Document:

<Page>

                              EMPLOYMENT AGREEMENT

         AGREEMENT, dated effective as of June 26, 2001 ("Effective Date"),
between KMG CHEMICALS, INC., a Texas corporation (the "Company"), with an office
at 10611 Harwin, Suite 402, Houston, Texas 77036 and JOHN V. SOBCHAK
("Executive"), with an address at 4032 Villanova, Houston, Texas 77005.

                              W I T N E S S E T H :

         WHEREAS, the Company wishes to employ the Executive to perform
executive duties for the Company and its subsidiaries, and the Executive wishes
to accept such employment, all on the terms and conditions set forth below;

         NOW, THEREFORE, in consideration of the mutual obligations herein set
forth, the parties agree as follows:

         1. EMPLOYMENT. The Company hereby employs the Executive under this
Agreement as of the Effective Date to serve as Chief Financial Officer of the
Company and its subsidiary, KMG-Bernuth, Inc., and the Executive hereby accepts
such employment, on the terms and conditions set forth in this Agreement.

         2. TERM OF EMPLOYMENT. The term of employment under this Agreement
shall be for the period commencing on July 16, 2001 and ending July 31, 2002,
subject to earlier termination as provided herein. The term of employment under
this Agreement shall be automatically extended for an additional one (1) year
period at the end of the initial term of employment and at the end of any
renewal term of employment unless the Company gives notice at least sixty (60)
days prior to the end of the employment period that the Executive's employment
under this Agreement shall not be so extended.

         3. DUTIES.

                  (a) The Executive shall continue to perform such duties of an
executive nature for the Company and its subsidiaries as may be assigned to him
from time to time by the President of the Company and that are customarily
performed by an executive holding positions similar to that of the Executive.
The Executive shall serve the Company and its subsidiaries faithfully and to the
best of his ability and shall devote his full business time and attention to the
affairs of the Company and its subsidiaries, subject to reasonable absences for
vacation and illness in accordance with then current Company policy. The
Executive shall be subject at all times to the direction and control of the
President. The Executive shall give the President periodic reports on and keep
him informed on a current basis concerning the business affairs of the Company
and its subsidiaries.

<Page>

            (b) The headquarters for the performance of the Executive's duties
during the term of this Agreement shall be the principal executive offices of
the Company in Houston, Texas, subject to such reasonable travel as the
performance of the Executive's duties in the business of the Company or its
subsidiaries may require.

            (c) During the term of this Agreement the Executive shall, if
elected, serve as a member of the Board of Directors and/or Executive Committee
of the Company or its subsidiaries and such other committees to which the
Executive may be appointed.

         4. COMPENSATION.

            (a) As compensation for all of the duties to be performed by the
Executive hereunder, the Company shall pay the Executive:

                (i) A base salary, payable in accordance with the Company's
normal payroll practices, at a rate per annum equal to $130,000 ("Base Salary"),
or such greater amount as shall be approved by the Company in its sole
discretion from time to time;

                (ii) a one-time bonus of $10,000 payable within 30 days after
the beginning of the Executive's term of employment and incentive compensation
pursuant to an incentive compensation plan for Company executives ("Executive
Incentive Plan") as such plan shall be in effect from time to time;

                (iii) two (2) options to purchase 25,000 shares of the common
stock of the Company (50,000 shares in total)(collectively, the "Stock
Options"), subject to vesting and the other terms and conditions set forth in
such Stock Options.

            (b) The Company shall have the unrestricted right to modify, amend,
terminate or change the Executive Incentive Plan at any time during the term of
this Agreement, provided, that the during the term of employment the Company
shall provide the Executive with the opportunity to receive an award of
incentive compensation targeted at fifty percent (50%) of Base Salary when
performance goals established by the Company are met; provided, further, that
the actual award will vary in the sole discretion of the Company above and below
the targeted percentage of Base Salary as achievement of the performance goals
varies above and below the goals and the maximum award payable will be
seventy-five percent (75%) of Base Salary in any given fiscal year. The
Executive acknowledges and agrees that the exercise price, vesting, and all
other terms and conditions of the Stock Options to be granted under paragraph
4(a)(iii)(B) shall be established by the Company in its sole discretion at the
time of grant.

                                       2
<Page>

         5. EXPENSES. The Company shall reimburse the Executive for any
out-of-pocket expenses reasonably incurred by the Executive in the performance
of his duties to the Company upon receipt of appropriate vouchers therefor, in
accordance with the Company's current practices as such practices may be changed
from time to time by the Company.

         6. BENEFITS. The Executive shall be entitled to one week paid vacation
in calendar 2001 and four weeks paid vacation in subsequent calendar years
during the term of his employment. The Executive shall be entitled to
participate in all Company group health (including family major medical plans),
life insurance, pension, profit-sharing, stock purchase or stock option plan,
annuity or other benefit programs that may, from time to time, be available to
employees of the Company generally, subject to eligibility, vesting requirements
and other terms and conditions from time to time in effect in respect of such
benefit programs; provided, however, that nothing herein shall require the
Company at any time to create or continue any such plan, program or arrangement.

         7. COPYRIGHT, PATENTS, TRADEMARKS.

            (a) All right, title and interest, of every kind whatsoever, in the
United States and throughout the world, in (i) any work, including the copyright
thereof (for the full terms and extensions thereof in every jurisdiction),
created by the Executive at any time during the term hereof and all material
embodiments of the work subject to such rights; and (ii) all inventions, ideas,
discoveries, designs and improvements, patentable or not, made or conceived by
the Executive at any time during the term of his employment under this
Agreement, shall be and remain the sole property of the Company without the
payment to the Executive or any other person of any further consideration, and
each such work shall, for United States copyright law ("Copyright Law")
purposes, be deemed created by the Executive pursuant to his duties under this
Agreement and within the scope of his employment and shall be deemed a work made
for hire; and the Executive agrees to assign, at the Company's expense, and the
Executive does hereby assign, all of his right, title and interest in and to all
such works, copyrights, materials, inventions, ideas, discoveries, designs and
improvements, patentable or not, and any copyrights, letters patent, trademarks,
trade secrets, and similar rights, and the applications therefor, which may
exist or be issued with respect thereto. For the purposes of this paragraph 7,
"works" shall include all materials created during the term hereof, whether or
not ever used by or submitted to the Company, including, without limitation, any
work which may be the subject matter of copyright under the Copyright Law of the
United States. In addition to its other rights, the Company may copyright any
such work in its name in the United States in accordance with the requirements
of the United States Copyright Law and the

                                       3
<Page>

Universal Copyright Convention and any other Convention or treaty to which the
United States is or may become a party.

