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HomeMy WebLinkAbout12050RESOLUTION NO. 12050 A RESOLUTION APPROVING THE AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION, AND KMG ELECTRONIC CHEMICALS, INC. RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, APPROVING AN INTERCREDITOR AGREEMENT IN CONNECTION WITH SAME, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAID AGREEMENTS, AND TRANSFERRING $500,000 FROM THE 1992-2011 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND THEREFOR BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The City Council finds and determines that the expenditure of $500,000 for the job creating capital improvement project with KMG Electronic Chemicals, Inc. described in the attached Agreement, meets and complies with the criteria and standards established by Ordinance No. 6381 and will create employment opportunities justifying the expenditure of public funds. SECTION 2. The Agreement dated as of December 27, 2010 between Pueblo, a Municipal Corporation and KMG Electronic Chemicals, Inc. relating to a job creating capital improvement project, a copy of which is attached hereto, having been approved as to form by the City Attorney, is hereby approved. The President of the City Council is authorized to execute and deliver the Agreement in the name of the City and the City Clerk is directed to affix the seal of the City thereto and attest same. SECTION 3. The Intercreditor Agreement dated as of December 27, 2010 between Pueblo, a Municipal Corporation and Wells Fargo Bank, N.A., a copy of which is attached hereto, having been approved as to form by the City Attorney, is hereby approved. The President of City Council is authorized to execute and deliver the Agreement in the name and on behalf of the City. SECTION 4. Funds in an amount of $500,000 are hereby authorized to be transferred, expended and made available to KMG Electronic Chemicals, Inc. out of the 1992-2011 Sales and Use Tax Capital Improvement Projects Fund for the sole purpose of the job creating capital improvement project and in the manner described in the Agreement. The funds hereby authorized to be transferred and expended shall be held by the City and released, disbursed and paid by the Director of Finance to or for the benefit of KMG Electronic Chemicals, Inc. upon compliance with section 2(b) of the Agreement and after receipt by the Director of written requests for payment in compliance with paragraph 2(c) of the Agreement. SECTION 5. The officers of the City are directed and authorized to perform any and all acts consistent with the intent of this Resolution and attached Agreement to effectuate the transactions described therein. SECTION 6. This Resolution shall become effective upon final approval and passage. INTRODUCED: December 27, 2010 BY: Judy Weaver COUNCILPERSON Background Paper for Proposed RESOLUTION DATE:AGENDA ITEM # Q-2 December 27, 2010 DEPARTMENT: Law Department Thomas J. Florczak, City Attorney TITLE A RESOLUTION APPROVING THE AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION, AND KMG ELECTRONIC CHEMICALS, INC. RELATING TO A JOB CREATING CAPITAL IMPROVEMENT PROJECT, APPROVING AN INTERCREDITOR AGREEMENT IN CONNECTION WITH SAME, AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAID AGREEMENTS, AND TRANSFERRING $500,000 FROM THE 1992-2011 SALES AND USE TAX CAPITAL IMPROVEMENT PROJECTS FUND THEREFOR ISSUE Should City Council approve the Agreement between the City and KMG Electronic Chemicals, Inc. and an ancillary agreement concerning collateral security for the funds provided? RECOMMENDATION PEDCO recommends that City Council approve the Agreement. BACKGROUND KMG Electronic Chemicals, a Texas corporation (“Company”) already operating at the Pueblo Airport Industrial park, intends to expand its chemical manufacturing facility within the City of Pueblo. The Agreement authorizes the expenditure of $500,000 from the 1992-2011 Sales and Use Tax Capital Improvement Projects Fund (“Funds”) as an employment incentive for 19 additional full-time employees whose annual compensation shall average at least $34,111.00. Funds will be used for the purchase of industrial equipment for blending, processing and packaging chemicals. If Company defaults in its employment commitment, Company will repay the Funds on a pro-rata basis. The employment commitment date is April 1, 2012 and the repayment period is 7-years after the employment commitment date. Company’s repayment obligation will be secured by a first security interest in equipment; the Intercreditor Agreement provides for subordination of the security interest of the Company’s lender, Wells Fargo, to the City’s security interest. FINANCIAL IMPACT See Background. Rev 12/16/2010 AGREEMENT THIS AGREEMENT ( "Agreement ") is entered into as of December 27, 2010 between Pueblo, a municipal corporation (the "City ") and KMG Electronic Chemicals, Inc , a Texas corporation (the "Company ") WHEREAS, Company has expressed a willingness to expand its manufacturing facility currently located within the Pueblo Memorial Airport Industrial Park Subdivision, Pueblo County, Colorado, and in furtherance