, the words “to” and “until” each mean “to but
excluding”, and the word “through” means “through and including”.

 

35

 

1.7 Computation of ABR Margin, LIBOR Margin, Unused Fee Percentage and Financial
Covenants.

(A) For purposes of computation of the ABR Margin, the LIBOR Margin, the amount of the Unused
Fee, and the financial covenants set forth in this Agreement, such
computation shall be (i) determined by Agent as of each Quarter-End, based on the Compliance
Certificate most recently delivered by Borrowers in accordance with the terms of this Agreement,
(ii) determined on a Consolidated Basis, (iii) based on an Annualized Rolling Period, if
applicable, and (iv) exclusive of any and all expenses paid or incurred by Borrower (up to a
maximum of $1,000,000.00) under any Transition Services Agreement.

(B) Notwithstanding the foregoing or anything in this Agreement to the contrary, with respect
to any Acquisition for consideration in excess of $15,000,000.00 (including the Acquisition being
made pursuant to the Air Products APA Documents), for purposes of computation of the financial
covenants set forth in this Agreement, such computation shall be made in good faith by Borrower
(but subject to the approval of Agent) by taking into account the historical results relating to
such Acquisition as follows: (i) for the Quarter-End immediately following the closing of such
Acquisition, the foregoing computation shall be made by adding the income and deducting the
expenses for the twelve-month period immediately preceding such Quarter-End, excluding the days
from the date of such Acquisition to such Quarter-End; (ii) for the second Quarter-End following
the closing of such Acquisition, the foregoing computation shall be made by adding the income and
deducting the expenses for the twelve-month period immediately preceding such Quarter-End,
excluding the days from the date of such Acquisition to such Quarter-End; (iii) for the third
Quarter-End following the closing of such Acquisition, the foregoing computation shall be made by
adding the income and deducting the expenses for the twelve-month period immediately preceding such
Quarter-End, excluding the days from the date of such Acquisition to such Quarter-End; and (iv) for
the fourth Quarter-End following the closing of such Acquisition, the foregoing computation shall
be made by adding the income and deducting the expenses for the twelve-month period immediately
preceding such Quarter-End, excluding the days from the date of such Acquisition to such
Quarter-End.

(C) Any adjustment in the ABR Margin, the LIBOR Margin or the amount of the Unused Fee shall
be prospective and shall commence as of the Business Day that the delivery of a Compliance
Certificate by Borrowers is required pursuant to Section 10.1(C) of this Agreement (provided that
should Borrowers fail to timely deliver a required Compliance Certificate, Agent at its option may
adjust the ABR Margin, LIBOR Margin and the amount of the Unused Fee to the highest applicable
percentage).

1.8 Reference to Borrowers and Borrower Parties. Any reference in this Agreement to (i)
“Borrower” shall mean each and any Borrower, singularly; (ii) “Borrowers” shall mean all of the
Borrowers; (iii) “Borrower Party” shall mean each and any Borrower Party, singularly; and (iv)
“Borrower Parties” shall mean all of the Borrower Parties.

1.9 Reference to Lenders and Lender Parties. Any reference in this Agreement to (i)
“Lender”, “Lender Party”, “Revolving Loan Lender” and “Term Loan Lender” shall mean, respectively,
each and any Lender, Lender Party, Revolving Loan Lender and Term Loan Lender, singularly; and (ii)
“Lenders”, “Lender Parties”, “Revolving Loan Lenders” and “Term Loan Lenders” shall mean,
respectively, all Lenders, Lender Parties, Revolving Loan Lenders and Term Loan Lenders,
collectively (and shall include any Person becoming a Lender, Lender Party, Revolving Loan Lender
or Term Loan Lender pursuant to an Assignment and Acceptance). The obligations and commitments of
each Lender under this Agreement and the
other Loan Documents are several, and neither Agent nor any Lender shall be responsible for
the performance by the other Lenders of its obligations or commitments hereunder or thereunder.

 

36

 

1.10 Joint and Several Liability of Borrowers.

(A) Each Borrower is accepting joint and several liability hereunder in consideration of the
financial accommodation to be provided by Lenders under this Agreement, for the mutual benefit,
directly and indirectly, of each Borrower and in consideration of the undertakings of each Borrower
to accept joint and several liability for the obligations of each other Borrower.

(B) Each Borrower jointly and severally irrevocably and unconditionally accepts, not merely as
a surety but also as a co-debtor, joint and several liability with the other Borrowers with respect
to the payment and performance of all of the Credit Agreement Obligations, it being the intention
of the parties hereto that all the Credit Agreement Obligations shall be the joint and several
obligations of each and all of the Borrowers without preferences or distinction among them.

(C) If and to the extent that any Borrower shall fail to make any payment with respect to any
of the Credit Agreement Obligations as and when due or to perform any of the Credit Agreement
Obligations in accordance with the terms thereof, then in each such event, the other Borrowers will
make such payment with respect to, or perform, such Credit Agreement Obligations.

(D) The obligations of each Borrower under any Loan Document constitute full recourse
obligations of such Borrower, enforceable against it to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.

(E) Except as otherwise expressly provided in any Loan Document, each Borrower hereby waives
notice of acceptance of its joint and several liability, notice of any borrowing made under this
Agreement, notice of occurrence of any Default or Event of Default, or of any demand for any
payment under this Agreement or any other Loan Document, notice of any action at any time taken or
omitted by any Lender Party under or in respect of any of the Credit Agreement Obligations, any
requirement of diligence and, generally, all demands, notice and other formalities of every kind in
connection with this Agreement or any other Loan Document. Each Borrower hereby assents to, and
waives notice of, any extension or postponement of the time for the payment of any of the Credit
Agreement Obligations, the acceptance of any partial payment thereon, any waiver, consent or other
action or acquiescence by any Lender Party at any time or times in respect of any default by any
Borrower in the performance or satisfaction of any term, covenant, condition or provision of this
Agreement or any other Loan Document, any and all other indulgences whatsoever by any Lender Party
in respect of any of the Credit Agreement Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of the Credit Agreement
Obligations or in part, at any time or times, of any security for any of the Credit Agreement
Obligations or the addition, substitution or release, in whole or in part, of any Borrower.
Without limiting the generality of the foregoing, each Borrower

 

37

 

assents
to any other action or delay in acting or failure to act on the part of any Lender Party, including, without
limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to
comply fully with the applicable laws or regulations thereunder which might, but for the provisions
of this Section, afford grounds for terminating, discharging or relieving such Borrower, in whole
or in part, from any of its obligations under this Agreement or any other Loan Document, it being
the intention of each Borrower that, so long as any of the Credit Agreement Obligations remain
unsatisfied, the obligations of such Borrower under this Agreement or any other Loan Document shall
not be discharged except by performance and then only to the extent of such performance. The
obligations of each Borrower under this Agreement and the other Loan Documents shall not be
diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation,
reconstruction or similar proceeding with respect to any Borrower Party or any Lender Party. The
joint and several liability of Borrowers hereunder shall continue in full force and effect
notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name,
membership, constitution or place of formation of any Borrower Party or any Lender Party.

(F) The provisions of this Section are made for the benefit of Lender Parties and their
respective successors and assigns, and may be enforced from time to time against any of the
Borrowers as often as occasion therefor may arise and without requirement on the part of any Lender
Party first to marshal any of its claims or to exercise any of its rights against any Borrower
Party or to exhaust any remedies available against any other Borrower Party or to resort to any
other source or means of obtaining payment of any of the Credit Agreement Obligations or to elect
any other remedy. The provisions of this Section shall remain in effect until all the Credit
Agreement Obligations shall have been paid in full or otherwise fully satisfied. If at any time,
any payment, or any part thereof, made in respect of any of the Credit Agreement Obligations, is
rescinded or must otherwise be restored or returned by any Lender Party upon the insolvency,
bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this Section will
forthwith be reinstated in effect, as though such payment had not been made.

(G) Notwithstanding any provision of any Loan Document, the liability of each Borrower under
the Loan Documents as of any date shall be limited to an amount equal to the greatest amount that
would not render such Borrower’s obligations under the Loan Documents subject to avoidance,
discharge or reduction as of such date as a fraudulent transfer or conveyance under applicable
Bankruptcy Laws or other Laws, in each instance after giving effect to all other liabilities of
such Borrower, contingent or otherwise, that are relevant under applicable Bankruptcy Laws or other
Laws (specifically excluding, however, any liabilities of such Borrower to the extent that such
liabilities would be discharged by payments made by such Borrower hereunder, and after giving
effect to any rights of subrogation, contribution, reimbursement, indemnity or similar rights of
such Borrower pursuant to applicable Laws or otherwise, including any agreement of such Borrower
with any other Person providing for an equitable allocation of such liability). Each Borrower
acknowledges and agrees that the Credit Agreement Obligations may from time to time exceed the
limitation of liability set forth in the preceding sentence without discharging, limiting or
otherwise affecting the obligations of any Borrower under the Loan Documents or the rights and
remedies of Lender Parties.

 

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1.11 Lender Party Swap Documents. Notwithstanding any provision of this Agreement, any
Loan Document or any Lender Party Swap Document to the contrary, (i) no covenant or agreement of
Borrower Party shall prohibit Borrower Party from entering into any Lender Party Swap Document; and
(ii) the right of Lender Parties to accelerate any of the Credit Agreement Obligations shall not be
construed to require the termination or unwinding of any transactions the subject of any Lender
Party Swap Documents.

1.12 Lien Granted For Lender Party Swap Obligations. To the extent that any Lien is
granted to any Lender Party as security for any Lender Party Swap Obligation of any Borrower Party
to any Lender Party other than Collateral Agent, the Lien so granted shall be deemed to be a Lien
granted to Collateral Agent as security for the Secured Obligations, without the necessity of any
act or consent of any Person.

ARTICLE II

2. THE REVOLVING LOAN

2.1 General Terms. Subject to the terms hereof, Revolving Loan Lenders will lend
Borrowers, from time to time until the Revolving Loan Maturity Date, such amounts which shall not
exceed, in the aggregate principal amount at any one time outstanding the Unused Revolving Loan
Commitment, less the outstanding Swing Line Loan Advances.

(A) Each Revolving Loan Lender severally agrees, on the terms and conditions hereinafter set
forth, to make Revolving Loan Advances to Borrowers from time to time on any Business Day during
the period from the date hereof until the Revolving Loan Maturity Date in an amount for each such
Revolving Loan Advance not to exceed such Revolving Loan Lender’s Pro Rata Share of the applicable
aggregate Revolving Loan Borrowing. Each Revolving Loan Borrowing shall be in the amount of
$100,000.00 or an integral multiple of $50,000.00 in excess thereof (other than a Revolving Loan
Borrowing the proceeds of which shall be used solely to repay or prepay in full outstanding Swing
Line Loan Advances and a Revolving Loan Borrowing in an amount equal to the entire Unused Revolving
Loan Commitment) and shall consist of Revolving Loan Advances made simultaneously by the Revolving
Loan Lenders Pro Rata.

(B) Subject to the terms hereof, Borrowers may borrow, repay without penalty or premium, and
reborrow hereunder, from the date of this Agreement until the Revolving Loan Maturity Date. If at
any time the unpaid principal balance of the Revolving Loan exceeds the amount Borrowers could
borrow at such time as set forth herein, Borrowers shall immediately upon demand of Agent pay or
cause to be paid such amounts to Agent for the account of the Revolving Loan Lenders (based on each
Revolving Loan Lender’s Pro Rata Share of the Revolving Loan Commitment at such time), to the
extent necessary to reduce the Revolving Loan to an amount which Borrowers could borrow at that
time.

 

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2.2 Disbursement of the Revolving Loan.

(A) Except for Revolving Loan Borrowings under Section 3.2 of this Agreement and subject to
the terms of any other agreement among Agent, Revolving Loan Lenders and Borrowers to the contrary,
in order to obtain a Revolving Loan Borrowing, a
Borrower’s Representative shall deliver a Notice of Borrowing to Agent (i) with respect to a
Revolving Loan Borrowing to be made at Closing, not later than the time of Closing, and (ii) with
respect to any other Revolving Loan Borrowing, (x) if the Revolving Loan Borrowing is to accrue
interest at the Adjusted LIBOR Rate, no later than 1:00 p.m. (Charlotte, North Carolina time) on a
date not less than three (3) Business Days prior to the date such Revolving Loan Borrowing is
sought, and (y) if the Revolving Loan Borrowing is to accrue interest at the Adjusted LIBOR Market
Index Rate or the Adjusted ABR Rate, no later than 1:00 p.m. (Charlotte, North Carolina time) on a
date not less than one (1) Business Day prior to the date such Revolving Loan Borrowing is sought.

(B) Upon Agent’s receipt of a Notice of Borrowing, Agent shall deliver a Notice of Funding to
each Revolving Loan Lender by (x) if the applicable Revolving Loan Borrowing is to accrue interest
at the Adjusted LIBOR Rate, 1:00 p.m. (Charlotte, North Carolina time) on a date not less than two
(2) Business Days prior to the date the Revolving Loan Borrowing is to be made, and (y) if the
applicable Revolving Loan Borrowing is to accrue interest at the Adjusted LIBOR Market Index Rate
or the Adjusted ABR Rate, 5:00 p.m. (Charlotte, North Carolina time) on a date not less than one
(1) Business Day prior to the date the Revolving Loan Borrowing is to be made, and each Revolving
Loan Lender shall, before 11:00 a.m. (Charlotte, North Carolina time) on the date of such Revolving
Loan Borrowing, make available to Agent at Agent’s Account, in same day funds, such Revolving Loan
Lender’s Pro Rata Share of such Revolving Loan Borrowing.

(C) After Agent’s receipt of such funds and upon fulfillment of any applicable conditions set
forth in this Agreement, Agent will make such funds available to Borrowers by crediting a
Borrower’s deposit account with Wachovia; provided, however, that upon (i) written notice to Agent
from Swing Line Lender given prior to the funding of the Revolving Loan Borrowing, Agent shall
first make a portion of such funds equal to the aggregate principal amount of any Swing Line Loan
Advances (plus interest accrued and unpaid thereon) available to the Swing Line Lender (and, if
applicable, each other Lender that has made a Swing Line Loan Advance that remains outstanding) for
repayment of such Swing Line Loan Advances; and (ii) written notice to Agent from Issuing Lender
given prior to the funding of the Revolving Loan Borrowing, Agent shall first make a portion of
such funds equal to the aggregate principal amount of any Letter of Credit Advances (plus interest
accrued and unpaid thereon) available to Issuing Lender (and, if applicable, each other Lender that
has made a Letter of Credit Advance that remains outstanding) for repayment of such Letter of
Credit Advances.

2.3 The Revolving Notes. Borrowers’ obligation to repay the Revolving Loan shall be
evidenced by the Revolving Notes.

2.4 Interest Rate. Interest on the Revolving Loan shall be calculated as follows:

(A) Except as provided in the immediately succeeding subparagraphs (B) and (C), during the
entire term of the Revolving Notes, the outstanding principal balance of the Revolving Notes shall
bear interest at the Adjusted LIBOR Market Index Rate.

 

40

 

(B) A Borrower’s Representative may from time to time deliver to Agent a Notice of Borrowing
or a Notice of Continuation/Conversion, electing to have all or a portion of
the outstanding principal balance of the Revolving Loan accrue interest based on the LIBOR
Rate, in which case the applicable LIBOR Rate Borrowing shall bear interest at the Adjusted LIBOR
Rate during the applicable LIBOR Rate Interest Period. Following the expiration of any applicable
LIBOR Rate Interest Period, if a Borrower’s Representative shall not have timely and properly
delivered a Notice of Conversion/Continuation electing a LIBOR Rate Interest Period to commence as
of the expiration of the applicable expiring LIBOR Rate Interest Period, then the applicable LIBOR
Rate Borrowing shall automatically bear interest at the Adjusted LIBOR Market Index Rate.

(C) A Borrower’s Representative may from time to time deliver to Agent a Notice of Borrowing
or a Notice of Continuation/Conversion, electing to have all or a portion of the outstanding
principal balance of the Revolving Loan accrue interest based on the ABR Rate, in which case such
ABR Rate Borrowing shall bear interest at the Adjusted ABR Rate. Such ABR Rate Borrowing shall
continue to bear interest at the Adjusted ABR Rate until such time as a Borrower’s Representative
shall have delivered to Agent a Notice of Continuation/Conversion, electing to have such ABR
Borrowing bear interest at the Adjusted LIBOR Market Index Rate or the Adjusted LIBOR Rate.

(D) Notwithstanding the foregoing, there shall not be more than four (4) Borrowings
outstanding at any time with respect to the Revolving Loan.

2.5 Payments of Principal and Interest. Principal and interest on the Revolving Loan
shall be payable as follows:

(A) On the first Interest Payment Due Date following the date of the Revolving Notes, and on
each successive Interest Payment Due Date thereafter until the entire indebtedness evidenced by the
Revolving Notes is paid in full, Borrowers shall pay to Agent for the account of the Revolving Loan
Lenders (based on each Revolving Loan Lender’s Revolving Loan Credit Percentage at such time) all
accrued and unpaid interest on the outstanding principal balance of the Revolving Notes.

(B) If not earlier demanded pursuant to Section 11.3 hereof, the outstanding principal balance
of the Revolving Loan, together with all accrued and unpaid interest thereon, shall be due and
payable to Agent for the account of the Revolving Loan Lenders (based on each Revolving Loan
Lender’s Revolving Loan Credit Percentage at such time) on the Revolving Loan Maturity Date.

2.6 Use of Proceeds of Revolving Loan. The proceeds of the Revolving Loan shall be used
to refinance Existing Indebtedness, to purchase certain assets in accordance with the terms of the
Air Products APA, to finance Borrowers’ general working capital needs, to pay fees and expenses
associated with the closing of the Loans, to repay Letter of Credit Advances, and to repay Swing
Line Loan Advances.

 

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ARTICLE III

3. THE SWING LINE LOAN.

3.1 General Terms.

(A) Subject to the terms hereof, Swing Line Lender will lend Borrowers, from time to time
until the Swing Line Loan Maturity Date, such amounts which shall not exceed, in the aggregate
principal amount at any one time outstanding, the Swing Line Loan Commitment.

(B) Subject to the terms hereof, Borrowers may borrow, repay without penalty or premium, and
reborrow hereunder, from the date of this Agreement until the Swing Line Loan Maturity Date. If at
any time the unpaid principal balance of the Swing Line Loan exceeds the amount Borrowers could
borrow at such time as set forth herein, Borrowers shall immediately and Without Notice pay or
cause to be paid such amounts to Swing Line Lender, to the extent necessary to reduce the Swing
Line Loan to an amount which Borrowers could borrow at that time.

3.2 Disbursement of the Swing Line Loan.

(A) Swing Line Lender will credit or pay the proceeds of each Swing Line Loan Advance to a
Borrower’s deposit account with Wachovia, or in such other manner as Borrowers and Swing Line
Lender may agree.

(B) Subject to the terms of any other agreement between Swing Line Lender and Borrowers to the
contrary (including any Cash Management Agreement), in order to obtain a Swing Line Loan Advance, a
Borrower’s Representative shall deliver a Notice of Borrowing to Agent and Swing Line Lender not
later than 1:00 p.m. (Charlotte, North Carolina time) on the Business Day such Swing Line Loan
Advance is sought. Upon Swing Line Lender’s receipt of such Notice of Borrowing and upon
satisfaction of the terms and conditions of this Agreement, Swing Line Lender will make such funds
available to Borrowers as provided for above. Notwithstanding anything contained herein to the
contrary, Borrowers shall not be entitled to receive nor shall Swing Line Lender be required to
disburse any Swing Line Loan Advance after the Swing Line Loan Maturity Date.

(C) Upon written demand by Swing Line Lender to Agent (a “Swing Line Put”), each Revolving
Loan Lender shall purchase from Swing Line Lender, and Swing Line Lender shall sell and assign
(without recourse except for the representations and warranties of Swing Line Lender set forth in
this paragraph) to each such Revolving Loan Lender, such Revolving Loan Lender’s Pro Rata Share of
any outstanding Swing Line Loan Advance as so demanded by Swing Line Lender, by making available
for the account of Swing Line Lender, by deposit to Agent’s Account in same day funds, an amount
equal to the portion of the outstanding principal amount of such Swing Line Loan Advance to be
purchased by such Revolving Loan Lender on (i) a Business Day on which notice of any such Swing
Line Put is given by Agent to Revolving Loan Lenders, provided that such notification is given by
Agent not later than 1:00 p.m. (Charlotte, North Carolina time) on such Business Day, or (ii) the
first Business Day thereafter if such notification is given by Agent later than 1:00 p.m.
(Charlotte, North Carolina time). If such

 

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Revolving Loan Lender shall pay to Agent such amount for
the account of Swing Line Lender, such amount so paid in respect of principal shall constitute a Revolving Loan
Advance made by such Revolving Loan Lender for purposes of this Agreement evidenced by such
Revolving Loan Lender’s Revolving Note, and the outstanding principal balance of the Swing Line
Loan shall be reduced by such amount on such Business Day. Borrower hereby agrees to each such
sale and assignment. Upon any such assignment by Swing Line Lender to any Revolving Loan Lender of
a portion of a Swing Line Loan Advance, Swing Line Lender represents and warrants to such Revolving
Loan Lender that Swing Line Lender is the legal and beneficial owner of such interest being
assigned by it, but makes no other representation or warranty and assumes no responsibility or
liability with respect to such Swing Line Loan Advance or the Loan Documents. Each Revolving Loan
Lender’s obligation to purchase its Pro Rata Share of an outstanding Swing Line Loan Advance
pursuant to this Section 3.2(C) shall be absolute and unconditional and shall not be affected by
any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which
such Revolving Loan Lender may have against Swing Line Lender, Borrower or any other Person for any
reason whatsoever, (B) the occurrence or continuance of a Default, or (c) the failure to satisfy
any condition precedent of this Agreement, or (d) any other occurrence, event or condition, whether
or not similar to any of the foregoing.

If any Revolving Loan Lender fails to make available to Agent for the account of Swing Line
Lender any amount required to be paid by such Revolving Loan Lender pursuant to the foregoing
provisions of this Article 3 by the time specified in this Section, Swing Line Lender shall be
entitled to recover from such Revolving Loan Lender (acting through Agent), on demand, such amount
with interest thereon for the period from the date such payment is required to the date on which
such payment is immediately available to Swing Line Lender at a rate per annum equal to the greater
of (i) the Federal Funds Rate, or (ii) the Adjusted LIBOR Market Index Rate, plus any
administrative, processing or similar fees customarily charged by Swing Line Lender in connection
with the foregoing. A certificate of Swing Line Lender submitted to any Revolving Loan Lender
(through Agent) with respect to any amounts owing under this paragraph shall be conclusive absent
manifest error.

3.3 The Swing Line Note. Borrowers’ obligation to repay the Swing Line Loan shall be
evidenced by the Swing Line Note.

3.4 Interest Rate. During the entire term of the Swing Line Note, the outstanding
principal balance of the Swing Line Note shall bear interest at the Adjusted LIBOR Market Index
Rate.

3.5 Payments of Principal and Interest.

(A) On the first Interest Payment Due Date following the date of the Swing Line Note, and on
each successive Interest Payment Due Date thereafter until the entire indebtedness evidenced by the
Swing Line Note is paid in full, Borrowers shall pay to Agent for the account of Swing Line Lender
all accrued and unpaid interest on the outstanding principal balance of the Swing Line Note.

(B) If not earlier demanded by Swing Line Lender pursuant to Section 11.3 hereof, the
outstanding principal balance of the Swing Line Loan, together with all accrued and
unpaid interest thereon, shall be due and payable to Agent for the account of Swing Line
Lender on the Swing Line Loan Maturity Date.

 

43

 

3.6 Use of Proceeds of Swing Line Loan. The proceeds of the Swing Line Loan shall be
used for Borrowers’ general short-term working capital and general corporate purposes.

3.7 Failure to Purchase Pro Rata Share of Swing Line Loan Advances. The failure of any
Revolving Loan Lender to purchase its Pro Rata Share of any Swing Line Loan Advance as required in
Section 3.2(C) shall not relieve any other Revolving Loan Lender of its obligation hereunder to
purchase its Pro Rata Share of such Swing Line Loan Advance, but no Revolving Loan Lender shall be
responsible for the failure of any other Revolving Loan Lender to purchase its Pro Rata Share of
any Swing Line Loan Advance.