            (b) Whenever the Company shall so request, whether during or after
the term of this Agreement, the Executive shall execute, acknowledge and deliver
all applications, assignments or other instruments; make or cause to be made all
rightful oaths; testify in all legal proceedings; communicate all known facts
which relate to such works, copyrights, inventions, ideas, discoveries, designs
and improvements; perform all lawful acts and otherwise render all such
assistance as the Company may deem necessary to apply for, obtain, register,
enforce and maintain any copyrights, letters patent and trademark registrations
of the United States or any foreign jurisdiction or under the Universal
Copyright Convention (or any other convention or treaty to which the United
States is or may become a party), or otherwise to protect the Company's
interests therein, including any which the Company shall deem necessary in
connection with any proceeding or litigation involving the same. The Company
shall reimburse the Executive for all reasonable out-of-pocket costs incurred by
the Executive in testifying at the Company's request or in rendering any other
assistance requested by the Company pursuant to this subparagraph 7(b). All
registration and filing fees and similar expense shall be paid by the Company.

         8. CONFIDENTIAL INFORMATION; NON-COMPETITION.

            (a) Company and its affiliates shall disclose to Executive, or place
Executive in a position to have access to or develop, trade secrets or
confidential information of Company or its affiliates; and/or shall entrust
Executive with business opportunities of Company or its affiliates; and/or shall
place Executive in a position to develop business good will on behalf of Company
or its affiliates. Executive recognizes and acknowledges that Executive will
have access to certain information of Company and its affiliates and that such
information is confidential and constitutes valuable, special and unique
property of Company or its affiliates . Executive shall not at any time, either
during or subsequent to the term of employment with Company, disclose to others,
use, copy or permit to be copied, except in pursuance of Executive's duties for
and on behalf of Company and its affiliates, successors, assigns or nominees,
any Confidential Information of Company or its affiliates (regardless of whether
developed by Executive) without the prior written consent of Company. The
Executive may make disclosure of Confidential Information if, and solely to the
extent that, the Executive is advised in writing by legal counsel prior to
disclosure that such disclosure is required by law or court order and a copy of
such advice is provided to the Company. The term "Confidential Information"
means any secret or confidential information or know-how and shall include, but
shall not be limited to, the plans, customers, costs, prices, uses, corporate
opportunities, research, financial data, evaluations, prospects, and
applications of products and services, results of

                                       4
<Page>

investigations or studies owned or used by Company or its affiliates, and all
apparatus, products, processes, compositions, samples, formulas, computer
programs, computer hardware designs, computer firmware designs, and servicing,
marketing or manufacturing methods and techniques at any time used, developed,
investigated, made or sold by Company or its affiliates, before or during the
term of employment with Company, that are not generally available to the public
or that are maintained as confidential by Company or its affiliates. Executive
shall maintain in confidence any Confidential Information of third parties
received as a result of Executive's employment with Company in accordance with
Company's obligations to such third parties and the policies established by
Company. Executive acknowledges that all books, records, documents, manuals,
computer data, notes, files, customer lists, marketing studies and any other
similar or dissimilar information or data, whether or not containing
Confidential Information, that are used by the Executive or other employees or
affiliates of the Company during Executive's term of employment are the
exclusive property of the Company or its affiliates and shall be delivered by
Executive to Company on termination of Executive's term of employment for
whatever reason, or at any earlier time requested by Company.

            (b) As part of the consideration for the compensation and benefits
to be paid to Executive hereunder; to protect the Confidential Information of
Company and its affiliates that has been and will in the future be disclosed or
entrusted to Executive, the business goodwill of Company and its affiliates that
has been and will in the future been developed in Executive, or the business
opportunities that have been and will in the future be disclosed or entrusted to
Executive by Company and its affiliates; and as an additional incentive for
Company to enter into this Agreement, Company and Executive agree to the
non-competition obligations hereunder. During the term of employment under this
Agreement and for a period of one year thereafter, the Executive shall not,
without the Company's prior written consent, directly or indirectly engage or be
interested in any business which is then competitive to the business of the
Company or the business of any of its subsidiaries in the United States or
Canada. For the purpose of this paragraph, the Executive will be considered to
have been directly or indirectly engaged or interested in a business if the
Executive is engaged or interested in such business as a stockholder, director,
officer, employee, agent, broker, partner, individual proprietor, lender,
consultant, licensor, independent contractor or otherwise, except that nothing
herein will prevent the Executive from owning or participating as a member of a
group which owns less than a five percent (5%) block of equity or debt
securities of any company traded on a national securities exchange or in any
established over-the-counter securities market. For the purpose of this
paragraph, the term "any business then competitive" to the business of the
Company or its subsidiaries shall mean any business that manufactures, sells or
distributes chemicals that were manufactured, sold or distributed by the Company
or any of its affiliates during the one year immediately preceding the
termination of the

                                       5
<Page>

Executive's term of employment under this Agreement, the Executive provided
substantial executive services.

            (c) In the event the Executive shall breach any provisions of this
paragraph 8 (which provisions the Executive hereby acknowledges are reasonable
and equitable), the Company shall be entitled to terminate any payments then
owing to the Executive under this Agreement and/or to seek specific performance
and injunctive relief for such breach or threatened breach. This termination of
payments shall be in addition to and not in substitution for any and all other
rights of the Company at law or in equity against the Executive arising out of
any such breach. The Executive acknowledges that his breach or attempted or
threatened breach of any provisions of this paragraph 8 would cause irreparable
injury to the Company not compensable in money damages and that the Company
shall be entitled, in addition to all other applicable remedies, to obtain a
temporary and a permanent injunction and a decree for specific performance of
paragraph 8 without being required to prove damages or furnish any bond or other
security.

            (d) Executive understands that the restrictions set forth in this
paragraph 8 may limit Executive's ability to engage in certain businesses
anywhere in the world during the period provided for above, but acknowledges
that Executive will receive sufficiently high remuneration and other benefits
under this Agreement to justify such restriction. It is expressly understood and
agreed that Company and Executive consider the restrictions contained in this
paragraph 8 to be reasonable and necessary to protect the Confidential
Information of Company. Nevertheless, if any of the aforesaid restrictions are
found by a court having jurisdiction to be unreasonable, or overly broad as to
geographic area or time, or otherwise unenforceable, the parties intend for the
restrictions therein set forth to be modified by such court so as to be
reasonable and enforceable and, as so modified by the court, to be fully
enforced.

         9. TERMINATION. The Executive's employment under this Agreement shall
terminate under the following circumstances:

            (a) DEATH OR DISABILITY. The Executive's employment shall terminate
upon the death or Disability of Executive. For purposes of this Agreement,
"Disability" shall be the inability to perform executive-level services,
combined with eligibility to receive disability benefits under the standards
used by the Company's long-term disability benefit plan. In the event Executive
is a "Qualified Individual with a Disability," as such term is defined in the
Americans with Disabilities Act, the Company shall not terminate Executive's
employment hereunder if Executive is able to perform the essential functions of
Executive's job with reasonable accommodation from the Company.

