Document:

Exhibit 10.7

 

PLEDGE AND SECURITY
AGREEMENT

 

PLEDGE AND SECURITY AGREEMENT, dated as of September 15,
2008 (as amended, supplemented or modified from time to time, this “Agreement”),
made by KEMET Electronics Corporation (the “Grantor”) in favor of Vishay
Intertechnology, Inc. (“Secured Party”).

RECITALS

 

Pursuant to the Loan Agreement dated as of the date
hereof (as amended, supplemented or modified from time to time, the “Loan
Agreement”; capitalized terms used but not defined herein shall have the
meanings given such terms in the Loan Agreement) by and among Kemet Electronics
Corporation, as Borrower, and Secured Party, Secured Party has agreed to make a
Loan to Borrower.  In order to induce
Secured Party to make the Loan, Grantor has agreed to grant a continuing Lien
on the Collateral to secure the Obligations (as hereinafter defined).  Accordingly, Grantor hereby agrees as
follows:

 

1.             Security Interest.

 

(a)           Collateral. 
For purposes of this Agreement, all of the following property now owned
or at any time hereafter acquired by Grantor or in which Grantor now has or at
any time in the future may acquire any right, title or interest is collectively
referred to as “Collateral”: (i)  US Pledged Accounts, (ii) all
books and records relating to the US Pledged Accounts, (ii) all Supporting
Obligations (as defined in the UCC) relating to the US Pledged Accounts, (iii) the
Collateral Account and all deposits therein, and (vi) to the extent not
otherwise included, all Proceeds (as defined in the UCC).

 

(b)           Grant of Security. 
As security for the Obligations (as hereinafter defined), Grantor hereby
delivers, assigns, pledges, sets over and grants to Secured Party a first
priority security interest in, all of its right, title and interest, whether
now existing or hereafter arising or acquired, in and to the Collateral,
together with all substitutions and replacements thereof and any products and
proceeds thereof.

 

(c)           Security for Obligations.  This Agreement secures the payment of all now
existing or hereafter arising obligations of Grantor to Secured Party, whether
primary or secondary, direct or indirect, absolute or contingent, joint or
several, secured or unsecured, due or not, liquidated or unliquidated, arising
by operation of law or otherwise under the Loan Agreement or any other Credit
Document but only to the extent required under the Loan Agreement or any other
Credit Document, whether for principal, interest, fees, expenses or otherwise,
together with all costs of collection or enforcement, including, without
limitation, reasonable attorneys’ fees incurred in any collection efforts or in
any action or proceeding (all such obligations being the “Obligations”).

 

(d)           Grantor Remains Liable.  This Agreement shall not affect Grantor’s
liability to perform all of its duties and obligations under the transactions
giving rise to the Obligations.  The
exercise by Secured Party of any of the rights hereunder shall not release
Grantor from any of its duties or obligations under the transactions giving
rise to the Obligations, which shall remain unchanged as if this Agreement had
not been executed.  Secured Party shall
not have any obligation or liability under the transactions giving rise to the
Obligations by reason of this Agreement, nor shall Secured Party be obligated
to perform any of the obligations or duties of any Grantor thereunder or to
take any action to collect or enforce any claim for payment assigned hereunder.

 

(e)           Continuing Agreement.  This Agreement shall create a continuing
security interest in the Collateral and shall remain in full force and effect
until payment in full of the Obligations 

 

 

(other than unasserted contingent indemnification
obligations, including those in Section 2.6 of the Loan Agreement).

 

2.                                       Representations
and Warranties.  To induce
Secured Party to enter into the Loan Agreement, Grantor represents and warrants
each of the following to Secured Party

 

(a)                                  Title; Liens and Encumbrances. 
Grantor is (or to the extent that this Agreement states that the
Collateral is to be acquired after the date hereof, will be) the record and
beneficial owner of, having (or to the extent that this Agreement states that
the Collateral is to be acquired after the date hereof, will have) good and
marketable title to, the Collateral pledged by it hereunder, free of any and
all Liens or options in favor of, or claims of, any other person, except the
Liens created by this Agreement and Grantor will promptly notify Secured Party
of any such other Lien or claim made or asserted against the Collateral and will
defend the Collateral against any such Lien or other claim.

 

(b)                                 State of Organization; Legal Name.

 

(i)            Grantor’s state of
incorporation or organization, chief executive office is set forth on Schedule
I.  Grantor shall promptly notify
Secured Party of any change in the foregoing representations.

 

(ii)           Grantor’s exact
legal name is as set forth on Schedule I.

 

(iii)          Grantor currently
uses, and during the last five years has used, no other names including
business or trade names, except as set forth on Schedule I.  Grantor shall not change such name without
providing Secured Party 5 Business Days’ prior written notice.

 

(iv)          Grantor’s
organizational identification number is as set forth on Schedule I.  Grantor shall not change such organizational
identification number without providing Secured Party 5 Business Days’ prior
written notice.

 

(c)                                  Perfection of Security Interest.

 

(i)            The grant of the
security interest in the Collateral, combined with the filing of financing
statements, the execution of the Control Agreement, and/or possession of the
Collateral, each as appropriate, is effective to vest in Secured Party a valid
and perfected first priority security interest, superior to the rights of any
person in and to the Collateral as set forth herein.

 

(ii)           Grantor authorizes
Secured Party to file all such financing statements and amendments thereto
pursuant to the UCC or other notices appropriate under applicable law, as
Secured Party may require, each in form satisfactory to Secured Party.  Such financing statements and amendments may
contain a description of the Collateral as set forth herein or in any generic
manner.

 

(iii)          Upon delivery by
Secured Party of an invoice therefor, Grantor shall pay fifty percent (50%) of
all filing or recording costs with respect thereto in all public offices where
filing or recording is deemed by Secured Party to be reasonably necessary.

 

(iv)          Grantor authorizes
Secured Party to take all other action which Secured Party may deem reasonably
necessary to perfect or otherwise protect the Liens created hereunder and to
obtain the benefits of this Agreement.

 

 

3.                                       Covenants.  Grantor covenants and agrees with Secured
Party that, from and after the date of this Agreement until the Obligations
(other than unasserted contingent indemnification obligations, including those
under Section 2.6 of the Loan Agreement) shall have been paid in full:

 

(a)                                  Instruments and Chattel Paper.  No
amount payable under or in connection with any Collateral shall be or become
evidenced by any Instrument or Chattel Paper.

 

(b)                                 Maintenance of Perfected Security Interest.

 

(i)            Grantor shall (A) maintain
the security interest created by this Agreement as a perfected security
interest having at least the priority described in Section 2(c) and (B) defend
such security interest against the claims and demands of all Persons.

 

(ii)           At any time and
from time to time, upon the written request of Secured Party, Grantor shall
promptly and duly execute and deliver, and have recorded, such further
instruments and documents (subject to Section 5.10 of the Loan Agreement)
and take such further action as Secured Party may reasonably request for the
purpose of obtaining or preserving the full benefits of this Agreement and of
the rights and powers herein granted, including the filing of any financing or
continuation statement required under the UCC (or other similar laws).

 

(c)                                  Change of Name or Location. 
Except upon 5 Business Days’ prior written notice to Secured Party and
delivery to Secured Party of all additional financing statements and other
documents necessary for Secured Party to maintain the validity, perfection and
priority of the security interests provided for herein, Grantor shall not (i) change
its jurisdiction of organization or the location of its chief executive, in
each case from that referred to in Section 2(c) and (ii) change
its name, identity or corporate structure to such an extent that any financing
statement filed in connection with this Agreement would become misleading.

 

(d)                                 Collateral Account.  On
or prior to the Closing Date, and at all times thereafter, Borrower shall
direct each of its Account Debtors with respect to each US Pledged Account to
make any and all payments on such US Pledged Account directly to the Collateral
Account.

 

4.                                       Events of Default.  The occurrence of any one or more Events of
Default under the Loan Agreement shall constitute an event of default (“Event
of Default”) under this Agreement.