ARTICLE IV

4. LETTERS OF CREDIT

4.1 Issuance of Letters of Credit. Subject to the terms hereof, from time to time until
the Revolving Loan Maturity Date, Borrower may request Issuing Lender to issue, and Issuing Lender
agrees to issue, Letters of Credit for the account of Borrower from time to time on any Business
Day in an aggregate Available Amount for all Letters of Credit not to exceed at any time the Letter
of Credit Commitment on such Business Day. No Letter of Credit shall have an expiration date
(including all rights of Borrower or the beneficiary to require renewal) later than the earlier of
(i) 30 days before the Revolving Loan Maturity Date, or (ii) one year after the date of issuance
thereof. In order for a Letter of Credit to be issued, a Borrower’s Representative shall deliver a
Notice of Issuance to Agent and Issuing Lender not later than 1:00 p.m. (Charlotte, North Carolina
time) on a date not less than three (3) Business Days prior to the date the issuance of such Letter
of Credit is sought, such Notice of Issuance to be accompanied by the form of the Letter of Credit
to be issued. If (i) the requested form of such Letter of Credit is acceptable to Issuing Lender
in its discretion, and (ii) if required by Agent and Issuing Lender, upon execution and delivery of
a Letter of Credit Agreement in form and substance satisfactory to Agent and Issuing Lender,
Issuing Lender will, subject to the other terms and conditions of this Agreement, issue such Letter
of Credit. In the event and to the extent that the provisions of any Letter of Credit Agreement
shall conflict with this Agreement, the provisions of this Agreement shall govern.

4.2 Reimbursement and Other Payments. Borrowers agree to pay to Agent immediately upon
demand of Agent or Issuing Lender for reimbursement to Issuing Lender (i) at the time when Issuing
Lender shall pay any draft presented under any Letter of Credit, a sum equal to the amount so paid
under such Letter of Credit, plus (ii) interest on any amount remaining unpaid by Borrowers to
Issuing Lender under clause (i) above from such time until payment in full at an interest rate
equal to (x) until the end of the Business Day next following the payment of any draft, the
Adjusted LIBOR Market Index Rate, and (y) thereafter, the Adjusted LIBOR Market Index Rate plus two
percent (2.0%).

 

44

 

4.3 Additional Remedies. In addition to any rights and remedies the Lender Parties may
otherwise have under this Agreement, if (i) any Default shall have occurred, Agent or Issuing
Lender may in their discretion by notice to Borrowers, declare the obligation of Issuing
Lender to issue any Letter of Credit to be terminated, whereupon the obligation of Issuing
Lender to issue any Letter of Credit shall forthwith terminate, and (ii) any Event of Default shall
have occurred, Agent may make demand upon Borrowers to, and forthwith upon such demand Borrowers
will pay to Agent in same day funds at Agent’s office designated in such demand, for deposit in a
special Cash Collateral Account to be maintained with Collateral Agent, an amount equal to the
maximum amount then available to be drawn under the Letters of Credit. The Cash Collateral
Account shall be in the name of Borrowers, but under the sole dominion and control of Collateral
Agent, and shall be held and disbursed as follows:

(A) Collateral Agent may from time to time invest funds on deposit in the Cash Collateral
Account, reinvest proceeds of any such investments which may mature or be sold, and invest interest
or other income received from any such investments, and all such investments and reinvestments
shall, for purposes of this Agreement, constitute part of the funds held in the Cash Collateral
Account.

(B) If at any time Agent or Collateral Agent determines that any funds held in the Cash
Collateral Account are subject to any right or claim of any Person other than claims arising under
this Agreement or that the total amount of such funds is less than the maximum amount at such time
available to be drawn under the Letters of Credit, Borrowers will, forthwith upon demand by Agent
or Collateral Agent, pay to Collateral Agent, as additional funds to be deposited and held in the
Cash Collateral Account, an amount equal to the excess of (i) such maximum amount at such time
available to be drawn under the Letters of Credit over (ii) the total amount of funds, if any, then
held in the Cash Collateral Account which Agent or Collateral Agent determine to be free and clear
of any such right and claim.

(C) Borrower hereby assigns, transfers and sets over, and grants to Collateral Agent a Lien on
and upon, the Cash Collateral Account, including all funds held in the Cash Collateral Account from
time to time and all proceeds thereof, as security for the Secured Obligations. Borrower agrees
that, to the extent notice of sale of any securities shall be required by Law, at least five
Business Days’ Notice to Borrower of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification. Collateral Agent may
adjourn any public or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and place to which it may
be so adjourned.

(D) Subject to the provisions of the Intercreditor Agreement, Collateral Agent may, at any
time or from time to time, apply funds from time to time held in the Cash Collateral Account to the
payment of (i) any Reimbursement Obligation, and (ii) upon termination of all Letters of Credit and
payment in full of all the Reimbursement Obligation, to the other Secured Obligations in such order
as Collateral Agent may elect.

(E) Neither Borrower nor any Person claiming on behalf of or through Borrower shall have any
right to withdraw any of the funds held in the Cash Collateral Account.

 

45

 

4.4 No Liability of Issuing Lender. Borrowers assume all risks of the acts or omissions
of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of
Credit. Neither Issuing Lender nor any of its officers or directors shall be liable or
responsible for (a) the use that may be made of any Letter of Credit or any acts or omissions
of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or
genuineness of documents, or of any endorsement thereon, even if such documents should prove to be
in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by Issuing Lender
against presentation of documents that do not comply with the terms of a Letter of Credit,
including failure of any documents to bear any reference or adequate reference to the Letter of
Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any
Letter of Credit. In furtherance and not in limitation of the foregoing, Issuing Lender may accept
documents that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.

4.5 Indemnification. In addition to any other indemnification obligation of Borrower
under this Agreement or any other Loan Document, Borrowers hereby agree to indemnify and hold the
Lender Parties harmless from and against any and all Indemnified Losses which the Lender Parties
may incur or which may be claimed against the Lender Parties by any Person by reason of or in
connection with the execution and delivery or transfer of, or payment or failure to make lawful
payment under, any Letter of Credit.

4.6 Pro Rata Participation, Drawing and Reimbursement With Respect to Letters of
Credit.

(A) Without any further action on the part of any Lender Party, effective immediately upon the
issuance of any Letter of Credit issued under this Agreement, Issuing Lender will be deemed to have
sold, transferred, and assigned to each Revolving Loan Lender at such time, and each Revolving Loan
Lender will have been deemed to have purchased and accepted from Issuing Lender, such Revolving
Loan Lender’s Pro Rata Share of Issuing Lender’s interest in the applicable Letter of Credit (such
Pro Rata Share to be determined without taking into account such Revolving Loan Lender’s obligation
to purchase as provided in this Section 4.6), which purchase shall unconditionally obligate each
Revolving Loan Lender to purchase from Issuing Lender such Revolving Loan Lender’s Pro Rata Share
of any Letter of Credit Advance in accordance with the provisions of Section 4.6(C) below, and upon
such purchase, shall entitle each Revolving Loan Lender, in accordance with and subject to the
provisions of this Agreement, to receive such Revolving Loan Lender’s Pro Rata Share of any and all
payments made by Borrower with respect to the applicable Letter of Credit and whether required
hereunder or under any Letter of Credit Agreement.

(B) The payment by Issuing Lender of a draft drawn under any Letter of Credit shall constitute
for all purposes of this Agreement the making by Issuing Lender of a Letter of Credit Advance in
the amount of such draft.

 

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(C) Upon written demand by Issuing Lender, with a copy of such demand to Agent, each Revolving
Loan Lender shall purchase from Issuing Lender, and Issuing Lender shall sell and assign to each
such Revolving Loan Lender, such Revolving Loan Lender’s Pro Rata Share of any outstanding Letter
of Credit Advance as of the date of such purchase, by making available to Agent for the account of
Issuing Lender, by deposit to the Agent’s Account, in same day funds, an amount equal to the
portion of the outstanding principal amount of such Letter of Credit Advance to be purchased by
such Revolving Loan Lender. If such Revolving
Loan Lender shall pay to Agent such amount for the account of Issuing Lender, such amount so
paid in respect of principal shall constitute a Revolving Loan Advance made by such Revolving Loan
Lender for purposes of this Agreement, and the outstanding amount of the Letter of Credit Advances
shall be reduced by such amount. Promptly after receipt thereof, Agent shall transfer such funds
to Issuing Lender. Borrower hereby agrees to each such sale and assignment. Each Revolving Loan
Lender unconditionally agrees to purchase its Pro Rata Share of an outstanding Letter of Credit
Advance on (i) the Business Day on which demand therefor is made by Issuing Lender, provided notice
of such demand is given not later than 11:00 a.m. (Charlotte, North Carolina time) on such Business
Day, or (ii) the first Business Day next succeeding such demand if notice of such demand is given
after such time. Upon any such assignment by Issuing Lender to any Revolving Loan Lender of a
portion of a Letter of Credit Advance, Issuing Lender represents and warrants to such Revolving
Loan Lender that Issuing Lender is the legal and beneficial owner of such interest being assigned
by it, free and clear of any Liens, but makes no other representation or warranty and assumes no
responsibility with respect to such Letter of Credit Advance, the Loan Documents or any Lender
Party. If and to the extent that any Revolving Loan Lender shall not have so made the amount of
such Letter of Credit Advance available to the Agent, such Revolving Loan Lender agrees to pay to
Agent forthwith on demand of Agent such amount together with interest thereon, for each day from
the date of demand by Issuing Lender until the date such amount is paid to Agent for its account or
the account of Issuing Lender, as applicable, at a rate per annum equal to the greater of (i) the
Federal Funds Rate, or (ii) the Adjusted ABR Rate.

4.7 Failure to Purchase Pro Rata Share of Letter of Credit Advances. The failure of any
Lender to purchase its Pro Rata Share of any Letter of Credit Advance as required in Section 4.6
shall not relieve any other Lender of its obligation hereunder to purchase its Pro Rata Share of
such Letter of Credit Advance, but no Lender shall be responsible for the failure of any other
Lender to purchase its Pro Rata Share of any Letter of Credit Advance.

4.8 Letter of Credit Reports. Issuing Lender shall furnish to Agent and each Revolving
Loan Lender on request (such request to be made not more frequently than monthly) a written report
summarizing issuance and expiration dates of the Letters of Credit issued by Issuing Lender and
drawings under all Letters of Credit.

ARTICLE V

5. THE TERM LOAN

5.1 General Terms. Subject to the terms hereof, Term Loan Lenders will lend to Borrowers
in a single Term Loan Borrowing at the Closing, an amount which shall not exceed the Term Loan
Commitment, which Term Loan Borrowing shall consist of Term Loan Advances made simultaneously by
the Term Loan Lenders Pro Rata.

5.2 The Term Notes. Borrowers’ obligation to repay the Term Loan shall be evidenced
by the Term Notes.

 

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5.3 Interest Rate. Interest on the Term Loan shall be calculated as follows:

(A) Except as provided in the immediately succeeding subparagraphs (B) and (C), during the
entire term of the Term Notes, the outstanding principal balance of the Term Notes shall bear
interest at the Adjusted LIBOR Market Index Rate.

(B) A Borrower’s Representative may from time to time deliver to Agent a Notice of Borrowing
or a Notice of Continuation/Conversion, electing to have all or a portion of the outstanding
principal balance of the Term Loan accrue interest based on the LIBOR Rate, in which case the
applicable LIBOR Rate Borrowing shall bear interest at the Adjusted LIBOR Rate during the
applicable LIBOR Rate Interest Period. Following the expiration of any applicable LIBOR Rate
Interest Period, if a Borrower’s Representative shall not have timely and properly delivered a
Notice of Conversion/Continuation electing a LIBOR Rate Interest Period to commence as of the
expiration of the applicable expiring LIBOR Rate Interest Period, then the applicable LIBOR Rate
Borrowing shall automatically bear interest at the Adjusted LIBOR Market Index Rate.

(C) A Borrower’s Representative may from time to time deliver to Agent a Notice of Borrowing
or a Notice of Continuation/Conversion, electing to have all or a portion of the outstanding
principal balance of the Term Loan accrue interest based on the ABR Rate, in which case such ABR
Rate Borrowing shall bear interest at the Adjusted ABR Rate. Such ABR Rate Borrowing shall
continue to bear interest at the Adjusted ABR Rate until such time as a Borrower’s Representative
shall have delivered to Agent a Notice of Continuation/Conversion, electing to have such ABR
Borrowing bear interest at the Adjusted LIBOR Market Index Rate or the Adjusted LIBOR Rate.

(D) Notwithstanding the foregoing, there shall not be more than four (4) Borrowings
outstanding at any time with respect to the Term Loan.

5.4 Payments of Principal and Interest. Principal and interest on the Term Loan shall be
payable as follows:

(A) On the first Interest Payment Due Date following the date of the Term Notes, and on each
successive Interest Payment Due Date thereafter until the entire indebtedness evidenced by the Term
Notes is paid in full, Borrowers shall pay to Agent for the account of the Term Loan Lenders (based
on each Term Loan Lender’s Term Loan Credit Percentage at such time) all accrued and unpaid
interest on the outstanding principal balance of the Term Notes.

(B) On the first Principal Payment Due Date following the date of the Term Notes, and on each
successive Principal Payment Due Date thereafter until the entire indebtedness evidenced by the
Term Notes is paid in full, Borrowers shall pay to Agent for the account of the Term Loan Lenders
(based on each Term Loan Lender’s Term Loan Credit Percentage at such time) a principal payment
each in the amount of (i) on the first twenty-four (24) Principal Payment Due Dates, $458,333.33;
and (ii) thereafter, $666,667.00.

(C) If not earlier demanded pursuant to Section 11.3 hereof, the outstanding principal balance
of the Term Loan, together with all accrued and unpaid interest thereon, shall
be due and payable to Agent for the account of the Term Loan Lenders (based on each Term Loan
Lender’s Term Loan Credit Percentage at such time) on the Term Loan Maturity Date.

 

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5.5 Use of Proceeds of Term Loan. The proceeds of the Term Loan shall be used to
refinance Existing Indebtedness of Borrowers and to purchase certain assets in accordance with the
terms of the Air Products APA.

ARTICLE VI

6. PAYMENTS, ADDITIONAL COSTS, ETC.

6.1 Payment to Agent.

(A) All monies payable to Lender Parties under this Agreement or under any other Loan Document
shall be paid directly to Agent in immediately available funds at the Place for Payment. If Agent
shall send Borrowers statements of amounts due hereunder, such statements shall be considered
correct and conclusively binding on Borrowers unless Borrower notifies Agent to the contrary within
thirty (30) days of its receipt of any statement which it deems to be incorrect. Alternatively, at
its discretion, Agent may charge against any deposit account of Borrower all or any part of any
amount owed by Borrower hereunder.

(B) All payments to be made by Borrower hereunder will be made to Agent not later than 1:00
p.m. at the Place for Payment. Payments received after 1:00 p.m. at the Place for Payment shall be
deemed to be payments made prior to 1:00 p.m. at the Place for Payment on the next succeeding
Business Day. Borrower hereby authorizes Agent to charge its accounts with Agent in order to cause
timely payment of amounts due hereunder to be made.

(C) At the time of making each such payment, Borrower shall, subject to the other terms and
conditions of this Agreement, specify to Agent the Loan or other obligation of Borrower hereunder
to which such payment is to be applied. In the event that Borrower fails to so specify the
relevant Loan or if an Event of Default shall have occurred and be continuing, Agent may apply such
payments as it may determine in its discretion.

6.2 Late Payments. If any scheduled payment, whether principal, interest or principal and
interest, is late fifteen (15) days or more, Borrower agrees to pay a late charge equal to five
percent (5%) of the amount of the payment which is late, but not more than the lesser of $10,000.00
or the maximum amount allowed by applicable Laws. The foregoing provision shall not be deemed to
excuse a late payment or be deemed a waiver of any other rights Lender Parties may have under this
Agreement, including, subject to the terms hereof, the right to declare the entire unpaid principal
and interest on all Loans immediately due and payable.

6.3 Prepayment.

(A) Borrower may prepay or cause to be prepaid the principal of the Loans in whole or, from
time to time, in part, without premium or penalty; provided, however, that except as may be agreed
between Borrower and Swing Line Lender with respect to the Swing Line Loan, partial prepayments
shall be in an aggregate principal amount of not less than $25,000.00 (or, if greater, in integral
multiples of $25,000.00 in excess thereof).

 

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(B) All partial prepayments, whether voluntary or mandatory, shall be applied against
principal and interest as Agent may determine in its discretion (subject to the provisions of the
Intercreditor Agreement), provided that no prepayment shall entitle Borrowers to cease making any
payment as otherwise scheduled hereunder.

(C) No prepayment of any Loan shall alter the notional amount of any transaction under any
Lender Party Swap Document or otherwise affect any Borrower Party’s obligations under any Lender
Party Swap Documents, which shall remain in full force and effect notwithstanding such prepayment,
subject to the terms of such Lender Party Swap Documents.

6.4 Default Rate. Notwithstanding any provision herein or in any other Loan Document to
the contrary, upon the occurrence and during the continuance of an Event of Default, the Interest
Rate payable on the Loans shall be the Default Rate.

6.5 No Setoff or Deduction. All payments of principal of and interest on the Loans and
other amounts payable by Borrowers hereunder shall be made by Borrowers without setoff or
counterclaim, and, subject to the next succeeding sentence, free and clear of, and without
deduction or withholding for, or on account of, any present or future taxes, levies, imposts,
duties, fees, assessments, or other charges of whatever nature, imposed by any Governmental
Authority, or by any department, agency or other political subdivision or taxing authority. If any
such taxes, levies, imposts, duties, fees, assessments or other charges are imposed, Borrowers will
pay such additional amounts as may be necessary so that payment of principal of and interest on the
Loans and other amounts payable hereunder, after withholding or deduction for or on account
thereof, will not be less than any amount provided to be paid hereunder and, in any such case,
Borrowers will furnish to Agent certified copies of all tax receipts evidencing the payment of such
amounts within 30 days after the date any such payment is due pursuant to applicable Laws.

6.6 Payment on Non-Business Day; Payment Computations. Except as otherwise provided in
this Agreement to the contrary, whenever any installment of principal of, or interest on, any Loan
or other amount due hereunder becomes due and payable on a day which is not a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day (unless such next succeeding
Business Day does not fall within the same calendar month, in which case the maturity thereof shall
be shortened to the immediately preceding Business Day). In the case of any extension in the time
for payment of any installment of principal, interest shall be payable thereon at the rate per
annum determined in accordance with this Agreement during such extension.

 

50

 

6.7 Indemnification. If Borrowers make any payment of principal with respect to any LIBOR
Rate Borrowing on any other date than the last day of a LIBOR Rate Interest Period applicable
thereto, or if Borrowers fail to borrow any LIBOR Rate Borrowing after notice has been given to
Agent in accordance with this Agreement, or if Borrowers fail to make any payment of principal or
interest in respect of any LIBOR Rate Borrowing when due, Borrowers shall reimburse the applicable
Lender on demand for any resulting loss or expense incurred by such Lender, including without
limitation any loss incurred in obtaining, liquidating or employing deposits from third parties,
whether or not such Lender shall have funded or committed to fund such LIBOR Rate Borrowing. A
statement as to the amount of such loss or
expense, prepared in good faith and in reasonable detail by such Lender and submitted by such
Lender to Borrowers, shall be conclusive and binding for all purposes absent manifest error in
computation. Calculation of all amounts payable to a Lender under this Section shall be made as
though such Lender shall have actually funded or committed to fund such LIBOR Rate Borrowing
through the purchase of an underlying deposit in an amount equal to the amount of such LIBOR Rate
Borrowing in the relevant market and having a maturity comparable to the related LIBOR Rate
Interest Period and through the transfer of such deposit to a domestic office of such Lender in the
United States; provided, however, that each Lender may fund such LIBOR Rate Borrowing in any manner
it sees fit and the foregoing assumption shall be utilized only for the purpose of calculation of
amounts payable under this Section.

6.8 360-Day Year. All interest payable under the Notes and all fees payable to Lender
Parties shall be calculated on the basis of a 360-day year by multiplying the applicable amount by
the applicable per annum rate, multiplying the product thereof by the actual number of days
elapsed, and dividing the product so obtained by 360.

6.9 No Requirement to Actually Obtain Funds. Notwithstanding the fact that the Interest
Rate pursuant to the Loans may be calculated based upon Lender’s cost of funds, Borrowers agree
that Lender shall not be required actually to obtain funds from such source at any time.

6.10 Usury Limitation. If at any time the Interest Rate payable on the Loans shall be
deemed by any competent court of law or any Governmental Authority to exceed the maximum rate of
interest permitted by any applicable Laws, then, for such time as the Interest Rate would be deemed
excessive, its application shall be suspended and there shall be charged instead the maximum rate
of interest permissible under such Laws, and any excess interest actually collected by Lender shall
be credited as a partial prepayment of principal.

6.11 Ratable Sharing. If any Lender shall obtain any payment or reduction (including any
amounts received as adequate protection of a bank account deposit treated as cash collateral under
the Bankruptcy Code) of any Credit Agreement Obligation hereunder (whether voluntary, involuntary,
through the exercise of any right of set off or otherwise) in excess of its Pro Rata Share of
payments or reductions on account of such Credit Agreement Obligations obtained by all of the
Lenders, such Lender shall forthwith (i) notify the other Lenders and Agent of such receipt and
(ii) purchase from the other Lenders such participations in the affected Credit Agreement
Obligations as shall be necessary to cause such purchasing Lender to share the excess payment or
reduction, net of costs incurred in connection therewith, on a Pro Rata basis, provided that if all
or any portion of such excess payment or reduction is thereafter recovered from such purchasing
Lender or additional costs are incurred, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery or such additional costs, but without interest. Borrower
agrees that any Lender so purchasing a participation from another Lender pursuant to this Section
6.11 may, to the fullest extent permitted by Applicable Law, exercise all of its rights of payment
(including the right of set off) with respect to such participation as fully as if such Lender were
the direct creditor of Borrower in the amount of such participation.