                                       6
<Page>

            (b) WITH "CAUSE". For purposes of this Agreement, the Company shall
have "Cause" to terminate Executive's employment hereunder upon the occurrence
of any of the following: (i) embezzlement, theft or other misappropriation of
any property of the Company or any of its subsidiaries by Executive, (ii) gross
negligence or willful misconduct by Executive resulting in substantial loss to
the Company or any of its subsidiaries or substantial damage to the reputation
of the Company or any of its subsidiaries, (iii) any act by Executive that
results in a conviction of, or a pleading nolo contendere to, a felony or other
crime involving moral turpitude, fraud or misrepresentation, (iv) willful and
continued failure or neglect by Executive to substantially perform his assigned
duties for the Company or any of its subsidiaries, (v) gross breach of
Executive's fiduciary obligations to the Company or any of its subsidiaries,
(vi) any chemical dependence which materially affects the performance of
Executive's duties and responsibilities to the Company or any of its
subsidiaries; provided, that in the case of the misconduct set forth in clauses
(iv) and (vi) above, such misconduct shall continue for a period of five (5)
days following written notice thereof by the Company to Executive.

            (c) WITHOUT "CAUSE". Notwithstanding any provisions of this
Agreement to the contrary, the Company may terminate Executive's employment
hereunder for any reason other than those specified in the foregoing paragraphs
(a) and (b), or for no reason, at any time, effective upon delivery of five (5)
day's notice by the Company.

            (d) VOLUNTARY RESIGNATION. Executive may terminate his employment
hereunder at any time during the Term subject only to the requirement that
Executive shall provide the Company with a minimum of sixty (60) days prior
written notice (a "Voluntary Resignation").

            (e) WITH "GOOD REASON". Notwithstanding any provision of this
Agreement to the contrary, Executive may terminate his employment hereunder for
Good Reason, subject to the requirement that Executive shall provide the Company
with a minimum of sixty (60) days prior written notice and subject to the
requirement that such notice is given within thirty (30) days (plus the
applicable cure period, if any) after the occurrence of the events constituting
a Good Reason. For purposes of this Agreement, Executive shall have "Good
Reason" to terminate his employment hereunder upon the occurrence, without
Executive's written consent, of any of the following: (i) a failure by the
Company to pay to Executive any amounts due to Executive (including but not
limited to Base Salary and incentive compensation payable under the Company's
Executive Incentive Compensation Plan), which failure is not cured within thirty
(30) days following receipt by the Company of written notice from Executive of
such failure; (ii) demotion of Executive from his position as Chief Financial
Officer of the Company or a change in his management reporting relationship such
that

                                       7
<Page>

he no longer reports to the Chief Executive Officer of the Company; (iii) a
relocation of the headquarters for the performance of the Executive's duties
during the term of this Agreement more than fifty miles outside the limits of
Houston, Texas, or (iv) any other material breach by the Company of this
Agreement that remains uncured for thirty (30) days after written notice thereof
by Executive to the Company.

         10. COMPENSATION UPON TERMINATION. Executive shall be entitled to the
following compensation from Company, in lieu of all compensation or other sums
or benefits owed or payable to Executive under paragraph 4 of this Agreement,
upon the termination of Executive's employment during the term of this
Agreement.

            (a) DEATH OR DISABILITY. In the event of the death or Disability of
Executive during the term of this Agreement, except for amounts of Base Salary
and accrued vacation time earned by Executive as of the date of termination but
not yet paid by the Company, the Company shall have no obligation to make
payments to Executive or his estate for the periods after the date Executive's
employment with the Company terminates on account of death or Disability.

            (b) WITH CAUSE. In the event that Executive's employment is
terminated by the Company for Cause, except for the amounts of Base Salary and
accrued vacation time earned by Executive as of the date of termination but not
yet paid by the Company, the Company shall have no obligation to make payments
to Executive for the periods before or after the date Executive's employment
with the Company terminates for Cause.

            (c) WITHOUT CAUSE. In the event that Executive's employment is
terminated by the Company without Cause at any time during the term of this
Agreement, Executive shall be entitled to receive (A) if the termination was not
within one year after a Change of Control, (i) the amounts of Base Salary and
accrued vacation time earned by Executive as of the date of termination but not
yet paid by the Company, (ii) an amount equal to two times the Base Salary then
in effect in a lump sum 45 days after the date of termination, and (iii) the
Stock Options that are vested as of the date of termination may be exercised
within two years of such termination as provided therein; or (B) if the
termination was within one year after a Change of Control, (i) the amounts of
Base Salary and accrued vacation time earned by Executive as of the date of
termination but not yet paid by the Company, (ii) an amount equal to two times
the Base Salary then in effect in a lump sum 45 days after the date of
termination, and (iii) the Stock Options shall be deemed fully vested as of the
date of termination and may be exercised within two years of such termination as
provided therein.

            (d) VOLUNTARY RESIGNATION.

                                       8
<Page>

            (i)  Without Good Reason. In the event that Executive's
                 employment is terminated by Executive as a Voluntary
                 Resignation pursuant to paragraph 9(d), except for amounts
                 of Base Salary and accrued vacation time earned by Executive
                 as of the date of termination but not yet paid by the
                 Company, the Company shall have no obligation to make
                 payments to Executive for the periods after the date
                 Executive's employment with the Company terminates on
                 account of Voluntary Resignation.

           (ii)  With Good Reason. Notwithstanding any provision of this
                 Agreement to the contrary, if Executive's employment with
                 the Company terminates on account of Voluntary Resignation
                 for Good Reason, Executive shall be entitled to receive (1)
                 if the termination was not within one year after a Change of
                 Control, (a) the amounts of Base Salary and accrued vacation
                 time earned by Executive as of the date of termination but
                 not yet paid by the Company, (b) an amount equal to two
                 times the Base Salary then in effect in a lump sum 45 days
                 after the date of termination, and (c) the Stock Options
                 that are vested as of the date of termination may be
                 exercised within two years of such termination as provided
                 therein; or (2) if the termination was within one year after
                 a Change of Control, (a) the amounts of Base Salary and
                 accrued vacation time earned by Executive as of the date of
                 termination but not yet paid by the Company, (b) an amount
                 equal to two times the Base Salary then in effect in a lump
                 sum 45 days after the date of termination, and (c) the Stock
                 Options shall be deemed fully vested as of the date of
                 termination and may be exercised within two years of such
                 termination as provided therein.