 

5.                                       Rights and
Remedies.

 

(a)           Upon the occurrence and during the continuance of an Event
of Default:  (i) Secured Party may exercise exclusive control
over the Collateral; (ii) Secured Party shall have the right, with or
without (to the extent permitted by applicable law) notice to Grantor, as to
any or all of the Collateral, by any available judicial procedure or without
judicial process, to take possession of the Collateral and without liability
for trespass to enter any premises where the Collateral may be located for the
purpose of taking possession of or removing the Collateral, and generally to
exercise any and all rights afforded to a secured party under the UCC or other
applicable law; (iii) Secured Party shall have the right to sell, lease,
or otherwise dispose of all or any part of the Collateral, whether in its then
condition or after further preparation or processing, either at public or
private sale or at any broker’s board, in lots or in bulk, for cash or for
credit, with or without warranties or representations, and upon such terms and
conditions, all as Secured Party in its sole discretion may deem advisable; (iv) at
Secured Party’s request, Grantor shall assemble the Collateral and make it
available to Secured Party at places which Secured Party shall select, whether
at Grantor’s premises or elsewhere, and make available to Secured Party,
without rent, all of Grantor’s premises and facilities for the purpose of
Secured Party’s 

 

 

taking possession of, removing or putting the
Collateral in saleable or disposable form; (v) Secured Party shall have
the right to receive any and all cash interest, dividends, distributions,
payments or other proceeds paid in respect of the Collateral and made
application thereof to the Obligations in such order as Secured Party may
determine; and (vi) any or all of the Collateral may be registered in the
name of Secured Party or its nominee and they may thereafter exercise (x) all
voting, corporate and other rights pertaining to such Collateral and (y) any
and all rights of conversion, exchange and subscription and any other rights,
privileges or options pertaining to such Collateral as if it were the absolute
owner thereof (including, without limitation, the right to exchange at its
discretion any and all securities or securities entitlements upon any merger,
consolidation, reorganization, recapitalization or other fundamental change, or
upon the exercise of Grantor or Secured Party of any right, privilege or option
pertaining to such securities or securities entitlements, and in connection
therewith, the right to deposit and deliver any and all of the securities or
securities entitlements with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as Secured
Party may determine), all without liability except to account for property
actually received by it, but Secured Party shall have no duty to Grantor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.

 

(b)           Any such sale, lease or other disposition of Collateral
may be made without demand for performance or any notice of advertisement
whatsoever except that where an applicable statute requires reasonable notice
of sale or other disposition, Grantor agrees that the sending of five days
notice by ordinary mail, postage prepaid, to Grantor of the place and time of
any public sale or of the time at which any private sale or other intended
disposition is to be made, shall be deemed reasonable notice thereof.  Notwithstanding the foregoing, if any of the
Collateral may be materially diminished in value during such five-day period,
Secured Party shall provide Grantor with such shorter notice as it deems
reasonable under the circumstances.

 

(c)           The proceeds of any such sale, lease or other disposition
of the Collateral shall be applied first to the expenses of retaking, holding,
storing, processing and preparing for sale, selling, and the like, and to the
reasonable attorneys’ fees and legal expenses incurred by Secured Party, and
then to satisfaction of the Obligations (in any order as Secured Party may
decide in its sole discretion), and to the payment of any other amounts
required by applicable law.  If, upon the
sale, lease or other disposition of the Collateral, the proceeds thereof are
insufficient to pay all amounts to which Secured Party is legally entitled,
Borrower will be liable for the deficiency, together with interest thereon, at
the rate prescribed in the agreements giving rise to the Obligations, and the
reasonable fees of any attorneys employed by Secured Party to collect such deficiency.  To the extent permitted by applicable law,
Grantor waives all claims, damages and demands against Secured Party arising
out of the repossession, removal, retention or sale of the Collateral.

 

(d)           Upon request of Secured Party, at any time after the
occurrence of an Event of Default, Grantor shall notify obligors on the US
Pledged Accounts that the US Pledged Accounts have been assigned to Secured
Party and that payments in respect thereof shall be made directly to Secured
Party.

 

(e)           Notwithstanding anything herein to the contrary, Grantor
shall remain liable under each of the US Pledged Accounts to observe and
perform all conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto.  Secured Party shall not have
any obligation or any liability under any US Pledged Account (or any agreement
giving rise thereto) by reason of or arising out of this Agreement or the
receipt by Secured Party of any payment relating thereto, nor shall Secured
Party be obligated in any manner to perform any of the obligations of Grantor
under or pursuant to any US Pledged Account (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or
sufficiency of the payment 

 

 

received by it or as to the sufficiency of any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

 

(f)            Secured Party hereby authorizes Grantor to collect the US
Pledged Accounts, subject to Secured Party’s direction and control after the
occurrence of an Event of Default, and Secured Party may curtail or terminate
said authority at any time at any time after the occurrence of an Event of
Default.  Any payments on US Pledged
Accounts when collected by Grantor after the occurrence and during the
continuance of an Event of Default, (i) shall be forwith (and in any event
no later than 2 Business Days) deposited by Grantor in the exact form received,
duly endorsed by Grantor to Secured Party if required, in an account maintained
under the sole dominion and control of Secured Party and (ii) until so
turned over, shall be held by Grantor in trust for Secured Party, segregated
from other funds of Grantor.  Each such
deposit of Proceeds of US Pledged Accounts shall be accompanied by a report
indentifying in reasonable detail the nature and source of the payments
included in the deposit.

 

(g)           The parties hereto agree that, upon the occurrence and
during the continuance of an Event of Default, Secured Party shall appoint a
third party administrator (the “Administrator”) that will take any
remedial or enforcement action available to Secured Party pursuant to this
Agreement or under applicable law on Secured Party’s behalf and at Secured
Party’s sole direction.  For the
avoidance of doubt, the parties hereto agree that (i) AlixPartners or a
similar entity shall be deemed to be acceptable to each party to act as
Administrator, (ii) Borrower shall not be required to deliver any
information to Lender to the extent that Borrower reasonably believes that
disclosure of such information to Lender is not consistent with, or is likely
to violate, applicable competition laws and (iii) Borrower shall be
required to deliver such information to the Administrator to the extent such
information is reasonably necessary in connection with any remedial or
enforcement action taken on behalf of or at the direction of Secured Party by
Administrator; provided that Administrator shall not share such
information with Lender.

 

6.             Power of Attorney.  Subject to Section 5(g), Grantor
authorizes Secured Party and does hereby make, constitute and appoint Secured
Party and any officer or agent of Secured Party, with full power of
substitution, as Grantor’s true and lawful attorney-in-fact, with power, in its
own name or in the name of Grantor:  (i) to endorse any notes,
checks, drafts, money orders, or other instruments of payment (including
payments payable under or in respect of any policy of insurance) in respect of
the Collateral that may come into possession of Secured Party; (ii) to pay
or discharge any taxes, liens, security interest or other encumbrances at any time
levied or placed on or threatened against the Collateral; (iii) to demand,
collect, issue receipt for, compromise, settle and sue for monies due in
respect of the Collateral; (iv) to receive, open and dispose of all mail
addressed to Grantor and to notify the post office authorities to change the
address for delivery of mail addressed to Grantor to such address as Secured
Party may designate; (v) to exercise all membership rights, powers and
privileges in connection with the Collateral to the same extent as Grantor is
entitled to exercise such rights, powers and privileges; and (vi) generally
to do all acts and things which Secured Party deems necessary to protect,
preserve and realize upon the Collateral and Secured Party’s security interest
therein.  Grantor hereby approves and
ratifies all acts of said attorney or designee, who shall not be liable for any
acts of commission or omission, nor for any error or judgment or mistake of
fact or law except for its own gross negligence or willful misconduct.  This power of attorney shall be irrevocable
for the term of this Agreement and thereafter as long as any of the Obligations
shall be outstanding.  Secured Party may
exercise this power of attorney only after the occurrence and during the
continuance of an Event of Default.

 

7.             Notices. 
Notices shall be given in the manner, to the addresses and with the
effect provided in Section 7.1 of the Loan Agreement.

 

 

8.             No Waiver; Rights Cumulative.

 

(a)           No course of dealing between Grantor and Secured Party, or
Secured Party’s failure to exercise or delay in exercising any right, power or
privilege hereunder shall operate as a waiver thereof.  Any single or partial exercise of any right,
power or privilege hereunder shall not preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.

 

(b)           All of Secured Party’s rights and remedies with respect to
the Collateral, whether established hereby or by any other agreements,
instruments or documents or by law, shall be cumulative and may be exercised
singly or concurrently.

 

9.             Limitation on Secured Party’s Duty in Respect of
Collateral.  Secured Party shall not
have any duty as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of it or any income thereon or as
to the preservation of rights against prior parties or any other rights
pertaining thereto, except that Secured Party shall use reasonable care with
respect to the Collateral in its possession or under its control.

 

10.           Amendments, Etc. 
No amendment or waiver of any provision of this Agreement nor consent to
any departure by Secured Party therefrom shall in any event be effective unless
the same shall be in writing, approved by Secured Party and signed by Secured
Party, and then any such waiver or consent shall only be effective in the
specific instance and for the specific purpose for which given.

 

11.           Successors and Assigns.  This Agreement and all obligations of Grantor
and Secured Party hereunder shall be binding upon the permitted successors and
assigns of Grantor and Secured Party, as applicable, and shall, together with
the rights and remedies of Secured Party hereunder, inure to the benefit of
Secured Party, Grantor and each of their respective successors and assigns.