thereof has, through the Pueblo Economic Development Corporation, made application for funds and other economic incentives with the City, and WHEREAS, the City has approved such application and will make funds and other economic incentives available to Company subject to and upon the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, City and Company agree as follows 1 The following terms as used in this Agreement shall have the following meaning unless the context clearly indicates otherwise "Effective Date" means the date of approval of this Agreement by City Council of City "Employment Commitment Date" means April 1, 2012. "Equipment" means industrial equipment, including a mixed acid etch blend tank, bottling line equipment, and related items, to be acquired, installed, maintained and used by Company in the Facility, which Equipment shall have a useful economic life of not less than 102 months "Facility" means the manufacturing facility located at 250 William White Boulevard, Pueblo, Colorado, wherein Company will conduct its manufacturing operations. "Full -Time Employee" means a person who actually performs work at the Facility for not less than thirty -five (35) hours per week whether employed by Company or by an outside entity acting as an agency to provide Full -Time Employees for Company The term "Full -Time Employee" does not include independent contractors nor employees of independent contractors except employees performing work at the Facility who are employees of an independent contractor acting as an agency to provide Full -Time Employees for Company "Quarter" means three consecutive calendar months commencing January 1, April 1, July 1 and October 1 of each calendar year "Quarterly Employees" means the sum of the aggregate number of Full -Time Employees on each business day of a Quarter, divided by the sum of the aggregate business days in such Quarter 2 If Company is not in default hereunder, City will, after the Effective Date, advance to or for the benefit of Company funds in an amount not to exceed $500,000 00 (the "City Funds "), subject to and contingent upon the following conditions and covenants which Company agrees to perform and comply with. (a) City Funds will be disbursed by City to Company solely for reimbursement for the acquisition of Equipment by Company at fair market value from a reputable vendor in an arms- length transaction. Acquisition of equipment from any person or entity related to or a subsidiary of Company is not an arms- length transaction. Company shall grant to City a perfected first security interest in all Equipment for which Company receives reimbursement from City by execution of a Security Agreement which identifies the Equipment in accordance with section 6 of this Agreement. (b) Company shall file in the office of the City Clerk copies of the following: (i) Company's certificate or other evidence of authority to transact business in the State of Colorado issued by the Colorado Secretary of State, (ii) certified copy of the resolution of the governing board of Company approving this Agreement and the Security Agreement, and authorizing its officers to execute and deliver this Agreement, the Security Agreement, and related documents in the name of Company, (iii) this Agreement, and Security Agreement executed by authorized officers of Company, and (iv) evidence reasonably satisfactory to City that Company will expand manufacturing operations at the Facility The date of the last to occur , of the filings required under (i), (ii), (iii), and (iv) of this section 2(b) shall be referred to herein ' as "Closing" If Closing does not occur on or before January 31, 2011, or such later date as Company and City shall mutually agree, City, at its sole option, may terminate this Agreement and City and Company shall thereafter be released and discharged from all obligations hereunder , (c) As conditions precedent to the disbursement of City Funds for the acquisition of Equipment, Company shall file (i) with the City Clerk, the documents described in subsection (b) above, and (ii) with the City's Director of Finance, written request for payment, certified to be true and correct by an officer of Company, representing that the amounts included in the request for payment have not been included in any prior request for payment and are for the actual cost of Equipment paid by Company, identifying the Equipment for which payment is sought, including paid invoices therefor and certificates of delivery and installation in the Facility 3 City and Company stipulate and agree that the total economic incentives provided by City to Company under this Agreement is $500,000 00 (the "Total Economic Incentives ") 4 Company acknowledges and agrees that the primary purpose of City in entering into this Agreement and the sole benefit to the City for making the Total Economic Incentives available to Company hereunder is the creation of jobs. Therefore, Company represents, covenants, and agrees that Company will on and after the Employment Commitment Date continuously conduct its business operations at the Facility and employ not less than eighty -seven (87) Full -Time Employees at the Facility whose annual salary shall average at least $34,111 00 (the "Employment Commitment ") Company will use good faith efforts in accordance with its sound business practices to (i) employ residents of the County of Pueblo as Full -Time Employees including, without limitation, engaging in reasonable programs and posting of employment openings in the City of Pueblo, and (ii) engage engineers, architects, contractors and suppliers whose principle places of business are located in Pueblo County, Colorado, in all construction work for or related to the Facility 5 Notwithstanding anything contained in this Agreement to the contrary, if Company shall for any reason default in its Employment Commitment, Company shall repay to City a pro -rata share of the Total Economic Incentives based upon the number of Full -Time Employees employed by Company at the Facility (the "Repayment Obligation "), as follows (a) During the seven (7) year period starting on the Employment Commitment Date and ending eighty -four (84) months thereafter (the "Repayment Period ") Company shall pay to City an amount for each Quarter equal to the Quarterly Employees less than eighty -seven (87) Full -Time Employees employed at the Facility by Company multiplied by $939 84 (the "Company's Quarterly Payments "), but not to exceed $17,856 95 per Quarter For example, if for the second Quarter of the third year after the Employment Commitment Date such Quarterly Employees is 82, the amount payable by Company to City on or before the fifteenth (15th) day of the next calendar month would be (87 - 82) x $939 94 = $4,699 70 If the number of Quarterly Employees for any Quarter is 68 or less, the Company's Quarterly Payment will be fixed at $17,856 95 (b) Company's Quarterly Payments, if any, shall be paid to the City without notice, demand, deduction or setoff on or before the fifteenth (15th) day of the month following the end of each Quarter during the Repayment Period at the office of the Director of Finance of City, 150 Central Main Street, Pueblo, Colorado, 81003, or such other person or location as the City may designate All past due Company's Quarterly Payments shall bear interest at the rate of eight percent (8 %) per annum ( "Default Interest ") until paid. (c) Within fifteen (15) days after the end of each Quarter after the Employment Commitment Date and for one calendar month after the Repayment Period, Company will submit to City's Director of Finance Company's statements showing the Quarterly Employees for the preceding Quarter and their annual salary, together with the basis upon which Quarterly Employees and Company's Quarterly Payment, if any, were computed certified by an officer of the Company to be true and correct. For purposes of verifying Company's employment and salary, City shall have access to Company's records relating to Company's employees employed at the Facility (d) If Company defaults in any of its obligations under this Agreement including, without limitation, its Repayment Obligation, and such default is not cured within thirty (30) days after written notice specifying the default is given by City to Company, then in such event, the entire balance of Company's Repayment Obligation shall become due and payable, without notice, notice being hereby expressly waived, together with Default Interest 3 from the date of default, and for such purpose, the entire balance of Company's Repayment Obligation shall be an amount equal to 19 times $939 94 multiplied by the remaining Quarters of the Repayment Period plus the amount of Company's unpaid Quarterly Payments, if any, but in no event more than the amount of the Total Economic Incentives actually provided by City to Company plus Default Interest. Company's Repayment Obligation is absolute and unconditional and shall not be abated, reduced, diminished, modified, withheld or otherwise offset for any cause or reason whatsoever 6 Company's Repayment Obligation under this Agreement shall be deemed to be a debt of Company payable to City until Company performs and discharges its obligations hereunder including, without limitation, its Repayment Obligation. Company's obligations under this Agreement including its Repayment Obligation shall be secured by a perfected first security interest in the Equipment. Contemporaneously with the execution of this Agreement, Company shall execute and deliver to City Company's Security Agreement, Financing Statement and other documents required to perfect a first security interest in the Equipment all in form and content approved by City's Attorney (the "Security Agreement ") 7 (a) Prior to instituting any proceeding to enforce Company's Repayment Obligation, City shall notify Company in writing of its intention to institute such proceedings. Company may request relief from its Repayment Obligation by delivering to City within twenty (20) days after date of City's notice, Company's written request for relief specifying the grounds upon which such relief is sought together with documents supporting said grounds. Within ninety (90) days after receipt of Company's request, City