Exhibit 4.2


 


EXECUTION COPY


U.S.$160,000,000


KEMET
CORPORATION


2.25% Convertible Notes Due 2026


REGISTRATION
RIGHTS AGREEMENT


November 1, 2006


Credit Suisse Securities (USA) LLC


	
  Deutsche Bank Securities Inc.,

  
	
  c/o 

  	
  Credit Suisse Securities (USA) LLC

  
	
   

  	
  Eleven Madison Avenue

  
	
   

  	
  New York, New York 10010-3629

  



 


Dear Sirs:


KEMET Corporation, a Delaware corporation (the “Company”), proposes to issue and sell to Credit
Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. (collectively,
the “Initial Purchasers”), upon the terms
set forth in a purchase agreement dated as of October 26, 2006 (the “Purchase Agreement”), $160,000,000 aggregate principal
amount (plus up to an additional $15,000,000
principal amount) of its 2.25% Convertible
Notes Due November 2026 (the “Initial Securities”)  The Initial Securities will be convertible
into shares of common stock, par value $0.01
per share, of the Company (the “Common  Stock”) at the conversion price
set forth in the Offering Circular dated October
26, 2006.  The Initial Securities
will be issued pursuant to an Indenture, dated as of November 1, 2006 (the “Indenture”), among the Company and Wachovia Bank, National
Association, as trustee (the “Trustee”).  As an inducement to the Initial Purchasers to
enter into the Purchase Agreement, the Company agrees with the Initial
Purchasers, for the benefit of (i) the Initial Purchasers and (ii) the holders
of the Initial Securities and the Common Stock issuable upon conversion of the
Initial Securities (collectively, the “Securities”)
from time to time until such time as such Securities have been sold pursuant to
a Shelf Registration Statement (as defined below) (each of the foregoing a “Holder” and collectively the “Holders”), as follows:


1.  Shelf Registration.  (a) 
The Company shall, at its cost, prepare and, within 120 days after the
First Closing Date (as defined in the Purchase Agreement), file with the
Securities and Exchange Commission (the “Commission”)
and thereafter use its commercially reasonable efforts to cause to be declared
effective (unless it becomes effective automatically upon filing) no later than
180 days after the date of original issuance of the Initial Securities, a
registration statement (the “Shelf Registration
Statement”) on Form S-3, which if the
Company is then eligible shall be an automatic shelf registration statement,
relating to the offer and sale of the Transfer Restricted Securities (as
defined in Section 5 hereof) by the Holders thereof from time to time in
accordance with the methods of distribution set forth in the Shelf Registration
Statement and Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”) (hereinafter, the “Shelf Registration”); provided, however, that
no Holder (other than an Initial Purchaser) shall be entitled to have the
Securities held by it covered by such Shelf Registration Statement unless such
Holder agrees in writing to be bound by all the provisions of this Agreement
applicable to such Holder.


(b)  The Company shall use its commercially
reasonable efforts to keep the Shelf Registration Statement continuously
effective in order to permit the prospectus included therein (the “Prospectus”) to be 













lawfully delivered
by the Holders of the relevant Securities, for a period commencing on the date
of its effectiveness and terminating on the earlier of (i) the date that is two
years (or for such longer period if extended pursuant to Section 2(h)
below) after such date and (ii) the date on which all the Securities covered by
the Shelf Registration Statement (A) have been sold pursuant thereto, (B) may
be sold pursuant to Rule 144(k) under the Securities Act, or any successor rule
thereof, or otherwise transferred in a manner that results in (1) the
Securities not being subject to transfer restrictions under the Securities Act
and (2) the absence of a need for a restrictive legend regarding registration
under the Securities Act, assuming for the purposes of this Section 1(b)(ii)(B)
that the Holders thereof are not affiliates of the Company, or (C) cease to be
outstanding (in any such case, such period being called the “Shelf Registration Period”) .  The Company shall be deemed not to have used
its commercially reasonable efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily takes any action that
would result in Holders of Securities covered thereby not being able to offer
and sell such Securities during that period, unless such action is (i) required
by applicable law or (ii) taken by the Company in good faith and as
contemplated by Section 2(b)(v) and 2(b)(vi) below, and the Company thereafter
complies with the requirements of Section 2(h). 
All references in this Agreement to “Prospectus”
shall, except when the context requires, include any prospectus (or amendment
or supplement thereto) filed with the Commission pursuant to Section 2 of
this Agreement, including any “free writing prospectus” issued pursuant to
Section 2(d).


(c)  Notwithstanding any other provisions of this
Agreement to the contrary, the Company shall cause the Shelf Registration
Statement and the Prospectus and any amendment or supplement thereto, as of
each effective date of the Shelf Registration Statement, amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission and (ii) not to contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.