 

12.           No Partnership. 
The relationship between Secured Party and Grantor shall be only of
creditor-debtor and no relationship of agency, partner or joint- or co-venturer
shall be created by or inferred from this Agreement or the other Credit
Documents.  Grantor shall indemnify,
defend, and save Secured Party harmless from any and all claims asserted
against Secured Party as being the agent, partner, or joint-venturer of
Grantor.

 

13.           Entire Agreement. 
This Agreement embodies the entire agreement and understanding between
Grantor and Secured Party with respect to its subject matter and supersedes all
prior conflicting or inconsistent agreements, consents and understandings
relating to such subject matter.  Grantor
acknowledges and agrees that there is no oral agreement between Grantor and
Secured Party which has not been incorporated in this Agreement.

 

14.           Counterparts. 
This Agreement may be executed in counterparts (and by different parties
hereto on different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy or electronic transmission
shall be effective as delivery of a manually executed counterpart of this
Agreement.

 

15.           Severability. 
Any provision of this Agreement held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without effecting the validity, legality and enforceability of the remaining
provisions thereof; and the invalidity of a particular provision in a
particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

 

16.           Governing Law; Jurisdiction; Consent to Service of
Process.

 

(a)           This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, except to the extent the UCC
provides for the application of the law of another state.

 

(b)           GRANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND CONSENTS TO THE
PLACING OF VENUE IN NEW YORK COUNTY OR OTHER COUNTY PERMITTED BY LAW.  TO THE EXTENT PERMITTED BY APPLICABLE LAW,
GRANTOR HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE
OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR INSTRUMENT REFERRED
TO HEREIN MAY NOT BE LITIGATED IN OR BY SUCH COURTS.  TO THE EXTENT PERMITTED BY APPLICABLE LAW,
GRANTOR AGREES NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE
JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION
WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT.  EXCEPT AS PROHIBITED BY LAW, GRANTOR HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT.

 

(c)           Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 7.1 of
the Loan Agreement.  Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

 

17.           Headings.  Section headings used herein
are for convenience of reference only, are not part of this Agreement and shall
not affect the construction of, or be taken into consideration in interpreting,
this Agreement.

 

18.           Reinstatement. 
Grantor further agrees that, if any payment made by Grantor or other
Person and applied to the Obligations is at any time annulled, avoided, set
aside, rescinded, invalidated, declared to be fraudulent or preferential or
otherwise required to be refunded or repaid, or the proceeds of Collateral are
required to be returned by Secured Party to Grantor, its estate, trustee,
receiver or any other party, under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or
repayment, any Lien or other Collateral securing such liability shall be and
remain in full force and effect, as fully as if such payment had never been
made or, if prior thereto the Lien granted hereby or other Collateral securing
such liability hereunder shall have been released or terminated by virtue of
such cancellation or surrender), such Lien or other Collateral shall be
reinstated in full force and effect, and such prior cancellation or surrender
shall not diminish, release, discharge, impair or otherwise affect any Lien or
other Collateral securing the obligations of Grantor in respect of the amount
of such payment.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

 

IN
WITNESS WHEREOF, the undersigned party has executed this Agreement to be
effective for all purposes as of the date above first written.

 

	
   

  	
  KEMET ELECTRONICS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
     /s/ PER-OLOF LOOF

  
	
   

  	
   

  	
     Name: Per-Olof Loof

  
	
   

  	
   

  	
     Title:   CEOExhibit 10.8

 

ASSET PURCHASE AGREEMENT

 

ASSET PURCHASE AGREEMENT (the “Agreement”),
dated as of September 15, 2008, by and between KEMET Electronics
Corporation (“Seller”), a Delaware corporation and a wholly-owned
subsidiary of KEMET Corporation (“Seller Guarantor”) and Siliconix
Technology C.V. (“Buyer”), a company organized under the laws of the
Netherlands and a wholly-owned subsidiary of Vishay Intertechnology, Inc.
(“Buyer Guarantor”).  Capitalized
terms used herein have the meanings set forth in Exhibit A hereto.

 

RECITALS

 

WHEREAS,
Seller is engaged in the business of developing, manufacturing, distributing
and selling wet tantalum capacitors (the “Business”).

 

WHEREAS,
Seller owns certain inventory located in Matamoros, Tamaulipas, Mexico and
Ciudad Victoria, Tamaulipas, Mexico, owns certain machinery, equipment, tooling
and other personal tangible property located in Matamoros, Mexico and Victoria,
Mexico, and owns certain intellectual property, all used in the Business.

 

WHEREAS,
Buyer and Seller desire that Buyer purchase from Seller, and that Seller sell
to Buyer, certain operating and intangible assets used in the Business on the
terms and conditions set forth herein.

 

WHEREAS,
simultaneously with the execution of this Agreement, Buyer and Seller are
entering into (i) that certain Loan Agreement, dated the date hereof (the “Loan
Agreement”), pursuant to which Buyer is lending to Seller $15,000,000 on
the terms and subject to the conditions set forth in the Loan Agreement, (ii) that
certain Transition Services Agreement, dated the date hereof (the “Transition
Services Agreement”), pursuant to which Seller will provide Buyer with
certain services relating to the Business, and (iii) that certain
Commodatum Agreement, dated as of the date hereof (the “Commodatum Agreement”)
to be executed by Seller and its Mexican subsidiaries with respect to the
Transferred Assets in order to fulfill its obligations under the Transition
Services Agreement.

 

WHEREAS,
concurrently with the execution and delivery of this Agreement, and as a
condition to Seller’s willingness to enter into this Agreement, Buyer Guarantor
has agreed fully and unconditionally to guarantee the representations,
warranties, covenants, agreements and other obligations of Buyer in this
Agreement (the “Buyer Guarantee”).

 

WHEREAS,
concurrently with the execution and delivery of this Agreement, and as a
condition to Buyer’s willingness to enter into this Agreement, Seller Guarantor
has agreed fully and unconditionally to guarantee the representations,
warranties, covenants, agreements and other obligations of Seller in this
Agreement (the “Seller Guarantee”).

 

NOW,
THEREFORE, in consideration of the foregoing premises and of the mutual
covenants, representations, warranties and agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

 

 

ARTICLE I

 

PURCHASE AND
SALE

 

Section 1.01.                         Purchase and Sale of Assets.

 

(a)                                  On the terms and conditions set forth herein, at
the Closing as described in Article II hereto, Buyer shall purchase from
Seller, and Seller shall (or with respect to the Arco Intellectual Property
owned by Seller’s wholly-owned subsidiary Arcotronics Italia S.p.A. or
Arcotronics Limited, a wholly-owned subsidiary of Arcotronics Italia
(Arcotronics Italia S.p.A and Arcotronics Limited collectively, “Arcotronics”),
shall cause Arcotronics to) irrevocably sell, transfer, convey, assign and
deliver to Buyer (or one or more direct or indirect wholly-owned subsidiaries
of Buyer Guarantor as Buyer may designate), good and valid title to,
and all rights, title and interests of Seller (or, with respect to the Arco
Intellectual Property owned by Arcotronics, all rights, title and interests of
Arcotronics) in and to the following property, free and clear of all liens,
charges, pledges, security interests, encumbrances, restrictions and claims of
any nature whatsoever other than Permitted Liens (collectively, the “Transferred
Assets”):

 

(i)                                     all of Seller’s rights with respect to the customer
orders of Inventory set forth on Schedule 1.01(a)(i);

 

(ii)                                  the Inventory;

 

(iii)                               the Intellectual Property listed on Schedule
1.01(a)(iii) and the Intellectual Property, to the extent such exists,
reflected in the documents listed on Schedule A (the “Transferred
Core Intellectual Property”);

 

(iv)                              the Arco Intellectual Property and the Intellectual
Property, to the extent such exists, reflected in the documents listed on Schedule
B (together, with the Transferred Core Intellectual Property, the “Transferred
Intellectual Property”);

 

(v)                                 the Tangible Personal Property;

 

(vi)                              the Transferred Agreements and all rights of Seller
under any confidentiality or similar agreement entered into with any employee
of Seller relating to the Business; and

 

(vii)                           All
part number lists, design drawings, design specifications, packaging designs,
product engineering designs and engineering documents, written processes,
written methodologies, written formulae, written algorithms, written technical
information, marketing data, import manifests, certificates of origin, invoices
of the assets located in Matamoros and Cuidad Victoria, Tamaulipas, Mexico,
business and financial records, files, books and records, and the documents
listed on Schedule A and Schedule B, in each case, specifically relating to the products set forth on Schedule
3.05(a)(i) and Schedule 3.05(a)(ii) or the Business and
any records listed on Schedule 1.01(a)(vii).