 

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ARTICLE VII

7. CONDITIONS PRECEDENT

The obligation of Lenders to make the Loans and any Advance hereunder, and the obligation of
Issuing Lender to issue any Letter of Credit, is subject to the following conditions precedent:

7.1 Documents Required for the Closing. Prior to or concurrently with the Closing, the
following instruments and documents, duly executed by all proper Persons and in form and substance
satisfactory to Agent and Collateral Agent, shall have been delivered to Agent:

(A) This Agreement;

(B) The Notes;

(C) The Intercreditor Agreement and copies of the Prudential Loan Documents;

(D) The Pledge Agreement, together with the original stock certificates, stock powers and
other items required to be delivered thereunder;

(E) The Mortgages, together with the following:

(1) Evidence that the Mortgages have been duly recorded in all filing or recording
offices that Collateral Agent may deem necessary or desirable in order to create a valid
Lien on the Mortgaged Property in favor of Collateral Agent subject to no other Liens, and
that all filing and recording taxes and fees have been paid;

(2) The Title Insurance Policies, with the Required Endorsements and in an amount
acceptable to Collateral Agent, issued, coinsured and reinsured by the Title Insurance
Companies, insuring the Mortgages to be a valid Lien on the Mortgaged Property, free and
clear of all Liens (including, but not limited to, mechanics’ and materialmen’s Liens),
excepting only Permitted Liens and other Liens approved by Collateral Agent in its
discretion, and providing for such other affirmative insurance and such coinsurance and
direct access reinsurance as Collateral Agent may deem necessary or desirable;

(3) Such consents and agreements of lessors, lessees, and other Third Parties, and such
estoppel letters and other confirmations, as Collateral Agent may deem necessary or
desirable;

(4) Evidence that all other action that Collateral Agent may deem necessary or
desirable in order to create a valid Lien on the Mortgaged Property has been taken;

(F) The Closing Certificates;

 

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(G) The Financing Statements, together with evidence that such Financing Statements have been
duly recorded in all filing or recording offices that Collateral Agent may deem necessary or
desirable in order to perfect Collateral Agent’s Lien on the Collateral, and that all filing and
recording taxes and fees have been paid;

(H) With respect to each Borrower Party (other than a Borrower Party that is an individual), a
certificate of an officer or other representative acceptable to Agent dated as of the date of this
Agreement, certifying as to the incumbency and signatures of the representative(s) of such Borrower
Party signing, as applicable, this Agreement and each of the other Loan Documents, and each other
document to be delivered pursuant hereto, together with the following documents attached thereto:

(1) A copy of the resolutions of such applicable Person’s Governing Body authorizing
the execution, delivery and performance of this Agreement, each of the Loan Documents, and
each other document to be delivered pursuant hereto, as applicable;

(2) A copy, certified as of the most recent date practicable by the secretary of state
(or similar Governmental Authority) of the state, province, or other Jurisdiction where such
Person is organized, of such Person’s Organizational Documents filed with such secretary of
state (or similar Governmental Authority);

(3) A copy of such Person’s other Organizational Documents;

(I) A certificate, as of the most recent date practicable, of the secretary of state (or
similar appropriate Governmental Authority) and department of revenue or taxation (or similar
appropriate Governmental Authority) of each Jurisdiction in which each Borrower Party (other than a
Borrower Party that is an individual) is organized as to the existence and good standing of each
such Person within such Jurisdiction, and a certificate, as of the most recent date practicable, of
the secretary of state (or similar appropriate Governmental Authority) of each state where any of
the Collateral is located as to the qualification and good standing of Borrower Party as a foreign
entity doing business in each such state;

(J) A written opinion of counsel to Borrowers, dated as of the date of Closing and addressed
to Lender Parties, in form and substance acceptable to Agent;

(K) The Most Recent Financial Statements and the Closing Balance Sheet, each in form and
substance acceptable to Agent;

(L) Certificates, in form and substance satisfactory to Agent, attesting to the Solvency of
Borrowers and after giving effect to the transactions contemplated hereby;

(M) UCC-11 reports showing no Liens superior to the Collateral Agent’s Lien, except for the
Permitted Liens;

 

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(N) An ALTA form survey of each parcel of Mortgaged Property, each such survey to be in form
and substance reasonably satisfactory to Collateral Agent, certified to Collateral Agent and the
applicable Title Insurance Company and prepared by a land surveyor duly registered and licensed in
the state in which the applicable Mortgaged Property is located
and acceptable to Collateral Agent, showing all buildings and other improvements, the location
of any easements, rights of way, building set back lines and other dimensional regulations and the
absence of encroachments, either by such improvements or on to such property, and other defects,
other than encroachments and other defects acceptable to Collateral Agent, and either (i) evidence
satisfactory to Collateral Agent that none of the Mortgaged Property is located in a flood hazard
area, or (ii) a flood insurance policy satisfactory to Collateral Agent;

(O) An appraisal of the Equipment and Mortgaged Property to be owned by the Borrower
Consolidated Group after the Closing, made at Borrower’s expense, which must be by an appraiser
engaged and approved by Agent, and in form and substance satisfactory to Agent, and reflecting a
value of the Collateral satisfactory to Agent;

(P) An environmental/hazardous substances survey and report with respect to the Mortgaged
Property, as approved by Collateral Agent;

(Q) Except as may be waived by Collateral Agent, copies of any Assigned Leases then in effect,
together with any guaranties of such Assigned Leases and estoppel certificates and subordination,
attornment and non-disturbance agreements with respect thereto, all in form and substance
acceptable to Collateral Agent;

(R) Copies of the Air Products APA Documents, and evidence of the closing of the purchase and
sale the subject thereof;

(S) Evidence satisfactory to Collateral Agent that Borrowers have obtained all insurance
policies as required under this Agreement or any of the other Loan Documents, together with
evidence satisfactory to Collateral Agent that all premiums therefore have been paid and that all
such policies are in full force and effect; and

(T) Receipt and approval by Agent and Collateral Agent of all other items reasonably required
to be provided to Agent and Collateral Agent, and not otherwise set forth above.

7.2 Certain Events Required for Closing and for all Advances. At the time of the Closing
and at the time of each Advance, Agent shall be satisfied that:

(A) No Default shall have occurred and be continuing;

(B) No Material Adverse Change shall have occurred;

(C) All of the Loan Documents shall have remained in full force and effect, and no Borrower
Party shall have questioned or challenged the enforceability of any provision of any of the Loan
Documents;

(D) Borrowers shall have paid the Fees and all other fees, expenses, costs and other amounts
then owing to Lender Parties;

(E) All Indebtedness to be prepaid, redeemed or defeased with the proceeds of any Advance
shall have been satisfied and extinguished contemporaneously therewith;

 

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(F) There shall exist no action, suit, investigation, litigation or proceeding affecting any
Borrower Party pending or threatened before any court, governmental agency or arbitrator that (i)
except as set forth on the attached Schedule 7.2(F), would reasonably be expected to have a
Material Adverse Effect, or (ii) purports to affect the legality, validity or enforceability of
this Agreement or any other Loan Document or the consummation of the transactions contemplated
hereby;

(G) All Governmental Approvals necessary in connection with the Loan Documents and the
transactions contemplated hereby and thereby shall have been obtained (without the imposition of
any conditions that are not acceptable to Agent) and shall remain in effect other than such
Governmental Approvals the failure to obtain which shall not affect the enforceability, validity or
binding effect of any of the Loan Documents; all applicable waiting periods shall have expired
without any action being taken by any competent authority; and no Law shall be applicable in the
judgment of Agent that restrains, prevents or imposes materially adverse conditions upon the Loan
Documents and the transactions contemplated hereby and thereby;

(H) Borrower will be able to meet its obligations under all Plans, that the Plans are, in all
material respects, funded in accordance with the minimum statutory requirements, that no material
“reportable event” (as defined in ERISA, but excluding events for which reporting has been waived)
has occurred as to any such Plan and that no termination of, or withdrawal from, any such Plan has
occurred or is contemplated that could result in a material liability;

(I) There shall have been delivered to Collateral Agent evidence of insurance naming
Collateral Agent as insured and loss payee (as applicable) with such responsible and reputable
insurance companies or associations, and in such amounts and covering such risks, as is
satisfactory to Collateral Agent or as otherwise required under any Loan Document; and

(J) There shall have been delivered to Agent the Collateral Reports and Compliance
Certificates as required under this Agreement and reflecting compliance with the terms of this
Agreement.

7.3 Legal Matters. At the time of Closing, and the disbursement of each Advance, all
legal matters incidental thereto shall be satisfactory to Burr & Forman LLP, counsel to Agent and
Collateral Agent.

7.4 Election to Make Advances Prior to Satisfaction of Conditions Precedent. In the event
Lender Party, at its option, elects to make one or more Advances prior to receipt and approval of
all items required by this Article, such election shall not constitute any commitment or agreement
of Lender Party to make any subsequent Advance until all items required by this Article have been
delivered.

 

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ARTICLE VIII

8. COLLATERAL SECURITY

8.1 Grant of Lien. 

(A) As security for the prompt satisfaction of all Secured Obligations, Borrower hereby
assigns, transfers, and sets over to Collateral Agent all of Borrower’s Interest in and to, and
grants Collateral Agent a Lien on, upon and in the Collateral.

(B) No submission by Borrower to Collateral Agent of a schedule or other particular
identification of Collateral shall be necessary to vest in Collateral Agent security title to and a
security interest in each and every item of Collateral now existing or hereafter created and
acquired, but rather such title and security interest shall vest in Collateral Agent immediately
upon the creation or acquisition or any item of Collateral hereafter created or acquired, without
the necessity for any other or further action by Borrower or by Collateral Agent.

8.2 Maintenance of Lien.

(A) Borrower authorizes Collateral Agent to file one or more Financing Statements (including
initial financial statements and continuation and amendment statements) to perfect Collateral
Agent’s Lien in the Collateral pursuant to the Uniform Commercial Code, such Financing Statements
to be in form and substance as required by Collateral Agent.

(B) Borrower hereby appoints Collateral Agent as its attorney-in-fact (without requiring
Collateral Agent to act as such) to file any Financing Statement in the name of Borrower, and to
perform all other acts that Collateral Agent deems appropriate to perfect and continue Collateral
Agent’s Lien and to protect and preserve the Collateral.

(C) In connection with Collateral Agent’s Lien, Borrower will:

(1) Execute and deliver, and cause to be executed and delivered, such documents and
instruments, including amendments to the Security Documents and Financing Statements
(including amendments thereto and continuation statements thereof) in form satisfactory to
Collateral Agent as Collateral Agent, from time to time, may specify, and pay, or reimburse
Collateral Agent upon demand for paying, all costs and taxes of filing or recording the same
in such Jurisdictions as Collateral Agent may designate; and

(2) Take such other steps as Collateral Agent, from time to time, may direct to
protect, perfect, and maintain Collateral Agent’s Lien.

ARTICLE IX

9. REPRESENTATIONS AND WARRANTIES.

Each Borrower represents and warrants to Lender Parties (provided that it is understood that
each Borrower is making its representations only on its own behalf, and only to the extent of
its knowledge with respect to any other Borrower), knowing that Lender Parties will rely on
such representations and warranties as an inducement to make the Loans, that:

 

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9.1 Existence. Each of KMG Chemicals and KMG ECI is a duly organized and existing
Texas corporation in good standing, is duly qualified and in good standing as a foreign corporation
in each other Jurisdiction where the failure to be so qualified might reasonably be expected to
have a Material Adverse Effect. KMG-Bernuth is a duly organized and existing Delaware corporation
in good standing, is duly qualified and in good standing as a foreign corporation in each other
Jurisdiction where the failure to be so qualified might reasonably be expected to have a Material
Adverse Effect. Each of KMG Chemicals, KMG-Bernuth and KMG ECI has full power and authority to
consummate the transactions contemplated by this Agreement. Each other Member of the Borrower
Consolidated Group is duly organized, validly existing and in good standing under the Laws of its
Jurisdiction of organization, and is duly qualified and in good standing as a foreign corporation
or other entity in each other Jurisdiction where the failure to be so qualified might reasonably be
expected to have a Material Adverse Effect.

9.2 Authority. The execution, delivery and performance of all of the Loan Documents have
been duly authorized by all requisite action by each Borrower Party a party thereto. All of the
Loan Documents have been duly executed and delivered and constitute valid and binding obligations
of each Borrower Party a party thereto, enforceable in accordance with their respective terms
(except as may be limited by applicable Bankruptcy Laws and other Laws affecting the enforceability
of creditors’ rights generally and principles of equity), and Lender Parties will be entitled to
the benefits of all of the Loan Documents.

9.3 Equity Owners and Equity Agreements. Set forth on Schedule 9.3 is a complete
and accurate list of (i) all holders of the Equity Interests of the Members of the Borrower
Consolidated Group (other than KMG Chemicals), showing as of the Closing the Equity Interests owned
by each Equity Owner, which Equity Interests have been validly issued, are fully paid and
non-assessable, and are owned by such Persons free and clear of all Liens; and (ii) all the Equity
Agreements.

9.4 Name. Set forth on Schedule 9.4 is a complete and accurate list of (i) all
names under which Borrowers have done business in the last six years; and (ii) the names of all
Persons whose assets (x) were acquired in the last six years by Borrower outside of Borrower’s
Ordinary Course of Business, (y) were included as assets of Borrowers on the Most Recent Financial
Statements with a market value of more than $250,000.00, and (z) constitute part of the Collateral.

9.5 Material Contracts. Set forth on Schedule 9.5 is a complete and accurate list
of all of the Material Contracts.

9.6 Consents or Approvals.

(A) Except for approvals, authorizations already obtained and remaining in effect, and notices
to and filings already given and made, no consent or approval of any Third Person, and no
authorization, approval or other action by, and no notice to or filing with, any Governmental
Authority or other Third Person is required with respect to the operation of
Borrower’s business (unless the failure to obtain or file such approvals, authorizations,
notices and filings would not reasonably be expected to have a Material Adverse Effect).

 

57

 

(B) No consent of any Third Person and no authorization, approval or other action by, and no
notice to or filing with, any Governmental Authority or other Third Person that is required has not
been obtained either (i) for the due execution, delivery, recordation, filing or performance by any
Borrower Party of this Agreement or any other Loan Document or for the consummation of the
transaction contemplated hereby, (ii) for the mortgage, pledge, assignment, or grant by Borrower of
Collateral Agent’s Lien, (iii) for the perfection or maintenance of Collateral Agent’s Lien, except
for the recording of the Mortgages and the Financing Statements, or (iv) for the exercise by Lender
Parties of their rights or remedies provided for in this Agreement or in any of the other Loan
Documents (except as may be required by applicable Laws in connection with the foreclosure and
disposition of the Collateral). All applicable waiting periods, if any, in connection with the
transactions contemplated hereby have expired without any action having been taken by any Person
restraining, preventing or imposing materially adverse conditions upon the rights of Borrower to
enter into and perform its obligations under this Agreement.

9.7 Violations or Actions Pending. There are no actions, suits, or proceedings pending
or, to the best of Borrower’s knowledge, threatened, which might reasonably be expected to have a
Material Adverse Effect or which might reasonably be expected to impair the value of the
Collateral. No Member of the Borrower Consolidated Group is in violation of any agreement the
violation of which will have, or might reasonably be expected to have, a Material Adverse Effect,
and no Member of the Borrower Consolidated Group is in violation of any order, judgment or decree
of any court, or any statute or governmental regulation to which such Member of the Borrower
Consolidated Group is subject with respect to which the violation thereof which will have, or
might reasonably be expected to have, a Material Adverse Effect. The execution and performance of
any Loan Document by Borrower will not result in any breach of or default under any mortgage,
lease, credit or loan agreement or any other instrument which may bind or affect Borrower.

9.8 Affiliates. Borrower has no Affiliates (other than officers and directors) except (i)
as disclosed on the attached Schedule 9.8, or (ii) Affiliates with a Tangible Net Worth of
less than $1,000,000.00.

9.9 Existing Indebtedness. No Member of the Borrower Consolidated Group is in default
with respect to any of the Existing Indebtedness.

9.10 Defaults Under Material Contracts. There is not existing any default or event of
default under any Material Contract which might reasonably be expected to have a Material Adverse
Effect.

9.11 Tax Returns. All federal, state, local and other tax returns and reports of the
Borrower Consolidated Group required by Laws to have been completed and filed have been completed
and duly filed, and all taxes, assessments and withholdings shown on such returns or billed to a
Member of the Borrower Consolidated Group have been paid, and the Borrower Consolidated Group
maintains adequate provisions and accruals in respect of all such federal,
state, local and other taxes, assessments and withholdings. There are no unpaid assessments
pending against any Member of the Borrower Consolidated Group for any taxes or withholdings, and
Borrower knows of no basis therefor.

 

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9.12 Financial Statements. All Financial Statements heretofore given and hereafter given to
Lender Parties are and will be true and complete in all material respects as of their respective
dates and prepared in accordance with Generally Accepted Accounting Principles, and fairly
represent and will fairly represent the financial conditions of the Persons to which they pertain
as of the respective dates thereof, and upon delivery to Lender Parties, no Material Adverse Change
has or will have occurred after the respective date thereof, except as may be disclosed in writing
to Bank.

9.13 Good and Marketable Title. Borrower has good and marketable title to all of its
assets, including, without limitation, Borrower’s Interest in the Collateral, subject to no Liens,
except for Permitted Liens.

9.14 Real Property Locations. Set forth on Schedule 9.14 is a complete and
accurate list of the Real Property, showing as of the date hereof the street address, county or
other relevant jurisdiction, state, and record owner thereof.

9.15 Solvency. Borrower is Solvent.

9.16 ERISA. Each Plan is and has been administered in compliance in all material respects
with all applicable Laws, including without limitation, the applicable provisions of ERISA and the
Internal Revenue Code. No ERISA Event has occurred and is continuing or, to the knowledge of
Borrower, is reasonably expected to occur with respect to any Plan, in either case that would be
reasonably likely, individually or in the aggregate, to have a Material Adverse Effect. No Plan
has any Unfunded Pension Liability, and neither Borrower nor any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA, in either instance where the
same would be reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect.

9.17 Priority of Liens. Collateral Agent’s Lien constitutes a first Lien against the
Collateral, prior to all other Liens, including those which may hereafter accrue, except for the
Permitted Liens.

9.18 Patents, Copyrights, Etc. Except as disclosed on Schedule 9.18 (i) Borrower
has no patents, trademarks, trade names, service marks or copyrights, and (ii) no Collateral is
subject to any license agreement relating to patents, trademarks, trade names, service marks, or
copyrights, which could, directly or indirectly, preclude or render impracticable the realization
of Collateral Agent’s Lien or materially diminish the value of such Collateral. Upon the
occurrence of any Default and demand of Collateral Agent, Borrower shall promptly execute and
deliver to Collateral Agent a Patent and Trademark Security Agreement in form and substance as may
be reasonably required by Collateral Agent, in order to grant to Collateral Agent a Lien in all of
Borrower’s patents, trademarks, trade names, service marks and copyrights, and all applications
therefor and licenses thereof.

 

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9.19 Accuracy of Documents. All documents furnished to Lender Parties by or on behalf of
any Borrower Party as part of or in support of the application for the Loans or the Loan Documents
are true, correct, complete and accurately represent the matters to which they pertain.

9.20 Environmental Matters. Except as disclosed on Schedule 9.20, or except as
would not reasonably be expected to give rise to a Material Adverse Change, (a) no Member of the
Borrower Consolidated Group nor the Mortgaged Property is in material violation of or subject to
any existing, pending or threatened investigation or inquiry by any Governmental Authority or any
remedial obligations under any applicable Environmental Laws, and Borrower will promptly notify
Agent if any Responsible Officer becomes aware of any such investigation or inquiry; (b) except for
Governmental Approvals already obtained, no Member of the Borrower Consolidated Group has obtained
or is required to obtain any Governmental Approvals to construct, occupy, operate or use any
buildings, improvements, fixtures or equipment by reason of any Environmental Laws; and (c)
Borrower covenants and agrees that it will not cause there to be any material violation of any
Environmental Law in connection with the disposal or release of Petroleum Products, Hazardous
Substances, Hazardous Materials or Solid Wastes.

9.21 Condemnation. There are no proceedings pending, or, to the best of Borrower’s
knowledge, threatened, to exercise any power of condemnation or eminent domain, with respect to the
Mortgaged Property, or any interest therein, or to enjoin or similarly prevent the use of the
Mortgaged Property.

9.22 Assigned Agreements.

(A) Borrower is (or, with respect to any Assigned Agreement hereafter made, will be) the sole
owner and holder of Borrower’s Interest in each Assigned Agreement, and Borrower has not
transferred or otherwise assigned any interest of Borrower as a party to any Assigned Agreement;

(B) Each of the Assigned Agreements is (or, with respect to any Assigned Agreements hereafter
made, will be) valid and enforceable in accordance with its respective terms, and in full force and
effect, and has not been (or, with respect to any Assigned Agreements hereafter made, will not be)
altered, modified or amended in any manner whatsoever except as permitted in this Agreement;

(C) None of the Rents have been or will be assigned, pledged or in any manner transferred or
hypothecated, except pursuant to this Agreement, and

(D) None of the Rents, for any period subsequent to the date of this Agreement, has been or
will be collected more than thirty (30) days in advance of the time when such Rents become due
under the terms of the Assigned Leases.

9.23 Full Disclosure. All material factual information heretofore or contemporaneously
furnished to Lender Parties by or on behalf of the Borrower Consolidated Group for purposes of or
in connection with this Agreement and the transactions contemplated hereby is, and all other such
factual information hereafter furnished to Lender Parties in writing by or on behalf of the
Borrower Consolidated Group will be, true and accurate in all material respects on the date as of
which such information is dated or certified (or, if such information has
been amended or supplemented, on the date as of which any such amendment or supplement is date
or certified) and not made incomplete by omitting to state a material fact necessary to make the
statements contained therein, in light of the circumstances under which such information was
provided, not materially misleading.

 

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9.24 Regulated Industries. Borrower is not an “investment company,” a company “controlled”
by an “investment company,” or an “investment advisor,” within the meaning of the Investment
Company Act of 1940, as amended.

9.25 Insurance. The assets, properties and business of the Borrower Consolidated Group are
insured against such hazards and liabilities, under such coverages and in such amounts, as are
required under Section 10.4 of this Agreement.

9.26 Anti-Terrorism Laws. 

(A) General. Neither Borrower nor any Affiliate of Borrower is in violation of any
Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids,
or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any Anti-Terrorism Law.

(B) Executive Order No. 13224.

(1) Neither Borrower nor any Affiliate of Borrower is any of the following (each a
“Blocked Person”):

(a) A Person that is listed in the annex to, or is otherwise subject to the
provisions of, Executive Order No. 13224;

(b) A Person owned or controlled by, or acting for or on behalf of, any Person
that is listed in the annex to, or is otherwise subject to the provisions of,
Executive Order No. 13224;

(c) A Person with which any bank or other financial institution is prohibited
from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

(d) A Person that commits, threatens or conspires to commit or supports
“terrorism” as defined in Executive Order No. 13224;

(e) A Person that is named as a “specially designated national” on the most
current list published by the U.S. Treasury Department Office of Foreign Asset
Control at its official website or any replacement website or other replacement
official publication of such list; or

(f) A Person who is affiliated with a Person listed above.

(2) Neither Borrower nor any Affiliate of Borrower (i) conducts any business or engages
in making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person or (ii) deals in, or otherwise engages in
any transaction relating to, any property or interests in property blocked pursuant to
Executive Order No. 13224.

 

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9.27 Securities Laws. Borrower has filed and will continue to file when and as due all
reports required under Section 15(b) of the Securities Exchange Act of 1934 (provided that any
delayed filing shall not constitute a Default so long as (x) such delayed filing does not continue
for more than one hundred eighty (180) days, (y) Agent is notified of the delayed filing within
thirty (30) days of the original filing due date and is provided a writing setting forth with
reasonable particularity the reasons for such delayed filing) and (z) if requested by Agent,
Borrower will provide periodic updates with respect to the status of the delayed filing.

9.28 Continuing Effectiveness. All representations and warranties contained herein shall
be deemed continuing, continually republished, and in effect at all times while Borrower remains
indebted to Lender Parties pursuant to the Loans and shall be deemed to be incorporated by
reference at the time of each Advance unless Borrower specifically notifies Agent of any change
therein.

ARTICLE X

10. BORROWER’S COVENANTS

Each Borrower does hereby covenant and agree with each Lender Party that, so long as any of
the Credit Agreement Obligations remain unsatisfied or any commitments hereunder remain
outstanding, such Borrower at all times will comply or cause to be complied with the following
covenants:

10.1 Affirmative Covenants.

(A) Borrower will duly and promptly pay and perform all of Borrower’s Credit Agreement
Obligations to Lender Parties according to the terms of this Agreement, the other Loan Documents
and the Lender Party Swap Documents, and will cause each other Borrower Party to perform such other
Borrower Party’s Credit Agreement Obligations to Lender Parties according to the terms of this
Agreement, the other Loan Documents and the Lender Party Swap Documents.

(B) Borrower will use the proceeds of the Loans only for the purposes permitted herein, or as
Required Lenders may have otherwise approved from time to time; and Borrower will furnish Agent
such evidence as it may reasonably require with respect to such uses.