            (e) CHANGE OF CONTROL. For purposes of this Agreement, a "Change of
Control" shall be deemed to exist upon the occurrence of any of the following:

            (i)  any "person" as such term is used in Sections 13(d) and
                 14(d) of the Securities Exchange Act of 1934 ("Act") (other
                 than (i) the Company, (ii) any trustee or other fiduciary
                 holding securities under any employee benefit plan of the
                 Company, (iii) any company owned, directly or indirectly, by
                 the stockholders of the Company in substantially the same
                 proportions as their ownership of the common stock of the
                 Company) is or becomes the "beneficial owner" (as defined in
                 Rule 13d-3 under the Act), directly or indirectly, of
                 securities of the Company representing

                                       9
<Page>

                 more than fifty percent (50%) of the combined voting power
                 of the Company's then outstanding securities;

           (ii)  a merger or consolidation of the Company with any other
                 corporation, other than a merger or consolidation that would
                 result in the voting securities of the Company outstanding
                 immediately prior thereto continuing to represent (either by
                 remaining outstanding or by being converted into voting
                 securities of the surviving entity) more than fifty percent
                 (50%) of the combined voting power of the voting securities
                 of the Company or such surviving entity outstanding
                 immediately after such merger or consolidation; provided,
                 however, that a merger or consolidation effected to
                 implement a recapitalization of the Company (or similar
                 transaction) in which no person, not already the beneficial
                 owner of less than fifty percent (50%) of the combined
                 voting power of the Company's then outstanding securities,
                 acquires more than fifty percent (50%) of the combined
                 voting power of the Company's then outstanding securities
                 shall not constitute a Change in Control of the Company; and
                 provided, further, a merger or consolidation in which the
                 Company is the surviving entity (other than as a wholly
                 owned subsidiary or another entity) and in which the Board
                 of the Company after giving effect to the merger or
                 consolidation is comprised of a majority of members who are
                 either (x) directors of the Company immediately preceding
                 the merger or consolidation, or (y) appointed to the Board
                 of the Company by the Company (or its Board) as an integral
                 part of such merger or consolidation, shall not constitute a
                 Change in Control of the Company; or

           (iii) the consummation of a plan of complete liquidation of the
                 Company or of a sale or disposition by the Company of all or
                 substantially all of the Company's assets other than (i) the
                 sale or disposition of all or substantially all of the
                 assets of the Company to a person or persons who
                 beneficially own, directly or indirectly, more than fifty
                 percent (50%) of the combined voting power of the
                 outstanding voting securities of the Company at the time of
                 the sale or (ii) pursuant to a dividend in kind or spin-off
                 type transactions, directly or indirectly, of such assets to
                 the stockholders of the Company.

            (f) MUTUAL RELEASE. Payment of the amounts payable on the
termination of the employment of the Executive under this paragraph 10, other
than

                                       10
<Page>

Base Salary and accrued vacation time earned by Executive as of the date of
termination but not yet paid by the Company, shall be conditioned upon the
execution by the Executive and the Company of a valid mutual release, pursuant
to which the Executive and the Company shall each mutually release each other,
to the maximum extent permitted by law, from any and all claims either party may
have against the other as of the date of termination that relate to or arise out
of the employment or termination of employment of the Executive, except such
claims arising under this Agreement, any employee benefit plan, or any other
written plan or agreement (a "Mutual Release").

         11. ARBITRATION. The parties will attempt to promptly resolve any
dispute or controversy arising out of or relating to this Agreement or
termination of the Executive by the Company. Any negotiations pursuant to this
paragraph 11 are confidential and will be treated as compromise and settlement
negotiations for all purposes. If the parties are unable to reach a settlement
amicably, the dispute will be submitted to binding arbitration before a single
arbitrator in accordance with the Employment Dispute Resolution Rules of the
American Arbitration Association. The arbitrator will be instructed and
empowered to take reasonable steps to expedite the arbitration and the
arbitrator's judgment will be final and binding upon the parties subject solely
to challenge on the grounds of fraud or gross misconduct. The parties agree that
the arbitrator shall not be empowered to award punitive or exemplary damages
each party hereby irrevocably waives any such damages. The arbitration will be
held in Harris County, Texas. Judgment upon any verdict in arbitration may be
entered in any court of competent jurisdiction and the parties hereby consent to
the jurisdiction of, and proper venue in, the federal and state courts located
in Harris County, Texas. Each party will bear its own costs in connection with
the arbitration and the costs of the arbitrator will be borne by the party who
the arbitrator determines did not prevail in the matter. Unless otherwise
expressly set forth in this Agreement, the procedures specified in this
paragraph 11 will be the sole and exclusive procedures for the resolution of
disputes and controversies between the parties arising out of or relating to
this Agreement. Notwithstanding the foregoing, a party may seek a preliminary
injunction or other provisional judicial relief if in such party's judgment such
action is necessary to avoid irreparable damage or to preserve the status quo.

         12. MISCELLANEOUS.

            (a) Any notice required or permitted under this Agreement shall be
in writing and shall be deemed given when delivered personally or three days
after being sent by first-class registered or certified mail, return receipt
requested, to the party for which intended at its or his address set forth at
the beginning of this Agreement (which, in the case of the Company, shall be
sent "Attention: President") or to such other address as either party may
hereafter specify by similar notice to the other.

                                       11
<Page>

            (b) This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas governing contracts made and to be performed
in Texas.

            (c) This Agreement supersedes all prior agreements between the
parties, written or oral, and cannot be amended or modified except by a writing
signed by both parties. It may be executed in one or more counterpart copies,
each of which shall be deemed an original, but all of which shall constitute the
same instrument.

            (d) This Agreement, which is personal in nature, may not be assigned
by either party without the prior written consent of the other party, but the
Executive may, upon reasonable prior notice to the Company, assign his right to
receive any payment previously due and owing provided, that, such assignment
shall be subject to all claims and defenses of the Company against the
Executive.

            (e) This Agreement shall be binding upon and inure to the benefit of
the parties and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns. The term "personal
representative" as used in this Agreement with respect to an individual shall
mean such individual's guardian, committee, executor, administrator or other
legal representative duly empowered to act on his behalf following his death or
legal incapacity.

            (f) Captions used in this Agreement are for convenience of
reference only and shall not be deemed a part of this Agreement nor used in the
construction of its meaning. Exhibits attached to this Agreement shall be deemed
as fully a part of this Agreement as if set forth in full herein.

            (g) The Company may setoff any amounts owed by it or its
subsidiaries to the Executive (or to the personal representative of the
Executive's estate), including but not limited to amounts owed hereunder,
against amounts owed by the Executive or his estate to the Company or any of its
subsidiaries under a promissory note or for any loans or advances made by the
Company or its subsidiaries to the Executive, including but not limited to loans
or advances of compensation hereunder.

            (h) This Agreement has a term co-extensive with the term of
employment provided in paragraph 2. Termination shall not affect any right or
obligation of any party which is accrued or vested prior to such termination.
Without limiting the scope of the preceding sentence, the provisions of
paragraphs 8 and 11 shall survive the termination of the employment relationship
and/or of this Agreement.