will schedule a meeting with the City Council of City ( "City Council ") at which meeting Company may appear City will notify Company of the time and place of the meeting. Failure of Company to timely deliver its complete wntten request for relief or to appear at the scheduled meeting with the City Council shall entitle City to immediately institute proceedings to enforce Company's Repayment Obligation. (b) City Council may or may not, in its sole and absolute discretion, relieve Company, in whole or in part, from Company's Repayment Obligation. Any action taken by the City Council relating to a request for relief shall be final and binding on Company, and not subject to judicial review Any such action by City Council is, and shall constitute, a legislative measure. Nothing contained in this section 7 shall grant or be construed to grant to Company any right or claim to relief from its Repayment Obligation or hearing with respect thereto (c) No delay by the City in scheduling a meeting, or failure by City to exercise its right to enforce this Agreement, including Company's Repayment Obligation, and no partial or single exercise of that right, shall constitute a waiver of that right. 8 In the event of any litigation arising under this Agreement, the court shall award to the prevailing party its costs and reasonable attorney fees. Exclusive venue for any such litigation shall be Pueblo County, Colorado All such litigation shall be filed in the District Court in and for the County of Pueblo, State of Colorado and each party submits to the jurisdiction of such District Court. To the extent allowed by law, each party waives its right to a 4 jury trial. 9 This Agreement expresses the entire understanding of the parties and supersedes and abrogates any and all prior dealings and commitments, whether oral or written, with respect to the subject matter of this Agreement and may not be amended or modified except in writing signed by City and Company Any waiver of any provision of this Agreement must be in writing and signed by the party whose rights are being waived. No waiver of any breach of any provision hereof shall be or be deemed to be a waiver of any preceding or subsequent breach of the same or any other provision of this Agreement. The failure of either party to enforce or seek enforcement of the terms of this Agreement following any breach shall not be construed as a waiver of such breach. 10 This Agreement shall be construed in accordance with and be governed by the laws of the State of Colorado without regard to conflict of law principles. 11 Any notices hereunder shall be sufficiently given if given in writing personally or mailed by first class, registered, or certified mail, postage prepaid, addressed. (a) if to City, City Manager, City of Pueblo, 1 City Hall Place, Pueblo, Colorado, 81003, or (b) if to the Company, KMG Electronic Chemicals, Inc., Attention. General Counsel, 9555 West Sam Houston Parkway South, Suite 600, Houston, TX 77099, or to such other person or address as either party shall specify in written notice given to the other party pursuant to the provisions of this section 11 12. Time is of the essence hereof. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, provided Company may not assign this Agreement or any interest herein without the express written consent of City, which consent shall not be unreasonably withheld. Any assignment or attempted assignment of this Agreement by Company without such consent shall be null and void. No such assignment nor City's consent thereto shall release or discharge Company from any obligation or liability under this Agreement. 15 The persons signing this Agreement in the name of and on behalf of Company represent and warrant that they and Company have the requisite power and authority to enter into, execute, and deliver this Agreement, and that this Agreement is a valid legally binding obligation of Company enforceable against Company in accordance with its terms. 16 Company represents and warrants that no person, entity, or organization has been employed or retained or will receive or be paid, directly or indirectly, any commission, percentage, contingent fee or any other remuneration, payment or receipt of which is contingent 5 upon approval of this Agreement or City providing the Total Economic Incentives hereunder, or any part thereof. For breach or violation of this warranty, City shall have the nght to terminate this Agreement, or recover the full amount of such commission, percentage, contingent fee or other remuneration, and /or to seek such other remedies legally available to City, which remedies shall be cumulative 17 In no event shall City, its officers, agents or employees be liable to Company for damages, including without limitation, compensatory, punitive, indirect, special or consequential damages, resulting from or arising out of or related to this Agreement or the performance or breach thereof by City or the failure or delay of City in the performance of any covenant or provision under this Agreement on its part to be performed. In consideration of City entering into this Agreement, Company