(d)
Each Holder of Transfer Restricted Securities (as defined below) agrees that if
such Holder wishes to sell Transfer Restricted Securities pursuant to the Shelf
Registration Statement and the Prospectus, it will do so only in accordance
with this Section 1(d) and Section 2(h). 
Each Holder of Transfer Restricted Securities wishing to sell Transfer
Restricted Securities pursuant to the Shelf Registration Statement or the
Prospectus and to be listed as a selling securityholder in the Shelf
Registration Statement and the Prospectus at the time the Shelf Registration
Statement is declared effective (the “Effective Time”)
agrees to deliver a written notice, substantially in the form of Annex A to the
offering circular disseminated in connection with the issuance of the Firm
Securities (a “Notice and Questionnaire”) to the
Company at least one (1) Business Day (a “Business Day”
meaning each day that is not a Saturday, Sunday or legal holiday) prior to the
filing of the Shelf Registration Statement or any amendment thereto.  From and after the date the Shelf
Registration Statement is declared effective, each Holder wishing to sell
Registrable Securities pursuant to the Shelf Registration Statement or the
Prospectus agrees to deliver a Notice and Questionnaire to the Company at least
ten (10) Business Days prior to any intended distribution of Transfer
Restricted Securities under the Shelf Registration Statement.  The Company shall, as promptly as reasonably
practicable after the later of the date of receipt of a Notice and
Questionnaire or the expiration of any Suspension Period (as defined in Section
2(b) hereof) in effect when the Notice and Questionnaire is delivered (i) if
required by applicable law, file with the Commission a post-effective amendment
to the Shelf Registration Statement or prepare and, if required by applicable
law, file a supplement to the Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other document required
under the Securities Act so that the Holder delivering such Notice and
Questionnaire is named as a selling securityholder in the Shelf Registration
Statement and the Prospectus in such a manner as to permit such Holder to
deliver such Prospectus to purchasers of the Transfer Restricted Securities in
accordance with applicable law and, if the Company shall file a post-effective
amendment to the Shelf Registration Statement, use commercially reasonable
efforts to cause such post-effective amendment to be declared effective under
the Securities Act as promptly as is practicable; (ii) provide such Holder
copies of any documents filed pursuant to Section 1(d)(i); and (iii) notify
such Holder 



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as promptly as
practicable after the effectiveness under the Securities Act of any
post-effective amendment filed pursuant to Section 1(d)(i).


2.  Registration Procedures.  In connection with the Shelf Registration
contemplated by Section 1 hereof, the following provisions shall apply:


(a)  The Company shall (i) give notice to the
Holders in the manner as set forth in the Indenture (A) of its intention to
file a Shelf Registration Statement (the “Filing Notice”)
and (B) when the Shelf Registration Statement or any amendment thereto has been
filed with the Commission and when the Shelf Registration Statement or any
post-effective amendment thereto has become effective;  (ii) furnish to each Initial Purchaser,
prior to the filing thereof with the Commission, a copy of the Shelf
Registration Statement and each amendment thereof and each supplement, if any,
to the Prospectus included therein and, in the event that an Initial Purchaser
(with respect to any portion of an unsold allotment from the original offering)
is participating in the Shelf Registration Statement, shall use its reasonable
best efforts to reflect in each such document, when so filed with the
Commission, such comments as such Initial Purchaser reasonably may propose; and
(iii) include in the Prospectus included in the Shelf Registration
Statement (or, if permitted by Commission Rule 430B(b), in a prospectus
supplement that becomes a part thereof pursuant to Commission
Rule 430B(f)) that is delivered to any Holder pursuant to
Section 2(d) and (e) the names of the Holders who propose to sell
Securities pursuant to the Shelf Registration Statement as selling
securityholders.  The Filing Notice will
seek, among other things, a determination from each such Holder as to whether
such Holder elects to have its Notes and the Common Stock issuable on
conversion thereof registered for sale pursuant to the Shelf Registration
Statement.


(b)  The Company shall give written notice to the
Initial Purchasers and the Holders of the Securities (which notice pursuant to
clauses (ii)-(vi) hereof shall be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes have been made):


(i) when the Shelf
Registration Statement or any amendment thereto has been filed with the
Commission and when the Shelf Registration Statement or any post-effective
amendment thereto has become effective;


(ii) of any request by
the Commission for amendments or supplements to the Shelf Registration
Statement or the Prospectus included therein or for additional information, or
it shall become necessary to amend such Shelf Registration Statement or
supplement the related prospectus to comply with the Securities Act or the  Securities Exchange Act of 1934 (the “Exchange Act”) or the respective rules thereunder;


(iii) of the issuance by
the Commission of any stop order suspending the effectiveness of the Shelf
Registration Statement or the initiation of any proceedings for that purpose,
or the issuance by the Commission of a notification of objection to the use of
the form on which the Shelf Registration Statement has been filed, and of the
happening of any event that causes the Company to become an “ineligible issuer,”
as defined in Rule 405 under the Securities Act;