                                       12
<Page>

            (i) If any provision of this Agreement shall be deemed invalid or
unenforceable as written it shall be construed, to the greatest extent possible,
in a manner which shall render it valid and enforceable and any limitations on
the scope or duration of any such provision necessary to make it valid and
enforceable shall be deemed to be part thereof; no invalidity or
unenforceability shall affect any other portion of this Agreement unless the
provision deemed to be so invalid or unenforceable is a material element of this
Agreement, taken as a whole.

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

                                         KMG CHEMICALS, INC.

                                         By:  /s/ David L. Hatcher
                                             ------------------------------
                                             David L. Hatcher,
                                             President

                                         /s/ John V. Sobchak
                                         ----------------------------------
                                         John V. Sobchak

                                       13<Page>

                               KMG CHEMICALS, INC.
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

         This Supplemental Executive Retirement Plan for eligible executives of
KMG Chemicals, Inc. and its subsidiaries, has been adopted by the Board to be
applicable on and after August 1, 2001. The purpose of this Plan is to provide
supplemental retirement benefits to certain Employees in addition to the
benefits that may be provided to those Employees under other retirement plans
maintained by an Employer. This Plan is also designed to retain executive level
personnel.

         This Plan is intended to constitute a non-qualified, unfunded deferred
compensation plan for a select group of management employees under Title I of
ERISA. All benefits payable under this Plan shall be paid from the general
assets of the Employer.

                                    ARTICLE 1
                                   DEFINITIONS

1.01     "ADMINISTRATIVE COMMITTEE" shall mean the person or persons appointed
         by the Board to administer and supervise the Plan as provided in
         Article IV. In the absence of such appointment, the Compensation
         Committee of the Board shall serve as the Administrative Committee.

1.02     "BENEFICIARY" shall mean the beneficiary designated by a Participant in
         the time and manner determined by the Administrative Committee. If the
         Participant fails to designate a beneficiary, or if his beneficiary
         predeceased him, his beneficiary shall be his spouse or, if none, his
         children in equal shares. If no beneficiary survives the Participant,
         his beneficiary shall be his estate.

1.03     "BOARD" shall mean the Board of Directors of KMG Chemicals, Inc.
         ("KMG").

1.04     "CODE" shall mean the Internal Revenue Code of 1986, as amended from
         time to time.

1.05     "COMPENSATION" shall mean the base salary only of the Employee and,
         without limitation, shall not include (i) cash incentive bonuses
         payable under any executive or other Employee incentive plan, (ii)
         other forms of incentive bonuses (including lump-sum merit, performance
         pay, mid-term and long-term incentive, and key employee bonuses); and
         (iii) amounts deferred under any deferred compensation plan.

1.06     "COMPENSATION COMMITTEE" shall mean the Compensation Committee of the
         Board.

<Page>

1.07     "CREDITED SERVICE" shall mean the number of years and months of a
         Participant's most recent period of consecutive employment with the
         Employer ending on the date the Participant retires or otherwise
         terminates his employment with the Employer. Solely for purposes of
         determining the amount of a Participant's Supplemental Pension Benefit,
         a Participant's Credited Service shall also include, (i) with respect
         to Executive Officers, service as the Compensation Committee, in its
         sole discretion, shall determine; and (ii) with respect to all other
         Participants, service as the Chief Executive Officer, in his sole
         discretion, shall determine.

1.08     "EFFECTIVE DATE" shall mean August 1, 2001.

1.09     "EMPLOYEE" shall mean an individual employed by the Employer.

1.10     "EMPLOYER" shall mean KMG Chemicals, Inc. or any predecessor or
         successor by merger, purchase or otherwise, and any subsidiary of KMG
         Chemicals, Inc.

1.11     "EQUIVALENT ACTUARIAL VALUE" shall mean the equivalent value when
         computed on the basis of such rates, tables and factors as the
         Compensation Committee shall determine upon the advice of an actuary
         appointed by the Compensation Committee.

1.12     "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
         as amended from time to time.

1.13     "EXECUTIVE OFFICER" shall mean the officers of KMG as shall be
         designated by the Compensation Committee from time to time.

1.14     "FINAL AVERAGE COMPENSATION" shall mean a Participant's average annual
         Compensation during the three consecutive calendar years of his
         employment with the Employer immediately preceding his retirement or
         other termination of employment.

1.15     "NORMAL RETIREMENT DATE" shall mean the first day of the calendar month
         coincident with or immediately following the earlier of the date the
         Participant: (i) attains age 65 and completes ten years of Credited
         Service or (ii) attains age 60 and completes 30 years of Credited
         Service.

1.16     "PARTICIPANT" shall mean any person participating in the Plan as
         provided in Article II of this Plan.

                                       2
<Page>

1.17     "PARTICIPANT'S BENEFIT PERCENTAGE" shall mean one-twentieth (1/20) of
         the percentage established from time to time by the Compensation
         Committee.

1.18     "PENSION PLAN" shall mean any defined benefit plans which meet the
         requirements of a qualified plan under Section 401(a) of the Code which
         may be maintained from time to time by the Employer. The term Pension
         Plan shall also include any defined benefit plan which meets the
         requirements of a qualified plan under Section 401(a) of the Code which
         is (or was) maintained by a Participant's prior employer if any service
         with such prior employer is deemed Credited Service under Section 1.06.

1.19     "PLAN" shall mean this Supplemental Executive Retirement Plan of KMG.

1.20     "SAVINGS PLAN" shall mean any defined contribution plans which meet the
         requirements of a qualified plan under Section 401(a) of the Code which
         may be maintained from time to time by the Employer. The term Savings
         Plan shall also include any defined contribution plan which meets the
         requirements of a qualified plan under Section 401(a) of the Code which
         is (or was) maintained by a Participant's prior employer if any service
         with such prior employer is deemed Credited Service under Section 1.06.

1.21     "SOCIAL SECURITY BENEFIT" shall mean the annual old-age insurance
         benefit the Participant is entitled to receive under Title II of the
         Social Security Act as in effect on the date he retires or otherwise
         terminates his employment, or would be entitled to receive if he did
         not disqualify himself from receiving a Social Security Benefit by
         entering into covered employment or for any other reason. In the case
         of a Participant who retires or otherwise terminates employment with
         the Employer prior to being eligible for an unreduced old-age benefit
         under Title II of the Social Security Act, the Social Security Benefit
         shall be computed on the assumption that the Participant will continue
         to receive compensation at the same rate as in effect on his retirement
         or termination of employment until the date he could first retire with
         the right to an unreduced old-age benefit.

1.22     "SUPPLEMENTAL PENSION BENEFIT" shall mean the amount determined under
         Section 3.01 of the Plan.

                                       3
<Page>

                                    ARTICLE 2
                                  PARTICIPATION

2.01     PARTICIPATION

         An Employee shall become a Participant in this Plan provided that he or
         she is: (i) an Executive Officer, or (ii) a United States-based
         executive selected by the Chief Executive Officer for participation in
         this Plan.