hereby waives and discharges City, its officers, agents and employees from all claims for any and all such damages. No breach, default, delay or failure of City under this Agreement shall be or be construed to be a waiver, discharge or release of Company's Repayment Obligation. Notwithstanding the foregoing, if City defaults in any material covenant of this Agreement, Company shall have the right, without the showing or any special damages or an inadequate remedy at law, to seek specific enforcement thereof, but not for damages of any type or nature 18 If any provision of this Agreement is declared by a court of competent jurisdiction to be invalid or unenforceable, such determination shall not affect the other provisions of this Agreement which shall remain in full force and effect. 19 Neither party shall be, or hold itself out as, agent of the other or as joint venturers under this Agreement. 20 Each party acknowledges that this Agreement was fully negotiated by the parties and, therefore, no provision of this Agreement shall be interpreted against any party because such party or its legal representative drafted such provision. 21 The provisions of this Agreement are for the exclusive benefit of the parties hereto and their successors and permitted assigns, and no third party shall be a beneficiary, or have any rights by virtue of this Agreement. 22. This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed for all purposes to be an original, and all such counterparts shall together constitute but one and the same original. Executed at Pueblo, Colorado, the day and year first above written. 6 [SEAL] Pueblo, a Municipal Corporation Attest: B t,a City Jerk President of the City Council [SEAL] ;;, Lo, 4 ° , '' KMG Electronic Chemicals, Inc. a Texas ° µ � ' .<' ' corporatio) `' ‘,/ - I _ \_. ,, ii - 7/By ( �1 �— r ef Name John V Sobchak \.°0 "`� 4 ',�'� 'Title: Vice - President and Chief Operating Officer I I 7 INTERCREDITOR AGREEMENT THIS INTERCREDITOR AGREEMENT is made as of December 27, 2010 between WELLS FARGO BANK, N.A., a national banking association, successor by merger to Wachovia Bank, N.A., as Agent and Collateral Agent (collectively, the "Agent ") pursuant to the Credit Agreement (hereinafter defined), and PUEBLO, a municipal corporation, organized and existing under the constitution of the state of Colorado ( "City ") RECITALS A. KMG Electronic Chemicals, Inc , a Texas corporation ( "Borrower ") and its affiliates, KMG Chemicals, Inc and KMG- Bernuth, Inc. (Borrower and such affiliates, collectively, the "Borrowing Group "), Agent and certain parties identified as Lenders have entered into that certain Amended and Restated Credit Agreement dated December 31, 2007, as amended (collectively, the "Credit Agreement "), by which Agent and Lenders have provided certain loans and credit accommodations to the Borrowing Group, which loans and credit accommodations are secured by liens and security interests on substantially all of the assets of Borrower, in favor of Agent for the benefit of Lenders; in connection with the Credit Agreement, certain parties identified as the Prudential Note Holders have also made loans to the Borrowing Group, secured by liens and security interests on substantially all of the assets of Borrower, in favor of Agent for the benefit of Prudential Note Holders, B City is providing certain funds and other economic incentives to Borrower, pursuant to the terms of that certain Agreement (the "Incentive Agreement ") of even date herewith, which funds and other economic incentives are secured by a security interest in that certain equipment (collectively, the "Equipment ") described in Exhibit "A" attached hereto and incorporated herein by reference for all purposes, C Pursuant to the Incentive Agreement, City is to have a first pnonty secunty interest in the Equipment and, in order to provide for such pnonty, City has requested Agent to enter into this Agreement, and Agent has consented to do so NOW, THEREFORE, for value received and in consideration of the recitals above, the mutual covenants herein, and other good and valuable consideration, the parties hereto do agree as follows. 1 Subordination. Agent hereby subordinates its security interest in the Equipment and all proceeds of the Equipment, which security interest is held by Agent for the benefit of Lenders and Prudential Note Holders, to the security interest of City in the Equipment; this subordination shall be effective until the earlier of (i) one (1) year after the expiration of the Repayment Period, as defined in the Incentive Agreement, or (ii) the satisfaction in full of the Repayment Obligation, as defined in the Incentive Agreement; upon the earlier to occur of such events, the subordination of security interests set forth in this Agreement shall automatically terminate, provided, however, that if dunng the period when the subordination is in effect, the City takes any action to enforce the Company's Repayment Obligation or to seize, repossess or sell the Equipment in partial or full satisfaction thereof, then the subordination shall continue and remain in effect until such action has been fully concluded, whether by final judgment after expiration of all appeal periods or sale of the Equipment and application of proceeds toward satisfaction of Borrower's obligations to City without the necessity of taking judicial or other action against Borrower The Incentive Agreement may not be amended or modified without the prior written consent of Agent; provided, however, that acceleration of the Repayment Obligation as provided in the Incentive Agreement shall not be deemed an amendment or modification of the Incentive Agreement. 