(iv) of the receipt by
the Company or its legal counsel of any notification with respect to the
suspension of the qualification of the Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose;


(v) of the happening of
any event that requires the Company to make changes in the Shelf Registration
Statement or the Prospectus in order that the Shelf Registration Statement or
the Prospectus does not contain an untrue statement of a material fact nor omit
to state a material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading; and



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(vi) the occurrence or
existence of any pending corporate development or other similar event with
respect to the Company or a public filing with the Commission that, in the
reasonable discretion of the Company, makes it appropriate to suspend the
availability of a Shelf Registration Statement or the Prospectus.


The Company shall be entitled
to exercise its right under this Section 2(b) to suspend the availability of
the Shelf Registration Statement and any Prospectus upon the occurrence of any
event contemplated by clauses (ii) through (vi) above, without incurring or
accruing any obligation to pay Additional Interest pursuant to Section 5,
except to the extent provided in Section 5(a)(iii), for one or more periods not
to exceed an aggregate of 45 days in any 12-month period (such period, during
which the availability of the Registration Statement and any Prospectus is
suspended being a “Suspension Period”).


(c)  The Company shall make every reasonable
effort to obtain the withdrawal at the earliest possible time, of any order
suspending the effectiveness of the Shelf Registration Statement.


(d)  The Company shall furnish to each Holder of
Securities included within the coverage of the Shelf Registration, without
charge, an electronic copy of the Shelf Registration Statement and any post-effective
amendment or supplement thereto, including financial statements and schedules,
and, if the Holder so requests in writing, all exhibits thereto (including
those, if any, incorporated by reference). 
The Company shall not, without the prior consent of the Initial
Purchasers, make any offer relating to the Securities that would constitute a “free
writing prospectus,” as defined in Rule 405 under the Securities Act.


(e)  The Company shall, during the Shelf
Registration Period, deliver to each Holder of Securities included within the
coverage of the Shelf Registration, without charge, an electronic copy of the
Prospectus (including each preliminary prospectus) included in the Shelf
Registration Statement and any amendment or supplement thereto as such person
may reasonably request.  The Company
consents during the Shelf Registration Period, subject to the provisions of
this Agreement, to the use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders of the Securities in connection with the
offering and sale of the Securities covered by the Prospectus, or any amendment
or supplement thereto, included in the Shelf Registration Statement.


(f)  Prior to any public offering of the
Securities pursuant to the Shelf Registration Statement, the Company shall
register or qualify or cooperate with the Holders of the Securities included
therein and their respective counsel in connection with the registration or
qualification of the Securities for offer and sale under the securities or “blue
sky” laws of such states of the United States as any Holder of the Securities
reasonably requests in writing and do any and all other acts or things
necessary or advisable to enable the offer and sale in such jurisdictions of
the Securities covered by such Shelf Registration Statement; provided, however,
that the Company shall not be required to (i) qualify generally to do
business in any jurisdiction where it is not then so qualified or
(ii) take any action which would subject it to general service of process
or to taxation in any jurisdiction where it is not then so subject.


(g)  The Company shall cooperate with the Holders
of the Securities to facilitate the timely preparation and delivery of
certificates representing the Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as the Holders may request a
reasonable period of time prior to sales of the Securities pursuant to the
Shelf Registration Statement.


(h)  Upon the occurrence of any event contemplated
by paragraphs (ii) through (vi) of Section 2(b) above during the
period for which the Company is required to maintain an effective Shelf
Registration Statement, the Company shall as promptly as practicable prepare
and file, if necessary pursuant to applicable law, a post-effective
amendment to the Shelf Registration Statement or an amendment or supplement to
the Prospectus and any other required document so that, as thereafter delivered
to Holders or 



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purchasers of the
Securities, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.  If
the Company notifies the Initial Purchasers and the Holders in accordance with
paragraphs (ii) through (vi) of Section 2(b) above to suspend the use
of the Prospectus until the requisite changes to the Prospectus have been made,
then the Initial Purchasers and the Holders shall suspend use of such
Prospectus, and the period of effectiveness of the Shelf Registration Statement
provided for in Section 1(b)(i) above shall be extended by the number
of days from and including the date of the giving of such notice to and
including the date when the Initial Purchasers and the Holders shall have been
advised by the Company that the Prospectus may be used or have received such
amended or supplemented Prospectus pursuant to this Section 2(h).  During the period during which the Company is
required to maintain an effective Shelf Registration Statement pursuant to this
Agreement, the Company will prior to the three-year expiration of such
Shelf Registration Statement file, and use its best efforts to cause to be
declared effective (unless it becomes effective automatically upon filing)
within a period that avoids any interruption in the ability of Holders of
Securities covered by the expiring Shelf Registration Statement to make
registered dispositions, a new registration statement relating to the
Securities, which shall be deemed the “Shelf Registration Statement” for
purposes of this Agreement.