 

2

 

(b)                                 Notwithstanding anything contained in this
Agreement to the contrary, the following rights, properties and assets of
Seller (the “Excluded Assets”) shall not be included in the Transferred
Assets:

 

(i)                                     all rights of Seller under this Agreement and the
Ancillary Agreements and the instruments and agreements delivered to Seller by
Buyer pursuant to this Agreement;

 

(ii)                                  rights with respect to agreements other than
Transferred Agreements;

 

(iii)                               cash and cash equivalents, bank accounts, deposits
and other financial assets;

 

(iv)                              except as otherwise set forth in the Trademark
License Agreement, the names “KEMET,” “Arcotronics” or any like or similar
name;

 

(v)                                 Seller’s tax returns and financial statements;

 

(vi)                              any benefit, claim or receivable of Seller for federal,
state or local income taxes, refunds or any other receivables whether accrued
or not;

 

(vii)                           policies of insurance and any rights or proceeds
arising out of such policies;

 

(viii)                        existing lawsuits in which Seller is a plaintiff or
defendant;

 

(ix)                                any pension plan assets or other employee benefit
plans of Seller;

 

(x)                                   any investments and prepaid assets (other than
packaging design costs);

 

(xi)                                the Receivables;

 

(xii)                             administrative and accounting systems, provided,
however, that the information relating to the Business stored on such systems
shall be included in the Transferred Assets to the extent provided under Section 1.01(a)(vii);

 

(xiii)                          any security deposits;

 

(xiv)                         those fixed assets, machinery and equipment
purchased by Seller from Blue Skye (Lux) S.à.r.l., previously used by Seller or
its predecessor in the manufacture of wet tantalum capacitors at its Towcester,
England facility, but redeployed by Seller in the manufacturing of other
products (other than wet tantalum capacitors) at the facilities of Seller’s
wholly-owned Mexican subsidiary, listed on Schedule 1.01(b)(xiv);
and

 

3

 

(xv)                            any and all property, business and assets of every
kind, nature and description, wherever located and whether real, personal or
mixed, tangible or intangible, that (A) is not used in the Business or (B) that
is not otherwise defined as a “Transferred Asset”.

 

(c)                                  Simultaneously herewith and partially in
consideration for the Purchase Price, Buyer and Seller are entering into a
separate trademark license agreement governing the use of certain of Seller’s
trademarks in the form attached as Exhibit B hereto (the “Trademark
License Agreement”).

 

Section 1.02.                         Assumption of Liabilities under Transferred
Agreements.  At Closing, Buyer shall assume and be liable
for, and shall pay, perform and discharge directly when due the following
Liabilities (collectively, the “Assumed Liabilities”):

 

(a)                                  all of Seller’s obligations on the date hereof to
fill orders, and all of Seller’s warranty obligations relating to such orders
(to the extent that products subject to such orders have not been delivered as
of the Closing Date), for wet tantalum capacitors set forth on Schedule
1.01(a)(i);

 

(b)                                 all of Seller’s outstanding commitments for the
purchase of raw materials and supplies set forth on Schedule 1.02(b);

 

(c)                                  all of Seller’s obligations and liabilities under
the Transferred Agreements, all as more fully set forth in the Assignment and
Assumption Agreement; and

 

(d)                                 all of Seller’s obligations and liabilities under
other Contracts that Buyer agrees to assume pursuant to Section 1.06 .

 

Section 1.03.                         Buyer Not Responsible for Liabilities Except Section 1.02
Liabilities.

 

(a)                                  Notwithstanding anything contained in this
Agreement to the contrary, Buyer does not assume or agree to undertake to pay,
satisfy, discharge or perform in respect of, and will not be deemed by virtue
of the execution and delivery of this Agreement or any document delivered at
the Closing pursuant to this Agreement, or as a result of the consummation of
the transactions contemplated by this Agreement, to have assumed, or to have
agreed to pay, satisfy, discharge or perform in respect of, any liability,
obligation, indebtedness or Taxes of Seller or of any other Person or in any
way relating to the Business (whether primary or secondary, direct or indirect,
known or unknown, absolute or contingent, matured or unmatured, or otherwise)
other than the Assumed Liabilities, (such liabilities and obligations retained
by Seller, including Seller’s transaction expenses and all liabilities and
obligations with respect to the Excluded Assets and any amounts due by Seller
to licensors of the Business arising prior to the Closing Date, being referred
to herein as the “Retained Liabilities”).  It is specifically agreed that Seller shall
retain, and as between Seller and Buyer, shall remain solely liable for, all of
the Retained Liabilities, which Retained Liabilities shall be satisfied in full
or otherwise discharged by Seller in the ordinary course of business following
the Closing.  Without limiting the
foregoing, the Retained Liabilities include Liabilities of or owing by Seller:

 

4

 

(i)                                     related to any Taxes;

 

(ii)                                  to sales representatives, distributors (including
those Liabilities associated with services performed by Seller’s
distributors prior to the Closing but that are otherwise incurred by Buyer
after the Closing), vendors or customers,
except as expressly provided under this Agreement;

 

(iii)                               to
any Affiliates, directors, officers, personnel, former personnel, independent
contractors, agents, representatives or other personnel of Seller or their
respective agents or representatives, including pursuant to any retention
agreement with employees of the Business entered into prior to the Closing;

 

(iv)                              associated
with or relating to any compensation or benefits of any director, officer,
personnel, former personnel, independent contractor, agent, or other
representative of Seller, including, without limitation, in respect of workers’
compensation or claims relating to employment of personnel by Seller prior to
the Closing, including severance obligations;

 

(v)                                 associated with or relating to any Action brought
by any Governmental Authority or any Person whatsoever, arising from any
condition in existence on or before the Closing Date relating to any
Transferred Asset or to any of the premises where the Business has been
conducted or any location where any of the assets used or related to the
Business and products manufactured by the Business have been stored,
transported, remodeled or otherwise delivered for or on behalf of Seller;

 

(vi)                              associated
with or relating to any Excluded Asset;

 

(vii)                           associated
with or relating to Seller’s issuance or endorsement of any check, note, draft
or instrument;

 

(viii)                        associated
with any accounts payable; or

 

(ix)                                associated
with any warranty or product liability claims in respect of products
manufactured and delivered in connection with the Business prior to the Closing
Date (including any incidental or consequential damages relating to such claims
or products).

 

Section 1.04.                         Purchase Price.  The
aggregate purchase price for the Transferred Assets shall be Thirty Five
Million Two Hundred Thousand Dollars ($35,200,000) (the “Purchase Price”).  Buyer shall pay the Purchase Price as
follows:

 

(a)                                  At
the time of the Closing by delivering to Seller, by wire transfer in
immediately available funds, the amount equal to Thirty Three Million Seven
Hundred Thousand Dollars ($33,700,000) (“Closing Date Cash Payment”).

 

(b)                                 At
the time of the Closing by delivering to the Escrow Agent, by wire transfer in
immediately available federal funds, the amount equal to One Million Five
Hundred 

 

5

 

Thousand Dollars
($1,500,000), consistent with the Escrow Agreement (the “Escrow Amount”).  The Escrow Amount shall be held in an escrow
account to secure Seller’s obligations under this Agreement and shall be
transferred to Seller (subject to pending claims) or Buyer (or Buyer Guarantor
on behalf of Buyer) as provided in the Escrow Agreement.

 

Section 1.05.                         Allocation of Buyer’s Consideration.  As soon as
practicable, Buyer shall provide to Seller a preliminary allocation of the Purchase
Price delivered hereunder to the Transferred Assets, the parties’ agreements as
contemplated by this Agreement and the Trademark License Agreement, it being
understood that only a nominal valuation is to be assigned to the Trademark
License Agreement.  Once the parties have
agreed on such allocation, each party agrees to report the transaction
contemplated by this Agreement for tax purposes in accordance with such
allocation.

 

Section 1.06.                         Assignment
of Contracts and Rights.

 

(a)                                  Schedule
1.06(a)(i) lists all written Contracts (including Contracts that
consist only of open purchase orders) in effect between Seller and other
Persons for the purchase of wet tantalum capacitors by such Persons from Seller
(the “Customer Contracts”) and identifies those Customer Contracts that
are between Seller and a distributor (“Distributor Contracts”) and those
that are between Seller and Persons that are not distributors (“Other
Customer Contracts”).

 

(b)                                 Distributor Contracts
shall not be assigned to Buyer.  Buyer
shall fulfill Seller’s obligations with respect to any open orders under
Distributor Contracts for wet tantalum capacitors listed on Schedule 1.01(a)(i) and
shall be entitled to receive the amount of any payments due to Seller with
respect to such orders.  After
fulfillment of such open orders, any further orders and sales of wet tantalum
capacitors given to Buyer by the respective distributors party to the
Distributor Contracts shall be governed by the terms of Buyer’s agreements with
the distributors party to the Distributor Contracts.  Seller shall direct any payor of amounts to
which Buyer is entitled to receive pursuant to this Section 1.06(b), to
pay such amounts, net of any discounts and credits which are applicable to such
amounts payable under the relevant Distributor Contract, directly to Buyer
except with respect to any orders for which Seller provided the invoice,
provided, however, that in all cases where Seller receives any amounts due to
Buyer pursuant to this Section 1.06(b), Seller shall promptly forward such
amounts to Buyer.

