GUARANTY OF PAYMENT
THIS AGREEMENT is made as of the 26th day of June, 1998, by KMG
CHEMICALS, INC., a Texas corporation (the "Guarantor"), in favor of
SOUTHTRUST BANK, NATIONAL ASSOCIATION (the "Bank").
R E C I T A L S
KMG-Bernuth, Inc., a Delaware corporation (the "Borrower"), has
requested that the Bank loan to Borrower the sum of Six Million and No/100
Dollars ($6,000,000.00) (the "Loan"), to be evidenced by Borrower's Term Note
of even date herewith (as the same may be amended or modified from time to
time, the "Note") payable by Borrower to Bank, and such other documents and
instruments as are more particularly described in the Note. As a condition
to making the Loan, the Bank has required that the Guarantor guarantee the
Loan and any other obligations of Borrower to the Bank, whether now existing
or hereafter incurred.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, as an
inducement to the Bank to make the Loan to Borrower, and as security for the
payment of all obligations of Borrower arising out of the Loan and the Note
evidencing the Loan, all renewals and extensions of the Loan, all obligations
of Borrower set forth in the Term Loan Agreement between Borrower and Bank
pursuant to which the Loan is made (as the same may be amended or modified
from time to time, the "Loan Agreement"), the Security Agreement (as defined
in the Loan Agreement), the Purchase Money Security Agreement (as defined in
the Loan Agreement), and any and all other documents and instruments, now
existing or hereafter arising, executed or delivered evidencing, securing or
relating to the Loan (the Note, the Loan Agreement, the Security Agreement,
the Purchase Money Security Agreement, and any and all such other documents
and instruments herein
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collectively called the "Loan Documents"), all as the same may at any time be
amended by Borrower and the Bank, the consent of Guarantor to which shall not
be required, and all other obligations now existing and hereafter incurred by
Borrower to the Bank in connection with the Loan and all renewals and
extensions thereof (the Loan and all other indebtedness, liabilities and
obligations secured hereby being hereinafter called "Obligations"), the
Guarantor agrees, covenants and represents as follows:
1. The Guarantor hereby absolutely and unconditionally guarantees to
the Bank the due, regular and punctual payment of the Obligations, including,
without limitation, payment of any sum or sums of money which the Borrower
now owes the Bank or from time to time hereafter shall owe the Bank in
connection with the Loan, whether evidenced by notes or other instruments, or
by open account or otherwise, and whether it represents an original balance,
a balance reduced by part payment, or a deficiency after sale of collateral,
an extension or renewal of an original debt, or otherwise. The Guarantor
hereby further guarantees the due, regular and punctual payment of any other
debt or obligations of any kind or character of the Borrower to the Bank set
forth in the Loan Agreement and each of the other Loan Documents or otherwise
arising in connection with the Loan, and upon failure of the Borrower to
timely do so, the Guarantor guarantees to Bank the payment of all costs and
expenses incurred by Bank in performing such obligations. Further, the
Guarantor guarantees the payment of all costs, attorney fees or expenses
which may be incurred by the Bank by reason of a default of the Borrower
under the Obligations or any other liability of the Borrower to the Bank.
In the event of any default by the Borrower in the payment of the
Obligations, the Guarantor absolutely and unconditionally promises to pay to
the Bank such amounts as are necessary to cure the default, or, at the option
of the
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Bank, the Guarantor agrees to pay the entire indebtedness owed the Bank by
the Borrower at the time of default.
This Guaranty is an unconditional guaranty, and the Guarantor agrees
that the Bank, upon the occurrence of an Event of Default by the Borrower
under the Note, the Loan Agreement and/or any one or more of the other Loan
Documents, shall not be required to assert any claim or cause of action
against the Borrower or any other party before asserting any claim or cause
of action against the Guarantor under this Agreement. Furthermore, the
Guarantor agrees that the Bank shall not be required to pursue or foreclose
on any collateral that it may receive from the Borrower, the Guarantor or
others as security for any Obligations before making a claim or asserting a
cause of action against the Guarantor under this Agreement.
The failure of the Bank to perfect any portion of its security interest
in the collateral as set forth in the Loan Documents or any other collateral
now or hereafter securing all or any part of the Obligations, shall not
release the Guarantor from the Guarantor's liabilities and obligations
hereunder.
To the extent permitted by law: notice of acceptance of this Guaranty
and of any default by the Borrower is hereby waived by the Guarantor;
presentment, protest, demand, and notice of protest and demand of any and all
collateral, and of the exercise of possessory remedies or foreclosure on any
and all collateral received by the Bank from the Borrower or the Guarantor
are hereby waived; and all settlements, compromises, compositions, accounts
stated, and agreed balances in good faith between any primary or secondary
obligors on any accounts received as collateral shall be binding upon the
Guarantor.