(i)  Not later than the effective date of the
Shelf Registration Statement, the Company will provide CUSIP numbers for the
Initial Securities and the Common Stock registered under the Shelf Registration
Statement, and provide the Trustee with printed certificates for the Initial
Securities, in a form eligible for deposit with The Depository Trust Company.


(j)  The Company will comply with all rules and regulations
of the Commission to the extent and so long as they are applicable to the Shelf
Registration and will make generally available to its security holders (or
otherwise provide in accordance with Section 11(a) of the Securities Act)
an earnings statement satisfying the provisions of Section 11(a) of the
Securities Act, no later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company’s first fiscal quarter commencing after the
effective date of the Shelf Registration Statement, which statement shall cover
such 12-month period.


(k)  The Company shall cause the Indenture to be
qualified under the Trust Indenture Act of 1939, as amended, (the “Trust Indenture Act”) in a timely manner
and containing such changes, if any, as shall be necessary for such
qualification.  In the event that such
qualification would require the appointment of a new trustee under the
Indenture, the Company shall appoint a new trustee thereunder pursuant to the
applicable provisions of the Indenture.


(l)  The Company may require each Holder of
Securities to be sold pursuant to the Shelf Registration Statement to furnish
to the Company such information regarding the Holder and the distribution of
the Securities as the Company may from time to time reasonably require for
inclusion in the Shelf Registration Statement, and the Company may exclude from
such registration the Securities of any Holder that unreasonably fails to
furnish such information within a reasonable time after receiving such
request.  Each Holder agrees, by
acquisition of the Securities, to be bound by and to comply in all respects
with its obligations as a Holder under this Agreement and that no Holder of
Securities shall be entitled to have the Securities held by it covered by the
Shelf Registration Statement or to sell any of such Securities pursuant to the
Shelf Registration Statement or to receive a Prospectus relating thereto,
unless such Holder has furnished the Company with a Notice and Questionnaire as
required in accordance with Section 1(d) (including all information required to
be included in such Notice and Questionnaire) and the information set forth in
the next sentence.  Each Holder agrees
promptly to furnish to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such
Holder not misleading and any other information regarding such Holder and the
distribution of such Securities as may be required to be disclosed in the Shelf
Registration Statement under applicable law or pursuant to comments of the
Commission or as the Company may reasonably request.



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(m)  The Company shall enter into such customary
agreements (including, if requested, an underwriting agreement in customary
form) and take all such other actions, if any, as any Holder shall reasonably
request in order to facilitate the disposition of the Securities pursuant to
the Shelf Registration; provided, however, that the Company shall not be required to
facilitate an underwritten offering pursuant to a Shelf Registration Statement
by any Holders (x) on more than two occasions and (y) unless, on each such
occasion, the offering relates to at least $50,000,000 of the Initial
Securities or an equivalent amount of Common Stock.


(n)  The Company shall (i) make reasonably
available for inspection by the Holders, any underwriter participating in any
disposition pursuant to the Shelf Registration Statement and any attorney,
accountant or other agent retained by the Holders or any such underwriter, all
relevant financial and other records, pertinent corporate documents and
properties of the Company and (ii) cause the Company’s officers,
directors, employees, accountants and auditors to supply all relevant information
reasonably requested by the Holders or any such underwriter, attorney,
accountant or agent in connection with the Shelf Registration Statement, in
each case, as shall be reasonably necessary to enable such persons, to conduct
a reasonable investigation within the meaning of Section 11 of the
Securities Act; provided, however, that the foregoing inspection
and information gathering shall be coordinated on behalf of the Initial
Purchasers by you and on behalf of the other parties, by one counsel designated
by and on behalf of such other parties as described in Section 3 hereof.