(C) Borrower will furnish or cause to be furnished to the Lender Parties:

(1) Within forty-five days after each Quarter-End (a) an unaudited
(management-prepared) income statement of the Borrower Consolidated Group for such Quarter,
and (b) an unaudited (management-prepared) balance sheet of the Borrower Consolidated Group
for such Quarter, all in reasonable detail with Agent having full access to all supporting
schedules and comments, such income statements and balance
sheets to be prepared in accordance with Generally Accepted Accounting Principles
consistently applied by the Borrower Consolidated Group, except for any inconsistencies
explained therein; provided, however, that Borrower providing Bank with a copy of the Form
10-Q filed with the Securities and Exchange Commission within three (3) Business Days of
such filing shall satisfy the requirements of this paragraph (1);

 

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(2) Within one hundred twenty (120) days after each Fiscal Year-End (a) a statement of
Equity Owners’ Equity for the Borrower Consolidated Group, (b) an income statement of the
Borrower Consolidated Group for such Fiscal Year, and (c) a balance sheet of the Borrower
Consolidated Group as of the end of such Fiscal Year, all in reasonable detail, including
all supporting schedules and comments; the statements and balance sheets to be audited by an
independent certified public accountant selected by the Borrower Consolidated Group and
acceptable to Agent, and certified by such accountants to have been prepared in accordance
with Generally Accepted Accounting Principles consistently applied by the Borrower
Consolidated Group, except for any inconsistencies explained in such certificate; and Agent
shall have the right, from time to time, to discuss any Member of the Borrower Consolidated
Group’s affairs directly with such Person’s accountants, and any such accountants are
authorized and directed to give Agent any information Agent may request at any time
regarding the financial affairs of the Borrower Consolidated Group, and are authorized and
directed to furnish Agent with copies of any documents in their possession related thereto;
provided, however, that Borrower providing Bank with a copy of the Form 10-K filed with the
Securities and Exchange Commission within three (3) Business Days of such filing shall
satisfy the requirements of this paragraph (2);

(3) Promptly after sending or making available or filing of the same, copies of all
reports, proxy statements and financial statements (if any) that Borrower sends or makes
available to its Equity Owners and all registration statements and reports that Borrower
files with the Securities and Exchange Commission (or any other similar Governmental
Authority) or any successor Person; and

(4) Within forty-five (45) days after each Quarter-End, a Compliance Certificate; and

(5) Within forty-five (45) days after each Quarter-End beginning the Quarter-End of
April 30, 2008, a Collateral Report as of such Quarter-End, certified to be correct by the
principal financial officer of Borrowers (together with a Schedule of Accounts and Schedule
of Inventory if required under Section 10.10 of this Agreement).

(D) Borrower will pay or cause to be paid when due (i) the Fees and all other fees and
expenses owing to Lender Parties; and (ii) all expenses involved in perfecting Collateral Agent’s
Lien or the priority of Collateral Agent’s Lien and all other expenses of Lender Parties related to
the Loans, or the protection and preservation of the Collateral, or the interpretation,
administration and enforcement of any provision of this Agreement, or the preparation and
negotiation of this Agreement, any of the other Loan Documents, or amendments to any of them,
including, without limitation, recording fees and taxes, tax, title and lien search charges, and
Attorneys’ Fees (including Attorneys’ Fees at trial and on any appeal by Borrower or Lender
Party), real property taxes and insurance premiums.

 

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(E) Borrower will permit Agent, Collateral Agent and their respective agents to have access to
the Collateral at reasonable times.

(F) After the occurrence of a Default and upon demand of Agent or Collateral Agent, Borrower
will cause, or permit Agent or Collateral Agent to cause, all or any part of the Mortgaged Property
and other Tangible Property comprising part of the Collateral to be appraised (or reappraised) at
Borrower’s expense at any time (but not more than once during any twelve-month period except (i)
after an Event of Default, (ii) if required on account of the requirements of any Governmental
Authority or regulatory authority, or (iii) if Agent or Collateral Agent in its reasonable
discretion determines that there may have been a material diminution in the value of such Tangible
Property).

(G) If any of the information or disclosures provided on any Schedule originally attached
hereto become outdated or incorrect in any material respect, Borrower shall deliver to Agent as
part of a Compliance Certificate such revision or updates to such Schedule as may be necessary or
appropriate to update or correct such Schedule; provided, that such revisions or updates to any
such Schedule shall only be deemed to have amended, modified or superseded such Schedule as
originally attached hereto, and to have cured any breach of warranty or misrepresentation resulting
from the inaccuracy or incompleteness of any such Schedule if such revisions or updates to such
Schedule would not otherwise result in a separate and independent Event of Default under the other
terms and provisions of this Agreement.

(H) Borrower will certify to Agent upon request by Agent that:

(1) Borrower has complied with and is in compliance with all terms, covenants and
conditions of this Agreement which are binding upon it;

(2) There exists no Default; or, if such is not the case, that one or more specified
Defaults have occurred; and

(3) The representations and warranties contained in this Agreement are true with the
same effect as though made on the date of such certificate, except for those representations
and warranties which relate to a specific date.

(I) Borrower will, when requested so to do, make available for inspection and audit by duly
authorized representatives of Agent or Collateral Agent any of its Records, and will furnish Agent
and Collateral Agent any information regarding its business affairs and financial condition within
a reasonable time after written request therefore. Borrower shall reimburse Agent and Collateral
Agent for all costs associated with such audit if the audit reveals a material discrepancy in any
financial report, statement or other document provided to Lender Party pursuant to this Agreement.

(J) Borrower will keep accurate and complete Records, consistent with customary industry
practices.

 

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(K) Within ten (10) days of Agent’s request therefore, Borrower will furnish or cause to be
furnished to Agent copies of income tax returns filed by each Member of the Borrower Consolidated
Group.

(L) Borrower will pay when due (or within applicable grace periods) all Indebtedness due Third
Parties, unless the failure so to pay such Indebtedness would not give rise to a Material Adverse
Change.

(M) Borrower will notify Agent and Collateral Agent thirty (30) days in advance of any change
in the Jurisdiction of organization of Borrower, any change in the location of any place of
business of Borrower or of the establishment of any new place of business, or the discontinuance of
any existing place of business.

(N) Borrower will promptly notify Agent and Collateral Agent in writing if any Responsible
Officer of Borrower obtains knowledge of any of the following:

(1) The occurrence of any Default or Event of Default, together with a written
statement of a Responsible Officer specifying the nature of such Default or Event of
Default, the period of existence thereof and the action that Borrower has taken and proposes
to take with respect thereto;

(2) The cancellation or termination of any Material Contract (other than upon the
expiration of its term); and

(3) Any default or event of default (after the expiration of any applicable grace and
cure period) under any agreement of any Borrower Party with any Person and relating to the
borrowing of money.

(O) Borrower will collect its Accounts and sell its Inventory only in the Ordinary Course of
Business (except in connection with Permitted Transfers of Assets).

(P) Borrower will:

(1) Fund all its Plans in accordance with no less than the minimum funding standards of
Section 302 of ERISA;

(2) Furnish Bank, upon request, with copies of all material reports or other statements
filed with the United States Department of Labor or the Internal Revenue Service with
respect to all such Plans; and

(3) Promptly advise Agent of the occurrence of any Reportable Event or Prohibited
Transaction with respect to any such Plan.

(Q) Borrower will notify Agent promptly upon Borrower (i) registering securities under Section
12 of the Securities Exchange Act of 1934 or (ii) filing a registration statement under the
Securities Act of 1933.

 

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10.2 Negative Covenants.

(A) No Borrower will permit any Member of the Borrower Consolidated Group to engage in any
business other than the Permitted Lines of Business.

(B) No Borrower will:

(1) permit any Member of the Borrower Consolidated Group to wind up, liquidate or dissolve its
affairs or merge or consolidate with any other Person, except that the following shall be
permitted: (i) Permitted Acquisitions; (ii) Permitted Transfers of Assets; (iii) any Subsidiary of
KMG Chemicals (other than Borrower) may merge or consolidate with or into any other Subsidiary of
KMG Chemicals; and (iv) any Subsidiary of KMG Chemicals (other than Borrower) may dissolve,
liquidate or wind up its affairs at any time, provided that such dissolution, liquidation or
winding up, as applicable, would not otherwise give rise to a Default or could not reasonably be
expected to have a Material Adverse Effect;

(2) change (i) its legal name or (ii) its jurisdiction of organization (in each case,
including by merging with or into any other entity, reorganizing, dissolving, liquidating,
reorganizing or organizing in any other Jurisdiction), until (A) it shall have given Collateral
Agent not less than 10 Business Days’ prior written notice, or such lesser notice period agreed to
by Collateral Agent, of its intention so to do, clearly describing such change and providing such
other information in connection therewith as Collateral Agent may reasonably request and (B) it
shall have taken all action reasonably satisfactory to Collateral Agent to maintain the perfection
and priority of Collateral Agent’s Lien in the Collateral, if applicable.

(C) No Borrower will permit any Member of the Borrower Consolidated Group to sell, transfer,
lease or otherwise dispose of, or enter into any agreement to sell, lease, transfer, assign or
otherwise dispose of, all or any part of its assets, including, without limitation, the Collateral
(other than Permitted Transfers of Assets).

(D) No Borrower will permit any Member of the Borrower Consolidated Group to consummate any
Acquisition (other than Permitted Acquisitions).

(E) Except for Subsidiaries with a Tangible Net Worth of less than $1,000,000.00 (each, an
“Immaterial Subsidiary”), no Borrower will permit any Member of the Borrower Consolidated Group to
create, acquire or own any Subsidiary in connection with an Acquisition or otherwise, provided that
the sum of the Tangible Net Worth of all Immaterial Subsidiaries does not exceed $5,000,000.

(F) No Borrower will permit any Member of the Borrower Consolidated Group to become liable,
directly or indirectly, as guarantor or otherwise for any obligation of any other Person, provided
that a Borrower may guaranty Indebtedness of any other Member of the Borrower Consolidated Group so
long as such guaranty does not otherwise give rise to a Default (and for purposes of this paragraph
(F), such contingent liability shall be included as Indebtedness of Borrower unless the same is
already reflected as Indebtedness on a Consolidated Basis).

 

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(G) No Borrower will permit any Member of the Borrower Consolidated Group to directly or
indirectly grant, make, create, incur, assume or suffer to exist (or enter into or suffer to exist
any agreement or restriction that prohibits or conditions the creation, incurrence or assumption
of), any Lien upon or with respect to any part of the Collateral, whether now owned or hereafter
acquired, or agree to do any of the foregoing, other than Permitted Liens.

(H) No Borrower will issue, redeem, purchase or retire any of its Equity Interests or grant or
issue any warrant, right or option pertaining thereto or any other security convertible into any of
the foregoing, nor otherwise permit any voluntary transfer, sale, redemption, retirement, or other
change in the ownership of any Equity Interests of Borrower by Borrower if the same would result in
a Change in Control.

(I) No Borrower will permit any Member of the Borrower Consolidated Group to amend or modify
in any material respect any of its Organizational Documents.

(J) No Borrower will directly or indirectly apply any part of the proceeds of any Loan to the
purchasing or carrying of any “margin stock” within the meaning of Regulation T, Regulation U or
Regulation X, or any regulations, interpretations or rulings thereunder.

(K) No Borrower will permit any Member of the Borrower Consolidated Group to treat, store,
handle, discharge, or dispose of any Hazardous Materials, Petroleum Products, or Solid Wastes
except in material compliance with all Environmental Laws or where any such failure in compliance
could not reasonably be expected to result in a Material Adverse Effect.

(L) No Borrower will permit any Member of the Borrower Consolidated Group to (i) conduct any
business or engage in any transaction or dealing with any Blocked Person, including the making or
receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person;
(ii) deal in, or otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to Executive Order No. 13224; or (iii) engage in on conspire to engage in
any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in Executive Order No. 13224 or the USA Patriot Act.
Borrower shall deliver to Agent any certification or other evidence requested from time to time by
Agent, in its discretion, confirming compliance with this Section 10.2(L).

(M) No Borrower will permit any Member of the Borrower Consolidated Group to make or permit
any material changes in its accounting policies or reporting practices, except as may be permitted
or required by Law or Generally Accepted Accounting Principles.

(N) Borrower shall not allow KMEX to (i) cease operations of the KMEX Plant or sell, transfer,
lease or otherwise dispose of the KMEX Plant, or (ii) so long as KMEX’s assets, liabilities, income
and losses are included within the definition of “Consolidated Basis”, sell, transfer, lease or
otherwise dispose of, or enter into any agreement to sell, lease, transfer, assign or otherwise
dispose of, all or any material part of KMEX’s assets (other than the KMEX Plant) except in KMEX’s
Ordinary Course of Business.

 

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10.3 Financial Covenants.

(A) Borrowers will cause the Borrower Consolidated Group to maintain at all times during the
term of this Agreement:

(1) A Fixed Charge Coverage of not less than (i) from the date of this Agreement
through July 31, 2008, 1.25 to 1.0, and (ii) thereafter, 1.5 to 1.0;

(2) A ratio of (i) Funded Debt to (ii) the sum of Funded Debt plus Equity Owners’
Equity of not more than (x) from the date of this Agreement through April 30, 2009, 60%, (y)
from May 1, 2009 through April 30, 2010, 50%, and (z) thereafter, 45%; and

(3) A ratio of Funded Debt to EBITDA of not more than (i) from the date of this
Agreement through October 31, 2008, 3.5 to 1.0, and (ii) thereafter, 3.0 to 1.0.

(B) No Borrower will permit any Member of the Borrower Consolidated Group to declare or pay
any Dividends in an amount such that such declaration or payment would give rise to a Default
arising out of the failure to maintain the covenants required under Section 10.3(A).

(C) No Borrower will permit any Member of the Borrower Consolidated Group to make any
Investment, other than Permitted Investments.

(D) No Borrower will permit any Member of the Borrower Consolidated Group to incur, create,
assume, or permit to exist any Indebtedness, other than Permitted Indebtedness.

(E) Except for agreements reflected in the Most Recent Financial Statements, agreements
currently in effect and listed on Schedule 10.3 (E) attached hereto, agreements which
provide only for either Permitted Investments or Permitted Indebtedness, and agreements between or
among Members of the Borrower Consolidated Group, no Borrower will permit any Member of the
Borrower Consolidated Group to enter into any agreement, transaction or series of transactions
where any Affiliate of any Member of the Borrower Consolidated Group is a party thereto, (i) except
in the Ordinary Course of Business or (ii) unless the Governing Body of the applicable Member of
the Borrower Consolidated Group has approved such agreement or transaction.

(F) No Borrower will permit any Member of the Borrower Consolidated Group to enter into any
agreement with respect to the Prudential Obligations, nor any of its Existing Indebtedness which is
Indebtedness for borrowed money, if the effect of such agreement is to:

(1) Increase the interest rate on such Indebtedness or Prudential Obligations, or
materially change the computation or component of the interest rate or yield provisions;

 

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(2) Change the dates upon which payments of principal, interest or other scheduled
payments are due on such Indebtedness or Prudential Obligations (other than to extend such
dates);

(3) Change any default or event of default or any definition thereof (other than to
delete or make less restrictive any default provision), or shorten any grace or cure period
with respect to such Indebtedness or Prudential Obligations;

(4) Add any material covenant with respect to such Indebtedness or Prudential
Obligations;

(5) Change the redemption or prepayment provisions of such Indebtedness or Prudential
Obligations (other than to extend the dates therefore or to reduce the premiums payable in
connection therewith); or

(6) Materially increase the obligations of the applicable Member of the Borrower
Consolidated Group (including any increase in the principal amount of any such Indebtedness)
or confer additional material rights to the holder of such Indebtedness or Prudential
Obligations in a manner adverse to any Member of the Borrower Consolidated Group or Lender
Party.

(G) Borrower shall not permit the Borrower Consolidated Group to make Capital Expenditures in
an aggregate amount in excess of $10,000,000.00 in any consecutive twelve-month period.

10.4 Insurance and Insurance Proceeds.

(A) Borrower shall cause the assets, properties and business of the Borrower Consolidated
Group to be insured against such hazards and liabilities, under such coverages and in such amounts,
as are customarily maintained by prudent companies similarly situated and under policies issued by
insurers of recognized responsibility. Upon request of Collateral Agent, Borrower shall provide
(and shall cause the other Members of the Borrower Consolidated Group to provide) Collateral Agent
with insurance certificates and copies of insurance policies then in effect (it being agreed that
no Member of the Borrower Consolidated Group shall be required to maintain coverages for (i)
products liability insurance on Borrowers’ wood treating products, nor (ii) business interruption
insurance, except for the Mortgaged Property located in Pueblo, Colorado).

(B) Borrower shall cause (i) each general liability insurance policy to name Collateral Agent
as additional insured, (ii) each casualty insurance policy insuring any Collateral to name
Collateral Agent as loss payee (and with respect to any Mortgaged Property, a mortgagee), and (iii)
all such policies to provide that such policies will not be canceled or materially changed without
thirty (30) days prior written notice to Collateral Agent.

 

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(C) Any Net Cash Proceeds payable under any insurance policy on account of damage or
destruction to the Mortgaged Property shall be paid to Collateral Agent as a prepayment of the
principal indebtedness owing under the Term Note; provided that such Net Cash Proceeds shall be
paid to Borrower so long as (1) no Event of Default exists at the time of
payment, and Collateral Agent determines in its reasonable discretion that the occurrence of
such casualty event would not reasonably be expected to result in an Event of Default (including an
Event of Default on account of loss of income occasioned by such casualty event); and (2) as soon
as reasonably practicable following the casualty event, Borrower provides evidence reasonably
satisfactory to Collateral Agent that such Net Cash Proceeds will be applied (i) to the repair or
restoration of the Mortgaged Property so damaged, or to the construction of a replacement facility
for the property damaged or condemned, or to the expansion of the productive capacity of an
existing facility in lieu thereof (and, unless waived by Required Lenders, Borrower shall execute
such documents and instruments as may be necessary or appropriate in Collateral Agent’s reasonable
discretion to cause such replacement facility or expanded facility to constitute part of the
Collateral); or (ii) if approved by Collateral Agent, to the purchase of other assets to be used in
the operation of the business of a Member of the Borrower Consolidated Group.

10.5 Borrower’s General Covenants and Agreements Pertaining to the Collateral. Borrower
covenants and agrees that:

(A) The addresses of Borrower’s principal place of business (or chief executive office if more
than one), the office where Borrower keeps and will keep Borrower’s Records, including, without
limitation, those Records concerning all of Borrower’s Accounts and the other Collateral, and the
place or places at which all of Borrower’s Inventory, Equipment and other Tangible Property is and
will be located are correctly set forth on Schedule 10.5(A); and Borrower shall immediately
advise Agent and Collateral Agent in writing of any change in any of said addresses. Borrower
shall not remove such Records from the place or places set forth on Schedule 10.5(A), nor shall
Borrower keep any of such Records at any other locations unless (i) Borrower gives Agent and
Collateral Agent at least 10 days’ written notice thereof and of the new location, and (ii) the new
location is within the continental United States of America. Borrower shall give Agent and
Collateral Agent at least 10 days’ prior written notice of Borrower’s opening of any new office or
place of business, and any such office or place of business shall be within the continental United
States of America.

(B) Subject to any Permitted Transfers of Assets, Borrower is and shall remain the owner of
all real estate on which any of the locations described in subparagraph (A) next above are located;
or if not, except as otherwise agreed to by Agent or Collateral Agent, Borrower has heretofore
obtained from each owner of said real estate a written waiver or subordination (in form and
substance reasonably satisfactory to Agent and/or Collateral Agent) of any landlord’s Lien or other
Lien said owner might have with respect to the Collateral, and Borrower has delivered the same to
Collateral Agent.

(C) Upon request of Agent or Collateral Agent, Borrower shall promptly deliver to Collateral
Agent the certificates of title for any motor vehicles now or hereafter included in the Collateral
that are subject to the title Laws of any state of the United States of America or any other
Jurisdiction and shall join with Collateral Agent in executing any applications and other documents
and taking any other actions necessary or desirable in Collateral Agent’s opinion to perfect
Collateral Agent’s Lien in such vehicles. Collateral Agent may retain possession of such
certificates of title until payment in full of all the Secured Obligations and/or until Collateral
Agent’s Lien is terminated.

 

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(D) Agent and Collateral Agent may correct any and all patent errors in any financing
statements filed in connection herewith.

(E) Borrower shall furnish to Agent and Collateral Agent from time to time statements and
schedules further identifying and describing the Collateral and such other reports in connection
with the Collateral as Agent or Collateral Agent may request, all in reasonable detail.

(F) Borrower shall keep and maintain at its own cost and expense satisfactory and complete
Records of the Collateral, including without limitation, a record of all payments received and all
credits granted with respect to the Collateral and all other dealings with the Collateral. Upon
request of Agent or Collateral Agent, Borrower shall make proper entries in its books disclosing
the assignment of the Collateral to Collateral Agent, and Borrower shall segregate its Records
concerning the Collateral and mark the Collateral with Collateral Agent’s name or in such other
manner as shall be satisfactory to Agent and Collateral Agent. After the occurrence of and during
the continuance of any Default, Borrower shall deliver and turn over to Agent or Collateral Agent
any such Records at any time on demand of Agent or Collateral Agent.

(G) Promptly upon written request of Agent or Collateral Agent, Borrower shall exercise
commercially reasonable efforts to obtain a waiver of any lien claims or rights that any owners or
mortgagees of any real estate (or of any possessory interest therein) on which the Collateral, or
any part thereof, is now or hereafter may be located, may have with respect to the Collateral, or
shall secure an agreement wherein such Persons subordinate their rights, titles, interests and lien
claims to Collateral Agent’s Lien in, on and upon the Collateral.

(H) Promptly upon written request of Agent or Collateral Agent, Borrower shall provide Agent
and Collateral Agent with copies of all agreements between Borrower and any warehouse at which any
Collateral may, from time to time, be kept and all lease or similar agreements between Borrower and
any other Person, whether Borrower is lessor or lessee thereunder.

(I) If any Account arises out of a contract with the United States of America, or any other
Governmental Authority, Borrower shall promptly notify Agent and Collateral Agent thereof in
writing and execute any instruments and take any other action required or requested by Agent or
Collateral Agent to perfect Collateral Agent’s Lien on and right to collect such Account under the
provisions of the Assignment of Claims Act or other applicable Law.

(J) Borrower shall promptly notify Agent and Collateral Agent in writing of the initiation of
any Commercial Tort Claim seeking damages on behalf of Borrower in excess of $500,000.00. Borrower
shall execute and deliver such statements, documents and notices and do and cause to be done all
such things as Agent or Collateral Agent may reasonably deem necessary or appropriate to create,
perfect and maintain Collateral Agent’s Lien upon any Commercial Tort Claim.

 

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10.6 Collection of Accounts; Segregation of Proceeds, Etc. Borrower covenants and agrees
that, except to the extent that Agent’s or Collateral Agent’s exercise of its rights and remedies
hereunder or under any other Loan Document shall prevent Borrower from doing so,
Borrower will, at Borrower’s sole expense, collect from the Account Debtor on each Account all
amounts due thereon as and when the same shall become due; and in the event of any default by any
Account Debtor justifying such action, Borrower shall have the authority, at Borrower’s sole
expense, to repossess any merchandise covered by any such Account in accordance with the terms
thereof and any applicable Law and to take such other action with respect to any such Account or
the merchandise covered thereby as Borrower, in the absence of instructions from Agent or
Collateral Agent, may deem advisable.

10.7 Collection Methods. Borrower agrees that no court action or other legal proceedings
for garnishment, attachment, repossession of property, detinue, or any attempt to repossess any
merchandise covered by any Account other than through legal proceedings, shall be done or attempted
to be done by Borrower except by or under the direction of competent legal counsel. Borrower
agrees to indemnify and hold Lender Party harmless from any loss or liability of any kind or
character which may be asserted or sought to be asserted against Lender Party by virtue of any suit
filed, process issued or any repossession or attempted repossession done or attempted by Borrower
or at Borrower’s direction or any endeavors that Borrower may make to collect or enforce any
Accounts or repossess any goods covered by any Account.

10.8 Verification of Accounts. Borrower agrees that any of Agent’s or Collateral Agent’s
officers, employees or agents shall have the right, at any time or times hereafter, in Agent’s or
Collateral Agent’s name or in the name of Borrower, to verify with any Account Debtor the validity
or amount of, or any other matter relating to, any Accounts by mail, telephone, telegraph or
otherwise.

10.9 Notice Regarding Disputed Accounts. Borrower covenants and agrees that in the event
any Eligible Account is subject to a dispute between any Account Debtor and Borrower where the
amount in controversy exceeds $500,000.00, Borrower shall promptly provide Agent and Collateral
Agent with written notice thereof, explaining in detail the reason for the dispute, all claims
related thereto and the amount in controversy.

10.10 Records, Schedules and Assignments. Borrower covenants and agrees that Borrower shall
keep accurate Records of Borrower’s Accounts and Inventory, and shall promptly deliver to Agent
and/or Collateral Agent, within 15 days after demand of Agent and/or Collateral Agent (i) a
detailed aged trial balance, in form and substance acceptable to Agent and Collateral Agent, of all
then-existing Accounts (“Schedule of Accounts”), (ii) a current schedule of Inventory (“Schedule of
Inventory”), (iii) the original or a copy of all Documents evidencing or relating to the Accounts
or Inventory so scheduled, (iv) such other information relating to the then-existing Accounts and
Inventory as Agent or Collateral Agent shall reasonably request, and (v) formal written assignments
or schedules specifically describing the Accounts and Inventory and confirming Collateral Agent’s
Lien thereon.