2.02     TERMINATION OF PARTICIPATION

         A Participant's participation in the Plan shall terminate on the date
         he or she terminates his employment with the Employer unless the
         Participant is entitled to a benefit under the Plan. If a Participant
         is entitled to a benefit under the Plan, his or her participation in
         the Plan shall terminate when the benefit is distributed to him.

                                    ARTICLE 3
                               AMOUNT AND PAYMENT
                        OF SUPPLEMENTAL PENSION BENEFITS

3.01     SUPPLEMENTAL PENSION BENEFIT

         A Participant who retires or otherwise terminates his employment on or
         after his Normal Retirement Date shall receive an annual benefit for
         ten years, equal to the excess, if any, of:

         (a)      the Participant's Benefit Percentage of the Participant's
                  Final Average Compensation multiplied by his years of Credited
                  Service up to a maximum of 20 years;

                  reduced by

         (b)      the sum of:

                  (i)      the annual amount of a single life annuity payable as
                           of the Participant's retirement or other termination
                           of employment which is of Equivalent Actuarial Value
                           to the Participant's accrued benefit under any
                           Pension Plan determined as of the Participant's
                           retirement or other termination of employment;

                                       4
<Page>

                  (ii)     the annual amount of a single life annuity payable as
                           of the Participant's retirement or other termination
                           of employment which is of Equivalent Actuarial Value
                           to the value of the Participant's accounts under the
                           Savings Plan attributable to contributions made by
                           the Employer (other than pre-tax contributions to a
                           qualified cash or deferred arrangement under Section
                           401(k) of the Code made by the Employer on behalf of
                           the Participant) determined as of the Participant's
                           retirement or other termination of employment;

                  (iii)    the Equivalent Actuarial Value determined as of the
                           Participant's retirement or other termination of
                           employment of fifty percent (50%) the Participant's
                           annual Social Security Benefit; and

                  (iv)     the annual amount of a single life annuity payable as
                           of the Participant's retirement or other termination
                           of employment which is of Equivalent Actuarial Value
                           to the Employer-provided portion of any benefit
                           provided under any other nonqualified retirement plan
                           or program.

         The Participant's accrued benefit under the Pension Plan, the value of
         his accounts under the Savings Plan, the amount of his Social Security
         Benefit and any determination which may be required under Section
         3.01(b)(iv) of the Plan shall be determined as of the first day of the
         month coincident with or immediately following the Participant's
         retirement or other termination of employment.

3.02     EARLY RETIREMENT

         (a)      If a Participant who has not reached his Normal Retirement
                  Date but who, prior to his termination of employment from the
                  Employer, has reached his 60th birthday and has completed ten
                  years of Credited Service with the Employer, may, with the
                  consent of the Administrative Committee, retire from service
                  and receive an early retirement Supplemental Pension Benefit
                  following the Administrative Committee's approval of his
                  retirement.

         (b)      The early retirement Supplemental Pension Benefit shall be a
                  deferred Supplemental Pension Benefit beginning on the
                  Participant's Normal Retirement Date and shall be equal to his
                  Supplemental Pension Benefit determined under Section 3.01.
                  However, the Participant may elect to receive an early
                  retirement Supplemental Pension Benefit beginning on the first
                  day of any calendar month before his Normal Retirement Date

                                       5
<Page>

                  and after the Administrative Committee's approval of his
                  retirement. In that case, the Participant's Supplemental
                  Pension Benefit shall be determined in accordance with the
                  provisions of Section 3.01; provided, however, that the amount
                  determined under Section 3.01(a) shall be reduced by
                  five-twelfths of one percent for each month by which the date
                  the Participant's early retirement Supplemental Pension
                  Benefit precedes his Normal Retirement Date.

3.03     DISABILITY

         (a)      A Participant who has completed at least ten years of Credited
                  Service with the Employer and who ceases to be employed by the
                  Employer on account of disability as defined in the Employer's
                  long-term disability plan shall continue to be credited with
                  Credited Service but only if he is eligible for and
                  continuously receiving disability benefits under the
                  Employer's long-term disability plan. There shall also be
                  included in his Credited Service any applicable waiting period
                  for disability benefits under the Employer's long-term
                  disability plan; provided that after expiration of such period
                  the Participant becomes entitled to such disability benefits.
                  Upon attaining age 65 the Participant shall be entitled to a
                  disability Supplemental Pension Benefit in an amount provided
                  in paragraph (b) below. A Participant's disability
                  Supplemental Pension Benefit shall commence on the
                  Participant's Normal Retirement Date or, if later, the first
                  day of the month on or immediately after the date he ceases,
                  because of retirement or otherwise, to be eligible for
                  payments under the Employer's long-term disability plan.

         (b)      The Participant's disability Supplemental Pension Benefit
                  shall be determined under Section 3.01 as in effect on the
                  date the Participant's disability Supplemental Pension Benefit
                  commences, based on his Final Average Compensation at the time
                  he ceased employment on account of disability, and his
                  Credited Service as modified by paragraph (a) above.

         (c)      If the Participant's disability benefits under the Employer's
                  long-term disability plan are discontinued prior to his Normal
                  Retirement Date and he is not restored to service with the
                  Employer, he shall be entitled to retire and receive an early
                  Supplemental Pension Benefit under Section 3.02 as of the
                  first day of the calendar month immediately after such
                  discontinuance if at the date he ceased to be disabled he had
                  completed ten years of Credited Service with the Employer and
                  he had attained age 60. The Participant's Supplemental Pension
                  Benefit shall be computed on the basis of his Final Average
                  Compensation at the time he ceased

                                       6
<Page>

                  employment on account of disability, his Credited Service as
                  modified by paragraph (a) above at the date he ceases to be
                  disabled, and the benefit formula in effect on the date he
                  ceases to be disabled.

3.04     DEATH BENEFITS

         (a)      If a Participant eligible for a Supplemental Pension Benefit
                  dies prior to his termination of employment with the Employer,
                  or after he terminates his employment with the Employer but
                  before payment of his Supplemental Pension Benefit begins, his
                  Beneficiary shall receive a Supplemental Pension Benefit. The
                  Supplemental Pension Benefit shall be paid in equal monthly
                  installments beginning the first day of the month following
                  the Participant's death and shall be equal to the excess of:

                  (i)      the amount determined under Section 3.01(a) as of the
                           date of his death, reduced by

                  (ii)     the amount determined under Section 3.01(b) as of the
                           date of his death.

                  The Supplemental Pension Benefit shall be paid for a period of
                  120 months. If the Participant's Beneficiary dies prior to
                  receiving 120 monthly payments, any remaining payments shall
                  be made to the Beneficiary's estate.

         (b)      If a Participant dies after payment of his Supplemental
                  Pension Benefit begins, his Beneficiary shall receive the
                  benefit, if any, provided in the event of the Participant's
                  death under the optional form of benefit in which the
                  Participant's Supplemental Pension Benefit was paid.

