8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 2, 2013 (June 28, 2013)

KMG Chemicals, Inc.

(Exact name of registrant as specified in its charter)

TEXAS	001-35577	75-2640529
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
9555 W. Sam Houston Parkway S., Suite 600, Houston, Texas		77099
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code 713-600-3800

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The Company’s Board of Directors (the “Board”) announced that Neal Butler (“Mr. Butler”) has decided to resign as President and Chief Executive Officer of the Company, as well as his position as a member of the Board, effective as of July 10, 2013. The Board appointed Christopher T. Fraser (“Mr. Fraser”), the Company’s Chairman of the Board, to serve as the Company’s Interim President and Chief Executive Officer of the Company effective as of July 10, 2013 while a search is conducted by the Board for a permanent Chief Executive Officer. A copy of the Company’s press release announcing the departure of Mr. Butler and the appointment of Mr. Fraser is furnished hereto as Exhibit 99.1.

The executive recruiting firm of Russell Reynolds has been engaged to assist the Board search for a permanent CEO, a process which is expected to be completed expeditiously. Mr. Fraser has removed himself as a candidate for this search.

Mr. Fraser, age 55, has been a director of the Company since 2008 and has served as the Chairman of the Board since December 2012. While serving as Interim Chief Executive Officer and President, Mr. Fraser will continue as Chairman of the Board.

Mr. Fraser has broad experience in the chemical industry, much of that experience with major, global participants. He retired in 2009, but most recently he was the President and CEO of Chemical Lime Company, a position held from 2006. Chemical Lime is the leading North American producer of calcium based (limestone), alkaline products with various industrial applications including the manufacture of steel, water treatment, flue gas desulphurization, and chemical production. Before joining Chemical Lime, Mr. Fraser was President and CEO of OCI Chemical Corporation, a wholly-owned subsidiary of DC Chemical Co. OCI is among the world’s leading producers of high quality soda ash and sodium percarbonate. Prior to joining OCI in 1996, Mr. Fraser held various positions of responsibility in sales, marketing, business development, operations and general management. In 2011, Mr. Fraser joined the Operating Partner Program of Advent International, a private equity firm, and in that position he has advised strategic advice for certain of Advent’s portfolio companies. Mr. Fraser holds a Bachelor of Science in Chemistry and in Business Administration from the University of Connecticut, as well as a Masters of Business Administration from Pepperdine University.

Mr. Butler’s resignation shall be deemed a termination by the Company other than for Cause or Poor Performance and a Qualifying Termination (as such terms are defined in the Severance Plan) for which he shall be entitled to the severance benefits under Section 4.2(a) (the “Severance Benefits”) of the Severance Plan. The Severance Benefits include (a) a lump sum severance payment of $930,860, which is two times Mr. Butler’s base salary for 2013, and (b) the amount of $350,921.47, which is a prorated portion of Mr. Butler’s target annual short term incentive or bonus (being 80% of his base salary) for the fiscal year ending July 31, 2013, with such proration based on the number of days in which Mr. Butler was employed this fiscal year, divided by 365.

In connection with his appointment, Mr. Fraser and the Company entered into an “at will” employment agreement dated June 28, 2013 (the “Interim CEO Agreement”), which will terminate upon the appointment of a new Chief Executive Officer, unless earlier terminated by Mr. Fraser or the Company. Under the Interim CEO Agreement, Mr. Fraser will receive an annual salary of $465,430 and will be reimbursed for all reasonable expenses incurred by him in the course of his duties. The Company also agreed to provide transportation expenses from Mr. Fraser’s permanent residence in Arlington, Texas and temporary housing expenses in Houston, Texas. Due to the temporary nature of his employment, pursuant to the Interim CEO Agreement, Mr. Fraser will not participate in any of the Company’s management incentive or welfare benefit plans; however, he will be eligible to receive equity awards on substantially the same terms that he would have received in the event he had retained his status as a non-employee member of the Board of Directors. While Mr. Fraser serves as the Company’s Interim Chief Executive Officer, he will not be eligible to receive cash or other compensation under the Company’s director compensation program for non-employee directors. The foregoing description of the Interim CEO Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Interim CEO Agreement, which is attached to this current report as Exhibit 10.29 and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

