Document:

Exhibit 10.2

 

EXECUTION COPY

 

INVESTOR RIGHTS AGREEMENT

 

THIS INVESTOR RIGHTS AGREEMENT, dated as of June 30,
2009 (this “Agreement”), is entered into by and between KEMET
Corporation, a Delaware corporation (the “Company”), and K Financing,
LLC, a Delaware limited liability company (“Investor”).

 

A.                                   The Company and Investor are parties to
that certain Amended and Restated Credit Agreement, dated as of June 7,
2009, as amended (the “Credit Agreement”), pursuant to which Investor
agreed to extend certain credit to the Company on the terms and conditions set
forth therein.

 

B.                                     The Company is, concurrently with its
execution and delivery hereof, issuing to Investor a warrant initially
exercisable to purchase up to Eighty Million Five Hundred Forty-Four Thousand
Six Hundred Eighty-Five (80,544,685) shares of Common Stock on the terms and
conditions set forth therein (the “Closing Warrant”).

 

NOW, THEREFORE, in consideration of the premises and
the mutual covenants contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
Investor hereby agree as follows:

 

Section 1. 
Definitions.

 

1.1.  Defined Terms.  As used in this Agreement, the following
terms shall have the meanings indicated:

 

“Affiliate” means, when used with respect to a
specified Person, another Person that directly, or indirectly through one or
more intermediaries, Controls or is Controlled by or is under common Control
with the Person specified.

 

“Agreement” has the meaning set forth in the
preamble hereto.

 

“Board of Directors” means the board of
directors of the Company.

 

“Business Day” means any day other than a Saturday, Sunday or
any day on which commercial banks in the City of New York are authorized or
required by law to remain closed.

 

“Closing Warrant” has the meaning set forth in Recital B.

 

“Common Stock” means the common stock, par
value $0.01 per share, of the Company and any securities of the Company or
successor of the Company into which such common stock is reclassified or
reconstituted or into which such stock is converted or otherwise exchanged in
connection with a combination of shares, recapitalization, merger, sale of
assets, consolidation or other reorganization or otherwise.

 

“Company” has the meaning set forth in the preamble and shall
include the Company’s successors by merger, acquisition, reorganization or
otherwise.

 

 

“Control” means, as to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise, and the terms “Controlling” and “Controlled”
shall have meanings correlative thereto.

 

“Credit Agreement” has the meaning set forth in Recital A.

 

“Demand Registration” has the meaning set forth in Section 2.1(a).

 

“Exchange Act” means the Securities Exchange
Act of 1934, as amended, and any successor thereto, and any rules and
regulations promulgated thereunder, all as the same shall be in effect from
time to time.

 

“FINRA” means the Financial Industry Regulatory
Authority, Inc.

 

“Governmental Authority” means any federal, state, local or
foreign (whether civil, criminal, military or otherwise) court, central bank or
governmental agency, tribunal, authority, instrumentality or regulatory body or
any subdivision thereof or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank).

 

“Information” has the meaning set forth in Section 4.4.

 

“Investor” has the meaning set forth in the preamble hereto.

 

“Legal Requirements” means, as to any Person,
the Organizational Documents of such Person, and any treaty, law (including the
common law), statute, ordinance, code, rule, regulation, order or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.

 

“Loss” has the meaning set forth in Section 2.7(a).

 

“Observer” has the meaning set forth in Section 3.1.

 

“Organizational Documents” means, with respect
to any Person that is not a natural person, (i) in the case of any
corporation, the certificate of incorporation and by-laws (or similar
documents) of such Person, (ii) in the case of any limited liability
company, the certificate of formation and operating agreement (or similar
documents) of such Person, (iii) in the case of any limited partnership,
the certificate of formation and limited partnership agreement (or similar
documents) of such Person, (iv) in the case of any general partnership,
the partnership agreement (or similar document) of such Person, (v) in any
other case, the functional equivalent of the foregoing, and (vi) any
shareholder, voting trust or similar agreement between or among any holders of
equity interests of such Person.

 

“Ownership Percentage” means, as to the Investor
as of any time of determination, the percentage obtained by dividing (X)
the number of shares of Common Stock acquired by 

 

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Investor upon exercise of the Closing Warrant (and still owned by the
Investor), together with the remaining shares of Common Stock (if any) then
issuable upon exercise of the Closing Warrant, by (Y) the aggregate number
of shares of Common Stock on a fully diluted basis then outstanding.

 

“Person” means any natural person, firm, limited
liability company or partnership, joint venture, corporation, joint stock
company, trust or unincorporated organization, incorporated or unincorporated
association, government (or any department, agency or political subdivision
thereof) or other entity of any kind.

 

“Piggyback Registration” has the meaning set
forth in Section 2.2(a).

 

“Prospectus” means the prospectus included in
any Registration Statement, all amendments and supplements to such prospectus
and all material incorporated by reference in such prospectus.

 

“Registrable Securities” means (i) all
shares of Common Stock or other securities issued and issuable upon exercise of
the Closing Warrant, and (ii) any shares of Common Stock or other
securities that may be issued or distributed or be issuable in respect thereof
by way of share split or other distribution, merger, consolidation, exchange
offer, recapitalization or reclassification or similar transaction or exercise
or conversion or adjustment; provided,
however, that any of the foregoing securities shall cease to be “Registrable
Securities” to the extent (i) a Registration Statement with respect to the
sale of such securities has been declared effective under the Securities Act
and such securities have been sold pursuant to such Registration Statement or
otherwise or (ii) such securities have been distributed or sold pursuant
to Rule 144 (or any similar provision then in force) under the Securities
Act.

 

“registration” means a registration of the
Registrable Securities for sale to the public under a Registration Statement.

 

“Registration Statement” means any registration
statement of the Company filed with, or to be filed with, the SEC under the rules and
regulations promulgated under the Securities Act, including the Prospectus,
amendments and supplements to such registration statement, including
post-effective amendments, and all exhibits and all material incorporated by
reference in such registration statement.

 

“Sale Notice” has the meaning set forth in Section 3.2.

 

“SEC” means the U.S. Securities and Exchange
Commission.

 

“Securities Act” means the Securities Act of
1933, as amended, and any successor thereto, and any rules and regulations
promulgated thereunder, all as the same shall be in effect from time to time.

 

“Underwritten Offering” means a registration in which securities
of the Company are sold to an underwriter or underwriters on a firm commitment
basis for reoffering to the public.

 

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1.2.  General Interpretive Principles.  Whenever used in this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, any noun
or pronoun shall be deemed to include the plural as well as the singular.  Unless otherwise specified, the terms “hereof,”
“herein,” “hereunder” and similar terms refer to this Agreement as a whole
(including the exhibits, schedules and disclosure statements hereto), and
references herein to Sections refer to Sections of this Agreement.  Any calculation contemplated hereby shall be
stated to the fifth (5th) decimal place.

 

Section 2.  Registration
Rights

 

2.1.                              Primary Registrations.

 

(a)                                  Demand Registrations. 
Subject to Section 2.1(c), the Company shall use commercially
reasonable efforts to file with the SEC, on or before the thirtieth (30th)
Business Day following a written request therefor by Investor (a “Demand
Registration”), a Registration Statement on an appropriate registration
form of the SEC relating to the offer and sale of Registrable Securities by
Investor in amounts and in accordance with the methods of distribution elected
by Investor (which may include a request for an offering to be made on a
continuous or delayed basis pursuant to Rule 415 under the Securities Act,
or any similar rule that may be adopted by the SEC, and which may, but
need not, be for an Underwritten Offering) and shall use commercially
reasonable efforts to cause such Registration Statement to be declared
effective under the Securities Act as promptly thereafter as possible.  Notwithstanding the foregoing, the Company
shall not be required to effect more than three (3) Demand
Registrations.  If the offering is to be
an Underwritten Offering, Investor shall have the right to select the managing
underwriter or underwriters for any such Underwritten Offering and the price,
underwriting discount and other financial terms for the such Underwritten
Offering shall be determined by Investor.