This Guaranty shall not be affected, modified, or impaired by the
voluntary or involuntary liquidation, dissolution, sale or other disposition
of all or substantially all of the assets, marshalling of assets and
liabilities,
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receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangements, composition with creditors or
readjustment of, or other similar proceedings affecting the Borrower, the
Guarantor or any other guarantor, or any of the assets belonging to one or
more of them, nor shall this Guaranty be affected, modified or impaired by
the invalidity of the Note, the Loan Agreement, any of the other Loan
Documents or any other document executed by the Borrower or the Guarantor in
connection with the Loan.
Without notice to the Guarantor, without the consent of the Guarantor,
and without affecting or limiting the Guarantor's liability hereunder, the
Bank may:
(a) grant the Borrower extensions of time for payment of the
Obligations or any part thereof;
(b) renew any of the Obligations;
(c) grant the Borrower extensions of time for performance of
agreements or other indulgences;
(d) at any time release any or all of the collateral held by the
Bank as security for the Obligations;
(e) at any time release any other guarantor from such guarantor's
guarantee of any of the Obligations;
(f) compromise, settle, release, or terminate any or all of the
obligations, covenants, or agreements of the Borrower under the Note, the
Loan Agreement, and/or any one or more of the other Loan Documents; and
(g) with Borrower's written consent, modify or amend any
obligation, covenant or agreement of the Borrower set forth in any one or
more of the Note, the Loan Agreement, and/or the other Loan Documents.
This Guaranty may not be terminated by the Guarantor until such time as
all Obligations, including any renewals or extensions thereof, have been paid
and performed in full and such payments and performance of the Obligations
have
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become final and are not subject to being refunded as a preference or
fraudulent transfer under the Bankruptcy Code or other applicable law.
2. The Guarantor represents and warrants to the Bank and covenants that
the Guarantor has full power and unrestricted right to enter into this
Agreement, to incur the obligations provided for herein, and to execute and
deliver the same to Bank, and that when executed and delivered, this
Agreement will constitute a valid and legally binding obligation of the
Guarantor, enforceable in accordance with its terms. The Guarantor
acknowledges that the Bank is relying upon the Guarantor's covenants herein
in making the Loan to Borrower, and the Guarantor undertakes to perform the
Guarantor's obligations hereunder promptly and in good faith.
3. The Guarantor confirms and warrants that the Borrower is in sound
financial condition and will perform its obligations in accordance with the
terms of the Note, the Loan Agreement and each of the other Loan Documents.
4. The Guarantor covenants and agrees that so long as the Obligations
are outstanding, the Guarantor will from time to time upon request, furnish
to the Bank such information regarding the business affairs, finances, and
conditions of the Guarantor and the Guarantor's properties in such detail as
the Bank reasonably may request. The Guarantor will furnish to the Bank such
financial statements as shall be required to be furnished by the Guarantor
pursuant to the Loan Agreement.
5. If Borrower is or shall hereafter be indebted to Bank for any
obligations, liability or indebtedness other than the Obligations, and Bank
should collect or receive any payments, funds or distributions which are not
specifically required, by law or agreement, to be applied to the Obligations,
Bank may, in its sole discretion, apply such payments, funds or distributions
to indebtedness of Borrower other than the Obligations.
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6. No payment by the Guarantor to the Bank pursuant to the provisions
of this Agreement will entitle the Guarantor (by subrogation to the rights of
the Bank in respect of which such payment is made or otherwise) to any
payment by the Borrower or out of the property of the Borrower, except after
indefeasible payment in full of all amounts and obligations owing to the Bank
by the Borrower and all other guarantors of the obligations of the Borrower
under the Loan Documents.
7. This Agreement shall be binding upon, and inure to the benefit of,
the Guarantor, the Bank and their respective successors and assigns.
8. The validity, interpretation, enforcement and effect of this
Agreement shall be governed by, and construed according to the laws of, the
State of Alabama. The Guarantor consents that any legal action or proceeding
arising hereunder may be brought, at the election of Bank, in the Circuit
Court of Jefferson County, of the State of Alabama, or in the United States
District Court for the Northern District of Alabama, and assents and submits
to the personal jurisdiction of any such courts in any such action or
proceeding.
9. GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM,
COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR IN
ANY WAY PERTAINING OR RELATING TO THIS GUARANTY OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR IN
CONNECTION WITH THE TRANSACTIONS RELATED HERETO OR THERETO OR CONTEMPLATED
HEREBY OR THEREBY OR THE EXERCISE OF ANY RIGHTS AND REMEDIES HEREUNDER OR
THEREUNDER, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. GUARANTOR
AGREES THAT BANK MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED AGREEMENT OF GUARANTOR WITH
BANK IRREVOCABLY TO WAIVE TRIAL BY JURY,
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AND THAT ANY DISPUTE OR CONTROVERSY WHATSOEVER BETWEEN THEM SHALL INSTEAD BE
TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
10. In the event that any provision hereof is deemed to be invalid by
reason of the operation of any law or by reason of the interpretation placed
thereon by any court, this Agreement shall be construed as not containing
such provisions and the invalidity of such provisions shall not affect other
provisions hereof which are otherwise lawful and valid and shall remain in
full force and effect.