3.05     PAYMENT OF BENEFITS

         (a)      Unless the Participant elects an optional form of payment
                  under Section 3.05(b), a Participant's Supplemental Pension
                  Benefit shall be paid to him in monthly installments ending
                  with the last monthly payment before his death.

         (b)      A Participant may elect to convert the Supplemental Pension
                  Benefit otherwise payable to him into an optional benefit of
                  Equivalent Actuarial Value as provided in one of the following
                  optional forms:

                                       7
<Page>

                  OPTION 1 - JOINT AND 100% SURVIVOR ANNUITY: A modified
                  Supplemental Pension Benefit payable during the Participant's
                  life, and after his death payable during the life of, and to,
                  the Beneficiary named by him when he elects the option.

                  OPTION 2 - JOINT AND 50% SURVIVOR ANNUITY: A modified
                  Supplemental Pension Benefit payable during the Participant's
                  life, and after his death payable at one-half of the rate of
                  his modified Supplemental Pension Benefit during the life of,
                  and to, the Beneficiary named by him when he elected the
                  option.

                  OPTION 3 - TEN YEAR CERTAIN AND LIFE: A modified Supplemental
                  Pension Benefit payable during the Participant's life;
                  provided, however, if the Participant dies before receiving
                  120 monthly payments, the remaining balance of those 120
                  monthly payments shall be paid to the Beneficiary named by him
                  when he elected the option. If the Beneficiary does not
                  survive to the end of the 120-month period, a lump sum payment
                  of Equivalent Actuarial Value shall be paid to the estate of
                  the last to survive of the Participant and the Beneficiary.

                  OPTION 4 - SINGLE SUM: A single sum payment; provided,
                  however, that the Administrative Committee, in its sole
                  discretion and without any obligation to exercise reasonable
                  discretion, approves of such single sum payment. If the
                  Administrative Committee does not grant approval of a single
                  sum payment, the Participant shall make an election to receive
                  benefits in any one of the forms otherwise permitted in this
                  Section 3.05.

         (c)      The Participant shall make his election by filing the
                  appropriate form with the Administrative Committee no later
                  than December 31 of the calendar year which is at least one
                  calendar year prior to the calendar year in which the
                  Participant terminates his employment with the Employer. Any
                  election made under this Section may be revoked in writing by
                  the Participant provided his written revocation is received by
                  the Administrative Committee no later than December 31 of the
                  calendar year which is at least one calendar year prior to the
                  calendar year in which the Participant terminates his
                  employment with the Employer.

                                       8
<Page>

3.06     CASH OUT OF SMALL BENEFITS

         Notwithstanding anything in this Plan to the contrary, if upon
         retirement, other termination of employment, or death:

         (a)      the single sum Equivalent Actuarial Value of the Participant's
                  Supplemental Pension Benefit is $30,000 or less; or

         (b)      the monthly Supplemental Pension Benefit payable to the
                  Participant is $500 or less;

         his Supplemental Pension Benefit may, in the discretion of the
         Administrative Committee, be paid in a single sum Equivalent Actuarial
         Value. Any payments to be made under this Section will be made as soon
         as practicable following the Participant's retirement, other
         termination of employment or death.

3.07     FORFEITURE

         Notwithstanding anything in this Plan to the contrary, if the
         Participant's employment with the Employer shall terminate prior to the
         attainment of Early Retirement or Normal Retirement Age as described
         above, and if such termination is not due to death or disability, all
         benefits that would otherwise be payable under this Plan shall be
         forfeited. If a Participant's employment with the Employer shall
         terminate prior to completion of five years of Credited Service with
         the Employer (exclusive of any Credited Service which relates to
         service with a prior employer), all benefits that would otherwise be
         payable under this Plan shall be forfeited. The application of this
         provision may be waived by the Chief Executive Officer; provided,
         however, that any waiver on behalf of an Executive Officer is subject
         to the consent of the Compensation Committee.

3.08     SOURCE OF BENEFITS

         Supplemental Pension Benefits shall be payable only from the general
         assets of the Employer.

3.09     RESTORATION TO SERVICE

         If a Participant who retired or whose employment was otherwise
         terminated is restored to employment with the Employer, any payments of
         a Supplemental Pension Benefit under this Plan shall cease. Upon his
         subsequent retirement or termination of employment with the Employer
         and his again becoming entitled

                                       9
<Page>

         to receive a Supplemental Pension Benefit, his Supplemental Pension
         Benefit shall be recomputed in accordance with the provisions of this
         Article. Any recomputed Supplemental Pension Benefit shall be reduced
         by the Equivalent Actuarial Value of any Supplemental Pension Benefit
         payments the Participant has previously received.

3.10     RECEIPT AND RELEASE

         Any final payment or distribution to a Participant or Beneficiary or
         their legal representative shall be in full satisfaction of all claims
         against the Plan, the Administrative Committee, the Compensation
         Committee, the Board and the Employer. The Administrative Committee
         may, in its sole discretion, require a Participant, or Beneficiary or
         their legal representative to execute a receipt and release, in such
         form as the Administrative Committee may determine, upon final payment
         of all claims or distributions under the Plan, or a receipt to the
         extent of any partial payment or distribution, as a condition of
         receiving such payment or distribution.

                                    ARTICLE 4
                               GENERAL PROVISIONS

4.01     ADMINISTRATION

         The administration of the Plan, the exclusive power to interpret it and
         to establish rules and regulations for its administration, and the
         responsibility for carrying out its provisions are vested in the
         Administrative Committee. Any interpretation of the Plan by the
         Administrative Committee or any administrative act by the
         Administrative Committee shall be final and binding on all Participants
         and Beneficiaries. The expenses of the Administrative Committee
         attributable to the administration of the Plan shall be paid directly
         by the Employer.

4.02     FUNDING

         (a)      Nothing contained in this Plan shall require the Employer to
                  segregate any monies from its general funds, or to create any
                  trusts, or to make any special deposits for any amounts to be
                  paid to any Participant, former Participant or Beneficiary.
                  Neither a Participant, former Participant or Beneficiary or
                  their heirs or personal representatives shall have any right,
                  title or interest in or to any of the funds of the Employer on
                  account of this Plan.

                                       10
<Page>

         (b)      All Supplemental Pension Benefits payable in accordance with
                  this Plan, as well as any administrative costs relating to the
                  Plan, shall constitute a general unsecured obligation of the
                  Employer and shall be payable only from the general assets of
                  the Employer.

4.03     NO CONTRACT OF EMPLOYMENT

         The establishment of the Plan shall not be construed as conferring any
         legal rights upon any person for a continuation of employment, nor
         shall it interfere with the rights of the Employer to modify a
         Participant's compensation or to discharge any Participant and to treat
         him without regard to the effect which such treatment might have upon
         him as a Participant in the Plan.

4.04     WITHHOLDING TAXES

         The Employer shall have the right to deduct any required federal, state
         and local withholding taxes from each payment to be made under the
         Plan.