 

(b)                                 Effectiveness. 
Subject to Section 2.1(c), the Company shall use commercially
reasonable efforts to keep the Registration Statement effective for one hundred
eighty (180) days following the date on which such Registration Statement has
been declared effective under the Securities Act; provided, that such 180-day
period shall be extended, on a day-for-day basis, for any days on which the use
of the Registration Statement is suspended by the Company pursuant to Section 2.1(c).

 

(c)                                  Suspension of Registration. 
If the filing, initial effectiveness or continued use of the
Registration Statement at any time would require the Company to make public
disclosure of material non-public information, which disclosure in the good
faith judgment of the Board of
Directors after consultation with counsel to the Company would not be
required to be made at such time but for the filing, effectiveness or use of
the Registration Statement, and would
be substantially detrimental to the Company or its business, or to the Company’s
ability to effect a material acquisition, disposition or financing, the
Company may, upon giving prompt written notice of such action to Investor,
delay the  filing or  initial
effectiveness of, or  suspend use
of, the Registration Statement; provided,
however, that the Company shall not be permitted to do so (i) more than
two (2) times during any six (6) month period, (ii) for a period
exceeding forty-five (45) days on any one occasion or (iii) for an
aggregate period exceeding ninety (90) days in any twelve (12) month period.  In the event the Company exercises its rights
under the 

 

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preceding sentence, Investor agrees to suspend,
immediately upon receipt of the notice referred to above, the use of the
Prospectus relating to the Registration in connection with any sale or offer to
sell Registrable Securities. The Company shall promptly (and in any event
within one (1) Business Day) notify Investor upon the expiration of any
period during which it exercised its rights under this Section 2.1(c).

 

2.2.  Piggyback Registrations.

 

(a)                                  Participation. 
If the Company at any time proposes to file a Registration Statement
with respect to any offering of Common Stock for its own account or for the
account of any holders of Common Stock (other than (i) a registration
under Section 2.1, (ii) a registration on Form S-4 or S-8 or any
successor form to such forms or
(iii) a registration of securities solely relating to an offering and sale
pursuant to any employee stock plan or other employee benefit plan
arrangement), then, not less than twenty (20) days prior to the proposed date
of filing such Registration Statement, the Company shall give written notice of
such proposed filing to Investor, and shall, subject to Section 2.2(b),
include in such Registration Statement all such Registrable Securities as
Investor requests be included therein within twenty (20) days after the receipt
of such notice (a “Piggyback Registration”).  The Company may elect not to proceed with any
proposed Piggyback Registration or to delay any proposed Piggyback Registration
at any time by written notice to Investor, and Investor may withdraw all or
part of its Registrable Securities from a Piggyback Registration at any
time.  If the offering pursuant to a
Piggyback Registration is to be an Underwritten Offering, then Investor must,
and the Company shall make such arrangements with the underwriters so that
Investor may, participate in such Underwritten Offering on the same terms as
the Company and other Persons selling securities in such Underwritten Offering.

 

(b)                                 Priority of Piggyback Registration. 
If the managing underwriter or underwriters of any proposed Underwritten
Offering of a class of securities included in a Piggyback Registration informs
Investor in writing that, in its or their opinion, the total amount of shares
of Registrable Securities that Investor has requested be included in such
offering exceeds the number which can be sold in such offering without being
likely to have a significant adverse effect on the price, timing or
distribution of the securities offered or the market for the Common Stock, then
the number of shares of Registrable Securities held by Investor to be included
in such registration may be reduced to such number of shares as would not have
such adverse effect, provided, however, that if the number of Registrable
Securities to be sold by Investor in any offering provided for in this Section 2.2
has been cut back by the underwriter(s), then (x) if such offering is an
offering for the Company’s own account, no other Person shall be permitted to
include any shares in such registration and (y) if such offering is an
offering for the account of another Person, neither the Company nor any other
Person shall be permitted to include any shares in such registration.

 

(c)                                  Effect on Piggyback Registration
Obligation.  The provisions of this Section 2.2 shall
apply whether or not the Company has filed and is maintaining the effectiveness
of a Registration Statement under Section 2.1.

 

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2.3.  Registration Procedures.

 

(a)                                  In connection with the Company’s registration
obligations in this Agreement, the Company will, subject to the limitations set
forth herein, use commercially reasonable efforts to effect any such
registration so as to permit the sale of the applicable Registrable Securities
in accordance with the intended method or methods of distribution thereof as
expeditiously as reasonably practicable, and in connection therewith the
Company will use commercially reasonable efforts to:

 

(1)                                  furnish to Investor and to the
underwriter or underwriters, if any, before filing a Registration Statement or
Prospectus, or any amendments or supplements thereto and in connection
therewith, copies of all documents prepared to be filed, which documents will
be subject to the review of Investor and any underwriter and their respective
counsel and not file any Registration Statement or Prospectus or amendments or
supplements thereto to which Investor or any underwriter shall reasonably
object, after consultation with legal counsel;

 

(2)                                  prepare and file with the SEC such amendments
or supplements to the applicable Registration Statement or Prospectus as may be
reasonably requested by Investor or any underwriter after consultation with
legal counsel or as may be necessary to keep such registration effective for
the period of time required by this Agreement;

 

(3)                                  notify Investor and the managing
underwriter or underwriters, if any, and confirm such advice in writing, if
requested, as soon as reasonably practicable after notice thereof is received
by the Company (A) when the applicable Registration Statement or any
amendment thereto has been filed or becomes effective and when the applicable
Prospectus or any amendment or supplement thereto has been filed, (B) of
any written comments by the SEC or any request by the SEC or any other federal
or state governmental authority for amendments or supplements to such
Registration Statement or Prospectus or for additional information, (C) of
the issuance by the SEC of any stop order suspending the effectiveness of such
Registration Statement or any order preventing or suspending the use of any
preliminary or final Prospectus or the initiation or threat of any proceedings
for such purposes and (D) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for offering or sale in any jurisdiction or the
initiation or threat of any proceeding for such purpose;

 

(4)                                  promptly notify Investor and the managing
underwriter or underwriters, if any, when the Company becomes aware of the
happening of any event as a result of which the applicable Registration
Statement or Prospectus (as then in effect) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements therein (in the case of the Prospectus and any preliminary
Prospectus, in light of the circumstances under which they were made) not
misleading or, if for any other reason it shall be necessary to amend or
supplement such Registration Statement or Prospectus in order to comply with
the Securities Act and, in either case as promptly as reasonably practicable
thereafter, prepare and file with the SEC an amendment or supplement to such
Registration Statement or Prospectus which will correct such statement or
omission or effect such compliance;

 

(5)                                  make every reasonable effort to prevent
or obtain as soon as possible the withdrawal of any stop order with respect to
the applicable Registration Statement or other order suspending the use of any
preliminary or final Prospectus;

 

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(6)                                  promptly incorporate in a Prospectus
supplement or post-effective amendment to the applicable Registration Statement
such information as Investor or the managing underwriter or underwriters, if
any, agree should be included therein relating to the plan of distribution with
respect to the Registrable Securities, and make all required filings of such
Prospectus supplement or post-effective amendment as soon as reasonably
practicable after being notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;