11. Any notice or payment required hereunder or by reason of the
application of any law shall be deemed to have been duly given if delivered
in person, mailed by certified or registered mail, postage prepaid, return
receipt requested, or sent by Federal Express or other similar national
overnight courier, to the Guarantor or the Bank, as applicable, at their
respective addresses set forth below, or to such other address as either
party shall designate to the other in a written notice, given as herein
provided:
If to the Guarantor to:
KMG Chemicals, Inc.
00000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
with copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxx & Xxxxxxx
0000 Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
If to the Bank to:
SouthTrust Bank, National Association
000 Xxxxx 00xx Xxxxxx (35203)
P. O. Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Metropolitan Lending
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With copy to:
Xxxxxxx X. Xxxxx, Esq.
Gordon, Silberman, Xxxxxxx & Childs, P.C.
0000 XxxxxXxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
All fees or expenses of mail or overnight courier shall be paid by the
sender. Notice shall be deemed received at the earlier of the time actually
received or three (3) days following the time deposited when sent by mail or
overnight courier in the manner aforesaid. Actual receipt of notice shall
not be required to effect notice hereunder. Payment shall be deemed received
only upon the actual receipt thereof.
12. The failure at any time or times hereafter to require strict
performance by the Guarantor of any of the provisions, warranties, terms and
conditions contained herein or in any other agreement, document or instrument
now or hereafter executed by the Guarantor and delivered to the Bank shall
not waive, affect or diminish any right of the Bank hereafter to demand
strict compliance or performance therewith and with respect to any other
provisions, warranties, terms and conditions contained in such agreements,
documents and instruments, and any waiver of any default shall not waive or
affect any other default, whether prior or subsequent thereto and whether of
the same or a different type. None of the warranties, conditions, provisions
and terms contained in this Agreement or in any agreement, document or
instrument now or hereafter executed by the Guarantor and delivered to the
Bank shall be deemed to have been waived by any act or knowledge of the Bank,
its agents, officers or employees, but only by an instrument in writing,
signed by an officer of the Bank, and directed to Guarantor specifying such
waiver.
13. The obligations of the Guarantor under this Agreement
will continue to be effective or be reinstated, as the case might
be, if at any time any payment from the Borrower of any sum due
to the Bank is rescinded or must
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otherwise be restored or returned by the Bank on the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or as a result of
the appointment of a custodian, conservator, receiver, trustee or other
officer with similar powers with respect to the Borrower or any part of the
Borrower's property or otherwise. If an event permitting the acceleration of
the maturity of the Loan has occurred and is continuing and such acceleration
is at such time prevented by reason of the pendency against the Borrower of a
proceeding under any bankruptcy or insolvency law, the Guarantor agrees that,
for the purposes of this Agreement and the obligations of the Guarantor under
this Agreement, the maturity of the Loan will be deemed to have been
accelerated with the same effect as if the Bank had accelerated the same in
accordance with the terms of the Loan Agreement, the Note, any of the other
Loan Documents or any other document executed in connection with the Loan,
and the Guarantor will immediately pay the unpaid balance of the Loan.
14. If, at any time or times hereafter, the Bank employs counsel to
advise or provide other representation with respect to this Agreement or any
other agreement, document or instrument heretofore, now or hereafter executed
by the Guarantor and delivered to the Bank with respect to the Borrower or
the 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 suit or proceeding relating to this Agreement or any
other agreement, instrument or document heretofore, now or hereafter executed
by the Guarantor and delivered to the Bank with respect to the Borrower or
the Obligations, or to represent the Bank in any litigation with respect to
the affairs of the Guarantor, or to enforce any rights of the Bank or
obligations of the Guarantor or any other person, firm or corporation which
may be obligated to the Bank by virtue of this Agreement or any other
agreement, document or instrument
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heretofore, now or hereafter delivered to the Bank by or for the benefit of
the Guarantor with respect to the Borrower or the Obligations, or to collect
from Guarantor any amounts owing hereunder, then in any such event, all of
the attorneys' fees incurred by the Bank arising from such services and any
expenses, costs and charges relating thereto shall constitute additional
obligations of the Guarantor payable on demand. The Guarantor does hereby
waive any rights of exemption of property from levy or sale under execution
or other process for the collection of debts under the Constitution or laws
of the United States or any state thereof as to any of the obligations
created hereunder.
15. This Agreement constitutes the entire agreement and supersedes all
prior agreements and understandings, both oral and written, between the
Guarantor and the Bank with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Guarantor has caused this instrument to be
executed by its duly authorized officer as of the day and year first above
written.
KMG CHEMICALS, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Its: Vice President
--------------------------------
STATE OF TEXAS
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COUNTY OF XXXXXX
----------
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that XXXXX X. XXXXXXX, whose name as VICE PRESIDENT of
KMG Chemicals, Inc., a Texas corporation, is signed to the foregoing
instrument, and who is known to me, acknowledged before me on this day that,
being informed of the contents of said instrument, he, as such officer and
with full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand and official seal, this the 25TH day of JUNE, 1998.
/s/ Xxxxxx Xxxxxxxxx
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(SEAL) Notary Public
My Commission Expires: 7/11/2001
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