10.11 Visitation. Borrower agrees to permit representatives of Agent and Collateral Agent
from time to time to visit and inspect the Collateral, all Records related thereto, the premises
upon which any of the Collateral is located, and any of the other offices and properties of
Borrower; to examine the assets, books of account, and Records of Borrower; to discuss the affairs
and finances of Borrower with and be advised as to the same by the officers thereof; and
to verify the amount, quantity, value and condition of, or any other matter relating to, the
Collateral, all at such reasonable times and intervals as Agent and Collateral Agent may desire.

 

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10.12 Use of Tangible Property. Borrower covenants and agrees (a) to comply with all
applicable Laws governing the use of all Tangible Property (except where a failure to so comply
with such Laws would cause a Material Adverse Effect), (b) to maintain all Tangible Property in
good condition and repair (normal wear and tear excepted), (c) to comply with the material terms of
any lease covering the premises wherein any Tangible Property is located and to comply with all
material requirements of any Governmental Authority concerning such premises or the conduct of
business therein where a failure to so comply with such lease terms or Laws would cause a Material
Adverse Effect; and (d) not to lease any of the Tangible Property to any Person or permit the same
to be leased or used for hire otherwise than pursuant to any Permitted Liens.

10.13 Collateral Evidenced by Instruments or Documents. Borrower covenants and agrees that
upon Borrower’s receipt of any Collateral which is evidenced or secured by an agreement,
Instrument, Document or Chattel Paper and upon demand of Agent or Collateral Agent, Borrower shall
deliver the original thereof (or each executed or original counterpart if more than one) to
Collateral Agent, together with appropriate endorsements and/or assignments in form and substance
acceptable to Collateral Agent.

10.14 Maintaining Bank Accounts. Borrower covenants and agrees that until the termination
of Collateral Agent’s Lien:

(A) Except for bank accounts that have average monthly collected balances of less than
$100,000.00 (in the aggregate), Borrower shall maintain all of its bank accounts (collectively, the
“Bank Accounts”), including any Deposit Accounts and disbursement accounts, only with Wachovia
(the “Approved Bank Accounts”); provided however, during the period of time that a Transition
Services Agreement is in effect, Borrowers may maintain and make deposits to and disbursements from
the bank accounts established and maintained thereunder.

(B) Upon the occurrence and during the continuance of a Default and the demand of Collateral
Agent, Borrower shall maintain lockboxes and blocked deposit accounts (each a “Lockbox Account”)
only with Wachovia and with other banks (each a “Lockbox Bank”) that have entered into letter or
other agreements (each a “Lockbox Agreement”) approved by and acceptable to Collateral Agent in its
discretion.

(C) Upon the occurrence and during the continuance of a Default and the demand of Collateral
Agent, Borrower shall promptly instruct each Person obligated at any time to make any payment to
Borrower for any reason to make such payment to a Lockbox Account, and shall pay to Collateral
Agent for deposit in an Approved Bank Account as may be from time to time designated by Collateral
Agent, at the end of each Business Day, all proceeds of Collateral and all other cash received by
it on such day.

(D) Borrower shall instruct each Lockbox Bank to transfer to an Approved Bank Account
designated by Collateral Agent, at the end of each Business Day, in same day funds, an amount equal
to the credit balance of the Lockbox Account in such Lockbox Bank.

 

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(E) Upon any termination of any Lockbox Agreement or other agreement with respect to the
maintenance of a Lockbox Account by Borrower or any Lockbox Bank, Borrower shall immediately notify
all Persons that were making payments to such Lockbox Account to make all future payments to
another Lockbox Account or to an Approved Bank Account designated by Collateral Agent. Borrower
agrees to terminate any or all Lockbox Account and Lockbox Agreements upon request by Collateral
Agent.

10.15 Filing Fees and Taxes. Borrower covenants and agrees to pay all recording and filing
fees, revenue stamps, taxes and other expenses and charges payable in connection with the execution
and delivery to Lender Parties of this Agreement and the other Loan Documents, and the recording,
filing, satisfaction, continuation and release of any mortgages, financing statements or other
instruments filed or recorded in connection herewith or therewith.

10.16 Assigned Agreements. Except in Borrower’s Ordinary Course of Business, Borrower
covenants and agrees that it shall not (a) cancel or terminate any Assigned Agreement or consent to
or accept any cancellation or termination thereof; (b) amend or otherwise modify any Assigned
Agreement or give any consent, waiver or approval thereunder; (c) waive any default or breach of
any Assigned Agreement; or (d) take any other action in connection with any Assigned Agreement,
and, notwithstanding the foregoing, in each case where any such action may give rise to a Material
Adverse Change, such action shall only be taken with Agent’s prior written consent.

10.17 Air Products APA Documents. Borrower shall (a) observe and perform in all material
respects all the obligations imposed upon Borrower under the Air Products APA Documents; (b)
promptly send to Agent copies of each material notice which Borrower shall send or receive under
the Air Products APA Documents (including, but not limited to, the “Statement” as defined in
Section 2.01(a) of the Air Products APA, any “Notice of Disagreement” as defined in Section 2.01(b)
of the Air Products APA, any updates to the Seller Disclosure Letter as provided for in Section
5.02(b)(i) of the Air Products APA, and any notice of termination as provided for in Section
8.01(a)(i) of the Air Products APA); (c) enforce the performance and observance of the material
provisions of the Air Products APA Documents; (d) not alter, modify or change the material terms of
the Air Products APA Documents, without the prior written consent of Agent in each such case; and
(e) not cancel or terminate any material Air Products APA Document except in accordance with its
terms.

10.18 Underlying Documentation. Borrower covenants and agrees that Borrower will, at any
time a Default exists and upon the request therefor by Agent or Collateral Agent, promptly deliver
possession to Collateral Agent of any or all of the Material Contracts.

10.19 Further Assurances. Borrower covenants and agrees that, at Borrower’s cost and
expense, upon request of Agent or Collateral Agent, Borrower shall duly execute and deliver, or
cause to be duly executed and delivered, to Agent and/or Collateral Agent such further instruments
and documents and do and cause to be done such further acts as may be reasonably necessary or
proper in the opinion of Agent, Collateral Agent or its respective counsel to carry out more
effectively the provisions and purposes of this Agreement.

10.20 Post-Closing Matters. Borrower shall satisfy the requirements set forth on
Schedule 10.20 on or before the date specified for such requirements or such later date to
be determined by the Required Lenders.

 

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ARTICLE XI

11. DEFAULT

11.1 Events of Default. The occurrence of any one or more of the following events shall
constitute an Event of Default hereunder:

(A) Borrower shall fail to pay any installment of principal or interest or fee or any other
amount payable under this Agreement or any other Loan Document within three (3) days after the same
becomes due.

(B) Borrower shall fail to timely perform the covenants set forth in Section 10.1(N), Section
10.2(B), Section 10.2(C), 10.2(F), Section 10.2(G), Section 10.2(H), Section 10.3(A), Section
10.3(B), Section 10.3(C), Section 10.3(D), or Section 10.20.

(C) Borrower shall default in the performance of or compliance with any term contained herein
(other than those referred to in Sections 11.1(A) or (B)) or in any other Loan Document and such
default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining
actual knowledge of such default and (ii) Borrower receiving written notice of such default from
any holder of the Notes (any such written notice to be identified as a “notice of default” and to
refer specifically to this Section 11.1(C)); provided that, with respect to any default in the
performance of or compliance with any term contained in Section 10.1(C), such 30 day cure period
shall be extended for up to an additional 30 days so long as on or before the 30th day after such
default Borrower has provided the holders of the Notes with unaudited financial statements of the
type required by Section 10.1(C) and Borrower has commenced and continues to diligently pursue a
cure of such default; provided, further, that with respect to any default in the performance of or
compliance with any term contained herein (other than those referred to in Sections 11.1 (A) or
(B)) or in any other Loan Document resulting from Borrower’s failure to cause any Foreign
Subsidiary to comply with any such term, such 30 day cure period shall be extended for up to an
additional 30 days so long as such default is capable of being cured and Borrower has commenced and
continues to diligently pursue a cure of such default.

(D) There shall occur any default, Default, event of default, or Event of Default as defined
and provided under any other Loan Document or any Prudential Loan Document (after the expiration of
any applicable grace and cure period).

(E) There shall occur any default or event of default (after the expiration of any applicable
grace and cure period) under any agreement of any Borrower Party with any Person and relating to
the borrowing of money.

(F) The validity or enforceability of this Agreement or any other Loan Document shall be
contested by any Borrower Party, and/or any Borrower Party shall deny that it has any or further
liability or obligation hereunder or thereunder.

 

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(G) Assignment or attempted assignment by Borrower of this Agreement, any rights hereunder, or
any Advance to be made hereunder, or the conveyance, lease, mortgage, or any other alienation or
encumbrance of the Collateral or any interest therein without the prior written consent of Agent
and Collateral Agent, except for transfers permitted hereunder or under any other Loan Document.

(H) Except as otherwise permitted herein, the transfer of Borrower’s interest in, or rights
under, this Agreement by operation of law or otherwise, including, without limitation, such
transfer by Borrower as debtor in possession under the Bankruptcy Code, or by a trustee for
Borrower under the Bankruptcy Code, to any Third Person, whether or not the obligations of Borrower
under this Agreement are assumed by such Third Person.

(I) The institution of a foreclosure or other possessory action against (i) the Mortgaged
Property, or (ii) any of the Collateral other than the Mortgaged Property, except where such action
would not be reasonably expected to have a Material Adverse Effect.

(J) The death or dissolution of any Borrower Party, or any Change in Control.

(K) Any financial statement, representation, warranty or certificate made or furnished by any
Borrower Party to any Lender Party in connection with this Agreement, or as inducement to any
Lender Party to enter into this Agreement, or in any separate statement or document to be delivered
hereunder to any Lender Party, shall be materially false, incorrect, or incomplete when made.

(L) The occurrence of any event, act, condition or occurrence of whatever nature wherein the
legality, validity, or enforceability of any provision of any Loan Document is questioned or
challenged.

(M) Any Borrower Party shall admit its inability to pay its debts as they mature, or shall
make an assignment for the benefit of itself or any of its creditors.

(N) Proceedings in Bankruptcy, or for reorganization of any Borrower Party, or for the
readjustment of any of its debts, under the Bankruptcy Code, as amended, or any part thereof, or
under any other Laws, whether state or federal, for the relief of debtors, now or hereafter
existing, shall be commenced by any Borrower Party, or shall be commenced against any Borrower
Party and shall not be discharged within sixty (60) days of commencement.

(O) A receiver or trustee shall be appointed for any Borrower Party or for any substantial
part of its assets, or any proceedings shall be instituted for the dissolution or the full or
partial liquidation of any Borrower Party, and such receiver or trustee shall not be discharged
within thirty (30) days of his appointment, or such proceedings shall not be discharged within
sixty (60) days of its commencement, or any Borrower Party shall discontinue business or materially
change the nature of its business.

(P) Any Borrower Party shall suffer a final judgment for payment of money in excess of
$1,000,000.00 and shall not discharge the same within a period of thirty (30) days unless, pending
further proceedings, execution has not been commenced or if commenced has been effectively stayed.

 

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(Q) A judgment creditor of any Borrower Party shall obtain possession of any of the Collateral
with an aggregate value of more than $1,000,000.00 by any means, including, without limitation,
levy, distraint, replevin or self-help.

(R) (i) Any Member of the Borrower Consolidated Group shall be in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium or make-whole amount or
interest on any Indebtedness that is outstanding in an aggregate principal amount of at least
$3,000,000 beyond any period of grace provided with respect thereto, or (ii) any Member of the
Borrower Consolidated Group shall be in default in the performance of or compliance with any term
of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least
$3,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Indebtedness has become, or has been
declared (or one or more Persons are entitled to declare such Indebtedness to be), due and payable
before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a
consequence of the occurrence or continuation of any event or condition (other than the passage of
time or the right of the holder of Indebtedness to convert such Indebtedness into equity
interests), (x) any Member of the Borrower Consolidated Group has become obligated to purchase or
repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment
in an aggregate outstanding principal amount of at least $3,000,000, or (y) one or more Persons
have the right to require any Member of the Borrower Consolidated Group so to purchase or repay
such Indebtedness.

(S) There shall occur any Casualty or Condemnation Event that results in the loss of value in
the assets the subject of such Casualty or Condemnation Event(s) (i) in an aggregate amount of more
than $5,000,000 in any Fiscal Year (after taking into account any insurance or condemnation
proceeds paid or payable on account of such Casualty or Condemnation Event(s)); or (ii) in an
aggregate amount of more than $10,000,000.00 subsequent to the date of this Agreement (after taking
into account any insurance or condemnation proceeds paid or payable on account of such Casualty or
Condemnation Event(s)); unless, in each case, within 30 days after the occurrence thereof, Required
Lenders have agreed in writing that such Casualty or Condemnation Event does not constitute an
Event of Default.

(T) There shall occur any default, event of default or termination event under any Lender
Party Swap Document for which Borrower Party is a defaulting party or an affected party.

Provided that with respect to each of the foregoing, an Event of Default will be deemed to
have occurred upon the occurrence of the applicable event without notice being required if Agent or
Collateral Agent is prevented from giving notice by Bankruptcy or other applicable Law.

11.2 No Advances After Default. Upon the occurrence and during the continuance of any
Default, and notwithstanding any provision contained herein or in any other Loan Document to the
contrary (i) the Swing Line Lender and the Revolving Loan Lenders shall have the absolute right to
refuse to make, and shall be under no obligation to make, any further Swing Line Loan Advances or
Revolving Loan Advances (other than Advances under Section 3.2(C)); and (ii) the Issuing Lender
shall have the right to refuse to issue any Letters of Credit.

 

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11.3 Acceleration. All Credit Agreement Obligations shall, at the option of Agent (or at
the written direction to Agent from the Required Lenders), become immediately due and payable,
Without Notice, upon the occurrence of an Event of Default without further action of any kind.

11.4 General Remedies. Upon the occurrence of any Event of Default, Lender Parties shall
have, in addition to the rights and remedies given them by this Agreement and the other Loan
Documents, all those allowed by all applicable Laws, including but without limitation, the Uniform
Commercial Code. Without limiting the generality of the foregoing, Agent may (and, at the written
direction of the Required Lenders, shall) immediately, Without Notice, cause Collateral Agent to
sell at public or private sale or otherwise realize upon, the whole or, from time to time, any part
of the Collateral, or any interest which Borrower may have therein.

11.5 Agent’s Additional Rights and Remedies. Upon the occurrence of any Event of Default
and except as may otherwise be prohibited or expressly provided for to the contrary under
applicable Law, in addition to any rights or remedies Lender Parties may otherwise have under this
Agreement, any other Loan Documents, or under applicable Laws, Without Notice, Agent shall have the
right to (and, at the written direction of the Required Lenders, shall) take any or all of the
following actions at the same or different times:

(A) To cancel Lender Parties’ obligations arising under this Agreement;

(B) To institute appropriate proceedings to specifically enforce performance of the terms and
conditions of this Agreement;

(C) To cause Collateral Agent to take immediate possession of the Collateral;

(D) To cause Collateral Agent to appoint or seek appointment of a receiver, Without Notice and
without regard to the solvency of Borrower or the adequacy of the security, for the purpose of
preserving the Collateral, preventing waste, and to protect all rights accruing to Lender Parties
by virtue of this Agreement and the other Loan Documents. All expenses incurred in connection with
the appointment of such receiver, or in protecting, preserving, or improving the Collateral, shall
be charged against Borrower and shall be secured by the Collateral Agent’s Lien;

(E) To cause Collateral Agent to proceed to perform any and all of the duties and obligations
and exercise all the rights and remedies of Borrower contained in the Assigned Agreements as fully
as Borrower could itself;

(F) To cause Collateral Agent to take possession of the Mortgaged Property and/or the Rents
and have, hold, manage, lease and operate the Mortgaged Property on such terms and for such period
of time as Collateral Agent may in its discretion deem proper, and, either with or without taking
possession of the Mortgaged Property in Collateral Agent’s own name:

(1) Make any payment or perform any act which Borrower has failed to make or perform,
in such manner and to such extent as Collateral Agent may deem necessary to protect the
security provided for in this Agreement, or otherwise, including
without limitation, the right to appear in and defend any action or proceeding
purporting to affect the security provided for in this Agreement, or the rights or powers of
Collateral Agent;

 

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(2) Lease the Mortgaged Property or any portion thereof in such manner and for such
Rents as Collateral Agent shall determine in its discretion; or

(3) Demand, sue for, or otherwise collect and receive from all Persons all Rents,
including those past due and unpaid, with full power to make from time to time all
alterations, renovations, repairs or replacements of and to the Mortgaged Property (or any
part thereof) as may seem proper to Collateral Agent and to apply the Rents to the payment
of (in such order of priority as Collateral Agent, in its discretion, may determine):

(a) All expenses of managing the Mortgaged Property, including, without
limitation, the salaries, fees and wages of a managing agent and such other
employees as Collateral Agent may deem necessary or desirable;

(b) All taxes, charges, claims, assessments, water rents, sewer rents, and any
other liens, and premiums for all insurance which Collateral Agent may deem
necessary or desirable, and the cost of all alterations, renovations, repairs, or
replacements, and all expenses incidental to taking and retaining possession of the
Mortgaged Property;

(c) All or any portion of the Loans; and/or

(d) All costs and Attorneys’ Fees incurred in connection therewith.

In connection with the foregoing, Borrower hereby authorizes and directs each party to any
Assigned Agreement (other than Borrower), upon receipt from Agent or Collateral Agent of written
notice to the effect that an Event of Default exists, to perform all of its obligations under the
Assigned Agreements as directed by Collateral Agent, and to continue to do as so directed until
otherwise notified by Collateral Agent.

(G) To cause Collateral Agent to notify Account Debtors that Accounts have been assigned to
Collateral Agent, demand and receive information from Account Debtors with respect to Accounts,
forward invoices to Account Debtors directing them to make payments to Collateral Agent, collect
all Accounts in Collateral Agent’s or Borrower’s name and take control of any cash or non-cash
proceeds of Collateral;

(H) To cause Collateral Agent to enforce payment of any Accounts, to prosecute any action or
proceeding with respect to Accounts, to extend the time of payment of any and all Accounts, to make
allowances and adjustments with respect thereto and to issue credits in the name of Collateral
Agent or Borrower;

 

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(I) To cause Collateral Agent to settle, compromise, extend, renew, release, terminate or
discharge, in whole or in part, any Account or deal with the same as Collateral Agent may deem
advisable;

(J) To cause Collateral Agent to require Borrower to open all mail only in the presence of a
representative of Collateral Agent, who may take therefrom any remittance on Collateral;

(K) To cause Collateral Agent to charge, set-off and otherwise apply all or any part of the
Secured Obligations against the Deposit Accounts, or any part thereof;

(L) To cause Collateral Agent to exercise any and all rights and remedies of Borrower under or
in connection with any Assigned Agreement or otherwise in respect of the Collateral, including,
without limitation, any and all rights of Borrower to demand or otherwise require payment of any
amount under, or performance of any provision of, any Assigned Agreement;

(M) To cause Collateral Agent to enter upon the premises of Borrower or any other place or
places where the Collateral is located and kept, and through self-help and without judicial
process, without first obtaining a final judgment or giving Borrower notice and opportunity for a
hearing on the validity of Collateral Agent’s claim, without any pre-seizure hearing as a condition
to repossession through court action and without any obligation to pay rent to Borrower, to remove
the Collateral therefrom to the premises of Collateral Agent or of any agent of Collateral Agent,
for such time as Collateral Agent may desire, in order effectively to collect or liquidate the
Collateral;

(N) To cause Collateral Agent to require Borrower, upon the request of Collateral Agent, to
assemble the Inventory, Equipment and any other property included in the Collateral and make it
available to Collateral Agent at places which Collateral Agent shall select, whether at Borrower’s
premises or elsewhere, and to make available to Collateral Agent all of Borrower’s premises and
facilities for the purpose of Collateral Agent’s taking possession of, removing or putting the
Inventory and such other goods in salable form;

(O) To cause Collateral Agent to collect, receive, appropriate, repossess and realize upon the
Collateral, or any part thereof, and to sell, lease, assign, give option or options to purchase, or
sell or otherwise dispose of and deliver the Collateral (or contract to do so), or any part
thereof, in one or more parcels, at public or private sale or sales, at any exchange broker’s board
or at any of Collateral Agent’s offices or elsewhere, at such prices as Collateral Agent may deem
best, for cash or on credit or for future delivery without assumption of any credit risk.
Collateral Agent shall have the right upon any such public sale or sales, and to the extent
permitted by Law, to purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption, which equity of redemption Borrower hereby releases, and Borrower waives all
claims, damages and demands against Collateral Agent arising out of the repossession, retention or
sale of the Collateral;

 

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(P) To cause Collateral Agent to use, and to permit any purchaser of any of the Collateral
from Collateral Agent to use without charge, Borrower’s labels, General Intangibles, and
advertising matter or any property of a similar nature, as it pertains to, or is
included in, any of the Collateral, in advertising for sale, preparing for sale and selling
any Collateral, and finishing the manufacture, processing, fabrication, packaging and delivery of
the Inventory, and Borrower’s rights under all licenses and all franchise agreements shall inure to
Collateral Agent’s benefit;

(Q) To cause Collateral Agent to send any written notice to Borrower required by Law or this
Agreement in the manner set forth in this Agreement; and any notice sent by Collateral Agent in
such manner at least ten (10) Business Days (counting the date of sending) prior to the date of a
proposed disposition of the Collateral shall be deemed to be reasonable notice (provided, however,
that nothing contained herein shall be deemed to require ten (10) Business Days’ notice if, under
the applicable circumstances, a shorter period of time would be allowed under applicable Law); and

(R) To exercise, and to cause Collateral Agent to exercise, in addition to all other rights
which it has under this Agreement or other applicable Law, all of the rights and remedies of a
secured party upon default under the Uniform Commercial Code or other applicable Law.

11.6 Right of Set-Off. Upon the occurrence of and during the continuance of any Default,
Lender Party may, and is hereby authorized by Borrower, at any time and from time to time, to the
fullest extent permitted by applicable Laws, and Without Notice to Borrower, set-off and apply any
and all deposits (general or special, time or demand, provisional or final) at any time held and
any other Indebtedness at any time owing by Lender Party to, or for the credit or the account of,
Borrower against any or all of the Credit Agreement Obligations now or hereafter existing whether
or not such Credit Agreement Obligations have matured and irrespective of whether Lender Party has
exercised any other rights that it has or may have with respect to such Credit Agreement
Obligations, including without limitation any acceleration rights. The aforesaid right of set-off
may be exercised by Lender Party against Borrower or against any trustee in Bankruptcy, debtor in
possession, assignee for the benefit of the creditors, receiver, or execution, judgment or
attachment creditor of Borrower, or such trustee in Bankruptcy, debtor in possession, assignee for
the benefit of creditors, receiver, or execution, judgment or attachment creditor, notwithstanding
the fact that such right of set-off shall not have been exercised by Lender Party prior to the
making, filing or issuance, or service upon Lender Party of, or of notice of, any such petition;
assignment for the benefit of creditors; appointment or application for the appointment of a
receiver; or issuance of execution, subpoena, order or warrant. Lender Party agrees to promptly
notify Borrower after any such set-off and application, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The rights of Lender Party
under this Section are in addition to the other rights and remedies (including, without limitation,
other rights of set-off) which Lender Party may have.