 

(7)                                  furnish to Investor and to each managing
underwriter, if any, without charge, such reasonable number of copies of the
applicable Registration Statement, Prospectus (including each preliminary
Prospectus) and such other documents as Investor or such managing underwriter
may reasonably request in order to facilitate the disposition of the
Registrable Securities by Investor or such underwriter;

 

(8)                                  on or prior to the date on which the
applicable Registration Statement is declared effective, use commercially
reasonable efforts to register or qualify such Registrable Securities for offer
and sale under the securities or “blue sky” laws of each state and other jurisdiction
of the United States, as Investor or any underwriter, or their respective
counsel, reasonably requests in writing, and do any and all other acts or
things reasonably necessary or advisable to keep such registration or
qualification in effect so as to permit the commencement and continuance of
sales and dealings in such jurisdictions for so long as may be necessary to
complete the distribution of Registrable Securities covered by the Registration
Statement, it being understood that the Company will not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action which would subject it to taxation or general service of
process in any such jurisdiction where it is not then so subject;

 

(9)                                  cooperate with Investor and the managing
underwriter, underwriters or agent, if any, to facilitate the timely
preparation and delivery of certificates, if applicable, representing
Registrable Securities to be sold and not bearing any restrictive legends;

 

(10)                            not later than the effective date of the
applicable Registration Statement, provide a CUSIP number for all Registrable
Securities and provide, if requested by Investor, the applicable transfer agent
with printed certificates for the Registrable Securities which certificates
shall be in a form eligible for deposit with The Depository Trust Company;

 

(11)                            obtain for delivery to Investor and to
the underwriter or underwriters, if any, an opinion or opinions from counsel
for the Company dated the effective date of the Registration Statement or, in
the event of an Underwritten Offering, the date of the closing under the
underwriting agreement, in customary form, scope and substance, which counsel
and opinions shall be reasonably satisfactory to Investor and such underwriter
or underwriters, if any, and their respective counsel;

 

(12)                            in the case of an Underwritten Offering,
obtain for delivery to the Company and the underwriter or underwriters, if any,
with copies to Investor, a comfort letter from the Company’s independent
registered public accounting firm in customary form and covering such matters
of the type customarily covered by comfort letters as the managing 

 

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underwriter or underwriters reasonably request, dated
the date of execution of the underwriting agreement and brought down to the
closing under the underwriting agreement;

 

(13)                            cooperate with Investor and each
underwriter or agent, if any, participating in the disposition of such
Registrable Securities and their respective counsel in connection with any
filings required to be made with FINRA;

 

(14)                            use commercially reasonable efforts to
comply with all applicable rules and regulations of the SEC;

 

(15)                            provide and cause to be maintained a
transfer agent and registrar for all Registrable Securities covered by the
applicable Registration Statement from and after a date not later than the
effective date of such Registration Statement;

 

(16)                            cause all Registrable Securities of a
class covered by the applicable Registration Statement to be listed on each
securities exchange on which any of the Company’s securities of such class are
then listed or quoted and on each inter-dealer quotation system on which any of
the Company’s securities of such class are then quoted;

 

(17)                            make available upon reasonable notice at
reasonable times and for reasonable periods for inspection by Investor, by any
managing underwriter or underwriters participating in any disposition to be
effected pursuant to such Registration Statement and by any attorney,
accountant or other agent or representative retained by Investor or any such
managing underwriter, all pertinent financial and other records, documents and
properties of the Company, and cause all of the Company’s officers, directors
and employees and the independent registered public accounting firm that has
certified the Company’s financial statements to make themselves available to
discuss the business of the Company and to supply all information reasonably
requested by Investor or any such underwriter, attorney, accountant or agent in
connection with such Registration Statement as shall be necessary to enable
them to exercise their due diligence responsibility (subject to the entry by
each party referred to in this clause (17) into customary confidentiality
agreements in a form reasonably acceptable to the Company); and

 

(18)                            in the case of an Underwritten Offering,
cause the senior executive officers of the Company to participate in such
customary “road show” presentations as may be reasonably requested by the
managing underwriter(s) in any such Underwritten Offering and otherwise to
facilitate, cooperate with, and participate in each proposed offering
contemplated herein and customary selling efforts related thereto.

 

(b)                                 Investor shall furnish the Company with
such information regarding the distribution of any Registrable Securities and
such other information relating to Investor and its ownership of the applicable
Registrable Securities as the Company may from time to time reasonably request
to enable the Company to comply with the provisions of this Agreement.

 

(c)                                  Investor agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in Section 2.3(a)(4),
Investor will discontinue disposition of its Registrable Securities pursuant to
such Registration Statement until Investor receives the supplemented or amended
Prospectus contemplated by Section 2.3(a)(4), or until Investor is advised
in writing by the Company that the use of the Prospectus may be resumed, 

 

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and has received any additional or supplemental
filings that are incorporated by reference in the Prospectus.

 

2.4.  Underwritten Offerings.  If requested by the underwriters for any
Underwritten Offering pursuant to Section 2.1 or 2.2, the Company and
Investor shall enter into an underwriting agreement with such underwriters,
such agreement to be reasonably satisfactory in substance and form to the
Company, Investor and the underwriters, and to contain such customary terms and
conditions in agreements of that type, including, without limitation,
indemnities no less favorable to the recipient thereof than those provided in Section 2.7.  Investor shall not be required in any such
underwriting agreement to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding Investor, Investor’s Registrable Securities,
Investor’s intended method of distribution and any other representations
required by law.

 

2.5.  No Inconsistent Agreements; Additional
Rights.  The Company will not enter
into, and is not currently a party to, any agreement which is, or could with
the passage of time be, inconsistent with the rights granted to Investor under
this Agreement.

 

2.6.  Registration Expenses.  In connection with any registration under
this Agreement of Registrable Securities, the Company shall pay (i) all
registration and filing fees and any other fees and expenses associated with
filings required to be made with the SEC or FINRA, (ii) all fees and
expenses of compliance with state securities or “blue sky” laws, (iii) all
printing, duplicating, word processing, messenger, telephone, facsimile and
delivery expenses (including expenses of printing certificates for the
Registrable Securities in a form eligible for deposit with The Depository Trust
Company and of printing prospectuses), (iv) all fees and disbursements of
counsel for the Company and of all independent registered public accounting
firms of the Company, (v) all premiums for Securities Act liability
insurance or similar insurance if the Company so desires or the underwriter or
underwriters, if any, so require in accordance with then-customary underwriting
practice, (vi) all fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange or the
quotation of the Registrable Securities on any inter-dealer quotation system or
the over-the-counter bulletin board, (vii) all internal Company expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), (viii) all fees and
expenses of any special experts retained by the Company and (ix) reasonable fees and disbursements (such fees
and disbursements not to exceed $45,000 in the aggregate per each Demand
Registration and Piggyback Registration; provided that the Company shall not be
required to pay any such fees and disbursements with respect to more than three
(3) of Registration Statements, combined) of one law firm or other counsel
to Investor.  The Company shall not be
required to pay any fees or expenses of counsel to the underwriters (other than
on a pro rata basis with respect to shares (if any) offered for the Company’s
account.  Underwriting discounts
and commissions and transfer taxes attributable to the sale of Registrable
Securities shall be paid by Investor.