 

(c)                                  Transferred Agreements
shall consist of (i) Other Customer Contracts that relate solely to the
sale of wet tantalum capacitors and that are assignable by their terms without
Consent or for which all required consents are obtained prior to the Closing
Date and (ii) the portion of Other Customer Contracts relating to the sale
of wet tantalum capacitors to the extent that such portion can be and is
severed from the remainder of the Contract pursuant to documentation satisfactory
to Seller and Buyer and executed by the other party to the Contract prior to
the Closing Date. Seller shall provide Buyer with copies of all Transferred
Agreements on or prior to the Closing. Anything contained in this Agreement to
the contrary notwithstanding, this Agreement shall not constitute an agreement
or attempted agreement to transfer, sublease or assign any Contract or any
claim or right with respect to any benefit arising thereunder or resulting
therefrom, if an attempted transfer, sublease or assignment thereof, without
the required Consent of any other party thereto, would constitute a breach
thereof or in any way affect the rights of Buyer or Seller thereunder.  Within a commercially reasonable time after
Closing, 

 

6

 

Seller shall use its commercially reasonable efforts
to obtain the Consent of any such third party to the transfer, sublease or
assignment to Buyer of Other Customer Contracts that relate solely to the sale
of wet tantalum capacitors in cases in which such Consent is required for such
transfer, sublease or assignment.  If any
such Consent is not obtained, Seller shall use its commercially reasonable
efforts to cooperate with Buyer in reasonable and lawful arrangements designed to
provide Buyer the benefits thereunder and provide for Buyer to perform the
obligations thereunder, including (a) adherence to reasonable procedures
established by Buyer for the immediate transfer to Buyer of any payments or
other funds received by Seller thereunder (other than the Receivables) and (b) enforcement
for the benefit of Buyer, at Buyer’s expense, of any and all rights of Seller
thereunder against the other party or parties thereto arising out of the breach
or cancellation thereof by such other party or parties or otherwise and
performance by Buyer, at Buyer’s expense, on behalf of Seller of the
obligations thereunder.   For the
avoidance of doubt, Buyer agrees to assume all obligations and liabilities of
Seller with respect to the Business and the sale of wet tantalum capacitors
arising under Other Customer Contracts that are not assigned to Buyer but only
if and to the extent that Buyer is entitled to receive the corresponding
amounts due to Buyer with respect to wet tantalum capacitors sold pursuant to
such Other Customer Contracts. 
Consistent with the foregoing, Buyer agrees to assume Seller’s warranty
obligations concerning all Products shipped on or after the Closing Date for
which Seller issues invoices to the customer pursuant to Other Customer
Contracts that are not assigned to Buyer.

 

(d)                                 To the extent assignable,
Seller hereby assigns to Buyer so much of the rights of Seller under or pursuant to all
warranties, representations and guarantees made by suppliers, manufacturers and
contractors relating directly to products sold or services provided in
connection with the Business or affecting the property, machinery or equipment
used by Seller in the Business, to the extent that such rights related to
Transferred Assets.

 

Section 1.07.                         No Other
Representations.  Except for the express
representations and warranties of Seller contained in Article III, Buyer
acknowledges that Seller has not made, and Buyer has not relied upon, any other
representation or warranty, express or implied, with respect to the Business or
the Transferred Assets.  SELLER HEREBY
EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES, INCLUDING ANY IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE, AND WARRANTIES
ARISING FROM CUSTOM AND PRACTICE.  EXCEPT
AS EXPRESSLY PROVIDED IN ARTICLE III, SELLER SELLS, AND BUYER ACCEPTS, THE
TRANSFERRED ASSETS ON AN “AS IS, WHERE IS” BASIS; provided, however, that
nothing herein shall relieve Seller of its liability for fraud or intentional
misstatement or misrepresentation.

 

ARTICLE II

 

CLOSING

 

Section 2.01.                         Upon the terms and subject to the conditions of
this Agreement, the closing of the transaction contemplated by this Agreement
(the “Closing”) is taking place at the offices of Kramer Levin
Naftalis & Frankel LLP, 1177 Avenue of the Americas, New York, New
York 10036, on September 15, 2008 (the “Closing Date”); provided
that the effective time of the Closing shall be 8:00 a.m. on the Closing
Date.

 

7

 

Section 2.02.                         Seller’s
Deliveries at Closing.  At the
Closing, Seller shall deliver or cause to be delivered to Buyer, the following:

 

(a)                                  each of the Ancillary
Agreements, in each case executed by a duly authorized officer of Seller;

 

(b)                                 such other duly
executed documents and certificates as may be required to be delivered by
Seller pursuant to the terms of this Agreement; and

 

Section 2.03.                         Buyer’s
Deliveries at Closing.  At the
Closing, Buyer shall deliver, or cause to be delivered, the following:

 

(a)                                  the Closing Date Cash
Payment to Seller by wire transfer of immediately available funds in accordance
with Section 1.04 hereto;

 

(b)                                 each of the Ancillary
Agreements, in each case executed by a duly authorized officer of Buyer that is
a party thereto (or by a duly authorized officer of any direct or indirect
subsidiary of Buyer Guarantor to which a Transferred Agreement is assigned) and
delivered to Seller;

 

(c)                                  the Escrow Amount to
the Escrow Agent; and

 

(d)                                 such other duly
executed documents and certificates to Seller as may be required to be
delivered by Buyer pursuant to the terms of this Agreement.

 

ARTICLE III

 

REPRESENTATIONS
AND WARRANTIES OF SELLER

 

Seller represents and warrants to Buyer as follows:

 

Section 3.01.                         Organization and Authority of Seller.  Seller is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Seller has the requisite corporate power and
authority to own, operate, lease, possess or dispose of the properties,
including the Transferred Assets, that it purports to own, operate, possess or
lease and to carry on its business (including the Business) as it is presently
conducted.  Seller has the full legal
right and all corporate power and authority to enter into this Agreement, and
each of the Ancillary Agreements, and to consummate the transactions
contemplated hereby and thereby.  This
Agreement, and each of the Ancillary Agreements has been duly authorized,
executed and delivered by Seller and no other corporate action on part of
Seller is necessary to authorize this Agreement and the Ancillary Agreements or
to consummate the transactions so contemplated. 
This Agreement and each of the Ancillary Agreements (assuming due
authorization, execution and delivery by Buyer) constitutes a legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms.

 

Section 3.02.                         No
Conflict.  Except as set forth on Schedule 3.02,
neither the execution nor delivery of this Agreement, or the Ancillary
Agreements by Seller nor the 

 

8

 

consummation by Seller of any of the transactions contemplated hereby or
thereby, will (a) conflict with or violate the Certificate of
Incorporation or By-laws of Seller (b) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, modification, cancellation or
acceleration or loss of benefits) under, any of the terms, conditions or
provisions of any Contract to which Seller is a party or to which it or the
Transferred Assets may be subject or which is included in the Transferred
Assets or the Assumed Liabilities or (c) violate any Permit applicable to
Seller, the Transferred Assets, the Assumed Liabilities or the Business; except
in the cases of clauses (b) or (c) for those violations, breaches or
defaults that would reasonably be expected to not have a Material Adverse
Effect.

 

Section 3.03.                         Consents
and Approvals.  Except as set forth on Schedule 3.03,
the execution and delivery of this Agreement and the Ancillary Agreements by
Seller do not, and the performance of this Agreement and each of the Ancillary
Agreements by Seller will not, require any Consent of any Governmental
Authority except as such may have been obtained, taken or made on or prior to
the date hereof (other than pre-consummation trade or competition filings
relating to the transaction contemplated by this Agreement as to which no
representation is made although no concession is made that any such filings are
required).  Other than ministerial
filings with Mexican Governmental Authorities, no Consents are required in
order for Buyer to move the Transferred Assets outside of Mexico.

 

Section 3.04.                         Financial
Statements.

 

(a)                                  Schedule 3.04(a) sets
forth a complete and accurate copy of the unaudited consolidated statements of
income for the Business as of and for each of the years ended March 31,
2008, March 31, 2007 and March 31, 2006 (provided that the
consolidated statement of income for the year ended March 31, 2006 shall
not include any revenue or related financial information relating to operation
of the Arco Tangible Assets), respectively (collectively, the “Financial
Statements”), and a complete and accurate copy of the unaudited
consolidated statements of income as of and for the quarter ended June 30,
2008 (the “Interim Financial Statements”).