(o)  The Company, if requested in connection with
an underwritten offering by any Holder of Securities covered by the Shelf
Registration Statement, shall cause (i) its counsel to deliver an opinion
and updates thereof relating to the Securities in customary form addressed to
such Holders and the Managing Underwriters (defined below), if any, thereof,
and dated, in the case of the initial opinion, the effective date of such Shelf
Registration Statement substantially in the form of the opinion delivered by
such counsel on the First Closing Date pursuant to Section 6(c) of the Purchase
Agreement with such changes as are customary in connection with the preparation
of a Shelf Registration Statement; provided, however, that such opinion shall state that (A) as of the
date of the opinion and as of the effective date of the Shelf Registration
Statement or the most recent post-effective amendment thereto or most
recent prospectus supplement thereto that is deemed to establish a new
effective date with respect thereto, as the case may be, such Shelf
Registration Statement and the Prospectus and any prospectus supplement
included therein, as then amended or supplemented, and any documents incorporated
by reference therein, do not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and (B) as of an applicable time on
the date of pricing identified by such Holders or Managing Underwriters, if
any, that the Prospectus (as supplemented by the most recent prospectus
amendment or supplement thereto), taken together with (1) the most recent
Prospectus or prospectus amendment or supplement, (2) any “free writing
prospectuses” issued in compliance with Section 2(d) and (3) the pricing
information with respect to the applicable Securities,  do not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they are made, not misleading; (ii) its officers to execute and
deliver all customary documents and certificates and updates thereof requested
by any underwriters of the Securities and (iii) its independent public
accountants and the independent public accountants with respect to any other
entity for which financial information is provided in the Shelf Registration
Statement to provide to the selling Holders of the applicable Securities and
any underwriter therefor a comfort letter in customary form and covering
matters of the type customarily covered in comfort letters in connection with
primary underwritten offerings, subject to receipt of appropriate documentation
as contemplated, and only if permitted, by AU Section 634.


(p)  The Company will use its best efforts to
(a) if the Initial Securities have been rated prior to the initial sale of
such Initial Securities, confirm such ratings will apply to the Securities
covered by a Shelf Registration Statement, or (b) if the Initial
Securities were not previously rated, cause the Securities covered by a Shelf
Registration Statement to be rated with the appropriate rating agencies, if so
requested by 



 6
 









Holders of a majority
in aggregate principal amount of Securities covered by the Shelf Registration
Statement, or by the Managing Underwriters (defined below), if any.


(q)  In the event that any broker-dealer
registered under the Exchange Act shall underwrite any Securities or
participate as a member of an underwriting syndicate or selling group or “assist
in the distribution” (within the meaning of the Conduct Rules (the “Rules”) of the National Association of Securities Dealers,
Inc. (“NASD”)) thereof, whether as a Holder of
such Securities or as an underwriter, a placement or sales agent or a broker or
dealer in respect thereof, or otherwise, the Company will assist such broker-dealer
in complying with the requirements of such Rules, including, without
limitation, by (i) if such Rules, including Rule 2720, shall so
require, engaging a “qualified independent underwriter” (as defined in
Rule 2720) to participate in the preparation of the Shelf Registration
Statement relating to such Securities, to exercise usual standards of due
diligence with respect thereto and, if any portion of the offering contemplated
by such Shelf Registration Statement is an underwritten offering or is made
through a placement or sales agent, to recommend the yield of such Securities,
(ii) indemnifying any such qualified independent underwriter to the extent
of the indemnification of underwriters provided in Section 5 hereof and
(iii) providing such information to such broker-dealer as may be
required in order for such broker-dealer to comply with the requirements
of the Rules.


(r)  The Company shall use its reasonable best
efforts to take all other steps necessary to effect the registration of the
Securities covered by a Shelf Registration Statement contemplated hereby.


3.  Registration Expenses.  (a) All expenses incident to the Company’s
performance of and compliance with this Agreement will be borne by the Company,
regardless of whether a Shelf Registration Statement is ever filed or becomes
effective, including without limitation;


(i)  all registration and filing fees and
expenses;


(ii) all fees and
expenses of compliance with federal securities and state “blue sky” or
securities laws;


(iii) all expenses
of printing (including printing certificates for the Securities to be issued
and printing of Prospectuses), messenger and delivery services and telephone;


(iv) all fees and
disbursements of counsel for the Company;


(v) all application
and filing fees in connection with listing the Securities on a national
securities exchange or automated quotation system pursuant to the requirements
hereof; and


(vi) all fees and
disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or
incident to such performance).


The Company will
bear its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expenses of any annual audit and the fees and expenses of any person,
including special experts, retained by the Company.


(b)  In connection with the Shelf Registration
Statement required by this Agreement, the Company will reimburse the Initial
Purchasers and the Holders of Securities covered by the Shelf Registration
Statement, for the reasonable fees and disbursements of not more than one
counsel, designated by the Holders of a majority in principal amount of the
Securities covered by the Shelf Registration Statement (provided that Holders
of Common Stock issued upon the conversion of the Initial Securities shall be
deemed to be Holders of the aggregate principal amount of Initial Securities
from which such Common Stock was converted) to act as counsel for the Holders
in connection therewith.