 

2.7.  Indemnification.

 

(a)                                  Indemnification by the Company. 
The Company shall indemnify and hold harmless, to the fullest extent
permitted by law, Investor and Investor’s officers, directors, advisors, agents,
representatives and employees and each Person who controls (within the 

 

9

 

meaning of the Securities Act or the Exchange Act)
such Persons from and against any and all losses, claims, damages, liabilities
(or actions or proceedings in respect thereof) and expenses (including
reasonable costs of investigation and legal expenses), joint or several (each,
a “Loss” and collectively “Losses”), arising out of or based upon
(i) any untrue or alleged untrue statement of a material fact contained in
any Registration Statement under which such Registrable Securities were
registered under the Securities Act (including any final, preliminary or
summary Prospectus contained therein or any amendment thereof or supplement
thereto or any documents incorporated by reference therein) or (ii) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
Prospectus or preliminary Prospectus, in light of the circumstances under which
they were made) not misleading; provided,
however, that the Company shall not be liable to any indemnified party in any
such case to the extent, but only to the extent, that any such Loss arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in any such Registration Statement in reliance upon
and in conformity with written information furnished to the Company, expressly
for use in the preparation of such Registration Statement, by Investor, its
Affiliates, any underwriter selected by Investor, any Controlling Person of
Investor, or any selling brokers, dealer managers and similar securities
industry professionals engaged by Investor in connection with such Registration
Statement.  This indemnity shall be in
addition to any liability the Company may otherwise have.  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of Investor or
any indemnified party and shall survive the transfer of such securities by Investor.  The
Company shall also provide customary indemnities, if applicable and if
requested, to any underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in any distribution pursuant
hereto, their officers and directors and each Person who Controls such Persons
(within the meaning of the Securities Act and the Exchange Act).

 

(b)                                 Indemnification by Investor. 
Investor shall indemnify and hold harmless, to the fullest extent
permitted by law, the Company, its directors and officers and each Person who
controls the Company (within the meaning of the Securities Act and the Exchange
Act) from and against any Losses arising out of or based upon (i) any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement under which such Registrable Securities were registered
under the Securities Act (including any final, preliminary or summary
Prospectus contained therein or any amendment thereof or supplement thereto or
any documents incorporated by reference therein) or (ii) any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a Prospectus or
preliminary Prospectus, in light of the circumstances under which they were
made) not misleading, in each case to the extent, but only to the extent, that
such untrue statement or omission had been contained in any information
furnished in writing by Investor, its Affiliates, any underwriter selected by
Investor, any Controlling Person of Investor, or any selling brokers, dealer
managers and similar securities industry professionals engaged by Investor in
connection therewith, to the Company specifically for inclusion in such
Registration Statement.  This indemnity
shall be in addition to any liability Investor may otherwise have.  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any indemnified party and shall survive
the transfer of such securities by Investor.  In no event shall the
liability of Investor hereunder be greater in amount than the dollar amount of
the proceeds received by Investor upon the sale of the Registrable Securities
giving rise to such indemnification obligation. 
Investor shall also provide
customary

 

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indemnities, if applicable
and if requested, to any underwriters of the Registrable Securities, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act).

 

(c)                                  Conduct of Indemnification Proceedings. 
Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided, however, that any delay or failure to so
notify the indemnifying party shall relieve the indemnifying party of its
obligations hereunder only to the extent, if at all, that the indemnifying
party is actually and materially prejudiced by reason of such delay or failure)
and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any Person
entitled to indemnification hereunder shall have the right to select and employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such Person unless (A) the
indemnifying party has agreed in writing to pay such fees or expenses, (B) the
indemnifying party shall have failed to assume the defense of such claim within
a reasonable time after having received notice of such claim from the Person
entitled to indemnification hereunder and to employ counsel reasonably
satisfactory to such Person, (C) in
the reasonable judgment of any such Person, based upon advice of its counsel, a
conflict of interest exists between such Person and the indemnifying party with
respect to such claims or (D) the
indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party (in
which case, if the Person notifies the indemnifying party in writing that such
Person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such Person).  If
such defense is not assumed by the indemnifying party, the indemnifying party
will not be subject to any liability for any settlement made without its
consent, but such consent may not be unreasonably withheld; provided, however, that an
indemnifying party shall not be required to consent to any settlement involving
the imposition of equitable remedies or involving the imposition of any
material obligations on such indemnifying party other than financial
obligations for which such indemnified party will be indemnified
hereunder.  If the indemnifying party
assumes the defense, the indemnifying party shall have the right to settle such
action without the consent of the indemnified party; provided, however, that the indemnifying party shall be required
to obtain such consent if the settlement includes any admission of wrongdoing
on the part of the indemnified party or any restriction on the indemnified
party or its officers or directors.  No
indemnifying party shall consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to each indemnified party of an unconditional
release from all liability in respect to such claim or litigation.  The indemnifying party or parties shall not,
in connection with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm (together with one firm
of local counsel) at any one time from all such indemnified party or
parties unless (x) the employment of more than one counsel has been
authorized in writing by the indemnifying party or parties (y) a conflict
or potential conflict exists or may exist (based on advice of counsel to an
indemnified party) between such indemnified party and the other indemnified
parties or (z) an indemnified
party has reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it that are different from or in addition to those
available to the other indemnified parties,  in each

 

11

 

of which cases the indemnifying party shall be
obligated to pay the reasonable fees and expenses of such additional counsel or
counsels.

 

(d)                                 Contribution. 
If for any reason the indemnification provided for in paragraphs (a) and
(b) of this Section 2.7 is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by paragraphs (a) and (b) of
this Section 2.7, then the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of such Loss in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and the indemnified party on the other.  The relative fault 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 indemnifying party or the
indemnified party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.  Notwithstanding anything in
this Section 2.7(d) to the contrary, Investor shall not be required
pursuant to this Section 2.7(d) to contribute any amount in excess of
the amount by which the net proceeds received by Investor from the sale of
Registrable Securities in the offering to which the Losses of the indemnified
parties relate exceeds the amount of any damages which such indemnifying party
has otherwise been required to pay by reason of such untrue statement or
omission.  The parties hereto agree that
it would not be just and equitable if contribution pursuant to this Section 2.7(d) were
determined by any method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding
paragraph.  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.  If indemnification is available
under this Section 2.7, the indemnifying parties shall indemnify each
indemnified party to the full extent provided in Sections 2.7(a) and 2.7(b) hereof
without regard to the relative fault of said indemnifying parties or
indemnified party.

 

(e)                                  Notwithstanding the foregoing, to the
extent that the provisions regarding indemnification and contribution contained
in any underwriting agreement entered into among the Company, Investor and one
or more underwriters in connection with an Underwritten Offering are in
conflict with the foregoing provisions, the provisions in such underwriting
agreement shall control.

 

2.8.  Rule 144.  The Company shall file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder and shall take such further action as
Investor may reasonably request, all to the extent required from time to time
to enable Investor to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act, as such Rules may be amended from time to time,
or any similar rule or regulation hereafter adopted by the SEC.

 

Section 3.  Certain Covenants.