 

(b)                                 Since
June 30, 2008, the Business has been conducted only in the ordinary course
consistent with past practice and there has been no material adverse change in
the business operations, conditions or prospects, financial or otherwise, with
respect to the Business or the Transferred Assets and, to Seller’s Knowledge,
no such change has been threatened nor is it pending.

 

(c)                                  The
Financial Statements and the Interim Financial Statements (as of the date
thereof and for the periods covered thereby) (i) have been prepared in
accordance with the books and records of Seller and the Business, (ii) are
true, complete and correct in all material respects and present fairly in all
material respects the results of operations of the Business for the periods
indicated and (iii) have been prepared in accordance with Business
Accounting Principles.

 

9

 

Section 3.05.                         Title
to Transferred Assets; Condition and Sufficiency of Assets.

 

(a)                                  The
Arco Intellectual Property constitutes all of the Intellectual Property
acquired from Blue Skye (Lux) S.à.r.l related exclusively to wet tantalum
capacitor products.  The Transferred Core
Intellectual Property constitutes all of the currently existing Intellectual
Property exclusively used or to be used by Seller to manufacture the products
listed on Schedule 3.05(a)(i). 
Other than the Transferred Intellectual Property, the rights licensed to
Buyer under the Trademark License Agreement and the proprietary information,
know-how and technical information transferred pursuant to this Agreement,
Seller does not own or use any other Intellectual Property, proprietary
information, know-how or technical information necessary for Buyer to
manufacture as Seller manufactured prior to the date hereof, or necessary for
the right to use, sell, offer to sell, market or import, any of the products of
the Business listed on Schedules 3.05(a)(i) and 3.05(a)(ii).

 

(b)                                 The Equipment is in good operating condition and
repair, subject to normal wear and tear, and is adequate for the uses they are
put to and is not in need of maintenance and repair that is material in nature
or cost.

 

(c)                                  Seller or its Mexican subsidiary have taken, or in
a timely manner will take after the Closing, all actions necessary to ensure
that the Transferred Assets imported into Mexico have been duly and legally
imported in Mexico for the development of the Business under certain permits
issued to the Mexican subsidiaries of Seller by the Ministry of Economy under
the denominated Decreto Para el Fomento de la Industria Manufacturera
Maquiladora y de Servicios de Exportación (“IMMEX”).

 

(d)                                 Seller has, or, with respect to the Arco Intellectual
Property owned by Arcotronics, Arcotronics has, the complete and unrestricted
power and the unqualified right to sell, transfer, assign and deliver, and
following the Closing, Buyer will have, good and valid title to all Transferred
Assets, and Seller shall so defend Buyer’s title, free and clear of all title
defects or objections, mortgages, liens, claims, charges, pledges, security
interests (collectively “Liens”) except for the liens described on Schedule
3.05 (“Permitted Liens”).

 

Section 3.06.                         Agreements.

 

(a)                                  The Customer Contracts are set forth on Schedule
1.06(a)(i).  Seller has previously
delivered or made available to Buyer correct and complete copies of each of the
Other Customer Contracts of Seller other than Other Customer Contracts that consist
only of open purchase orders.

 

(b)                                 Each of the Other Customer Contracts is a legal,
valid and binding agreement enforceable by and against Seller in accordance
with its terms and in full force and effect on the date hereof.  Seller has received no notice of cancellation
or termination (written or otherwise) under any option or right reserved to the
other party to any Other Customer Contract or any notice of default (written or
otherwise) under such agreement.  Except
as otherwise disclosed on Schedule 3.06(b), neither Seller, nor to the
Knowledge of Seller any other party is in breach or default of any Other
Customer Contract that would cause a Material Adverse Effect and, to the
Knowledge of Seller, no event has occurred that, with notice or lapse of time
or both, would constitute such a breach or default or permit termination,
modification or acceleration under such Other Customer Contract that would 

 

10

 

cause a Material Adverse Effect. 
Except as separately identified in Schedule 3.06(b), no Consent
of any person is needed in order that the Other Customer Contracts continue in
full force and effect following the assignment of such agreements to Buyer.

 

(c)                                  Aside from the Customer Contracts, the orders
listed on Schedule 1.01(a)(i) and Schedule 1.02(b),
Contracts for tantalum wire and powder and the other Contracts listed on Schedule
3.06(c), there are no (i) Customer Contracts; (ii) written
Contracts for raw materials specifically used by Seller to manufacture wet
tantalum capacitors; (iii) written Contracts specifically relating to the
Business pursuant to which Seller is required to pay or is entitled to receive
$50,000 or more in any twelve month period or (iv) other written Contracts
specifically relating to the Business that are material to the Business as
conducted by Seller.

 

(d)                                 Seller is not a party to a Contract that will in
any way restrict or limit the conduct of the Business by Buyer or the use of
the Transferred Assets by Buyer, including without limitation any joint venture
or other cooperative.

 

Section 3.07.                         Intellectual Property Rights.

 

(a)                                  Schedule  3.07 sets forth a complete and accurate list of
all United States and foreign issued or registered Intellectual Property
(including but not limited to patents, copyrights and trademarks), and all
applications therefor, used in connection with the Business, indicating for
each the applicable jurisdiction, issuance/registration/application number, and
dates of filing/issuance/registration.

 

(b)                                 Except as set forth on Schedule 3.07, Seller
is the sole and exclusive owner of the Transferred Intellectual Property used
in connection with the Business, free and clear of all liens, claims, charges
and encumbrances and free from contractual restrictions and any other
restriction.  In each case where any
patent, registered trademark, registered copyright, or the like used in
connection with the Business is held by Seller by assignment, the assignment
has been duly and properly recorded with the U.S. Copyright Office, the U.S.
Patent and Trademark Office or the corresponding foreign authorities, as the
case may be, to preserve all of Seller’s rights.

 

(c)                                  Seller has the full right and authority to
conduct the Business and use the Transferred Intellectual Property used in
connection with the Business in the manner in which they are currently being
conducted and used and, to the Knowledge of Seller, such activities do not
conflict with, violate, misappropriate or infringe on the rights of any other
Person.

 

(d)                                 No Action has been asserted, nor to the Knowledge of Seller has any
Action been threatened, verbally or otherwise, by any Person (i) challenging,
or seeking to deny or restrict, the use by Seller of any Transferred
Intellectual Property or (ii) alleging the violation, misappropriation, or
infringement by Seller in connection with its conduct of the Business or its
use of Transferred Intellectual Property. 
Seller has not asserted or threatened any Action against (i) any
Person based upon any Intellectual Property related to the Business or (ii) any
Intellectual Property owned by any other Person.

 

11

 

(e)                                  No Person, other than
Seller and Arcotronics, is authorized to use any of the trademarks “KEMET”, “CASTANET”
and “ARCOTRONICS” or, to Seller’s Knowledge, any other Intellectual Property
owned by Seller, with respect to the manufacture, marketing, distribution, use,
importation or sale of wet tantalum capacitors or otherwise in competition with
any aspect of the Business except as set forth on Schedule 3.07(e).

 

(f)                                    No Contract, agreement or
understanding between Seller and any Person exists which could impede or
prevent the continued use by Seller or, following the Closing, Buyer in and to
the Transferred Intellectual Property or which could result in the grant of any
rights therein to another Person.  No
registered or issued Transferred Intellectual Property set forth in Schedule
3.07 has, to Seller’s Knowledge, lapsed, expired, or been abandoned or
canceled, or is subject to any pending or threatened opposition, cancellation
proceeding before the U.S. Patent and Trademark Office or the U.S. Copyright Office
or other U.S. or foreign proceeding.

 

(g)                                 To the Knowledge of Seller, all employees and
independent contractors of Seller who created, prepared, developed or conceived
any inventions, discoveries, trade secrets, ideas or works of authorship,
whether or not patented or patentable or otherwise protectable under law, have
duly assigned all of their rights therein to Seller pursuant to valid and
enforceable written agreements.

 

(h)                                 Schedule 3.07(h) lists all computer software, code, programs, databases, and
computer services, other than commercially available off-the-shelf items
costing less than $500 per licensed user/copy, which are necessary to operate
the Equipment.

 

Section 3.08.                         Litigation.  Except as set forth in Schedule
3.08, (i) no Action is pending or, to the Knowledge of Seller,
threatened that questions the validity of this Agreement or any Ancillary
Agreement or any action taken or to be taken in connection with this Agreement
or any Ancillary Agreement, or which seeks to delay or prevent the consummation
of the transactions being consummated hereby or thereby; (ii) no Action is
pending or, to the Knowledge of Seller, threatened, that relate to or otherwise
affect any of the Transferred Assets, the Assumed Liabilities or the Business;
and (iii) there are no outstanding judgments, writs, injunctions, orders,
decrees or settlements that apply, in whole or in part, to any of the
Transferred Assets, the Assumed Liabilities, or the Business, that restrict the
ownership or use of any Transferred Assets, the Assumed Liabilities or the
Business in any way.