11.7 No Limitation on Rights and Remedies. The enumeration of the powers, rights and
remedies in this Article shall not be construed to limit the exercise thereof to such time as an
Event of Default occurs if, under applicable Law or any other provision of this Agreement or any
other Loan Document, Lender Party has any of such powers, rights and remedies regardless of whether
an Event of Default has occurred, and any limitation contained herein or in any of the other Loan
Documents as to Lender Party’s exercise of any power, right or remedy for a period of time only
during the continuance of an Event of Default shall only be applicable at such time
as Lender Party shall have actual knowledge that such Event of Default is no longer continuing
and for a reasonable time thereafter as may be necessary for Lender Party to cease the exercise of
such powers, rights and remedies (it being expressly understood and agreed that until such time as
Lender Party shall obtain such knowledge and after the expiration of such reasonable time, Lender
Party shall have no liability whatsoever for the commencement of or continuing exercise of any such
power, right or remedy).

 

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11.8 Repossession of the Collateral; Care and Custody of the Collateral, Etc. Borrower
agrees to give Collateral Agent notice in the manner set forth in this Agreement within 24 hours of
the time of repossession of the Collateral, or any part thereof, by Collateral Agent as to any
other property of Borrower alleged to have been left on, upon or in the repossessed Collateral at
the time of repossession; and such notice shall be an express condition precedent to any action or
suit for loss or damages in connection therewith. Borrower further agrees that Collateral Agent
may hold any such property of Borrower without liability for a reasonable time after any such
notice is received, and that Collateral Agent will have a reasonable time to notify Borrower as to
where Borrower can collect such property. Borrower agrees that if Collateral Agent shall repossess
the Collateral, or any part thereof, at a time when no Event of Default shall have occurred
hereunder, and the repossessed Collateral is thereafter returned to Borrower, the damages therefor,
if any, shall not exceed the fair rental value of the repossessed Collateral for the time it was in
Collateral Agent’s possession. Borrower hereby expressly and irrevocably consents to, and to the
extent that Borrower may lawfully do so, invites Collateral Agent and its agents to come upon any
premises on which the Collateral, or any part thereof, is now or hereafter located for any and all
purposes related to the Collateral including without limitation repossession of the Collateral, or
any part thereof. To the extent that Borrower may lawfully do so, Borrower further covenants and
warrants that (a) any entry by Collateral Agent and its agents upon such premises for the purpose
of repossessing the Collateral, or any part thereof, shall not be trespass upon such premises, and
(b) any such repossession shall not constitute conversion of the Collateral, or any part thereof,
and Borrower further agrees to indemnify and hold Collateral Agent harmless against, and hereby
releases Collateral Agent from any actions, costs, obligations or expenses arising directly,
indirectly or remotely from any attempt to enter such premises and repossess the Collateral, or any
part thereof. Collateral Agent shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if it takes such reasonable actions for that
purpose as Borrower shall request in writing, but Collateral Agent shall have sole power to
determine whether such actions are reasonable. Any omission to do any act not requested by
Borrower shall not be deemed a failure to exercise reasonable care. Borrower shall at all times be
responsible for the preservation of the Collateral and shall be liable for any failure to realize
upon, or to exercise any right or power with respect to, the Collateral, or for any delay in so
doing, whether or not the Collateral is in Borrower’s possession.

11.9 Application of Proceeds. Except as otherwise expressly required to the contrary by
applicable Law, any Loan Document or the Intercreditor Agreement, the proceeds and avails of any
sale of the Collateral or the exercise of any of the rights and remedies of Lender Parties under
this Agreement shall be applied by Agent (i) first, to the payment of all charges, expenses, costs
and Attorneys’ Fees owing to Agent or Collateral Agent hereunder or under any other Loan Document;
(ii) second, to the payment of all charges, expenses, costs and Attorneys’ Fees owing to Lender
Parties (other than Agent or Collateral Agent) hereunder or under any other Loan Document; and
(iii) third, to the pro rata payment of the other Credit Agreement Obligations
(based on the total amount of the Credit Agreement Obligations owing to Lender Parties), and
Borrower shall remain liable to Lender Parties for any deficiency.

 

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11.10 Attorney-in-Fact. Borrower hereby constitutes and appoints each of Agent and
Collateral Agent, or any other Person whom Agent or Collateral Agent may designate upon notice to
Borrower, as Borrower’s attorney-in-fact (such appointment being coupled with an interest and being
irrevocable until Collateral Agent’s Lien shall have been terminated in writing as set forth in
this Agreement), at Borrower’s sole cost and expense, to exercise any one or more of the following
rights and powers at any time after the occurrence and during the continuance of an Event of
Default (and all acts of such attorney-in-fact taken pursuant to this Section are hereby ratified
and approved by Borrower, and said attorney shall not be liable for any acts or omissions nor for
any error of judgment or mistake of fact or law):

(A) To take or to bring, in the name of Agent or Collateral Agent or in the name of Borrower,
all steps, action, suits or proceeding deemed by Agent or Collateral Agent necessary or desirable
to effect collection of the Accounts;

(B) To settle, adjust, compromise, extend, renew, discharge, terminate or release the Accounts
in whole or in part;

(C) To settle, adjust or compromise any legal proceedings brought to collect the Accounts;

(D) To notify Account Debtors to make payments on the Accounts directly to Collateral Agent or
to a Lockbox designated by Agent or Collateral Agent;

(E) To transmit to Account Debtors notice of Collateral Agent’s interest in the Accounts and
to demand and receive from such Account Debtors at any time, in the name of Agent, Collateral Agent
or Borrower, information concerning the Accounts and the amounts owing thereon;

(F) To use Borrower’s stationery and sign the name of Borrower to verifications of the
Accounts and notices thereof to Account Debtors;

(G) To sell or assign any of the Collateral upon such terms, for such amounts and at such time
or times as Collateral Agent deems advisable, and to execute any bills of sale or assignments in
the name of Borrower in relation thereto;

(H) To take control, in any manner, of any item of payment on, or proceeds of, Collateral;

(I) To prepare, file and sign Borrower’s name on any proof of claim in Bankruptcy or similar
document against any Account Debtor;

(J) To prepare, file and sign Borrower’s name on any notice of lien, assignment or
satisfaction of lien or similar document in connection with the Collateral;

 

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(K) To sign or endorse the name of Borrower upon any Chattel Paper, Document, Instrument,
invoice, freight bill, bill of lading, warehouse receipt or similar document or agreement relating
to the Collateral;

(L) To use the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Collateral to which Borrower has access;

(M) To enter into contracts or agreements for the processing, fabrication, packaging and
delivery of the Collateral as said attorney-in-fact, Agent or Collateral Agent may from time to
time deem appropriate and charge Borrower’s account for any costs thereby incurred;

(N) To receive, take, endorse, assign and deliver in Agent, Collateral Agent’s or Borrower’s
name any and all checks, notes, drafts and other instruments;

(O) To receive, open and dispose of all mail addressed to Borrower and to notify postal
authorities to change the address for the delivery thereof to such address as Agent or Collateral
Agent may designate; and

(P) To do all acts and things necessary, in Agent’s and Collateral Agent’s discretion, to
fulfill Borrower’s obligations under this Agreement and to otherwise carry out the purposes of this
Agreement.

11.11 Default Costs. Borrower hereby agrees to pay to each Lender Party upon demand all
Default Costs incurred by such Lender Party, which agreement shall be a continuing agreement and
shall survive payment of the Loans and termination of this Agreement.

ARTICLE XII

12. THE AGENT.

12.1 Authorization and Action.

(A) Each Lender hereby appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers and discretion under this Agreement and the other Loan Documents
as are delegated to Agent by the terms hereof and thereof, together with such powers and discretion
as are reasonably incidental thereto. As to any matters provided for in the Loan Documents as
being subject to the consent, direction or approval of Agent, such matters shall be subject to the
sole discretion of Agent, its directors, officers, agents and employees, without the approval of
any Lender. Agent shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such instructions shall
be binding upon all Lender Parties and all holders of Notes. Agent shall be entitled to request
instructions from the Required Lenders in exercising any discretion or taking any action and shall
be fully protected in so acting or refraining from acting upon the instructions of the Required
Lenders, and such instructions shall be binding upon all
Lender Parties and all holders of Notes. In no event shall Agent be required to take any
action that Agent believes to be contrary to this Agreement or applicable Law.

 

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(B) Notwithstanding the preceding, each of the following shall require the approval or consent
of the Required Lenders:

(1) The exercise of any rights and remedies under the Loan Documents following an Event
of Default, provided that absent any direction from the Required Lenders, Agent may exercise
any right or remedy under the Loan Documents as Agent may determine in good faith to be
necessary or appropriate to protect the Lenders or the Collateral;

(2) Appointment of a successor Agent;

(3) Approval of any amendment or modification of this Agreement or any of the other
Loan Documents, or issuance of any waiver of any provision of this Agreement or any of the
other Loan Documents; and

(4) Any waiver of any Default or Event of Default.

(C) Notwithstanding the preceding, each of the following shall require the approval or consent
of all the Lenders:

(1) Any extension of the Revolving Loan Maturity Date, the Swing Line Loan Maturity
Date, or the Term Loan Maturity Date, any forgiveness of all or any portion of the principal
amount of any Loan or any accrued interest thereon, or any other amendment of this Agreement
or the other Loan Documents which would reduce the ABR Margin, the LIBOR Margin, the amount
of the Unused Fee, or the rate at which interest, the Letter of Credit Facility Fee or the
Unused Fee are calculated, or forgive any Letter of Credit Facility Fee or Unused Fee, or
extend the time of payment of or of any grace or cure period with respect to the payment of
any principal, interest, Letter of Credit Facility Fee or Unused Fee;

(2) Any modification of the definition of “Required Lenders” or any other provision
hereof specifying the number or percentage of Lenders required to amend, waiver or otherwise
modify any rights hereunder or make any determination or grant any consent hereunder;

(3) Any increase of the amount of any Loan or any Commitment;

(4) Any release of Collateral Agent’s Lien on all or any material portion of the
Collateral, except as otherwise expressly permitted under the terms of the Loan Documents;

(5) Any release of any Borrower Party;

 

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(6) Any modification of the Intercreditor Agreement which would have the effect of
materially reducing payments paid or payable to the Lender Parties as set forth in Section
4.3 of the Intercreditor Agreement; and

(7) Any amendment of the provisions of this Article 12.

(D) Notwithstanding the preceding, no amendment, waiver or consent shall, unless in writing
and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or
duties of Swing Ling Lender under this Agreement.

12.2 Agent’s Notices, Etc. In the event that Agent has knowledge of a Default or Event of
Default or receives a notice thereof from a Lender or Borrower Party, Agent shall give prompt
notice thereof to Lenders (provided that Agent shall be deemed to have knowledge only if the
officers of Agent primarily responsible for administration of the Loans have actual knowledge of
such Default or Event of Default, and in no event shall any knowledge of a Default or Event of
Default be imputed to Agent). Agent may, in its discretion, or shall upon direction of the
Required Lenders, give any notice pursuant to this Agreement that is necessary for commencement of
any cure period. Agent shall take such action with respect to such Default or Event of Default as
shall reasonably be directed by the Required Lenders; provided that, unless and until Agent shall
have received such directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of Lenders. Lenders agree that any actions taken by Agent pursuant
to this paragraph shall be deemed a reasonable course of conduct, and Lenders hereby, approve,
ratify and affirm such actions.

12.3 Agent’s Reliance, Etc. Neither Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken under or in connection with
the Loan Documents. Without limitation of the generality of the foregoing, Agent (a) may treat the
payee of any Note as the holder thereof until Agent receives and accepts an Assignment and
Acceptance entered into by the Lender that is the payee of such Note, as assignor, and an Eligible
Assignee, as assignee; (b) may consult with legal counsel (including counsel for any Lender Party),
independent public accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (c) makes no warranty or representation to any Lender and shall
not be responsible to any Lender for any statements, warranties or representations (whether written
or oral) made in or in connection with the Loan Documents; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants or conditions of
any Loan Document on the part of any Lender Party or to inspect the property (including the books
and records) of any Lender Party; (e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any Lien created or purported to be created under or in connection with, any Loan
Document or any other instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Loan Document by acting upon any notice, consent, certificate
or other instrument or writing (which may be by telegram, telecopy or telex) believed by it to be
genuine and signed or sent by the proper Person.

 

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12.4 No Reliance on Agent’s Customer Identification Program. Each Lender acknowledges and
agrees that neither such Lender, nor any of its Affiliates, participants, transferees or assignees,
may rely on Agent to carry out such Lender’s, Affiliate’s, participant’s, Transferee’s or
assignee’s customer identification program, or other obligations required or imposed under or
pursuant to the USA Patriot Act or the regulations thereunder, or any other Anti-Terrorism Law,
including any programs involving any of the following items relating to or in connection with
Borrower, its Affiliates or its agents, the Loan Documents or the Loans hereunder: (1) any
identity verification procedures, (2) any recordkeeping, (3) any comparisons with government lists,
(4) any customer notices, or (5) any other procedures required under the applicable laws.

12.5 Wachovia and Affiliates. With respect to its Commitments, the Advances made by it and
the Notes issued to it, Wachovia shall have the same rights and powers under the Loan Documents as
any other Lender and may exercise the same as though it were not an Agent; and the term “Lender”
shall, unless otherwise expressly indicated, include Wachovia in its capacity as a lender under
this Agreement. Wachovia and its Affiliates may accept deposits from, lend money to, act as
trustee under indentures of, accept investment banking engagements from and generally engage in any
kind of business with, Borrower and any other Lender, any of their respective Subsidiaries and any
Person who may do business with or own securities of any such Person, all as if Wachovia were not
Agent and without any duty to account therefor to any Person.

12.6 Lender Credit Decision. Each Lender acknowledges that it has, independently and
without reliance upon Agent or any other Lender and based on the financial statements of Borrower
and such other documents and information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement.

12.7 Indemnification.

(A) Each Lender severally agrees to indemnify Agent (to the extent not promptly reimbursed by
Borrower) from and against such Lender’s Pro Rata Share of any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind
or nature whatsoever that may be imposed on, incurred by, or asserted against Agent in any way
relating to or arising out of the Loan Documents or any action taken or omitted by Agent under the
Loan Documents; provided, however, that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent’s gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse Agent promptly upon demand for its Pro
Rata Share of any costs and expenses (including, without limitation, Attorneys’ Fees and expenses)
payable by Borrower under this Agreement, to the extent that Agent is not promptly reimbursed for
such costs and expenses by Borrower. The failure of any Lender to reimburse Agent promptly upon
demand for its Pro Rata Share of any amount required to be paid by Lender to Agent as provided
herein shall not relieve any other Lender of its obligation hereunder to reimburse Agent for its
Pro Rata Share of such amount, but
no Lender shall be responsible for the failure of any other Lender to reimburse Agent for such
other Lender’s Pro Rata Share of such amount. Without prejudice to the survival of any other
agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this
Section shall survive the payment in full of principal, interest and all other amounts payable
hereunder and under the other Loan Documents.

 

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(B) Each Lender severally agrees to indemnify Issuing Lender (to the extent not promptly
reimbursed by Borrower) from and against such Lender’s Pro Rata Share of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted
against Issuing Lender in any way relating to or arising out of the Loan Documents or any action
taken or omitted by Issuing Lender under the Loan Documents. Without limitation of the foregoing,
each Lender agrees to reimburse Issuing Lender promptly upon demand for its Pro Rata Share of any
costs and expenses (including, without limitation, Attorneys’ Fees and expenses) payable by
Borrower under this Agreement, to the extent that Issuing Lender is not promptly reimbursed for
such costs and expenses by Borrower. The failure of any Lender to reimburse Issuing Lender
promptly upon demand for its Pro Rata Share of any amount required to be paid by the Lender Parties
to Issuing Lender as provided herein shall not relieve any other Lender of its obligation hereunder
to reimburse Issuing Lender for its Pro Rata Share of such amount, but no Lender shall be
responsible for the failure of any other Lender to reimburse Issuing Lender for such other Lender’s
Pro Rata Share of such amount. Without prejudice to the survival of any other agreement of any
Lender hereunder, the agreement and obligations of each Lender contained in this Section shall
survive the payment in full of principal, interest and all other amounts payable hereunder and
under the other Loan Documents.

12.8 Successor Agent. Agent may resign at any time by giving written notice thereof to
Lender Parties and Borrower, and may be removed at any time with or without cause by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent’s giving
of notice of resignation or the Required Lenders’ removal of the retiring Agent, then the retiring
Agent may, on behalf of Lender Parties, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States or of any State thereof and having a combined capital
and surplus of at least $500,000,000.00. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent and upon the execution and filing or recording of such financing statements,
or amendments thereto, and such amendments or supplements to the Security Documents, and such other
instruments or notices, as may be necessary or desirable, or as the Required Lenders may request,
in order to continue the perfection of the Liens granted or purported to be granted by the Security
Documents, such successor Agent shall succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring Agent’s resignation
or removal hereunder as Agent, the provisions of this Article 12 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this Agreement.

12.9 No Third Party Beneficiary. The provisions of this Article 12 are solely for the
benefit of Lender Parties, and no Person other than Lender Parties is intended to be a beneficiary
of the rights and obligations of Lender Parties under this Article 12, and Lender Parties
shall have the right to amend or modify this Article 12 or waive any requirement under this Article
12, without the consent or approval of any other Person (except Lender Parties shall notify
Borrower as to any such amendment or modification). 

 

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ARTICLE XIII

13. MISCELLANEOUS

13.1 Termination of Collateral Agent’s Lien. This Agreement and the Collateral Agent’s
Lien will not be terminated until one of Collateral Agent’s officers signs a written termination or
satisfaction agreement to such effect. Even if all of the Secured Obligations owing to Lender
Parties at any time should be paid, Collateral Agent’s Lien will continue to secure any Secured
Obligations of any Borrower Party thereafter arising until the written termination or satisfaction
agreement referred to above has been executed by Collateral Agent (provided that Collateral Agent
agrees to promptly provide a written termination or satisfaction agreement upon request of
Borrower, provided that all the Secured Obligations have been fully paid and performed and Lender
Parties have no obligation to make any further Advances, and there is not existing any Default).
Except as otherwise expressly provided for in this Agreement, no termination of this Agreement
shall in any way affect or impair the representations, warranties, agreements, covenants,
obligations, duties and Secured Obligations of any Borrower Party or the powers, rights, and
remedies of Lender Party under this Agreement with respect to any transaction or event occurring
prior to such termination, all of which shall survive such termination. Except as may otherwise
expressly be provided herein to the contrary, in no event shall Collateral Agent be obligated to
terminate Collateral Agent’s Lien or return or release the Collateral or any portion thereof to
Borrower (a) until payment in full of the Secured Obligations (including termination of all
transactions outstanding under any Lender Party Swap Documents and payment in full of all amounts
payable thereunder), or (b) if Lender Party is obligated to extend credit to or for the benefit of
Borrower under this Agreement (including any obligation that might arise on account of any Letter
of Credit).

13.2 Construction. The provisions of this Agreement shall be in addition to those of any
other Loan Document and any guaranty, pledge or security agreement, mortgage, deed of trust,
security deed, note or other evidence of liability given by any Borrower Party to or for the
benefit of any Lender Party, all of which shall be construed as complementary to each other, and
all existing liabilities and obligations of any Borrower Party to any Lender Party and any Liens
heretofore granted to or for the benefit of any Lender Party shall, except and only to the extent
expressly provided herein to the contrary, remain in full force and effect, and shall not be
released, impaired, diminished, or in any other way modified or amended as a result of the
execution and delivery of this Agreement or any other Loan Document or by the agreements and
undertaking of any Borrower Party contained herein and therein. Nothing herein contained shall
prevent any Lender Party from enforcing any or all other notes, guaranties, pledges or security
agreements, mortgages, deeds of trust, or security deeds in accordance with their respective terms.
In the event of a conflict between any of the provisions of this Agreement, the Notes, any one or
more of the Security Documents or any other Loan Document, the provisions most favorable to Lender
Parties shall control.

 

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13.3 Indemnity. Borrower hereby agrees to indemnify Lender Parties and their respective
officers, directors, agents, and attorneys against, and to hold Lender Parties and all such other
Persons harmless from all Indemnified Losses resulting from any representation or warranty made by
any Borrower Party or on any Borrower Party’s behalf pursuant to this Agreement having been false
when made, or resulting from Borrower’s breach of any of the covenants set forth in this Agreement,
which indemnification is in addition to, and not in derogation of, any statutory, equitable, or
common law right or remedy Lender Parties may have for breach of representation, warranty,
statement or covenant or otherwise may have under any of the Loan Documents. This agreement of
indemnity shall be a continuing agreement and shall survive payment of the Loans and termination of
this Agreement.

13.4 Lender Party’s Consent. Except where otherwise expressly provided in the Loan
Documents, in any instance where the approval, consent, or the exercise of Lender Party’s judgment
or discretion is required or permitted, the granting or denial of such approval or consent and the
exercise of such judgment or discretion shall be (a) within the sole discretion of Lender Party;
and (b) deemed to have been given only by a specific writing intended for the purpose given and
executed by Lender Party.

13.5 Enforcement and Waiver by Lender Party. Lender Party shall have the right at all
times to enforce the provisions of this Agreement, the Notes, and each of other Loan Documents in
strict accordance with the terms hereof and thereof, notwithstanding any conduct or custom on the
part of Lender Party in refraining from so doing at any time or times. The failure of Lender Party
at any time or times to enforce its rights under such provisions, strictly in accordance with the
same, shall not be construed as having created a custom in any way or manner contrary to specific
provisions of this Agreement or as having in any way or manner modified or waived the same. All
rights and remedies of Lender Party are cumulative and the exercise of one right or remedy shall
not be deemed a waiver or release of any other right or remedy.

13.6 No Representation, Assumption, or Duty. Nothing, including any Advance or acceptance
of any document or instrument, shall be construed as a representation or warranty, express or
implied, to any Person by any Lender Party. Any inspection or audit of the Collateral or the
Records of Borrower, or the procuring of documents and financial and other information, by or on
behalf of any Lender Party shall be for Lender Parties’ protection only, and shall not constitute
any assumption of responsibility by any Lender Party with respect thereto or relieve Borrower of
any of Borrower’s obligations.

13.7 Expenses of Lender Parties. Borrower will, on demand, reimburse Lender Parties for
all expenses incurred by Lender Parties in connection with the closing of the Loans and the
preparation, negotiation, amendment, modification, interpretation, administration or enforcement of
this Agreement and the other Loan Documents and/or in the collection of any amounts owing from any
Borrower Party or any other Person to Lender Parties under this Agreement or any other Loan
Document and, until so paid, the amount of such expenses shall be added to and become part of the
amount of the Credit Agreement Obligations.

 

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13.8 Attorneys’ Fees. If at any time or times hereafter Lender Party, employs counsel to
advise or provide other representation with respect to this Agreement, any Loan Document, or any
other agreement, document or instrument heretofore, now or hereafter executed by any
Borrower Party and delivered to Lender Party with respect to the Credit Agreement Obligations,
or to commence, defend or intervene, file a petition, complaint, answer, motion or other pleadings
or to take any other action in or with respect to any pending, threatened or anticipated suit or
proceeding relating to this Agreement, any Loan Document, or any other agreement, instrument or
document heretofore, now or hereafter executed by Borrower Party and delivered to Lender Party with
respect to the Credit Agreement Obligations, or to represent Lender Party in any litigation with
respect to the affairs of Borrower Party, or to enforce any rights of Lender Party or obligations
of Borrower Party or any other Person which may be obligated to Lender Party by virtue of this
Agreement, any Loan Document, or any other agreement, document or instrument heretofore, now or
hereafter delivered to Lender Party by or for the benefit of Borrower Party with respect to the
Credit Agreement Obligations, or to collect from Borrower Party any amounts owing hereunder, then
in any such event, all of the Attorneys’ Fees incurred by Lender Party arising from such services
and any expenses, costs and charges relating thereto shall constitute additional obligations of
Borrower payable on demand and, until so paid, shall be added to and become part of the Credit
Agreement Obligations.

13.9 Exclusiveness. This Agreement, the Notes, the Security Documents, and any other Loan
Documents made pursuant hereto are made for the sole protection of Borrower Parties, Lender
Parties, and Lender Parties’ successors and assigns, and no other Person shall have any right of
action hereunder.