 

3.1.  Board Observers.  Investor shall have the right, upon written
notice to the Company, to appoint up to three (3) representatives (each an “Observer”
and collectively the “Observers”) who shall, subject to any redactions
or restrictions imposed which are reasonably necessary to 

 

12

 

preserve attorney-client privilege (provided that a
brief general description of the redacted or restricted information is provided
in lieu thereof), (i) receive written notice of all meetings (both regular
and special) of the Board of Directors, such notice to be delivered at the same
time as notice is given to the members of the Board of Directors, (ii) be
entitled to attend (or, in the case of telephone meetings, monitor) all such
meetings of the Board of Directors, (iii) receive all notices, information
and reports which are furnished to the members of the Board of Directors at the
same time and in the same manner as the same is furnished to such members, (iv) be
entitled to participate in all discussions conducted at such meetings and (v) receive
as soon as available (but in any event prior to the next succeeding meeting of
the Board of Directors) copies of the minutes of all such meetings; provided,
however, that Investor’s right to appoint Observers to the Board of Directors
(and the rights and privileges of such Observers under this Section 3.1)
shall be limited to (x) two (2) Observers in the event that Investor’s
Ownership Percentage is less than thirty percent (30%) but greater than or
equal to twenty percent (20%), (y) one (1) Observer in the event that
Investor’s Ownership Percentage is less than twenty percent (20%) but greater
than or equal to ten percent (10%) and (z) no Observers in the event that
Investor’s Ownership Percentage is less than ten percent (10%).  If any action is proposed to be taken by the
Board of Directors by written consent in lieu of a meeting, the Company will
use reasonable efforts to give written notice thereof to such Observers, which
notice shall describe in reasonable detail the nature and substance of such
proposed action and shall be delivered at the same time as notice is given to
the members of the Board of Directors and the Company will furnish such
Observers with copies of each such written consent no later than five (5) Business
Days after it has been signed by its last signatory.  Any such Observers shall not constitute
members of the Board of Directors and shall not be entitled to vote on any
matters presented at meetings of the Board of Directors or to consent to any
matter as to which the consent of the Board of Directors shall have been
requested.

 

3.2.  Preemptive Rights.

 

(a)                                  Subject to Section 3.2(b), in
connection with any proposed issuance or sale by the Company of any shares of
Common Stock, or any securities exercisable for or convertible into shares of
Common Stock, the Company shall offer to sell to Investor a pro rata portion of
such securities equal to the percentage determined by dividing (x) the sum
of (i) the number of shares of Common Stock then held by Investor plus (ii) the
number of shares of Common Stock then issuable upon exercise (on a cash basis)
of the Closing Warrant by (y) the number of shares of Common Stock then
outstanding on a fully diluted basis. 
Investor shall be entitled to purchase all or part of such securities at
the same price and on the same terms as such securities are to be offered to
any other Persons.  The Company shall
provide written notice to Investor at least ten (10) Business Days prior
to the consummation of any sale of securities to which the rights granted under
this Section 3.2 apply (a “Sale Notice”), which Sale Notice shall
describe in reasonable detail the securities being offered (including, without
limitation, the amount of such securities being offered), the purchase price
payable therefor, the payment terms thereof, Investor’s pro rata portion
thereof, and any other materials with respect to such securities and the
offering thereof.  Investor shall be
entitled to exercise its preemptive rights and purchase securities under and in
accordance with this Section 3.2 at any time within ten (10) Business
Days after its receipt of the Sale Notice from the Company by delivering
written notice thereof to the Company. 
Upon the expiration of such ten (10) Business Day period, the
Company shall be free to sell such securities which Investor has not elected to
purchase during the ninety (90) day 

 

13

 

period following such expiration on terms and
conditions no more favorable to the purchasers thereof than those offered to
Investor pursuant to the Sale Notice. 
Any securities offered or sold by the Company after such ninety (90) day
period must be reoffered to Investor pursuant to the terms of this Section 3.2.

 

(b)                                 The provisions of Section 3.2(a) shall
not apply to: (i) the issuance of securities in connection with
subdivisions of the securities of the Company, share splits or dividends; (ii) the
issuance of securities to employees, officers, consultants, members of
management or directors of the Company as compensation pursuant to any equity
incentive or stock purchase plans; (iii) the issuances of Common Stock
upon the exercise or conversion of any securities outstanding on the date of
this Agreement (including, without limitation, the Closing Warrant); (iv) the
issuance of securities in connection with any acquisition, amalgamation,
merger, joint venture or similar transactions; or (v) the issuance of any
other securities contemplated by this Agreement.

 

3.3.  Certain Information.  The Company shall furnish to Investor (i) as
soon as available and in any event within 90 days after the end of each fiscal
year (but no later than the date on which the Company would be required to file
a Form 10-K under the Exchange Act if it were subject to Section 15
and 13(d) of the Exchange Act), audited consolidated financial statements
of the Company for such fiscal year, (ii) as soon as available and in any
event within 45 days after the end of each of the first three fiscal quarters
of each fiscal year (but no later than the date on which the Company would be
required to file a Form 10-Q under the Exchange Act if it were subject to Section 15
and 13(d) of the Exchange Act), consolidated financial statements of the
Company for each such fiscal quarter, and (iii) promptly after the same
become publicly available, copies of all periodic and other reports, proxy
statements, notices and other materials or information filed by the Company
with the SEC.  Without limiting the
generality of the foregoing, Investor acknowledges and agrees that, so long as
the Credit Agreement remains in effect, compliance by the Company with the
covenants set forth in Section 5.01 of the Credit Agreement shall
constitute compliance with this Section 3.3.

 

3.4.                              Securities Exchange Listing. 
The Company shall use commercially reasonable efforts to cause the
Common Stock to be listed for trading on the New York Stock Exchange or any
U.S. national securities exchange operated by The NASDAQ Stock Market LLC (or
any successor thereto).

 

3.5.                              No Impairment of Other Rights. 
Nothing in this Section 3 shall be deemed to be to the exclusion
of, in lieu of, or otherwise modify or waive any other rights that Investor may
have pursuant to applicable law or contract. 
Investor’s rights under this Section 3 may be exercised at any time
or from time to time in accordance herewith.

 

Section 4.  Miscellaneous

 

4.1.                              Representations and Warranties of the
Company.  The Company represents and warrants to
Investor as follows: (i) the execution, delivery and performance of this
Agreement has been duly authorized by all necessary action on the part of the
Company, (ii) this Agreement has been duly executed and delivered by the
Company, (iii) this Agreement constitutes a legal, valid and binding
obligation of the Company, enforceable in accordance with its terms and (iv) 

 

14

 

the execution, delivery and performance of this
Agreement does not require any material consent or approval of, registration or
filing with, or any other action by, any governmental authority or any other
Person and will not violate the certificate of incorporation or bylaws of the
Company, any law or any material agreement binding upon any Company.

 

4.2.                              Representations and Warranties of
Investor.  Investor represents and warrants to the
Company as follows: (i) the execution, delivery and performance of this
Agreement has been duly authorized by all necessary action on the part of
Investor, (ii) this Agreement and has been duly executed and delivered by
Investor, (iii) this Agreement constitutes a legal, valid and binding
obligation of Investor, enforceable in accordance with its terms, (iv) the
execution, delivery and performance of this Agreement does not require any
material consent or approval of, registration or filing with, or any other
action by, any governmental authority or any other Person and will not violate
the certificate of incorporation, bylaws or other governance document of
Investor, any law or any material agreement binding upon any Investor, (v) Investor
is acquiring an interest in the Company for its own account and not on behalf
of others, (vi) Investor understands and acknowledges that federal and
state securities laws govern and restrict its right to offer, sell, or
otherwise dispose of any Common Stock unless the offer, sale or other
disposition thereof is registered under the Securities Act and state securities
laws, or such offer, sale or other disposition is exempt from registration or
qualification thereunder, (vii) Investor represents that it has such
knowledge and expertise in financial and business matters that Investor is
capable of evaluating the merits and risk of its investment in the Common Stock
and (viii) Investor is an “accredited investor” as such term is defined in
Rule 501(a) promulgated under the Securities Act.