 

Section 3.09.                         Permits; Compliance with Laws.

 

(a)                                  All
Permits required with respect to the Business have been legally obtained and
maintained and are valid and in full force and effect.  Seller is duly licensed to conduct the
Business as presently conducted in all jurisdictions in which the Business is
conducted and is in compliance with all of the terms and conditions of such
licenses.  There has been no material
change in the facts or circumstances reported or assumed in the application for
or granting of any Permits.  No
outstanding violations are or have been recorded in respect of 

 

12

 

any of the
Permits.  No proceeding is pending or, to
Seller’s Knowledge, threatened, to suspend, revoke, withdraw, modify or limit
any Permit, and, to Seller’s Knowledge, there is no fact, error or admission
relevant to any Permit that would permit the suspension, revocation,
withdrawal, modification or limitation of, or result in the threatened
suspension, revocation, withdrawal, modification or limitation of, or in the
loss of any Permit.

 

(b)                                 The Business is being and has been conducted in
compliance in all material respects with all Permits and applicable Laws.  Seller is not in violation of any Laws
applicable to the Business by which any of the Transferred Assets is bound or
affected, other than those violations which do not have a Material Adverse
Effect.  Except as disclosed on Schedule
3.09(b), Seller has not taken any action, or failed to take any action,
which might, to any extent, prevent, impede or result in the revocation of the
vesting in Buyer of good and valid title to the Transferred Assets (or any
portion thereof) free and clear of all claims and interests of creditors and
equity security holders.

 

(c)                                  There are no Permits required to conduct the
Business as and where it is presently being conducted and which relate
specifically to the manufacturing process for wet tantalum capacitors.

 

(d)                                 Except as set forth on Schedule 3.09 hereto,
Seller has not received any notification that it is in violation of any
applicable building, zoning, anti-pollution, environmental, health or other Law
in respect of the Business and no such violation exists.

 

Section 3.10.                         Government
Contracts.

 

(a)                                  “Government Contracts”
shall mean all current Contracts pursuant to which the Business has generated
and/or is expected to generate revenues in excess of $50,000: (i) between
Seller and the United States Government, including any blanket purchase
agreements, task orders, or other agreements thereunder; and (ii) between
Seller and any entity which is a party to a Contract or other agreement with
the United States Government in which Seller participates in the bid or
contract process.  Seller is not a party
to any current dispute relating to a Government Contract.  Seller has not, with respect to any
Governmental Contract, received notice that Seller has breached or violated any
Law, order, certification, representation, clause, provision, or requirement
with respect to any such Government Contract. 
There are no current or, to the Knowledge of Seller, threatened claims,
appeals, “Requests for Equitable Adjustment,” protests, or lawsuits (including,
without limitation, any qui tam suit brought under the False Claims Act, 31
U.S.C. 3729), against Seller arising out of or relating to any Government
Contract.

 

(b)                                 During
the past five (5) years, Seller has not been suspended or debarred from
doing business with the United States Government, nor has any such suspension
or debarment action been threatened, proposed, or commenced.  To the Knowledge of Seller, there is no valid
basis, or specific circumstances that with the passage of time would become a
basis, for Seller’s suspension or debarment from doing business with the United
States Government.

 

(c)                                  Neither
Seller, nor, to the Knowledge of Seller, any of Seller’s officers, directors,
or employees, has knowingly provided to any person any false or misleading 

 

13

 

information with
respect to Seller, or any of its officers, directors, equityholders or
employees, in connection with the procurement of, performance under or renewal
of, any Government Contract.

 

Section 3.11.                         Insurance.  Seller
or its Affiliates have in place insurance policies with respect to the
Transferred Assets and the Business in amounts and types that are customary in
the industry for similar assets and sufficient to cover the full value of the
Tangible Personal Property, and all such policies are valid and in full force
and effect.  Schedule 3.11
contains a complete and accurate list and an accurate summary of all property,
commercial general liability, workers’ compensation and automobile liability
insurance policies currently maintained relating to the Transferred Assets or
the Business.  Such policies, as are
current, are valid and in full force and effect, all premiums due thereon have
been paid, Seller and, if applicable, its Affiliates, have complied with the
material provisions of such policies, and all such policies either specifically
include Seller as named insured or include omnibus named insured language which
generally includes Seller, and Seller or its
Affiliates have not received any notification of cancellation, modification or
denial of renewal of any such policies, except as set forth on Schedule 3.11.

 

Section 3.12.                         Employees
and Related Matters.  There are
no pending or threatened disputes, grievances, charges, complaints, petitions
or proceedings involving the employees of Seller that could be reasonably
expected to have a Material Adverse Effect and there are no pending or
threatened strikes, lockouts or general work stoppages involving employees
of Seller which could cause a cessation of operation of the Business or any
facility where the Business is conducted and Seller is not subject to show
cause, notices or debarment or administrative procedure involving any
Governmental Authority related to its employees practices with respect to the
Business that could reasonably be expected to result in a Material Adverse
Effect.

 

Section 3.13.                         Customers and
Suppliers.  Schedule 3.13 sets forth a list of (x) the
ten (10) largest customers of the Business in terms of sales during the
fiscal year ended March 31, 2008 and for Arcotronics, year-to-date as of July 31,
2008 and for Seller and its subsidiaries, year-to-date as of August 20,
2008, showing the approximate total sales by the Business to each such customer
during such periods, respectively, and (y) the ten (10) largest
suppliers to the Business during the fiscal year ended March 31, 2008 and
for the quarter ended June 30, 2008, measured by dollar volume of
purchases.  Except as set forth in Schedule
3.13, Seller has received no notice of termination and is not aware of an
intention to terminate the relationship with the Business or
significantly reduce the volume of the Business from any customer or supplier
named in Schedule 3.13.  The list
of customers provided by Seller in accordance with Section 5.02 is true
and correct.

 

Section 3.14.                         Product
Liability.  Except as set forth
in Schedule 3.14 hereto, no Action has been commenced in the five year
period immediately preceding the date of this Agreement, is currently pending
or, to Seller’s Knowledge, threatened, against or involving the Business
relating to any product alleged to have been manufactured or sold by Seller in
connection with the Business and alleged to have been defective, or improperly
designed or manufactured.

 

14

 

Section 3.15.                         Environmental
Compliance.

 

(a)                                  Each
of Seller and its Affiliates is in compliance in all material respects with the
Mexican General Law of Ecological Equilibrium and Environmental Protection, its
Regulations and Mexican Official Standards that may apply (the “Mexican
Environmental Legislation”), as well as all applicable federal, foreign,
state and local environmental laws, rules and regulations, including,
without limitation, those applicable to emissions to the environment, waste
management and waste disposal, except for such noncompliance which would not,
individually or in the aggregate, reasonably be likely to have a Material
Adverse Effect.

 

(b)                                 No
lien has been imposed or asserted on any of the Transferred Assets, the Business
or the Assumed Liabilities by any Governmental Authority or other person in
connection with any Mexican Environmental Law or Environmental Condition.

 

(c)                                  Seller
has discharged all of its obligations pertaining to the operation of the
Business.  Seller (i) has all
environmental permits necessary for the activities and operations of the
Business and for any past or ongoing alterations or improvements at its
facilities in Ciudad Victoria and Matamoros, State of Tamaulipas, Mexico, and (ii) is
not in violation of any such environmental permits and has applied for renewals
where necessary.

 

Section 3.16.                         Foreign
Practices Act.  Seller has not,
directly or indirectly, at any time directly in connection with the Business
made any payment to any state, federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments or contributions required or allowed by applicable
law.  Seller’s internal accounting
controls and procedures with respect to the Business are sufficient to cause
Seller to comply in all material respects with the Foreign Corrupt Practices
Act of 1977, as amended.

 

Section 3.17.                         Inventory.  At
the Closing, the Inventory will be items of good quality and usable or saleable
by the Business in the ordinary course of business consistent with past
practice and merchantable and fit for the purpose for which such Inventory was
procured or manufactured.

 

Section 3.18.                         Transactions
with Affiliates.  Except as set
forth on Schedule 3.18, no officer, director, employee, agent or
representative of Seller, nor any spouse or child of any of them or any Person
affiliated with any of them (each a “Related Person”), has any interest
in any assets or properties used in or pertaining to the Business, to the
extent related to the Transferred Assets or Assumed Liabilities.  No Related Person has, or owns any Person who
has, directly or indirectly, and whether on an individual, joint or other
basis, any equity interest or any other financial or profit interest in a
Person that has (i) had business dealings with Seller pertaining to the
Business or (ii) engaged in competition with the Business, to the extent
related to the Transferred Assets or the Assumed Liabilities.

