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Fifth Amendment To Term Loan Agreement

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Sectors: Chemicals
Effective Date: June 07, 2005
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FIFTH AMENDMENT TO TERM LOAN AGREEMENT



THIS FIFTH AMENDMENT TO TERM LOAN AGREEMENT (this "Amendment" or "Fifth Amendment to Loan Agreement") is entered into by and between KMG-BERNUTH, INC. , a Delaware corporation (hereinafter referred to as "Borrower") and WACHOVIA BANK, NATIONAL ASSOCIATION , a national banking association, successor by merger to SouthTrust Bank, an Alabama banking corporation, successor by conversion to SouthTrust Bank, National Association (hereinafter referred to as "Bank") as of the 7th day of June, 2005.



W I T N E S S E T H:



WHEREAS , Borrower and Bank are parties to that certain Term Loan Agreement dated as of June 26, 1998, as amended by that certain First Amendment to Term Loan Agreement dated as of December 30, 2002, by that certain Second Amendment to Term Loan Agreement dated as of December 5, 2003, by that certain Third Amendment to Term Loan Agreement dated as of June 8, 2004, and by that certain Fourth Amendment to Term Loan Agreement dated as of July 31, 2004 (as so amended and as hereby amended, the "Loan Agreement"), whereby Borrower became indebted to Bank for a Term Loan in the original principal amount of $6,000,000.00 and thereafter amended to a principal amount of $5,050,000.00 and a Term Loan No. 2 in the principal amount of $6,000,000.00 and thereafter amended to a principal amount of $8,600,000.00 (all of the foregoing capitalized terms together with all other capitalized terms used herein shall have the respective meanings assigned thereto in the Loan Agreement, unless otherwise specifically defined herein); and



WHEREAS, upon request of the Borrower, the Bank has agreed to certain additional amendments to the Loan Agreement, without limitation, amendments to certain of the financial covenants required by the Loan Agreement, which amendments are specifically set forth below.



NOW, THEREFORE , in consideration of the sum of One and No/100 Dollar ($1.00) and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows:



1. The parties hereby acknowledge that SouthTrust Bank has heretofore merged into Wachovia Bank, National Association, and, accordingly, the Loan Agreement is hereby further amended to provide that any and all references to "SouthTrust Bank", "SouthTrust Bank, National Association" in the Loan Agreement shall be deemed to be "Wachovia Bank, National Association".



2. Section 1.1 of the Loan Agreement is hereby amended by adding the following definitions as additional defined terms:



" Basic Chemicals " means Basic Chemicals Company, LLC, a Delaware corporation.



" Basic Chemicals Debt " means any amount owing by Borrower to Basic Chemicals pursuant to the Basic Chemicals Note.



" Basic Chemicals Loan Documents " means the Basic Chemicals Note and any and all agreements, documents, and instruments of any kind executed or delivered in connection with, or evidencing, securing, guaranteeing or otherwise relating to the indebtedness owing by Borrower to Basic Chemicals under the Basic Chemicals Note, together with all modifications and amendments at any time made to any thereof.



1






" Basic Chemicals Note " means the promissory note dated June 7, 2005, made by the Borrower payable to Basic Chemicals in an original principal amount of $10,000,000.00, and includes, provided that there shall have first been obtained the prior written approval of the Bank, any amendment to such note and any promissory note given in extension or renewal of, or in substitution for, such note.



3. Section 1.1 of the Loan Agreement is hereby amended by deleting the definition of "Coverage Ratio" in its entirety and substituting the following new definition in lieu thereof:



" Coverage Ratio " means, for any period, the ratio of (i) the principal amount of all borrowed debt and capitalized lease obligations of Borrower and Guarantor as of the end of the applicable period, to (ii) the sum of EBITDA for the Borrower and Guarantor for the preceding four (4) fiscal quarters.



4. Section 6.1 of the Loan Agreement is hereby amended by deleting Subsection (F) thereof in its entirety and substituting the following new Subsection (F) in lieu thereof:



(F) The Borrower will maintain during the term of this Agreement (determined on a consolidated basis with the Guarantor):



(1) A Fixed Charge Coverage of not less than 1.25 to 1.0 at any time; such Fixed Charge Coverage to be measured quarterly based on a rolling four-quarter basis.



(2) A Coverage Ratio of not greater than: (a) 3.0 to 1.0 as of July 31, 2005, and October 31, 2005; and (b) 2.75 to 1.0 as of January 31, 2006, and at all times thereafter; said Coverage Ratio to be measured quarterly based on a rolling four-quarter basis.



5. Section 6.2 of the Loan Agreement is hereby amended by adding thereto the following new Subsection (S):



(S) The Borrower and the Guarantor (on a consolidated basis) will not incur, create, assume, or permit to exist any future Indebtedness in excess of, in the aggregate, $2,000,000.00 except:



(1) Indebtedness owing to the Bank;



(2) The Basic Chemicals Debt;



(3) Indebtedness existing as of June 7, 2005; and



(4) Trade indebtedness incurred in the ordinary course of business.



6. Section 7.1 of the Loan Agreement is hereby amended by adding thereto the following new Subsection (N) as an additional Event of Default:



(N) There shall occur any default under the Basic Chemicals
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