 

4.3.                              Double Trigger Severance Arrangements. 
The Company hereby covenants and agrees that if it is a party to or has
obligations under any Double Trigger Severance Arrangement (as defined below)
with any person, then the Company will not, without prior approval of the Board
of Directors, terminate the employment or service of any such person on or
after the date hereof in a manner or under circumstances that would cause any
additional, increased or modified benefits or payments being required to be
made to such officer or director under the applicable Double Trigger Severance
Arrangement.  “Double Trigger
Severance Arrangement” means any contract, arrangement, agreement or
understanding, whether written or oral, between the Company (or any Affiliate
thereof) and any officer or director thereof, pursuant to which the issuance of
the Closing Warrant or the consummation of any other transactions contemplated by
and in the Credit Agreement would constitute a “change of control,” “change in
control” or similar event or circumstance regarding the Company (or any
Affiliate thereof), and as a result thereof the subsequent termination of such
officer or director’s employment with or service to the Company (or any
Affiliate thereof) within a specified period thereafter would result in any
additional, increased or modified benefits or payments being required to be
provided to such officer or director.

 

4.4.                              Confidentiality. 
Investor agrees to use commercially reasonable efforts to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’ directors, officers,
employees, agents, advisors, other representatives and third parties who have a
bona fide need to know the same,
including without limitation accountants, legal counsel, other advisors and
lenders (it being understood that the persons to whom such disclosure is made
will be informed of the confidential nature of such 

 

15

 

Information and instructed to keep such Information
confidential pursuant to the terms hereof or will otherwise be subject to
contractual or other confidentiality restrictions that are no less restrictive
than the provisions hereof), (b) to the extent requested by any regulatory
authority or any quasi-regulatory authority, (c) to the extent required by
applicable Legal Requirements or by any subpoena or similar legal process, (d) in
connection with the exercise of any remedies under this Agreement or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (e) with the consent of the Company or (f) to the extent
such Information (i) is publicly available at the time of disclosure or
becomes publicly available other than as a result of a breach of this Section 4.4
or (ii) becomes available to Investor on a nonconfidential basis from a
source other than the Company.  For the
purposes of this Section 4.4, “Information” shall mean all
information received from the Company relating to the Company or any of its
subsidiaries or its business that would reasonably be considered to be
confidential, other than any such information that is available to Investor on
a nonconfidential basis prior to disclosure by the Company.

 

4.5.                              Successors, Assigns and Transferees. 
This Agreement and the rights of Investor under this Agreement
(excluding under Section 3 hereof) may be transferred and assigned by Investor;
provided, however, that no such transfer or assignment shall be binding upon or
obligate the Company to any such transferee or assignee unless and until the
Company shall have received notice of such transfer or assignment as herein
provided and a written agreement of the transferee or assignee to be bound by
the provisions of this Agreement.  The
rights of Investor under Section 3 of this Agreement may not be directly
or indirectly transferred or assigned without the prior written consent of the Company;
provided, however, that such rights may be transferred or assigned to an
Affiliate of Investor without the consent of the Company, subject to compliance
with the requirements set forth in the proviso contained in the immediately
preceding sentence.  Any purported
transfer or assignment of this Agreement and the rights of Investor hereunder
in the absence of any consent of the Company required by the immediately
preceding sentence shall be deemed to be a transfer and assignment of all
rights of Investor under this Agreement excluding under Section 3 hereof,
and notwithstanding anything herein to the contrary the assignee shall have no
rights under such section.  Any transfer
or assignment made other than as provided in the foregoing sentences shall be
null and void.  In the event of any such
transfer or assignment by Investor, any provisions of this Agreement that
requires the approval of Investor, an election by Investor or any similar
action on Investor’s part shall be read to require the approval, election or
action of the holders of a majority of the then outstanding Registrable
Securities.  This Agreement may not be
transferred or assigned by the Company without the prior written consent of
Investor but, in any case of any successor-in-interest to the Company or any
Person other than the Company who is an issuer of Registrable Securities, such
successor-in-interest or other issuer, shall assume, jointly and severally with
the Company, the rights and duties of the Company hereunder, and in the event
of a merger or consolidation of the Company with or into another corporation
(or another entity) or the sale of all or substantially all of the Company’s
assets (and it shall be a condition to any such merger, consolidation or sale
that such successor-in-interest or other issuer assume (in a writing delivered
to Investor) all obligations hereunder jointly and severally with the Company
as provided herein).  This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto, and
their respective successors and permitted assigns.

 

16

 

4.6.  Headings.  The section and paragraph headings contained
in this Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.

 

4.7.  Applicable Law; Submission to Jurisdiction.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without regard
to principles of conflicts of law.  Each
party hereto hereby submits to the exclusive jurisdiction of the state and
federal courts residing in the State of Delaware with respect to the
maintenance and resolution of any claims arising hereunder or related hereto.

 

4.8.  Severability.  Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or portion
of any provision in such jurisdiction, and this agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
therein.

 

4.9.  Amendment; Waiver.  This Agreement may amended only by a writing
signed by the Company and Investor.  No
waiver hereunder shall be effective unless set forth in a writing signed by the
party granting such waiver.

 

4.10.  Attorneys’ Fees.  In any action or proceeding brought to
enforce any provision of this Agreement or where any provision hereof is
validly asserted as a defense, the successful party shall, to the extent
permitted by applicable law, be entitled to recover reasonable attorneys’ fees
in addition to any other available remedy.

 

4.11.  Notices.  All notices and other communications provided
for or permitted hereunder shall be made as set forth in Section 10.01 of
the Credit Agreement.

 

4.12.  Counterparts.  This Agreement may be executed in any number
of separate counterparts (including by facsimile or other electronic
transmission) 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 together
shall constitute one and the same agreement.

 

4.13.  Entire Agreement.  This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. 
This Agreement supersedes all prior agreements and understandings between
the parties with respect to such subject matter contained herein.

 

4.14.  Further Assurances.  The parties shall execute and deliver all
such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

 

17

 

4.15.                        Termination. 
Notwithstanding anything to the contrary contained herein, this
Agreement will terminate in its entirety and be of no further force or effect
upon the first date on which Investor’s Ownership Percentage is less than 10%;
provided however, the provisions contained in Section 4 hereof (other than
Section 4.1, Section 4.2 and Section 4.3) shall survive any such
termination.

 

[REMAINDER OF PAGE LEFT
BLANK INTENTIONALLY]

 

18

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first written above.

 

	
   

  	
  KEMET
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William M. Lowe,
  Jr.

  
	
   

  	
  Name:

  	
  William M. Lowe, Jr.

  
	
   

  	
  Title:

  	
  Executive Vice President and Chief Financial Officer

  

 

Signature Page to Investor Rights Agreement

 

 

	
   

  	
  K FINANCING, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mary Ann Sigler

  
	
   

  	
  Name: 

  	
  Mary Ann Sigler

  
	
   

  	
  Title: 

  	
  Vice President

  

 

Signature Page to Investor Rights AgreementExhibit 10.3

 

EXECUTION COPY

 

CORPORATE ADVISORY SERVICES
AGREEMENT

 

This CORPORATE ADVISORY
SERVICES AGREEMENT (this “Agreement”) is entered into as of June 30, 2009
(the “Effective Date”) by and between KEMET CORPORATION, a Delaware corporation (the
“Company”), and PLATINUM EQUITY ADVISORS, LLC, a Delaware limited liability
company (the “Advisor”).