10.29	Interim CEO Agreement with Mr. Fraser
99.1	Press Release, dated June 28, 2013

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

KMG Chemicals, Inc.
By:	/s/ John V. Sobchak	Date July 2, 2013
Name:	John V. Sobchak
Title:	Vice President & CFO

EX-10.29

Exhibit 10.29

KMG CHEMICALS, INC. 9555 W.Sam Houston Parkway S., Suite 600 Houston,Texas 77099

June 28, 2013

Christopher T. Fraser

9448 Bella Terra Drive

Fort Worth, TX 76126

Dear Chris:

You have agreed to serve (i) effective immediately until July 10, 2013, as the Executive Chairman of KMG Chemicals, Inc. (the “Company”), with all of the powers and spending authority comparable to the CEO of the Company, and (ii) effective as of July 10, 2013, as Interim President and Chief Executive Officer of the Company during the Company’s search for a permanent Chief Executive Officer and President. Such positions as Executive Chairman and Interim President and CEO are collectively referred to herein as the “Interim CEO”. This letter agreement (the “Agreement”) sets forth the terms of your employment as Interim CEOs and is effective as of June 28, 2013 (the “Effective Date”).

1. Position. In your position as Interim CEO, you will report to the Company’s Board of Directors (the “Board”). The Interim CEO position is a full-time position with its principal work place at the Company’s headquarters in Houston, Texas. While you render services to the Company as Interim CEO, you will not engage in any other employment, consulting or other business activity (whether full-time or part-time) that would create a conflict of interest with the Company; provided, however, (i) that you may continue to serve on any boards of directors or committees thereof on which you served as of the Effective Date, and (ii) you may continue serving as an Operating Partner with Advent International, a private equity firm, pursuant to which you provide consulting advice from time to time to their portfolio companies. By signing this Agreement, you confirm to the Company that you have no contractual commitments or other legal obligations that would prohibit you from performing your duties for the Company.

2. Term. From the Effective Date, your position as Interim CEO may continue, at the latest, until the date on which a permanent successor Chief Executive Officer is hired and commences employment with the Company (the “Interim Term”). Notwithstanding the foregoing, your employment is “at will,” and may be terminated by you or the Company at any time, with or without cause, or with or without advance notice. Following the end of the Interim Term, you will remain on the Board as a non-employee director.

3. Board Service; Equity Awards. While you serve as Interim CEO, you will also continue to serve on the Board and act as its Chairman. During the Interim Term, you will not earn any non-employee director cash retainers, equity grants or other compensation under the Company’s Director Compensation Program for your services as a director (including as Chairman); provided, however, you will continue to be granted equity awards on the same basis, time, vesting and other conditions as non-employee directors may be granted during the Term.

4. Compensation and Benefits.

(a) During the Interim Term, the Company will pay you a salary at the annualized rate of Four Hundred Sixty-Five Thousand Four Hundred Thirty Dollars ($465,430) per year, payable at such times as the Company’s normal payroll.

(b) During the Initial Term, except for the New Equity Awards described in Section 3 above, unless the Compensation and Development Committee of the Board otherwise determines in its sole discretion and to the extent consistent with applicable law:

(i) you will not be eligible to participate in any Company cash-based or equity-based incentive plans or programs applicable to the Company’s Executive Officers (collectively, the “Executive Officer Plans”), including, without limitation, the annual incentive compensation program for fiscal year 2013, any performance-based restricted stock grants for fiscal year 2013 under the 2009 Long-Term Incentive Plan, or the Executive Severance Plan; and

(ii) you will not be eligible to participate in any other Company compensation, severance or employee welfare benefit plan, program, agreement or policy (collectively with the Executive Officer Plans, the “Plans.”