13.10 WAIVER OF PUNITIVE DAMAGES. BORROWER AGREES THAT WITH RESPECT TO ANY CLAIM OF
BORROWER ARISING UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, IN NO EVENT SHALL BORROWER HAVE A
REMEDY OF, OR SHALL ANY LENDER PARTY BE LIABLE FOR, INDIRECT, SPECIAL, CONSEQUENTIAL, PUNITIVE OR
EXEMPLARY DAMAGES, AND BORROWER WAIVES ANY RIGHT OR CLAIM TO SUCH DAMAGES BORROWER MAY HAVE OR
WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH THE LOANS OR THE LOAN DOCUMENTS, WHETHER THE SAME
IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIAL PROCESS OR OTHERWISE.

13.11 Waiver and Release by Borrower. Borrower (A) waives protest of all commercial paper
at any time held by Lender Party on which Borrower is any way liable; (B) waives notice of
acceleration and of intention to accelerate; (C) waives notice and opportunity to be heard, after
acceleration, before exercise by Lender Party of the remedies of self-help, set-off, or of other
summary procedures permitted by any applicable Laws or by any agreement with Borrower, and except
where required hereby or by any applicable Laws which requirement cannot be waived, notice of any
other action taken by Lender Party; and (D) releases Lender Parties and their respective officers,
attorneys, agents and employees from all claims for loss or damage caused by any act or omission on
the part of any of them in connection with the Credit Agreement Obligations, the Loan Documents or
the Lender Party Swap Documents.

13.12 Limitation on Waiver of Notice, Etc. Notwithstanding any provision of this Agreement
to the contrary, to the extent that any applicable Law expressly limits any waiver of any right
contained herein or in any other Loan Document (including any waiver of any notice or other
demand), such waiver shall be ineffective to such extent.

 

91

 

13.13 Additional Costs. In the event that any applicable Law now or hereafter in effect and
whether or not presently applicable to Lender Party, or any interpretation or administration
thereof by any Governmental Authority charged with the interpretation or administration thereof, or
compliance by Lender Party with any guideline, request or directive of any such Governmental
Authority (whether or not having the force of law), shall (i) affect the basis of taxation of
payments to Lender Party of any amounts payable by Borrower under this Agreement (other than taxes
imposed on the overall net income of Lender Party), or (ii) impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits with or for the account
of, or credit extended by Lender Party, or (iii) impose any other condition with respect to this
Agreement, the Notes or the Loans, or (iv) affect the amount of capital required or expected to be
maintained by Lender Party, and the result of any of the foregoing is to increase the cost to
Lender Party of making, funding or maintaining the Loans or to reduce the amount of any amount
receivable by Lender Party thereon, then Borrower shall pay to Lender Party from time to time, upon
request by Lender Party, additional amounts sufficient to compensate Lender Party for such
increased cost or reduced amount receivable to the extent Lender Party is not compensated therefor
in the computation of the interest rate applicable to the Loans. A statement as to the amount of
such increased cost or reduced amount receivable, prepared in good faith and in reasonable detail
by Lender Party and submitted by Lender Party to Borrower, shall be conclusive and binding for all
purposes absent manifest error in computation.

13.14 Illegality and Impossibility. In the event that any applicable Law now or hereafter
in effect and whether or not presently applicable to Lender Party, or any interpretation or
administration thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance by Lender Party with any guideline, request or directive of
such Governmental Authority (whether or not having the force of law), including without limitation
exchange controls, shall make it unlawful or impossible for Lender Party to maintain any Loan under
this Agreement, Borrower shall upon receipt of reasonable notice thereof from Lender Party repay in
full the then outstanding principal amount of such Loan, together with all accrued interest thereon
to the date of payment and all amounts owing to Lender Party, (a) on the last day of the then
current interest period applicable to such Loan if Lender Party may lawfully continue to maintain
such Loan to such day, or (b) immediately if Lender Party may not continue to maintain such Loan to
such day.

13.15 Assignments and Participations.

(A) Each Lender may assign to one or more Eligible Assignees all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a portion of its
Commitment or Commitments, the Advances owing to it and the Note or Notes held by it);
provided, however, that (i) each such assignment shall be of a uniform, and not a
varying, percentage of all rights and obligations under this Agreement and the other Loan
Documents; (ii) except in the case of an assignment to a Person that, immediately prior to such
assignment, was a Lender or an assignment of all of a Lender’s rights and obligations under this
Agreement, the amount of the Commitment of the assigning Lender being assigned pursuant to each
such assignment (determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $1,000,000.00; (iii) each such assignment shall be to an
Eligible Assignee; (iv) the parties to each such assignment shall execute and deliver to Agent, for
its acceptance, an Assignment and Acceptance, together with any Note or Notes subject to
such assignment and a processing fee of $5,000.00; and (v) until the occurrence of a Default,
Borrowers shall approve the Eligible Assignee (such approval not to be unreasonably withheld or
delayed).

 

92

 

(B) Upon such execution, delivery, acceptance and recording, from and after the effective date
specified in such Assignment and Acceptance, (i) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder, and (ii) the
Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released
from its obligations under this Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).

(C) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder
and the assignee thereunder confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or any other Loan
Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any Lien created or purported to be created under or in
connection with, this Agreement or any other Loan Document or any other instrument or document
furnished pursuant hereto or thereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition of Borrower or any
other Lender Party or the performance or observance by any Lender Party of any of its obligations
under any Loan Document or any other instrument or document furnished pursuant thereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together with copies of the
Financial Statements and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under this Agreement;
(v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes Agent to take such action as agent on its behalf and to exercise such powers and
discretion under the Loan Documents as are delegated to Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations which by the terms of
this Agreement are required to be performed by it as a Lender.

(D) Agent shall maintain at its principal office a copy of each Assignment and Acceptance
delivered to and accepted by it and a record of the names and addresses of the Lender Parties and
the Commitment of, and principal amount of the Advances owing to, each Lender from time to time
(the “Register”). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and Borrower, Agent and Lender Parties may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes
of this Agreement. The Register shall be available for inspection by Borrower or Lender at
any reasonable time and from time to time upon reasonable prior notice.

 

93

 

(E) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an
assignee, together with any Note or Notes subject to such assignment, Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form as required by this
Agreement, (i) accept such Assignment and Acceptance, (ii) record the information contained therein
in the Register and (iii) give prompt notice thereof to Borrower and each Lender. In the case of
any assignment by Lender, within five Business Days after its receipt of such notice, Borrower, at
its own expense, shall execute and deliver to Agent in exchange for the surrendered Note or Notes a
new Note to the order of such Eligible Assignee in an amount equal to the Commitment assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a Commitment
hereunder, a new Note to the order of the assigning Lender in an amount equal to the Commitment
retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal
to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in substantially the form of the Note
or Notes so surrendered.

(F) Each Lender may sell participations to one or more Persons (other than any Lender Party or
any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the Advances owing to it and
the Note or Notes (if any) held by it); provided, however, that (i) such Lender’s
obligations under this Agreement (including, without limitation, its Commitments) shall remain
unchanged; (ii) such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations; (iii) such Lender shall remain the holder of any such Note for all
purposes of this Agreement; (iv) Borrower, Agent and the other Lender Parties shall continue to
deal solely and directly with such Lender in connection with such Lender’s rights and obligations
under this Agreement; (v) no participant under any such participation shall have any right to
approve any amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Lender Party therefrom, except to the extent that such amendment, waiver or
consent would reduce the principal of, or interest on, the Notes or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation, postpone any date
fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation, or release all or
substantially all of the Collateral; and (vi) until the occurrence of a Default, Borrowers shall
approve the participant (such approval not to be unreasonably withheld or delayed).

(G) Any Lender may, in connection with any assignment or participation or proposed assignment
or participation pursuant to this Section, disclose to the assignee or participant or proposed
assignee or participant, any information relating to Borrower furnished to such Lender by or on
behalf of any Borrower Party; provided, however, that, prior to any such
disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve
the confidentiality of any confidential information received by it from such Lender.

 

94

 

13.16 Binding Effect, Assignment. This Agreement shall inure to the benefit of, and shall
be binding upon, the respective successors and permitted assigns of the parties hereto.
Borrower has no right to assign any of its rights or obligations hereunder without the prior
written consent of the Lender Parties.

13.17 Entire Agreement, Amendments. This Agreement, including the Exhibits hereto, all of
which are hereby incorporated herein by reference, and the documents executed and delivered
pursuant hereto, constitute the entire agreement between the parties, and may be amended only by a
writing signed on behalf of each party.

13.18 Severability. If any provision of this Agreement, the Notes, or any of the other Loan
Documents shall be held invalid under any applicable Laws, such invalidity shall not affect any
other provision of this Agreement or such other instrument or agreement that can be given effect
without the invalid provision, and, to this end, the provisions hereof are severable.

13.19 Headings. The section and paragraph headings hereof are inserted for convenience of
reference only, and shall not alter, define, or be used in construing the text of such sections and
paragraphs.

13.20 Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together shall constitute but one and the
same instrument.

13.21 Seal. This Agreement is intended to take effect as an instrument under seal.

ARTICLE XIV

14. SUBMISSION TO JURISDICTION, GOVERNING LAW AND NOTICES

14.1 Notices. Any notices or consents required or permitted by this Agreement shall be in
writing and shall be deemed delivered if delivered in person or if sent by certified mail, postage
prepaid, return receipt requested, or by nationally recognized overnight courier (such as Federal
Express), as follows, unless such address is changed by written notice hereunder:

(A) If to Borrowers:

KMG Chemicals, Inc.

10611 Harwin Drive, Suite 402

Houston, Texas 77036-1534

Attention: Mr. John V. Sobchak

KMG-Bernuth, Inc.

10611 Harwin Drive, Suite 402

Houston, Texas 77036-1534

Attention: Mr. John V. Sobchak

KMG Electronic Chemicals, Inc.

10611 Harwin Drive, Suite 402

Houston, Texas 77036-1534

Attention: Mr. John V. Sobchak

 

95

 

with a copy to:

Joseph Vilardo, Esq.

Haynes and Boone, LLP

One Houston Center

1221 McKinney, Suite 2100

Houston, Texas 77010

(B) If to Wachovia (whether as a Lender, Agent or Collateral Agent):

Wachovia Bank, National Association

P.O. Box 2554

Birmingham, Alabama 35290

Mail Code: AL0028

with a copy to:

Ray D. Gibbons, Esq.

Burr & Forman LLP

420 North 20th Street

Suite 3400

Birmingham, Alabama 35203

(C) If to Lenders (other than Wachovia):

Bank of America, N.A.

700 Louisiana, 7th Floor

Houston, Texas 77002

Attention: Adam Rose

The Prudential Insurance Company of America

c/o Prudential Capital Group

2200 Ross Avenue, Suite 4200E

Dallas, Texas 75201

Attention: Brian N. Thomas

Pruco Life Insurance Company

c/o Prudential Capital Group

2200 Ross Avenue, Suite 4200E

Dallas, Texas 75201

Attention: Brian N. Thomas

and with a copy to Agent:

Wachovia Bank, National Association

P.O. Box 2554

Birmingham, Alabama 35290

Mail Code: AL0028

 

96

 

with a copy to:

Ray D. Gibbons, Esq.

Burr & Forman LLP

420 North 20th Street

Suite 3400

Birmingham, Alabama 35203

14.2 Governing Law. This Agreement is entered into and performable in Jefferson County,
Alabama, and the substantive Laws, without giving effect to principles of conflict of laws, of the
United States and the State of Alabama shall govern the construction of this Agreement and the
documents executed and delivered pursuant hereto, and the rights and remedies of the parties hereto
and thereto, except to the extent that the Uniform Commercial Code or other applicable Law requires
that the perfection, the effect of perfection or non-perfection, the priority of Collateral Agent’s
Lien, or the enforcement of certain of Collateral Agent’s remedies with respect to the Collateral,
be governed by the Laws of another Jurisdiction.

14.3 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL, ETC.

(A) BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY:

(1) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO
THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF ALABAMA, THE COURTS OF
THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ALABAMA, AND APPELLATE COURTS FROM
ANY THEREOF;

(2) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS, AND
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

(3) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY
MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS SET FORTH IN THIS AGREEMENT OR AT SUCH
OTHER ADDRESS OF WHICH AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; AND

(4) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

 

97

 

(B) EACH OF BORROWER AND LENDER PARTY HEREBY:

(1) IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING OR COUNTERCLAIM OF ANY TYPE AS TO ANY MATTER ARISING DIRECTLY OR INDIRECTLY
OUT OF OR WITH RESPECT TO THIS AGREEMENT, THE NOTES, ANY OF THE OTHER LOAN DOCUMENTS OR ANY
OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH; AND

(2) AGREES THAT ANY OF THEM MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY
TO WAIVE TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY OF ANY KIND WHATSOEVER BETWEEN
OR AMONG THEM SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING
WITHOUT A JURY.

* * * * *

 

98

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective duly authorized representatives as of the day and year first above written.

[SIGNATURE PAGES TO FOLLOW]

 

99

 

SIGNATURE PAGES — BORROWERS

	 	 	 	 	 	 	 	 	 
	 	 	KMG CHEMICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	KMG-BERNUTH, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	KMG ELECTRONIC CHEMICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

 

100

 

SIGNATURE PAGE — WACHOVIA

	 	 	 	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION,	 	 
	 	 	as Agent, Collateral Agent,	 	 
	 	 	Lender and Issuing Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Instructions for Wire Transfers to Agent:

Wachovia Bank, National Association

Charlotte, NC

ABA Number: 053 000 219

Account Number: 01459670001944

Account Name: Agency Svcs Synd Clearing

Payment Details: KMG Chemicals

 

101

 

SIGNATURE PAGE — BANK OF AMERICA

	 	 	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

 

102

 

SIGNATURE PAGE — THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

	 	 	 	 	 	 	 	 	 
	 	 	THE PRUDENTIAL INSURANCE

COMPANY OF AMERICA, as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

 

103

 

SIGNATURE PAGE — PRUCO LIFE INSURANCE COMPANY

	 	 	 	 	 	 	 	 	 
	 	 	PRUCO LIFE INSURANCE COMPANY,

as a Lender	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

 

104

 

EXHIBIT A

FORM OF ASSIGNMENT AND ACCEPTANCE

ASSIGNMENT AND ACCEPTANCE

Reference is made to that certain Amended and Restated Credit Agreement dated as of December
31, 2007 (as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among KMG Chemicals, Inc. (“KMG Chemicals”), KMG-Bernuth, Inc. (“KMG-Bernuth”), KMG
Electronic Chemicals, Inc. (“KMG ECI”) (KMG Chemicals, KMG-Bernuth and KMG ECI hereinafter referred
to as the “Borrowers”), Wachovia Bank, National Association, as Agent, and the other Lender
Parties as defined therein. Terms defined in the Credit Agreement are used herein with the same
meaning.

The “Assignor” and the “Assignee” referred to on Schedule 1 hereto agree as follows:

1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases
and assumes from the Assignor, an interest in and to the Assignor’s rights and obligations under
the Credit Agreement as of the date hereof equal to the percentage interest specified on Schedule 1
hereto of all outstanding rights and obligations under the Credit Agreement and the other Loan
Documents. After giving effect to such sale and assignment, the Assignee’s Commitments and the
amount of the Advances owing to the Assignee will be as set forth on Schedule 1 hereto.

2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear of any adverse
claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any lien or security interest created or purported to be created under or
in connection with, the Loan Documents or any other instrument or document furnished pursuant
thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Loan Party or the performance or observance by any Loan Party of
any of its obligations under any Loan Document or any other instrument or document furnished
pursuant thereto; and (iv) attaches the Note or Notes held by the Assignor and requests that Agent
exchange such Note or Notes for a new Note or Notes payable to the order of the Assignee in an
amount equal to the Commitments assumed by the Assignee pursuant hereto or new Notes payable to the
order of the Assignee in an amount equal to the Commitments assumed by the Assignee pursuant hereto
and the Assignor in an amount equal to the Commitments retained by the Assignor under the Credit
Agreement, respectively, as specified on Schedule 1 hereto.

 

105

 

3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together
with such financial information and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this Assignment and
Acceptance; (ii) agrees that it will, independently and without reliance upon Agent, the Assignor
or any other Lender Party and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in taking or not
taking action under the Credit Agreement; (iii) confirms that it is an Eligible Assignee;
(iv) appoints and authorizes Agent to take such action as agent on its behalf and to exercise such
powers and discretion under the Loan Documents as are delegated to Agent by the terms thereof,
together with such powers and discretion as are reasonably incidental thereto; and (v) agrees that
it will perform in accordance with their terms all of the obligations that by the terms of the
Credit Agreement are required to be performed by it as a Lender Party.

4. Following the execution of this Assignment and Acceptance, this document will be delivered
to Agent for acceptance and recording by Agent. The effective date for this Assignment and
Acceptance (the “Effective Date”) shall be the date of acceptance hereof by Agent, unless
otherwise specified on Schedule 1 hereto.

5. Upon such acceptance and recording by Agent, as of the Effective Date, (i) the Assignee
shall be a party to the Credit Agreement and the other Loan Documents and, to the extent provided
in this Assignment and Acceptance, have the rights and obligations of a Lender Party thereunder and
(ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Credit Agreement and the other Loan
Documents.

6. Upon such acceptance and recording by Agent, from and after the Effective Date, Agent shall
make all payments under the Credit Agreement and the Notes in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest and commitment fees with
respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments
in payments under the Credit Agreement and the Notes for periods prior to the Effective Date
directly between themselves.

7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the
laws of the State of Alabama.

8. This Assignment and Acceptance may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance by telecopier
shall be effective as delivery of a manually executed counterpart of this Assignment and
Acceptance.

 

106

 

IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this Assignment
and Acceptance to be executed by their officers thereunto duly authorized as of the date specified
thereon.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	[NAME OF ASSIGNOR], as Assignor	 	[NAME OF ASSIGNEE], as Assignee	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 

	 	 
	Dated: __________________, 20___	 	Dated: _________________, 20___	 	 

Accepted and Approved this
_____

day of _____, 20_____

[NAME OF AGENT]

	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Title:	 	 	 	 

Dated:  __________________, 20___

 

107

 

SCHEDULE 1

to

ASSIGNMENT AND ACCEPTANCE

	 	 	 	 	 
	A. Assignor’s Credit Percentage before assignment
	 	 	                    	%
	B. Assignor’s Credit Percentage being assigned
	 	 	                    	%
	C. Assignor’s Credit Percentage remaining after assignment
	 	 	                    	%
	 
	 	 	 	 
	Note: The sum of B and C must total A.
	 	 	 	 
	 
	 	 	 	 
	A. Aggregate outstanding Advances of Assignor before assignment
	 	$	                    	 
	B. Aggregate outstanding Advances of Assignor after assignment
	 	$	                    	 
	C. Aggregate outstanding Advances of Assignee after assignment
	 	$	                    	 
	 
	 	 	 	 
	A. Maximum principal amount of Revolving Note
payable to Assignor before assignment
	 	$	                    	 
	 
	 	 	 	 
	B. Maximum principal amount of Revolving Note
payable to Assignor after assignment
	 	$	                    	 
	 
	 	 	 	 
	C. Maximum principal amount of Revolving Note
payable to Assignee after assignment
	 	$	                    	 
	 
	 	 	 	 
	D. Maximum principal amount of Term Note
payable to Assignor before assignment
	 	$	                    	 
	 
	 	 	 	 
	E. Maximum principal amount of Term Note
payable to Assignor after assignment
	 	$	                    	 
	 
	 	 	 	 
	F. Maximum principal amount of Term Note
payable to Assignee after assignment
	 	$	                    	 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	[NAME OF ASSIGNOR], as Assignor	 	[NAME OF ASSIGNEE], as Assignee	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 

	 	 
	Dated:                                         , 20___	 	Dated:                                         , 20___	 	 

Accepted and Approved this _____ 

day of  _____, 20_____ 

[NAME OF AGENT]

	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	Dated:                                         , 20___	 	 

 

108

 

EXHIBIT B

FORM OF COLLATERAL REPORT

COLLATERAL REPORT

FOR THE PERIOD ENDING                                         

	 	 	 
	To:

	 	Wachovia Bank, National Association, as Agent
	 

	 	P.O. Box 2554
	 

	 	Birmingham, Alabama 35290
	 

	 	Attention: AL0029

Pursuant to that certain Amended and Restated Credit Agreement dated as of December 31, 2007
(as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”)
among KMG Chemicals, Inc. (“KMG Chemicals”), KMG-Bernuth, Inc. (“KMG-Bernuth”), KMG Electronic
Chemicals, Inc. (“KMG ECI”) (KMG Chemicals, KMG-Bernuth and KMG ECI hereinafter referred to as the
“Borrowers”), Wachovia Bank, National Association, as Agent, and the other Lender Parties as
defined therein, the undersigned Borrowers submit this Collateral Report and Borrowing Base
Certificate. As used herein, capitalized words and phrases shall have the meanings set forth in
the Credit Agreement.

	 	 	 	 	 
	I. Collateral
	 	 	 	 
	 
	 	 	 	 
	A. Accounts Receivable
	 	 	 	 
	 
	 	 	 	 
	1. Total Accounts at __________, 20___.
	 	$	                    	 
	 
	 	 	 	 
	2. Deduct Ineligible Accounts:
	 	 	 	 
	a. Accounts over 60 days past due
	 	$	                    	 
	b. Accounts with Affiliates
	 	$	                    	 
	c. Other ineligible Accounts
	 	$	                    	 
	TOTAL of 2a through 2c
	 	$	                    	 
	 
	 	 	 	 
	3. Eligible Accounts (A.1. minus A.2.)
	 	$	                    	 
	 
	 	 	 	 
	4. Accounts Eligibility - 80% of Item I.A.3
	 	$	                    	 
	 
	 	 	 	 
	B. Inventory
	 	 	 	 
	 
	 	 	 	 
	1. Inventory value (at lower of cost or market)
of Eligible Inventory at ________________, 20___.
	 	 	 	 
	a. Raw Materials
	 	$	                    	 
	b. Work in Process
	 	$	                    	 
	c. Finished Goods
	 	$	                    	 
	TOTAL of 1a through 1c
	 	$	                    	 
	 
	 	 	 	 
	2. Deduct Ineligible Inventory:
	 	 	 	 
	a. Inventory located in Mexico
	 	$	                    	 
	b. Other ineligible Inventory
	 	$	                    	 
	TOTAL of 2a through 2b
	 	$	                    	 

 

109

 

	 	 	 	 	 
	3. Eligible Inventory
(B.1. minus B.2.)
	 	$	                    	 
	 
	 	 	 	 
	4. Inventory Availability - 50% of Item I.B.3
(but not more than $18,000,000)
	 	$	                    	 
	 
	 	 	 	 
	II. Net Availability Calculations
	 	 	 	 
	 
	 	 	 	 
	A. Borrowing Base
	 	 	 	 
	 
	 	 	 	 
	1. Accounts Availability, Item I.A.4.
	 	$	                    	 
	 
	 	 	 	 
	2. Inventory Availability, Item I.B.4.
	 	$	                    	 
	 
	 	 	 	 
	3. Total Availability (total of
Item II.A.1., plus Item II.A.2.)
	 	$	                    	 
	 
	 	 	 	 
	B. Outstanding Advances
	 	 	 	 
	 
	 	 	 	 
	1. Outstanding Revolving Loan Advances
	 	$	                    	 
	 
	 	 	 	 
	2. Outstanding Swing Line Loan Advances
	 	$	                    	 
	 
	 	 	 	 
	3. Outstanding Letter of Credit Advances
	 	$	                    	 
	 
	 	 	 	 
	4. Available Amount of Letters of Credit
	 	$	                    	 
	 
	 	 	 	 
	5. Total Outstanding Advances (Item II.B.1, plus
Item II.B.2, plus Item II.B.3, plus Item II.B.4)
	 	$	                    	 
	 
	 	 	 	 
	C. Availability
	 	 	 	 
	 
	 	 	 	 
	1. The lesser of (a) Item II.A.3. minus Item II.B.5.
or (b) $35,000,000,000 minus Item II B.5.
(mandatory prepayment if less than $0;
availability if greater than $0)
	 	$	                    	 

The undersigned represents and warrants to Agent that all information set forth in this
Collateral Report and Borrowing Base Certificate is true, complete, and accurate.

Executed this
 _____ 
day of
 _____, 20_____.