 

RECITALS

 

A.                                   The Company
specializes in manufacturing capacitors that are used in a wide variety of
electronic applications and products (collectively, the “Business”).

 

B.                                     The Advisor
agrees to perform certain services with respect to the Company and the
Business, and, in exchange for such services, the Company agrees to pay Advisor
certain fees and to provide for other consideration, all as set forth herein.

 

C.                                     The Company and
K Financing, LLC, a Delaware limited liability company (“Lender”), are parties
to that certain Amended and Restated Credit Agreement, dated as of June 7,
2009, as amended (as the same may be further amended from time to time, the “Credit
Agreement”), pursuant to which Lender agreed to provide certain credit to the
Company on the terms and subject to the conditions thereof.  Lender is an affiliate of Advisor.

 

D.                                    The execution
and delivery of this Agreement by the Company is a condition precedent to the
obligations of Lender under the Credit Agreement to make the initial loans
thereunder.

 

AGREEMENT

 

NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:

 

1.                                       Appointment and
Term.  The Company hereby retains the
Advisor to render those services set forth in Exhibit A hereto,
together with such other services as the Company and the Advisor may mutually
agree upon from time to time (collectively, the “Services”).  The term of this Agreement shall begin on the
Effective Date and shall continue until the later to occur of (i) the fourth
(4th) anniversary of the date of this Agreement and (ii) the termination of the
Credit Agreement.  Notwithstanding the
foregoing, (x) the Advisor may, with or without cause and in its sole
discretion, terminate this Agreement at any time upon written notice to the
Company, and (y) subject to the following sentence, this Agreement shall
automatically terminate at the effective time of (I) a merger or consolidation
of the Company with or into any entity, or the transfer or sale by the holders
of the Company’s common stock (on a fully diluted, as converted basis), which
results in the holders of the Company’s outstanding common stock immediately
prior to any such merger, consolidation, transfer or sale ceasing to own,
directly or indirectly, immediately following such merger, consolidation,
transfer or sale, at least 50% of the outstanding voting securities (measured
by voting rights) (on a fully diluted, as converted basis) of the surviving
entity, (II) the sale, transfer or other disposition of all or
substantially all of the Company assets and (III) the liquidation or
dissolution of the Company; provided, however, that

 

 

this Agreement shall not automatically
terminate as provided in the foregoing clause (y)(I) or (y)(II) (and
shall rather continue in full force and effect) if the Company so requests in
writing prior to the effective time of the applicable transaction and concurrently
therewith the applicable successor to or assignee of the Company assumes in
writing, on a joint and several basis with the Company, all of the Company’s
obligations hereunder upon such effective time. 
If this Agreement is terminated pursuant to clause (y) of the
immediately preceding sentence, concurrently with (and as a condition precedent
to the effectiveness of) such termination, the Company shall make a lump sum
payment to the Advisor equal to the aggregate amount of remaining Advisory Fees
that would be payable to the Advisor pursuant to Section 3 if the term of
this Agreement continued until the fourth (4th) anniversary of the date of this
Agreement.

 

2.                                       Quality of
Services.  The Advisor
shall use commercially reasonable efforts to render the Services in a
professional, timely and workmanlike manner; provided that notwithstanding the
foregoing or anything herein to the contrary, the Advisor makes no other
representations or warranties, either express or implied, with respect to the
Services rendered hereunder.  It is
further understood and agreed that, notwithstanding anything herein to the
contrary, the Company is not precluded from engaging other persons aside from
or in addition to the Advisor to provide similar or identical Services to the
Company during the term of this Agreement, and any such engagement of another
person shall not affect or impair the Advisor’s right to receive the fees set
forth herein.

 

3.                                       Compensation.

 

(a)                                  In
consideration of the Services and the Advisor’s willingness to provide the
same, the Company shall pay to the Advisor a fee (the “Advisory Fee”) of
US$1,500,000 per calendar year during the term of this Agreement.  The Company shall make a single lump sum
Advisory Fee payment of US$1,500,000 on the date hereof, which shall satisfy
the Company’s obligations to pay the Advisory Fee hereunder through the
remainder of calendar year 2009 and the portion of calendar year 2010 ending on
the first anniversary of the date of this Agreement.  Beginning with the first calendar quarter
ending after the first anniversary of the date of this Agreement, the Company
shall pay the Advisory Fee for the applicable calendar year in arrears in equal
quarterly installments due and payable on the last business day of each
calendar quarter during the term of this Agreement.  For example, if the date of this Agreement is
June 30, 2009, (i) with respect to calendar year 2009, the Company
shall make a single lump sum Advisory Fee payment of US$1,500,000 on June 30,
2009 and (ii) with respect to calendar year 2010, if this Agreement is in
effect, the Company shall make an Advisory Fee payment of $375,000 on September 30,
2010 and $375,000 on December 31, 2010. 
For the avoidance of doubt, the Company’s Advisory Fee payment for the
first calendar quarter ending after the first anniversary of the date of this
agreement shall be made on a pro rata basis based upon the actual number of
days in such calendar quarter after the first anniversary of the date of this
Agreement.  Payments of the Advisory Fee
shall be due and payable, without demand or other notice from the Advisor, as
provided herein.  All Advisory Fee
payments due and payable hereunder shall be made by the Company via wire
transfer of immediately available funds to an account designated by the Advisor
or in such other manner as may be mutually agreed upon by the Company and
Advisor.  All Advisory Fees payable
hereunder shall be non-refundable (including, without limitation, if this
Agreement is terminated prior to the completion of a particular calendar
quarter), and shall 

 

2

 

be paid when due, without right of
offset.  The Company shall promptly
reimburse the Advisor (on a periodic basis, as invoiced) for all reasonable
out-of-pocket costs and expenses incurred by the Advisor in connection with
rendering the Services.

 

(b)                                 If, at the time
any payment due hereunder from the Company to the Advisor is due and payable,
the Company either (i) does not have sufficient funds available to make such
payment at such time or (ii) is prohibited by any of its debt financing
agreements from making such payment at such time, then the Company may defer
such payment until the earliest subsequent time when the Company has sufficient
funds available to make such payment or when such prohibition in the Company’s
debt financing agreements is no longer effective, as applicable; provided that (x) nothing
in the foregoing shall be deemed to alter the Company’s absolute obligation to
make such payment, and (y) any payment so deferred shall bear interest at
the Applicable Rate from the due date thereof until the date such payment
(including all accrued interest thereon) is made in full.  For the purposes of this Agreement, the “Applicable
Rate” shall be the “prime rate” then in effect as published in The Wall Street
Journal for the date such payment is due or is made in full, whichever is
greater, plus three percent (3%).  For
the avoidance of doubt, except as expressly permitted by this Section 3(b),
the Company may not defer any payment due hereunder.

 

4.                                       Representation
and Warranties.

 

(a)                                  The Advisor
represents and warrants to the Company that as of the date hereof: (i) the
Advisor is a limited liability company duly organized and validly existing
under the laws of the state of Delaware, and all corporate and other internal
authorization required for the execution of this Agreement by the Advisor have
been obtained, and (ii) this Agreement does not materially violate any
agreements to which the Advisor is a party or is otherwise bound.  Except as otherwise expressly set forth
herein, the Advisor makes no representations or warranties with respect to the
Services, this Agreement or any other matter related hereto.