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4.  Indemnification.  (a) 
The Company agrees to indemnify and hold harmless each Holder and each
person, if any, who controls such Holder within the meaning of the Securities
Act or the Exchange Act (each Holder, and such controlling persons are referred
to collectively as the “Indemnified Parties”) from and against any losses, claims, damages or
liabilities, joint or several, or any actions in respect thereof (including,
but not limited to, any losses, claims, damages, liabilities or actions
relating to purchases and sales of the Securities) to which each Indemnified
Party may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Shelf Registration Statement or Prospectus
including any document incorporated by reference therein, or in any amendment
or supplement thereto or in any preliminary prospectus or “issuer free writing
prospectus,” as defined in Rule 433 under the Securities Act (“Issuer FWP”), relating to the Shelf Registration, or arise
out of, or are based upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse, as incurred, the Indemnified
Parties for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action in respect thereof; provided, however, that
the Company shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement made in, or omission or alleged omission from, the
Shelf Registration Statement or Prospectus or in any amendment or supplement
thereto or in any preliminary prospectus or Issuer FWP relating to the Shelf
Registration in reliance upon and in conformity with written information
pertaining to such Holder and furnished to the Company by or on behalf of such
Holder specifically for inclusion therein; provided further, however,
that this indemnity agreement will be in addition to any liability which the
Company may otherwise have to such Indemnified Party.  The Company shall also indemnify
underwriters, their officers and directors and each person who controls such
underwriters within the meaning of the Securities Act or the Exchange Act to
the same extent as provided above with respect to the indemnification of the
Holders of the Securities if requested by such Holders.


(b)  Each Holder, severally and not jointly, will
indemnify and hold harmless the Company, its officers and directors and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act from and against any losses, claims, damages or
liabilities or any actions in respect thereof, to which the Company or any such
controlling person may become subject under the Securities Act, the Exchange
Act or otherwise, insofar as such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration Statement or
Prospectus or in any amendment or supplement thereto or in any preliminary
prospectus or Issuer FWP relating to the Shelf Registration, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact necessary to make the statements therein not misleading, but in each case
only to the extent that the untrue statement or omission or alleged untrue
statement or omission was made in reliance upon and in conformity with written
information pertaining to such Holder and furnished to the Company by or on
behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Company for any legal or other expenses reasonably incurred by
the Company or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof.  This indemnity agreement will be in addition
to any liability which such Holder may otherwise have to the Company or any of
its controlling persons.


(c)  Promptly after receipt by an indemnified
party under this Section 4 of notice of the commencement of any action or
proceeding (including a governmental investigation), such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 4, notify the indemnifying party of the
commencement thereof; but the failure to
notify the indemnifying party shall not relieve it from any 



 8
 









liability that it may have under subsection (a) or (b) above except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided further that the
failure to notify the indemnifying party shall not relieve it from any
liability that it may have to an indemnified
party otherwise than under subsection (a) or (b) above.  In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 4 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof.  No
indemnifying party shall, without the prior written consent of the indemnified
party (which consent shall not be unreasonably withheld, delayed or
conditioned), effect any settlement of any pending or threatened action in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party unless
such settlement (i) includes an unconditional release of such indemnified party
from all liability on any claims that are the subject matter of such action,
and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.


(d)  If the indemnification provided for in this
Section 4 is unavailable or insufficient to hold harmless an indemnified
party under subsections (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to in subsection (a) or (b) above in such proportion as is appropriate
to reflect the relative fault of the indemnifying party or parties on the one
hand and the indemnified party on the other in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof) as well as any other relevant equitable
considerations.  The relative fault of
the parties shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company on the one hand or such Holder or such other indemnified party, as
the case may be, on the other, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.  The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which
is the subject of this subsection (d). 
Notwithstanding any other provision of this Section 4(d), the
Holders shall not be required to contribute any amount in excess of the amount
by which the net proceeds received by such Holders from the sale of the
Securities pursuant to the Shelf Registration Statement exceeds the amount of
damages which such Holders have otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.  For
purposes of this paragraph (d), each person, if any, who controls such
indemnified party within the meaning of the Securities Act or the Exchange Act
shall have the same rights to contribution as such indemnified party and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act shall have the same rights to contribution as the
Company.


(e)  The agreements contained in this
Section 4 shall survive the sale of the Securities pursuant to the Shelf
Registration Statement and shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement or any investigation made by
or on behalf of any indemnified party.


5.  Additional Interest Under
Certain Circumstances. 
(a)  Additional interest (the “Additional
Interest”) with respect to the Initial
Securities and the underlying shares of Common Stock that are registrable
securities shall be assessed as follows if any of the following events occur
(each such event in clauses (i) through (iii) below being herein called a “Registration Default”):



 9
 









 


 (i)  the
Shelf Registration Statement has not been filed with the Commission by the 120th after the first date of original issuance of
the Initial Securities;


(ii)  the Shelf Registration Statement has not
become effective by the 180th day after the
first date of original issue of the Initial Securities; or


(iii)  the Shelf Registration Statement becomes
effective but (A) the Shelf Registration Statement thereafter ceases to be
effective without being succeeded immediately by a replacement registration
statement or (B) the Shelf Registration Statement or the Prospectus ceases
to be usable in connection with resales of Transfer Restricted Securities (as
defined below) during the periods specified herein for a period of time
(including any Suspension Period) which exceeds 90 days in the aggregate in any
consecutive 12-month period during the Shelf Registration Period because either
(1) any event occurs as a result of which the Prospectus forming part of
such Shelf Registration Statement would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, (2) it shall be necessary to amend such Shelf Registration
Statement or supplement the related Prospectus, to comply with the Securities
Act or the Exchange Act or the respective rules thereunder, or (3) such
Registration Statement is a Shelf Registration Statement that has expired
before a replacement Shelf Registration Statement has become effective.