	 	 	 	 	 	 	 	 	 
	 	 	KMG CHEMICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	KMG-BERNUTH, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	KMG ELECTRONIC CHEMICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

 

110

 

EXHIBIT C

FORM OF COMPLIANCE CERTIFICATE

COMPLIANCE CERTIFICATE

FOR THE PERIOD ENDING                                         

	 	 	 
	To:

	 	Wachovia Bank, National Association, as Agent
	 

	 	P.O. Box 2554
	 

	 	Birmingham, Alabama 35290
	 

	 	Attention: Corporate Banking Department

Pursuant to that certain Amended and Restated Credit Agreement dated as of December 31, 2007
(as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”)
among KMG Chemicals, Inc. (“KMG Chemicals”), KMG-Bernuth, Inc. (“KMG-Bernuth”), KMG Electronic
Chemicals, Inc. (“KMG ECI”) (KMG Chemicals, KMG-Bernuth and KMG ECI hereinafter referred to as the
“Borrowers”), Wachovia Bank, National Association, as Agent, and the other Lender Parties as
defined therein, the undersigned submits this Compliance Certificate and certifies that the
covenants and financial tests described in the Credit Agreement are as follows:

	 	 	 	 	 	 	 	 	 
	 	 	Compliance	 
	 	 	(Please Indicate)	 
	I. Financial Statements and Reports
	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	A. Annual CPA audited, Fiscal Year-End financial statements
within 120 days after each Fiscal Year-End
	 	Yes	 	No
	 
	 	 	 	 	 	 	 	 
	B. Quarterly unaudited financial statements
within 45 days after each Quarter-End
	 	Yes	 	No
	 
	 	 	 	 	 	 	 	 
	C. A Collateral Report within 45 days after each Quarter-End
	 	Yes	 	No
	 
	 	 	 	 	 	 	 	 
	II. Fixed Charge Coverage
	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	
A minimum of 1.25 to 1.0 required at each Quarter-End through 7/31/08.

A minimum of 1.5 to 1.0 required at each Quarter-End thereafter.

	 	 	 	 

	 	 	 	 	 
	Numerator:
	 	 	 	 
	EBIDA
	 	$	                    	 
	Plus: Lease and Rental Expense
	 	$	                    	 
	Less: Dividends
	 	$	                    	 
	TOTAL:
	 	$	                    	 
	 
	 	 	 	 
	Denominator:
	 	 	 	 
	Current Maturities of Long-Term Debt
	 	$	                    	 
	Plus: Interest Expense
	 	$	                    	 
	Plus: Lease and Rental Expense
	 	$	                    	 
	TOTAL:
	 	$	                    	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$

	 	 	 	divided by
	 	 	$	 	 	 	 	=
	 	 	 	Yes                 No      
	 

	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 

	 	Numerator
	 	 	 	 	 	 	 	Denominator
	 	 	 	Ratio	 	 

 

111

 

	 	 	 	 	 
	 	 	 	 	Compliance
	 	 	 	 	(Please Indicate)
	III. Ratio of Funded Debt to Capitalization
	 	 	 	 
	 	 	 	 	 
	A minimum of 60% required at each Quarter-End through 4/30/09.

A minimum of 50% required at each Quarter-End from 5/1/09 — 4/30/10.

A minimum of 45% required at each Quarter-End thereafter.
	 	 	 	 
	 	 	 	 	 
	Numerator:
	 	 	 	 
	Funded Debt
	 	$	                    	 
	 
	 	 	 	 
	Denominator:
	 	 	 	 
	Funded Debt
	 	$	                    	 
	Plus: Equity Owners’ Equity
	 	$	                    	 
	TOTAL:
	 	$	                    	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$

	 	 	 	divided by
	 	 	$	 	 	 	 	=
	 	 	%	Yes             No       
	 

	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 

	 	Numerator
	 	 	 	 	 	 	 	Denominator
	 	 	 	Ratio	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	IV. Funded Debt to EBITDA
	 	 	 	 
	 	 	 	 	 
	Maximum of 3.5 to 1.0 allowed through 10/31/08.

Maximum of 3.0 to 1.0 allowed thereafter.

	 	 	 	 
	 	 	 	 	 
	As of the period ending                                         

	 	 	 	 
	 	 	 	 	 
	$

	 	 	 	/$
	 	 	 	=
	 	 	 	 	 	Yes            No
	 

	 	 
	 	 	 	 
	 	 	 	 	 	 	 	 
	 

	 	Funded Debt
	 	 	 	EBITDA
	 	 	 	Ratio	 	 	 	 

A. The undersigned Borrowers represent and warrant to Agent that the undersigned have reviewed
the provisions of the Credit Agreement and that a review of the activities of Borrowers during the
period covered by this Compliance Certificate has been made by or under the supervision of the
undersigned with a view to determining whether Borrowers have kept, observed, performed and
fulfilled all of its obligations under the Credit Agreement.

B. Borrowers have observed and performed each and every undertaking contained in the Credit
Agreement, and no Default or Event of Default has occurred and is continuing.

C. Borrowers certify that all information set forth in this Compliance Certificate is true,
complete, and accurate.

Executed this
 _____ 
day of
 _____, 20
 _____.

	 	 	 	 	 	 	 	 	 
	 	 	KMG CHEMICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	KMG-BERNUTH, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	KMG ELECTRONIC CHEMICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

 

112

 

EXHIBIT D

LENDERS’ CREDIT PERCENTAGES

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Revolving Loan	 	 	Term Loan	 	 	 	 
	 	 	Commitment and	 	 	Commitment and	 	 	Total Loans and	 
	 	 	Revolving Loan	 	 	Term Loan Credit	 	 	Total Credit	 
	Lender	 	Credit Percentage	 	 	Percentage	 	 	Percentage	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Wachovia Bank, National Association
	 	$	20,000,000	 	 	$	20,000,000	 	 	$	40,000,000	 
	 
	 	 	57.14	%	 	 	57.14	%	 	 	57.14	%
	Bank of America, N.A.
	 	$	10,000,000	 	 	$	10,000,000	 	 	$	20,000,000	 
	 
	 	 	28.57	%	 	 	28.57	%	 	 	28.57	%
	The Prudential Insurance Company of America
	 	$	2,500,000	 	 	$	2,500,000	 	 	$	5,000,000	 
	 
	 	 	7.145	%	 	 	7.145	%	 	 	7.145	%
	Pruco Life Insurance Company
	 	$	2,500,000	 	 	$	2,500,000	 	 	$	5,000,000	 
	 
	 	 	7.145	%	 	 	7.145	%	 	 	7.145	%
	Total
	 	$	35,000,000	 	 	$	35,000,000	 	 	$	70,000,000	 
	 
	 	 	100	%	 	 	100	%	 	 	100	%

 

113

 

EXHIBIT E

FORM OF NOTICE OF BORROWING

                    , 20___

Wachovia Bank, National Association, as Agent

P.O. Box 2554

Birmingham, Alabama 35290

Mail Code: AL0029

Ladies and Gentlemen:

The undersigned refers to that certain Amended and Restated Credit Agreement dated as of
December 31, 2007 (as amended, supplemented or otherwise modified from time to time, the
“Credit Agreement”) among KMG Chemicals, Inc. (“KMG Chemicals”), KMG-Bernuth, Inc.
(“KMG-Bernuth”), KMG Electronic Chemicals, Inc. (“KMG ECI”) (KMG Chemicals, KMG-Bernuth and KMG ECI
hereinafter referred to as the “Borrowers”), Wachovia Bank, National Association, as Agent, and the
other Lender Parties as defined therein, and hereby gives you notice, irrevocably, pursuant to the
Credit Agreement, that the undersigned requests a Revolving Loan Borrowing under the Credit
Agreement, and in that connection sets forth below the information relating to such Revolving Loan
Borrowing (the “Proposed Borrowing”) as required by the Credit Agreement:

1. The Business Day of the Proposed Borrowing is _________ __, 20__.1

2. Check one, and circle options as applicable:

	 	 	 
	o

	 	The amount of the Proposed Borrowing is $_____, which shall bear
interest at the Adjusted LIBOR Market Index Rate.

	 
	 	 
	o

	 	The amount of the Proposed Borrowing is $_____, which shall bear
interest at the Adjusted ABR Rate.

	 
	 	 
	o

	 	The amount of the Proposed Borrowing is
$_____2,
which shall bear interest at the Adjusted LIBOR Rate for a LIBOR Rate
Interest Period of [one month / two months / three months].

 

	 	 	 
	1	 	Not less than (i) 3 Business Days prior to the date
such Proposed Borrowing is sought if the Proposed Borrowing is to bear interest
at the Adjusted LIBOR Rate, and (ii) 1 Business Day prior to the date such
Proposed Borrowing is sought if the Proposed Borrowing is to bear interest at
the Adjusted ABR Rate.

	 
	2	 	In an amount of $100,000.00 or an integral multiple of
$50,000.00 in excess thereof.

 

114

 

The undersigned hereby certifies that the following statements are true on the date hereof,
and will be true on the date of the Proposed Borrowing:

1. The representations and warranties contained in each Loan Document are correct as of the date
hereof and after giving effect to the Proposed Borrowing and to the application of the proceeds
therefrom, as though made on the date hereof; and

2. No event has occurred and is continuing, or would result from such Proposed Borrowing or from
the application of the proceeds therefrom, that constitutes a Default.

	 	 	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	KMG CHEMICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	KMG-BERNUTH, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	KMG ELECTRONIC CHEMICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

 

115

 

EXHIBIT F

FORM OF NOTICE OF CONVERSION/CONTINUATION

NOTICE OF CONVERSION/CONTINUATION

                                        , 20____

Wachovia Bank, National Association, as Agent

P.O. Box 2554

Birmingham, Alabama 35290

Mail Code: AL0029

Ladies and Gentlemen:

The undersigned refers to that certain Amended and Restated Credit Agreement dated as of
December 31, 2007 (as amended, supplemented or otherwise modified from time to time, the
“Credit Agreement”) among KMG Chemicals, Inc. (“KMG Chemicals”), KMG-Bernuth, Inc.
(“KMG-Bernuth”), KMG Electronic Chemicals, Inc. (“KMG ECI”) (KMG Chemicals, KMG-Bernuth and KMG ECI
hereinafter referred to as the “Borrowers”), Wachovia Bank, National Association, as Agent, and the
other Lender Parties as defined therein, and hereby gives you notice, irrevocably, pursuant to the
Credit Agreement, that the undersigned requests the conversion of amounts bearing interest at the
Adjusted LIBOR Market Index Rate to ABR Borrowings or LIBOR Rate Borrowings, or the continuation of
existing LIBOR Rate Borrowings, and in that connection sets forth below the information relating to
such conversion or continuation (the “Conversion/Continuation”) as required by the Credit
Agreement:

1.
The Business Day of the Conversion/Continuation is ____ _____, 20_____.3

2. This Notice of Conversion/Continuation relates to the (circle one) Revolving Loan / Term
Loan.

 

	 	 	 
	3	 	Not less than 3 Business Days prior to the date such
Conversion/Continuation is sought.

 

116

 

3. Check one, and circle options as applicable:

	 	 	 
	o

	 	The aggregate amount of the Conversion/Continuation is
$_______4, which is a conversion of a LIBOR Market
Index Rate Borrowing to a LIBOR Rate Borrowing, and which as so
converted shall bear interest at the Adjusted LIBOR Rate for a
LIBOR Rate Interest Period of [one month / two months / three
months].

	 
	 	 
	o

	 	The aggregate amount of the Conversion/Continuation is
$______, which is a conversion of a LIBOR Market Index Rate
Borrowing to an ABR Rate Borrowing, and which as so converted
shall bear interest at the Adjusted ABR Rate.

	 
	 	 
	o

	 	The aggregate amount of the Conversion/Continuation is
$_______5, which is a conversion of an ABR Rate
Borrowing to a LIBOR Rate Borrowing, and which as so converted
shall bear interest at the Adjusted LIBOR Rate for a LIBOR Rate
Interest Period of [one month / two months / three months].

	 
	 	 
	o

	 	The aggregate amount of the Conversion/Continuation is
$_______, which is a conversion of an ABR Rate Borrowing to a
LIBOR Market Index Rate Borrowing, and which as so converted
shall bear interest at the Adjusted LIBOR Market Index Rate.

	 
	 	 
	o

	 	The aggregate amount of the Conversion/Continuation is
$_______6, which is a continuation of an existing
LIBOR Rate Borrowing with a LIBOR Rate Interest Period expiring
on the Business Day next preceding the Business Day set forth in
Item 1 above, and which shall continue to bear interest at the
Adjusted LIBOR Rate for a LIBOR Rate Interest Period of [one
month / two months / three months].

 

	 	 	 
	4	 	In an amount of $200,000.00 or an integral multiple of
$100,000.00 in excess thereof.

	 
	5	 	In an amount of $200,000.00 or an integral multiple of
$100,000.00 in excess thereof.

	 
	6	 	In an amount of $200,000.00 or an integral multiple of
$100,000.00 in excess thereof.

 

117

 

The undersigned hereby certifies that the following statements are true on the date hereof,
and will be true on the date of the Conversion/Continuation:

1. The representations and warranties contained in each Loan Document are correct as of the
date hereof and after giving effect to the Conversion/Continuation, as though made on the date
hereof; and

2. No event has occurred and is continuing, or would result from such Conversion/Continuation,
that constitutes a Default.

	 	 	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	KMG CHEMICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	KMG-BERNUTH, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	KMG ELECTRONIC CHEMICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

 

118

 

EXHIBIT G

FORM OF NOTICE OF FUNDING

NOTICE OF FUNDING

                                        , 20___

Wachovia Bank, National Association

P.O. Box 2554

Birmingham, Alabama 35290

Mail Code: AL0029

Bank of America, N.A.

700 Louisiana, 7th Floor

Houston, Texas 77002

Attention: Adam Rose

The Prudential Insurance Company of America

c/o Prudential Capital Group

2200 Ross Avenue, Suite 4200E

Dallas, Texas 75201

Attention: Brian N. Thomas

Pruco Life Insurance Company

c/o Prudential Capital Group

2200 Ross Avenue, Suite 4200E

Dallas, Texas 75201

Attention: Brian N. Thomas

Gentlemen:

Please consider this letter as a Notice of Funding under the Revolving Loan as provided in
that certain Amended and Restated Credit Agreement dated as of December 31, 2007 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”, capitalized terms
used herein as therein defined), among us, you, and KMG Chemicals, Inc. (“KMG Chemicals”),
KMG-Bernuth, Inc. (“KMG-Bernuth”), KMG Electronic Chemicals, Inc. (“KMG ECI”) (KMG Chemicals,
KMG-Bernuth and KMG ECI hereinafter referred to as the “Borrowers”). Attached hereto is a Notice
of Borrowing requesting a Revolving Loan Borrowing of $_____ on _____, 20_____.
Your Pro-Rata Share of the Revolving Loan Borrowing is as follows:

	 	 	 	 	 
	Wachovia Bank, National Association
	 	$	                    	 
	 
	 	 	 	 
	Bank of America, N.A.
	 	$	                    	 
	 
	 	 	 	 
	The Prudential Insurance Company of America
	 	$	                    	 
	 
	 	 	 	 
	Pruco Life Insurance Company
	 	$	                    	 

	 	 	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	WACHOVIA BANK,	 	 
	 	 	NATIONAL ASSOCIATION, as Agent	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

 

119

 

EXHIBIT H

PERMITTED LIENS

None

 

120

 

SCHEDULE 7.2(F)

LITIGATION

None

 

121

 

SCHEDULE 9.3 

LIST OF EQUITY OWNERS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Members of	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Borrower	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Consolidated	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Percentage	 
	Group (Excluding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	of	 
	KMG Chemicals,	 	 	 	 	 	Type of	 	 	Certificate	 	 	Number	 	 	Ownership	 
	Inc.)	 	Name of Owner	 	Security	 	Number	 	 	of Shares	 	 	Interest	 
	KMG-Bernuth, Inc.
	 	KMG Chemicals, Inc.	 	Common Stock	 	 	N/A	 	 	 	12,820	 	 	 	100	%
	KMG Electronic
Chemicals, Inc.
	 	KMG Chemicals, Inc.	 	Common Stock	 	 	 	 	 	 	100	 	 	 	100	%
	KMG Italia S.r.l.
	 	KMG Chemicals, Inc.	 	 	 	 	 	Not certificated	 	 	 	 	 	 	 	5	%
	KMG de Mexico S.A.
de C.V.
	 	KMG-Bernuth, Inc.	 	Common Stock	 	 	7-B	 	 	 	5,967,760	 	 	 	99.98	%
	 
	 	 	 	 	 	 	 	 	 	 	10-B	 	 	 	20,000,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	11-B	 	 	 	17,120	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	1-A	 	 	 	960	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	1-B	 	 	 	95,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	3-A	 	 	 	20	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	3-B	 	 	 	2,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	5-A	 	 	 	10	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	5-B	 	 	 	1,000,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	6-B	 	 	 	7,000,000	 	 	 	 	 
	KMG Italia S.r.l.
	 	KMG Electronic	 	 	 	 	 	Not certificated	 	 	 	 	 	 	 	95	%
	 
	 	Chemicals, Inc.	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

122

 

SCHEDULE 9.4

LIST OF NAMES USED BY BORROWERS AND PERSONS

ACQUIRED IN LAST SIX YEARS

	1.	 	KMG Chemicals, Inc. (Section 9.4(i))

	2.	 	KMG-Bernuth, Inc. (Section 9.4(i))

	3.	 	Persons from whom assets were acquired in the last six years: Wood Protection Products,
Inc., Boehringer Ingelheim Vetmedica, Inc., Trenton Sales, Inc., Basic Chemicals Company, LLC,
Air Products and Chemicals, Inc., and Air Products Italia, S.r.l. (Section 9.4(ii))

 

123

 

SCHEDULE 9.5 

MATERIAL CONTRACTS

The following contracts between KMG-Bernuth, Inc. and the indicated parties:

	1.	 	Supply Agreement dated May 8, 2007 with Koppers, Inc.

	 
	2.	 	Creosote Oil Supply Contract with VFT Belgium NV (formerly Rutgers VFT)

	 
	3.	 	Maquila contract (Operating Contract) with KMG de Mexico SA de CV

	 
	4.	 	Employee/payroll contract with ASI V, Ltd. (Advantec) and/or with ADP

The following contracts between KMG Chemicals, Inc. and/or KMG Electronic Chemicals, Inc. and the
indicated parties

	5.	 	Asset Purchase Agreement with Air Products and Chemicals, Inc.

	 
	6.	 	Transition Services Agreement with Air Products and Chemicals, Inc.

	 
	7.	 	Additional Material Contracts entered into or assumed in connection with the consummation of
the transaction contemplated by the Asset Purchase Agreement with Air Products and Chemicals,
Inc., will be specifically identified post-closing (see Schedule 10.20)

 

124

 

SCHEDULE 9.8 

AFFILIATES

KMG de Mexico, S.A. de C.V.

KMG Italia, S.r.l.

 

125

 

SCHEDULE 9.14

LISTING OF REAL PROPERTY

	 	 	 
	Owned by KMG-Bernuth, Inc.:	 	Leased with KMG Bernuth:
	KMG-Bernuth, Inc.

2910 3rd Street 

Tuscaloosa, Alabama 35401
Tuscaloosa County

	 	KMG Chemicals, Inc. and KMG-Bernuth, Inc. (Leased office space)

10611 Harwin Drive, Suite 402

Houston, Texas 77036

Harris County
	 
	 	 
	KMG-Bernuth, Inc. 

15th and Oak Street 

Elwood, Kansas 66024

Doniphan County

	 	Gulf Facilities (Third Party Warehouse)

Port of Brownsville

Donald L Fouest Mineral Loop

Brownsville, Texas 78521

Cameron County
	 
	 	 
	 

	 	Angelo Interlogistics (Third Party Warehouse)

427 Couch Road

Olmito, Texas 78575

Cameron County
	 
	 	 
	 

	 	
IMTT (Third Party Tank storage facility)

5450 River Road

Avondale, Louisiana 70094

Jefferson County
	 
	 	 
	 

	 	Pony Express (Third Party Warehouse)

1312 S 4th Street

St. Joseph, Missouri 64501

Buchanan County
	 
	 	 
	 

	 	Brown Warehouse (Third Party Warehouse)

5501 Corporate Drive

St. Joseph, Missouri 64507

Buchanan County

 

126

 

SCHEDULE 9.14

LISTING OF REAL PROPERTY (continued)

	 	 	 
	 	 	Third Party Warehouse Locations for the HPPC
	Owned by KMG Electronic Chemicals, Inc.:	 	business of KMG Electronic Chemicals, Inc.:
	KMG Electronic Chemicals, Inc.
250 William White Blvd
Pueblo, CO 81001

	 	Almeda Chemical

7071 W. Frye Road Chandler, AZ 85226
	 
	 	 
	 

	 	Almeda Chemical

1161 Avenida Acasco Camarillo, CA 93012
	 
	 	 
	 

	 	Almeda Chemical

860 81st Avenue Oakland, CA 94621
	 
	 	 
	 

	 	Almeda Chemical

3835 Wabash Street Colorado Springs, CO 80906
	 
	 	 
	 

	 	Almeda Chemical

1336 N. 20th Street Nampa, ID 83687
	 
	 	 
	 

	 	Doe & Ingals

25 Commercial Street Medford, MA
	 
	 	 
	 

	 	Doe & Ingals

5401 Lewis Avenue Sandston, VA 23150
	 
	 	 
	 

	 	Hisco

8330 Cross Park Drive Austin, TX 78754
	 
	 	 
	 

	 	Hubbard Hall

100 Progress Way Wilmington, MA 01887
	 
	 	 
	 

	 	Jacobson Warehouse

4701 W. Jefferson Street Phoenix, AZ 85043
	 
	 	 
	 

	 	L.A. Chemical

6750 W. Boston Street Chandler, AZ 85226
	 
	 	 
	 

	 	Rinchem Company

6838 W. Frye Road Chandler, AZ 85226
	 
	 	 
	 

	 	Rinchem Company

2150 Executive Circle Colorado Springs, CO 80900
	 
	 	 
	 

	 	Rinchem Company/Monsanto

465 Lancaster Road Leominster, MA 01453
	 
	 	 
	 

	 	Rinchem Company

917 Lone Oak Road, Suite 100 Eagan, MN 55379
	 
	 	 
	 

	 	Rinchem Company

6133 Edith Blvd NE Albuquerque, NM 87107
	 
	 	 
	 

	 	Rinchem Company

4605 NW 235th Hillsboro, OR 97124
	 
	 	 
	 

	 	Rinchem Company

4143 Singleton Avenue Dallas, TX 75210
	 
	 	 
	 

	 	Rinchem Company

13570 Rosecrans Avenue Santa Fe Springs, CA 90670
	 
	 	 
	 

	 	Air Products

8201 S. Central Expressway

Dallas TX 75241-7819
	 
	 	 
	 

	 	Air Products

400 Island Park Rd

Easton PA 18042-6814

 

127

 

SCHEDULE 9.18

INTELLECTUAL PROPERTY

None

 

128

 

SCHEDULE 9.20

ENVIRONMENTAL MATTERS

None

 

129

 

SCHEDULE 10.3(E)

LISTING OF AGREEMENTS CURRENTLY IN EFFECT

WITH AFFILIATES AND PERMITTED POST-CLOSING

None

 

130

 

SCHEDULE 10.5(A)

BUSINESS LOCATIONS; LOCATION OF RECORDS

Chief Executive Office:

KMG Chemicals, Inc.

10611 Harwin Drive, Suite 402

Houston, Texas 77036

Harris County

Other locations of Inventory, Equipment and other Tangible Property as set forth on Schedule
9.14.

 

131

 

SCHEDULE 10.20

POST-CLOSING MATTERS

1. Additional Material Contracts entered into or assumed in connection with the consummation of
the transaction contemplated by the Asset Purchase Agreement with Air Products and Chemicals, Inc.,
will be identified to the extent they constitute Material Contracts on or before 75 days (March 16,
2008) of the date hereof (except as extended in Collateral Agent’s discretion).

2. Opinion letters acceptable to Required Lenders from counsel for KMEX and KMG Italia as to due
organization and no Lender Party being subject to foreign jurisdiction laws on account of making
the Loans and entering into Loan Documents — to be delivered no later than January 31, 2008 (except
as extended in Collateral Agent’s discretion).

 

132

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