 

(b)                                 The Company
represents and warrants to the Advisor that as of the date hereof: (i) the
Company is a corporation duly incorporated and validly existing under the laws
of the State of Delaware, and all
corporate and other internal authorization required for the execution of this
Agreement by the Company have been obtained, (ii) this Agreement does not
materially violate any agreements to which the Company is a party or is
otherwise bound, (iii) the Company is not a party to or otherwise bound by
any agreement that prohibits the Company from making any payment hereunder when
due, and the Company hereby covenants that it will not enter into any such
agreement and will not modify or amend any existing agreement to which the
Company is a party or otherwise bound in a manner that would cause any such
prohibition to be applicable.  Except as
otherwise expressly set forth herein, the Company makes no representations or
warranties with respect to the Services, this Agreement or any other matter
related hereto.

 

5.                                       Confidentiality.  The Advisor agrees to use commercially
reasonable efforts to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and
its Affiliates’ directors, officers, employees, agents, advisors, other
representatives and third parties who have a bona fide need to know the same,
including without limitation accountants, legal counsel, other advisors and
lenders (it being understood that the

 

3

 

persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential pursuant to the terms hereof or will otherwise be
subject to contractual or other confidentiality restrictions that are no less
restrictive than the provisions hereof), (b) to the extent requested by
any regulatory authority or any quasi-regulatory authority, (c) to the
extent required by applicable Legal Requirements or by any subpoena or similar
legal process, (d) in connection with the exercise of any remedies under
this Agreement or any suit, action or proceeding relating to this Agreement or
the enforcement of rights hereunder, (e) with the consent of the Company
or (f) to the extent such Information (i) is publicly available at
the time of disclosure or becomes publicly available other than as a result of
a breach of this Section 5 or (ii) becomes available to the Advisor
on a nonconfidential basis from a source other than the Company.  For the purposes of this Section 5, “Information”
shall mean all information received from the Company relating to the Company or
any of its subsidiaries or its business that would reasonably be considered to
be confidential, other than any such information that is available to the
Advisor on a nonconfidential basis prior to disclosure by the Company.

 

6.                                       Independent
Contractor.  The Company
acknowledges that in performing the Services, the Advisor is acting as an
independent contractor, and not as a fiduciary, agent or otherwise, to the
Company or any other person or entity. 
The Advisor acknowledges that it shall not, unless otherwise expressly
authorized in writing by the Company, have any authority to act for or
represent the Company in any way, execute any transaction on behalf of the
Company or otherwise be deemed an agent of the Company.  Nothing contained in this Agreement shall be
deemed or construed by the parties or any third party to create the
relationship of partners or joint venturers between the Advisor and the
Company.  The Company acknowledges and
agrees that the Advisor and its affiliates may have and may continue to have
relationships with parties other than the Company pursuant to which the Advisor
may acquire information relevant to the Business or otherwise of interest to
the Company, and the Advisor shall have no obligation to disclose any such
information to the Company or to use such information in connection with any
Services.

 

7.                                       Indemnification;
Limitation of Liability.  The
Company shall indemnify, to the fullest extent permitted by law, the Advisor
and its officers, directors employees, affiliates, agents and other
representatives (collectively, the “Advisor Parties”), against all liabilities,
costs and expenses incurred in connection with the Services provided hereunder,
other than if and to the extent such liabilities, costs and expenses arise as a
result of the gross negligence, bad faith, fraud or willful misconduct of the
party to be charged.  Notwithstanding
anything herein to the contrary, the maximum aggregate monetary or other liability
that the Advisor Parties shall have to the Company or any other party
(including, without limitation, the Company’s officers, directors, employees,
agents and other representatives and stockholders) with respect to any and all
claims (on a cumulative basis) related to or in connection with the breach or
alleged breach hereof by the Advisor, or related to or in connection with the
Services provided or to be provided hereunder, shall be the lesser of (i) the
aggregate amount of Advisory Fees paid by the Company to the Advisor hereunder
and (ii) US$1,500,000. 
Notwithstanding anything herein to the contrary, the Advisor shall not
be liable under any circumstance for any lost profits or other special,
incidental, indirect, punitive or consequential damages, however, caused and
under any

 

4

 

theory of liability, arising from its
provision of the Services or otherwise related to or in connection with this
Agreement.

 

8.                                       General.  Each provision of this Agreement shall be
considered severable, and if for any reason any provision that is not essential
to the effectuation of the basic purposes of this Agreement is determined to be
invalid and contrary to any existing or future law, such invalidity shall not
impair the operation of or affect those provisions of this Agreement that are
valid.  The waiver of either party of any
breach of this Agreement shall not operate or be construed to be a waiver of
any subsequent breach.  This Agreement
shall be construed and enforced in accordance with the laws of the state of
California, United States, without regard to its conflict of laws
principles.  All section headings in this
Agreement are for convenience of reference only and are not intended to qualify
the meaning of any section.  No persons
other than the parties to this Agreement may directly or indirectly rely upon
or enforce the provisions of this Agreement, whether as a third party
beneficiary or otherwise.  This Agreement
represents the entire agreement and understanding of the parties with respect
to the subject matter hereof, and supersedes all prior agreements and
understandings with respect thereto. 
This Agreement may only be amended by a writing signed by each of the
parties hereto.  The provisions contained
in Section 5, Section 7 and Section 8 hereof shall survive the
termination of this Agreement. 
Capitalized terms which are defined in the Credit Agreement and used but
not defined herein shall have the meaning assigned to such terms in the Credit
Agreement.

 

Signature
Page Follows Immediately Hereafter

 

5

 

IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed by their duly authorized
representatives as of the date first set forth above.

 

 

	
  KEMET
  CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ William M. Lowe, Jr.

  	
   

  
	
  Name:

  	
  William M. Lowe, Jr.

  	
   

  
	
  Title:

  	
   

  	
   

  

 

Signature Page to Corporate Advisory Services
Agreement

 

 

	
  PLATINUM EQUITY ADVISORS,
  LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Mary Ann Sigler

  	
   

  
	
  Name:

  	
  Mary Ann Sigler

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  

 

Signature Page to Corporate Advisory Services
Agreement

 

 

EXHIBIT
A TO CORPORATE ADVISORY SERVICES AGREEMENT*

 

·                  Providing
general business advice.

 

·                  Providing
advice regarding corporate restructuring.

 

·                  Providing
advice regarding structuring and negotiating transactions.

 

·                  Providing
advice regarding identifying, structuring, negotiating, obtaining bank,
institutional and other sources of financing for the Company.

 

·                  Providing
advice regarding financial activities of the Company.

 

·                  Providing
management advice and financial planning advice.

 

·                  Providing such
other advice to the Company as generally may be required to properly carry on
the business and operations of the Company.

 

·                  Administrative
advice:

 

(i)                                     Advice on the
performance of financial analyses and research by the Company, including
financial forecasting, strategic planning, budgeting, and analysis; and

 

(ii)                                  Advice to the Company in
connection with capital investments.

 

·                  Financial
advice:

 

(i)                                     Advice in the coordination
and oversight of the short-term and long-term financing requirements of the
Company (including as to cash-flow projections);

 

(ii)                                  Advice on and oversight of
the investments to be carried out by the Company;

 

(iii)                               Advice in the
coordination of cash and equivalents held by the Company, including cash on
hand, and investments of cash and equivalents on a consolidated basis; advice
on the control and recovery of liabilities and receivables;

 

(iv)                              Advice in the coordination
of the management of foreign currencies and hedging operations; and

 

(v)                                 Review of and subsequent
advice regarding the business plan of the Company.

 

*
The specific nature and scope of all Services to be rendered hereunder to be
determined as mutually agreed from time to time by the parties.

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