Each of the
foregoing will constitute a Registration Default whatever the reason for any
such event and whether it is voluntary or involuntary or is beyond the control
of the Company or pursuant to operation of law or as a result of any action or
inaction by the Commission .


Additional
Interest shall accrue on the Initial Securities and the shares of Common Stock
issued upon conversion of the Initial Securities over and above the interest
set forth in the title of the Initial Securities from and including the date on
which any such Registration Default shall occur to but excluding the date on
which all such Registration Defaults have been cured, at a rate of
(a) 0.25% per annum of the principal amount of the Initial Securities (or
an equivalent amount for any shares of Common Stock issued upon conversion of
the Initial Securities) per year (the “Additional Interest Rate”)
to and including the 90th day immediately following the occurrence of such
Registration Default and (b) 0.50% of the principal amount of the Initial
Securities (or an equivalent amount for any shares of Common Stock issued upon
conversion of the Initial Securities) per year from and after the 91st day
following such Registration Default.


(b)  A Registration Default referred to in
Section 5(a)(iii) hereof shall be deemed not to have occurred and be
continuing in relation to the Shelf Registration Statement or the related
Prospectus if (i) such Registration Default has occurred solely as a
result of (x) the filing of a post-effective amendment to the Shelf
Registration Statement to incorporate annual audited financial information with
respect to the Company where such post-effective amendment is not yet
effective and needs to be declared effective to permit Holders to use the
related Prospectus or (y) other material events, with respect to the Company
that would need to be described in such Shelf Registration Statement or the
related Prospectus and (ii) in the case of clause (y), the Company is
proceeding promptly and in good faith to amend or supplement the Shelf
Registration Statement and related Prospectus to describe such events as
required by paragraph 2(h) hereof; provided, however, that in any
case if such Registration Default occurs for a continuous period in excess of
45 days in any consecutive twelve month period, Additional Interest shall
be payable in accordance with the above paragraph from the day such
Registration Default occurs until such Registration Default is cured.


(c)  Any amounts of Additional Interest due
pursuant to Section 5(a) will be payable in cash on the regular interest
payment dates with respect to the Initial Securities.  The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest Rate by the
principal amount of the Initial Securities (plus, with respect to any shares of
Common Stock issued upon conversion of Initial Securities, 



 10
 









the principal
amount of the Initial Securities from which such shares were converted),
further multiplied by a fraction, the numerator of which is the number
of days such Additional Interest Rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day
months), and the denominator of which is 360.


(d)  “Transfer Restricted
Securities” means each Initial Security until (i) the date on
which such Initial Security has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or
(ii) the date on which such Security is distributed to the public pursuant
to Rule 144 under the Securities Act or is saleable pursuant to
Rule 144(k) under the Securities Act.


6.  Rules 144 and 144A.  The Company shall use its reasonable best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Company is not
required to file such reports, it will, upon the request of any Holder, make
publicly available other information so long as necessary to permit sales of
their securities pursuant to Rules 144 and 144A during the Shelf
Registration Period.  The Company
covenants that it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Transfer Restricted Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rules 144 and 144A
(including the requirements of Rule 144A(d)(4)).  The Company will provide a copy of this
Agreement to prospective purchasers of Securities identified to the Company by
the Initial Purchasers upon request. 
Upon the request of any Holder, the Company shall deliver to such Holder
a written statement as to whether it has complied with such requirements.  Notwithstanding the foregoing, nothing in
this Section 6 shall be deemed to require the Company to register any of
its securities pursuant to the Exchange Act.


7.  Underwritten Registrations.  If any of the Transfer Restricted Securities
covered by the Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will administer
the offering (the “Managing Underwriters”)
shall be designated by the Company subject to the consent of the Holders of a
majority in aggregate principal amount of such Transfer Restricted Securities
to be included in such offering (provided that Holders of Common Stock issued
upon conversion of the Initial Securities shall not be deemed Holders of Common
Stock, but shall be deemed to be holders of the aggregate principal amount of
Initial Securities from which such Common Stock was converted).


No
person may participate in any underwritten registration hereunder unless such
person (i) agrees to sell such person’s Transfer Restricted Securities on the
basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.