(c) In addition, you hereby waive, relinquish and forever release the Company and the respective Plans from any and all rights to awards, payments and benefits that you may otherwise have under the terms thereof. Without limiting the foregoing, and for the avoidance of doubt, you will not be eligible to participate in any severance plan, program or policy sponsored by the Company and you will not be eligible to receive any severance benefits upon the termination of your services as the Interim CEO.

5. Expenses. During the Interim Term, the Company will promptly reimburse you for (i) reasonable business expenses in accordance with the Company’s expense reimbursement policy as in effect from time to time, (ii) reasonable travel expenses between your permanent residence and your office at the Company (on a weekly basis), and (iii) the rent and other associated costs incurred by you for renting a furnished two bedroom apartment located near the Company’s headquarters in Houston, Texas, in each case, upon submission by you of receipts and other documentation as requested by the Company. Such expenses shall be subject to the approval of the Chair of the Compensation and Development Committee of the Board. The Company will make you whole for any employment and income taxes associated with your travel and housing benefits.

6. Indemnification. The Company shall indemnify you with respect to activities in connection with your employment hereunder to the fullest extent provided by applicable law and to the same extent as the Company indemnifies other Company officers or directors. You will also be named as an insured in your capacities as Interim CEO and as director of the Company on the director and officer liability insurance policy currently maintained or as may be maintained by the Company from time to time.

7. Required Employment Forms. You will be required, as a condition of your employment with the Company, to sign all of the Company’s standard forms applicable to new employees. You agree and acknowledge that, as an employee of the Company, you will be subject to the Company’s policies as in effect from time to time (including, but not limited to, policies related to ethics, insider trading, confidentiality and proprietary information) and you agree to execute any agreements as reasonably requested by the Company to acknowledge your agreement to such policies.

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8. Tax Matters. All forms of compensation referred to in this Agreement are subject to applicable withholding and payroll taxes and other deductions required by law.

9. Entire Agreement. This Agreement supersedes and replaces any prior agreements, representations or understandings (whether written, oral, implied or otherwise) between you and the Company, and constitutes the complete agreement between you and the Company, regarding your position as Interim CEO. This Agreement may not be amended or modified, except by an express written agreement signed by both you and the Chair of the Compensation and Development Committee.

10. Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, excluding laws relating to conflicts or choice of law. For any action between the parties arising out of or relating to this Agreement, each of the parties irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the state and federal courts located in Harris County, Texas.

Very truly yours,
KMG CHEMICALS, INC.
By:	/s/ Fred C. Leonard III
	Fred C. Leonard III
	Chair of Compensation and Development Committee

I have read and accept this employment offer:

/s/ Christopher T. Fraser

Christopher T. Fraser

Dated: 6-28-13

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EX-99.1

Exhibit 99.1

KMG Chemicals, Inc. 9555 W. Sam Houston Parkway South Suite 600 Houston, TX 77099 USA

Neal Butler, President and CEO, To Step Down from KMG Chemicals

Board Chair Christopher T. Fraser to serve as Interim President and CEO

HOUSTON — (Business Wire) — June 28, 2013 — The Board of Directors of KMG Chemicals, Inc. (NYSE: KMG), a global provider of specialty chemicals to select markets, announced today that J. Neal Butler, current president and chief executive officer, has decided to resign as an officer and director of the company, effective July 10. Christopher T. Fraser, chairman of KMG’s board of directors, has been appointed interim president and CEO to lead the company until a successor is in place.

Executive recruitment firm Russell Reynolds, as a part of its ongoing service to KMG, is assisting the board in the CEO search, a process which is expected to be completed expeditiously. Fraser has removed himself as a candidate for this search and will continue as chairman of the board.