4.05     NONALIENATION

         Subject to any applicable law, no benefit under the Plan shall be
         subject in any manner to anticipation, alienation, sale, transfer,
         assignment, pledge, encumbrance or charge, and any attempt so to do
         shall be void, nor shall any such benefit be in any manner liable for
         or subject to garnishment, attachment, execution or levy, or liable for
         or subject to the debts, contracts, liabilities, engagements or torts
         of the Participant.

4.06     PAYMENT TO MINORS, OTHERS

         If the Administrative Committee finds that a Participant or other
         person entitled to a benefit under the Plan is unable to care for his
         affairs because of illness or accident or because he is a minor, the
         Administrative Committee may direct that any benefit due him be paid to
         his spouse, a child, a parent or other blood relative or a person with
         whom he resides, unless a claim has been made for the benefit by a duly
         appointed legal representative. Any payment made under the provisions
         of this Section shall be a complete discharge of the liabilities of the
         Plan for that benefit.

4.07     FURNISHING OF INFORMATION

         Prior to paying any benefit under this Plan, the Administrative
         Committee may require the Participant or Beneficiary to provide such
         information or material as

                                       11
<Page>

         the Administrative Committee, in its sole discretion, shall deem
         necessary for it to make any determination it may be required to make
         under this Plan. The Administrative Committee may withhold payment of
         any benefit under this Plan until it receives all such information and
         material and is reasonably satisfied of its correctness and
         genuineness.

4.08     EFFECT ON OTHER PLANS

         Nothing in this Plan shall be deemed to affect the provisions of any
         Savings Plan or any other employee benefit plan as defined in Section
         3(3) of ERISA, or any employment contract maintained by or entered into
         by the Employer.

4.09     INDEMNIFICATION

         (a)      KMG shall indemnify the members of the Administrative
                  Committee, the Compensation Committee and/or any of their
                  delegates against the reasonable expenses, including
                  attorneys' fees, actually and appropriately incurred by them
                  in connection with the defense of any action, suit or
                  proceeding, or in connection with any appeal thereto, to which
                  they or any of them may be a party by reason of any action
                  taken or failure to act under or in connection with the Plan
                  (including any action or failure to act constituting
                  negligence) and against all amounts paid by them in settlement
                  thereof and against all amounts paid by them in satisfaction
                  of a judgment in any such action, suit or proceeding, except
                  in relation to matters as to which it shall be adjudged in a
                  suit of final adjudication that such member is liable for
                  gross negligence, fraud, deliberate dishonesty or willful
                  misconduct in the performance of his duties.

         (b)      In case any proceeding (including any governmental
                  investigation) shall be instituted involving any person in
                  respect of which indemnity may be sought pursuant to this
                  Section 4.09, such person (the "Indemnified Party") shall
                  promptly notify KMG in writing. No indemnification provided
                  for in Section 4.09(a) shall be available to any party who
                  shall fail to give notice as provided in this Section 4.09(b)
                  if KMG was unaware of the proceeding to which such notice
                  would have related and was prejudiced by the failure to give
                  such notice, but the failure to give such notice shall not
                  relieve KMG from any liability which it may have to the
                  Indemnified Party for contribution or otherwise than on
                  account of the provisions of Section 4.09(a). In case any such
                  proceeding shall be brought against any Indemnified Party and
                  it shall notify KMG of the commencement thereof, KMG shall be
                  entitled to participate therein and, to the extent that it
                  shall wish, to assume the defense thereof, with counsel

                                       12
<Page>
                  satisfactory to such Indemnified Party and shall pay as
                  incurred the fees and disbursements of such counsel related to
                  such proceeding. In any such proceeding, any Indemnified Party
                  shall have the right to retain its own counsel at its own
                  expense. Notwithstanding the foregoing, KMG shall pay as
                  incurred the fees and expenses of the counsel retained by the
                  Indemnified Party in the event (i) KMG and the Indemnified
                  Party shall have mutually agreed to the retention of such
                  counsel or (ii) the named parties to any such proceeding
                  (including any impleaded parties) include both KMG and the
                  Indemnified Party and representation of both parties by the
                  same counsel would be inappropriate due to actual or potential
                  differing interests between them. It is understood that KMG
                  shall not, in connection with any proceeding or related
                  proceedings in the same jurisdiction, be liable for the
                  reasonable fees and expenses or more than one separate firm
                  for all such Indemnified Parties. Such firm shall be
                  designated in writing by KMG. KMG shall not be liable for any
                  settlement of any proceeding effected without its written
                  consent but if settled with such consent or if there be a
                  final judgment for the plaintiff, KMG agrees to indemnify the
                  Indemnified Party from and against any loss or liability by
                  reason of such settlement or judgment.

4.10     CLAIMS PROCEDURE

         The Administrative Committee shall provide adequate notice in writing
         to any Participant, former Participant or Beneficiary whose claim for
         benefits under this Plan has been denied, setting forth the specific
         reasons for such denial. A reasonable opportunity shall be afforded to
         any such Participant, former Participant or Beneficiary for a full and
         fair review by the Administrative Committee of its decision denying the
         claim. The Administrative Committee's decision on any such review shall
         be final and binding on the Participant, former Participant or
         Beneficiary and all other interested persons.

4.11     CONSTRUCTION

         (a)      The Plan is intended to constitute an unfunded deferred
                  compensation arrangement for a select group of management or
                  highly compensated employees and therefore exempt from the
                  requirements of Sections 201, 301 and 401 of ERISA. All rights
                  hereunder shall be governed by and construed in accordance
                  with the laws of the State of Texas to the extent such laws
                  are not pre-empted by ERISA or other federal law.

         (b)      The masculine pronoun shall mean the feminine wherever
                  appropriate.

                                       13
<Page>

         (c)      The titles and headings of the Articles and Sections of the
                  Plan are for convenience only. In case of ambiguity or
                  inconsistency, the text, rather than the titles or headings,
                  shall control.

                                    ARTICLE 5
                            AMENDMENT OR TERMINATION

         The Chief Executive Officer may modify or amend the Plan at any time,
provided, however, that any material modification shall be subject to
Compensation Committee approval. The Board may suspend or terminate this Plan
for any reason at any time. No modification, amendment, suspension or
termination of the Plan shall reduce the right of a Participant or his
Beneficiary to receive benefits accrued under the Plan in respect of such
Participant as of the date of the modification, amendment, suspension or
termination unless the Participant or his Beneficiary, as the case may be,
agrees in writing to such modification, amendment, suspension or termination.

         IN WITNESS WHEREOF, the proper officer of KMG Chemicals, Inc. has
executed this instrument this 25th day of June, 2001.

                                        KMG CHEMICALS, INC.

                                        By: /s/ David L. Hatcher
                                            -------------------------------
                                                David L. Hatcher, President

                                       14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}]]