8.  Miscellaneous.


(a)  Remedies.  The Company acknowledges and agrees that any
failure by the Company to comply with its obligations hereunder may result in
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
the Initial Purchasers or any Holder may obtain such relief as may be required
to specifically enforce the Company’s obligations hereunder.  The Company further agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.


(b)  No Inconsistent Agreements.  The Company will not on or after the date of
this Agreement enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. 
The rights granted to the 



 11
 









Holders hereunder
do not in any way conflict with and are not inconsistent with the rights
granted to the holders of the Company’s securities under any agreement in
effect on the date hereof.


(c)  Amendments and Waivers. 
The provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, except by the Company with the written consent of the Holders
of a majority in principal amount of the Securities affected by such amendment,
modification, supplement, waiver or consent (provided that Holders of Common
Stock issued upon conversion of Initial Securities shall not be deemed Holders
of Common Stock, but shall be deemed to be Holders of the aggregate principal
amount of Initial Securities from which such Common Stock was converted).  Without the consent of the Holder of each
Initial Security, however, no modification may change the provisions relating
to the payment of Additional Interest.


(d)  Notices.  All notices and other communications provided
for or permitted hereunder shall be made in writing by hand delivery, first-class
mail, facsimile transmission, or air courier which guarantees overnight
delivery:


(1)  if to a
Holder of the Securities, at the most current address given by such Holder to
the Company.


(2)  if to the Initial Purchasers;


Credit Suisse Securities (USA) LLC

Eleven Madison Avenue

New York, NY 10010-3629

Fax No.:  (212) 325-8278

Attention:  LCD-IBD Group


and to


Deutsche Bank Securities Inc.

60 Wall Street, 4th Floor

New York, NY 10005

Fax No.:  (212) 797-9344

Attention:  Equity Capital Markets

with a copy to:

Fax No: (212) 797-4564

Attention:  General Counsel


with
a copy to:


Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019-7475

Fax No.:  (212) 474-3700

Attention:  William J. Whelan III, Esq.


(3)  if to the Company, at its address as follows:


KEMET Corporation

2835 Kemet Way

Simpsonville, SC 29681

Fax No.:  (864) 228-4161

Attention:  Michael W. Boone


 



 12
 









 


with
a copy to:


Kirkland & Ellis LLP

200 East Randolph Drive

Chicago, IL 60601-6636

Fax No.:  (312) 861-2200

Attention:  H. Kurt von Moltke, P.C.,
Esq.


All
such notices and communications shall be deemed to have been duly given:  at the time delivered by hand, if personally
delivered; three business days after being deposited in the mail, postage
prepaid, if mailed; when receipt is acknowledged by recipient’s facsimile
machine operator, if sent by facsimile transmission; and on the day
delivered, if sent by overnight air courier guaranteeing next day
delivery.


(e)
Third Party Beneficiaries.  The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right
to enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.


(f)  Successors and Assigns.  This Agreement shall be binding upon the
Company and its successors and assigns.


(g)  Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.


(h)  Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.


(i)  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD APPLY THE LAWS OF ANOTHER
JURISDICTION.


By
the execution and delivery of this Agreement, the Company submits to the
nonexclusive jurisdiction of any federal or state court in the State of New
York.


(j)  Severability.  If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.


(k)  Securities Held by the
Company.  Whenever the consent
or approval of Holders of a specified percentage of principal amount of
Securities is required hereunder, Securities held by the Company or its
affiliates (other than subsequent Holders of Securities if such subsequent
Holders are deemed to be affiliates solely by reason of their holdings of such
Securities) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.



 13
 









If the foregoing
is in accordance with your understanding of our agreement, please sign and
return to the Company a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement among the several
Initial Purchasers and the Company in accordance with its terms.


	
  

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KEMET CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David E. Gable

  
	
   

  	
  Name:

  	
  David E. Gable

  
	
   

  	
  Title:

  	
  Senior Vice President and

  
	
   

  	
   

  	
  Chief Financial Officer

  
				



 


The foregoing
Registration

Rights Agreement is hereby confirmed

and accepted as of the date first

above written.


	
  Credit Suisse Securities
  (USA) LLC,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  by

  	
   

  	
   

  
	
   

  	
  /s/ Richard Wallach

  	
   

  
	
   

  	
  Name:

  	
  Richard Wallach

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
  Deutsche Bank
  Securities Inc.,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  by

  	
   

  	
   

  
	
   

  	
  /s/ Alex Vitale

  	
   

  
	
   

  	
  Name:

  	
  Alex Vitale

  
	
   

  	
  Title:

  	
  MD

  
	
  by

  	
   

  	
   

  
	
   

  	
  /s/ Mark Keene

  	
   

  
	
   

  	
  Name:

  	
  Mark Keene

  
	
   

  	
  Title:

  	
  MD

  
						



 



 14