2 Agent's Right to Notices. City shall give to Agent a copy of all notices it is required by law or the Incentive Agreement to give to Borrower relating to any default by Borrower or any action by City under the Incentive Agreement, including without limitation any required notices of default, notices of meetings with the City Council, notices of any action to take possession of or foreclose upon the Equipment, and notice or service of any suit or other action to recover the amount of the Repayment Obligation or possession of the Equipment. 3 Agent's Right to Pay If at any time Borrower defaults in the Repayment Obligation, Agent shall have the right, but not the obligation, to pay the Repayment Obligation, including any costs of collection and reasonable attorneys' fees then due and owing, at par, without premium or penalty Upon payment of the Repayment Obligation, City shall assign to Agent all of City's right, title and interest in and to the Repayment Obligation and its nghts, hens and security interests securing the Repayment Obligation, without recourse 4 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand or by messenger service (including any nationally recognized overnight delivery service), or five (5) days after being deposited into the custody of the United States Postal Service, properly addressed and with sufficient postage, by certified mail, return receipt requested, addressed as set forth below or to such address or other address as may be hereafter notified by the respective parties hereto To Agent: Wells Fargo Bank, N.A. Attn. John L. Kallina, Vice President 2500 Citywest Blvd., Suite 1100 Houston, Texas 77042 With a copy to Winstead PC Attn. Nelson R. Block 600 Travis Street, Suite 1100 Houston, Texas 77002 To City. City of Pueblo Attn. City Manager 1 City Hall Place Pueblo, Colorado 81003 With a copy to City Attorney 503 N Main Street, Suite 203 2 Pueblo, Colorado 81003 5 CHOICE OF LAW, VENUE AND JURISDICTION THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF TEXAS PRIORITY OF LIENS AND SECURITY INTERESTS SHALL BE DETERMINED IN ACCORDANCE WITH THE UNIFORM COMMERCIAL CODE OF THE STATE OF COLORADO THE STATE AND FEDERAL COURTS SITTING IN HARRIS COUNTY, TEXAS SHALL BE THE EXCLUSIVE VENUES FOR ANY MATTER ARISING OUT OF THIS AGREEMENT, AND THE PARTIES CONSENT TO THE JURISDICTION OF SAID COURTS 6 No Third -Party Beneficiaries. Borrower has executed this Agreement in order to evidence its acknowledgment of the terms hereof and to consent to the Agent's right to payment of the Repayment Obligation provided in Section 3 This Agreement is solely for the benefit of Agent and City, and neither Borrower nor any other person shall be deemed to be a third party beneficiary of this Agreement. 7 Successors and Assigns. This Agreement is binding upon, and inures to the benefit of, Agent and City, and their respective successors and assigns. 8 Severability Any provision of this Agreement held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Agreement and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. 9 Counterparts. This Agreement may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument. 10 Effect of Waiver No consent or waiver, express or implied, by either party to or for any breach of or deviation from any covenant, condition or duty by the other party shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty 11 Headings. The headings, captions, and arrangements used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement. 12 NO ORAL AGREEMENTS THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES [Signature page follows.] 3 EXECUTED as of the date set forth above. AGENT WELLS FARGO BANK, N.A., as Agent By• ,�J(4 John L. Kallina Vice President CITY PUEBLO, a Colorado Municipal corporation BY' LarryW. Atencio President of City Council BORROWER. KMG ELECTRONIC CHEMICALS, INC. By' .� / Y L ohn V Sobchak Vice President and Chief Financial Officer 4 EXHIBIT "A" Equipment Equipment to be acquired consisting of a mixed acid etch blend tank and bottling line equipment, including dust cap removal equipment, conveyors, head fillers, docking station, centralized control panel with PLC controls, automatic 2 head bottle capper, and related additional equipment. Borrower shall give to Agent and City a complete description of each principal item of Equipment at the time each item is acquired, and within a reasonable time thereafter Agent and City shall supplement this Exhibit with a more complete description of the Equipment upon which they shall jointly agree. HOUSTON_1 \1073103 v8 12/17/2010