Butler joined the company in 2004 as chief operating officer and in 2007 was named president and CEO and member of the board of directors. “Leaving this company I have helped build is not an easy decision, but the time is right for me to move on. After 37 years in the industry, I look forward to spending time with my family, traveling and doing the things that a CEO’s schedule would not allow,” said Butler. “Our corporate strategy is firmly in place, our latest acquisition has been completed and integration is progressing well. I will always support KMG and I leave fully confident that continued success lies ahead.”

As the board’s chairman, Fraser expressed the board’s appreciation to the outgoing CEO. “Under Neal Butler’s leadership, KMG’s revenues grew from $44 million in fiscal 2004 to $273 million in the last fiscal year,” said Fraser. “He accomplished important objectives during his nine years here, and I join the entire board of directors in thanking Neal for his major contributions to the growth and success of KMG Chemicals. We wish him only the best in this new chapter of his life.”

Fraser is an experienced executive in the chemicals industry, and has been CEO of two chemical companies. He has served on KMG’s board since 2008 and as chairman of the board since December 2012. In his role as interim CEO, Fraser will lead the business, in conjunction with KMG’s existing management team.

“Our recently completed acquisition of the Ultra Pure Chemicals business from OM Group results in a company one-third larger in terms of revenue and with expanded global breadth,” Fraser said. “As the company pursues its growth strategy in selected specialty chemicals markets, our challenges and opportunities will necessarily increase given KMG’s expanded operations in Europe and first physical presence in Asia. The selection criteria for the next CEO reflect this new stage in the company’s growth and the skills and experience that the future will require,” he said.

J. Neal Butler biographical information

J. Neal Butler was named KMG’s president and CEO on June 1, 2007. Butler was employed in 2004 as the chief operating officer and was added to the board of directors on February 20, 2007. Before joining the Company, Mr. Butler was CEO and president of Naturize BioSciences, which specialized in biological treatments for the turf, crop and plant care markets. Prior to that, he served in various senior management positions at Zeneca Agrochemicals and ISK Biosciences. Butler started his career with Diamond Shamrock and later Fermenta ASC in various sales, product management and division manager positions.

Phone: 713-600-3800 • Fax: 713-600-3850

www.kmgchemicals.com • NYSE: KMG

Chris Fraser biographical information:

Christopher T. Fraser has served as board director of KMG Chemicals, Inc. since June 2008 and was elected chairman of the board of directors in December 2012. As an operating partner of the global equity firm Advent International since 2011, he advises that firm on investment opportunities in the industrial sector, focusing on chemicals and materials. Until his retirement in 2009, Fraser was president and CEO of Chemical Lime Company, North America’s leading producer of calcium based (limestone) alkaline products with various industrial applications including the manufacture of steel, water treatment, flue gas desulphurization, and chemical production. Before joining Chemical Lime, he was president and CEO of OCI Chemical Corporation, a wholly-owned subsidiary of DC Chemical Co. Prior to joining OCI in 1990, Fraser held various positions of responsibility in sales, marketing, business development, operations and general management. He earned his Bachelor of Science in Chemistry and in Business Administration from the University of Connecticut and his Masters of Business Administration from Pepperdine University.

About KMG Chemicals, Inc.

KMG Chemicals, Inc., through its subsidiaries, produces and distributes specialty chemicals to select markets. The Company grows by acquiring and optimizing stable chemical product lines and businesses with established production processes. Its current operations are focused on the electronic and industrial wood treatment chemical markets. For more information, visit the Company’s website at http://kmgchemicals.com.

The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements as to the future performance of the company. Although the company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, successful performance of internal plans, product development acceptance, the impact of competitive services and pricing and general economic risks and uncertainties.

Source: KMG Chemicals, Inc.

KMG Chemicals, Inc.

Eric Glover, 713-600-3865

Investor Relations Manager

Main: 713-600-3800 • Fax: 713-600-3850

www.kmgchemicals.com • NYSE: KMG