 

Section 3.19.                         Taxes.

 

(a)                                  Except as set forth on Schedule 3.19, all
tax returns or information statements required to be filed by or on account of
the Transferred Assets, the Assumed Liabilities or the Business have been filed
before the federal, state or local tax authorities, and all statements and
information contained therein are true and correct in all material 

 

15

 

respects and Seller has paid or caused to be paid all Taxes which have
become due pursuant to such returns or pursuant to any assessments which have
been levied on Seller.  Except as set
forth on Schedule 3.19, to Seller’s Knowledge, there is no tax
deficiency proposed or threatened by any governmental or regulatory agency
against the Business, or the Transferred Assets.  Except as set forth on Schedule 3.19,
no audit of any tax return of Seller with respect to the Business, or the
Transferred Assets is in progress.

 

(b)                                 All Taxes with respect to the Business, the Assumed
Liabilities and the Transferred Assets not yet due but incurred on or before
the execution of this Agreement (including, without limitation, Taxes arising
out of the transactions contemplated hereby) are or will be adequately
disclosed to Buyer in order to ascertain that there is no contingent liability
that may be charged to Seller affecting the Business, the Assumed Liabilities
or the Transferred Assets.

 

Section 3.20.                         Brokers and Finders.  Except as set forth on Schedule 3.20,
neither Seller nor any of its officers, directors or employees has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finders’ fees in connection with the transactions contemplated by this
Agreement.

 

Section 3.21.                         No
Misleading Statements.  To the Knowledge of Seller, it has not failed
to disclose to Buyer in writing any fact that has specific application to the
Business (other than general economic or industry conditions) that could
reasonably be expected to have a Material Adverse Effect on the Business.  No representation or warranty contained in
this Agreement contains any untrue statement of a material fact, or omits or
will omit to state any material fact necessary to make any of them, in light of
the circumstances under which it was made, not misleading.

 

ARTICLE IV

 

REPRESENTATIONS
AND WARRANTIES OF BUYER

 

Buyer represents and warrants to Seller as follows:

 

Section 4.01.                         Organization and Authority of
Buyer.  Buyer
is a company duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. 
Buyer has the full legal right and all corporate power and authority to
enter into this Agreement, and each of the Ancillary Agreements to which it is
a party, and to consummate the transactions contemplated hereby and
thereby.  This Agreement, and each of the
Ancillary Agreements has been duly authorized, executed and delivered by Buyer
and no other corporate action on part of Buyer is necessary to authorize this
Agreement and the Ancillary Agreements or to consummate the transactions so
contemplated.  This Agreement and each of
the Ancillary Agreements (assuming due authorization, execution and delivery by
Seller) constitutes a legal, valid and binding obligation of Buyer enforceable against Buyer in
accordance with its terms.

 

Section 4.02.                         No
Conflict.  Neither
the execution nor delivery of this Agreement, or the Ancillary Agreements by
Buyer nor the consummation by Buyer of any of the 

 

16

 

transactions contemplated hereby or thereby, will (a) conflict with
or violate the certificate of incorporation, by-laws, or similar organizational
documents of Buyer (b) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise
to any right of termination, modification, cancellation or acceleration or loss
of benefits) under, any of the terms, conditions or provisions of any Contract
to which Buyer is a party or (c) violate any Permit applicable to Buyer;
except in the cases of clauses (b) or (c) for those violations,
breaches or defaults that would reasonably be expected to not have a material
adverse affect on the ability of Buyer to consummate the transactions
contemplated by this Agreement and each of the Ancillary Agreements.

 

Section 4.03.                         Consents and Approvals.  The
execution and delivery of this Agreement and each of the Ancillary Agreements
by Buyer does not, and the performance of this Agreement and each of the
Ancillary Agreements by Buyer will not, require any Permit or Consent of any
Governmental Authority or any other Person except as such may have been
obtained, taken or made on or prior to the date hereof (other than
pre-consummation trade or competition filings relating to the transaction
contemplated by this Agreement as to which no representation is made although
no concession is made that any such filings are required).

 

Section 4.04.                         Litigation.  No Action is pending or, to the
Knowledge of Buyer, threatened against Buyer which seeks to delay or prevent
the consummation of the transactions contemplated hereby or which may adversely affect
or restrict Buyer’s ability to consummate the transactions contemplated hereby.

 

Section 4.05.                         Brokers and Finders.  Neither
Buyer, nor any of its officers, directors or employees has employed any broker
or finder or incurred any liability for any brokerage fees, commissions or
finder’s fees in connection with the transactions contemplated by this
Agreement.

 

ARTICLE V

COVENANTS OF THE PARTIES

 

Section 5.01.                         Employees.  In addition to the Retained Liabilities,
Seller shall retain all liabilities and claims for salary, bonuses, back-pay,
commissions, benefits or other compensation based claims due employees or
former employees of Seller (whether or not engaged in the Business) arising
prior to, as a result of, or following the Closing.

 

Section 5.02.                         Customers.  Immediately after the Closing,  Seller
shall provide to Buyer a list of each of the customers of the Business during
the fiscal year ended March 31, 2008 and the quarter ended June 30,
2008, showing the approximate total sales by the Business to each such customer
during such periods.

 

Section 5.03.                         Transfer
Taxes.  Notwithstanding any other
provision of this Agreement, all transfer, registration, stamp, documentary,
sales and similar taxes (including all applicable real estate transfer or gains
taxes), and any penalties, interest and additions to tax, incurred in
connection with this Agreement or the transfer of the Business and the
Transferred Assets shall 

 

17

 

be the
responsibility of and be timely paid by Seller. 
Seller and Buyer shall cooperate in the timely making of all filings,
returns, reports and forms as may be required in connection therewith.

 

Section 5.04.                         Further
Action.

 

(a)                                  Each of the parties hereto shall execute such
documents (including, without limitation, the Ancillary Agreements) and other
papers and take such further actions as may be reasonably required or desirable
to carry out the provisions hereof and the transactions contemplated hereby, at
or after the Closing, to evidence the consummation of the transactions
consummated pursuant to this Agreement. 
Upon the terms and subject to the conditions hereof, each of the parties
hereto shall take, or cause to be taken, all actions and do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement and to obtain in a timely manner all necessary waivers and Consents and
to effect all necessary registrations and filings.  Following the Closing, each party will afford
the other party, its counsel and its accountants, during normal business hours,
reasonable access to the books, records and other data relating to the Business
in its possession with respect to periods prior to the Closing and the right to
make copies and extracts therefrom, at the requesting party’s expense, to the
extent that such access may be reasonably required by the requesting party in
connection with (i) the preparation of financial reports or tax returns, (ii) the
determination or enforcement of rights and obligations under this Agreement or
any of the Ancillary Agreements, (iii) compliance with the requirements of
any Governmental Authority, or (v) in connection with any actual or
threatened Action or proceeding, but in each case only to the extent that such
access does not unreasonably interfere with the business and operations of the
party providing such access.  The
requesting party shall provide a written request to access such information
(which written request shall include the reason for such party’s request to
access such information) within a reasonable time prior to the requested date
of access.  Further, each party agrees
for a period extending for five (5) years after the Closing Date not to
destroy or otherwise dispose of any such books, records and other data unless
such party shall first offer in writing to surrender such books, records and
other data to the other party and such other party does not agree in writing to
take possession thereof during the ten (10) day period after such offer is
made.  Any information obtained by a
party in accordance with this subsection shall be held confidential by such
party in accordance with Section 5.07.

 

Section 5.05.                         Assets After
the Closing.  If Seller shall, at any time after the
Closing, receive any Transferred Assets (including any payments relating to any
Transferred Agreements, to the extent performed after the Closing), it shall
promptly deliver such assets or property to Buyer.

 

Section 5.06.                         Non-Compete.

 

(a)                                  From the Closing and
for a period of seven (7) years thereafter (the “Non-Compete Period”),
Seller and Seller Guarantor shall not, and shall cause their Affiliates not to,
directly or indirectly, engage in, hold an interest in, lend funds to, own,
manage, operate, control, direct, be connected with as a stockholder (other
than as a holder of less than two percent (2%) 

 

18

 

of a publicly-traded
security), joint venturer, partner or consultant, or otherwise engage or
advise, specifically with respect to the development, production, manufacture
or sale of wet tantalum capacitors, any Person seeking to engage in the
business of developing, producing, manufacturing or selling (through
subcontract or otherwise) wet tantalum capacitors anywhere in the world.

 

(b)                                 If, at the time of
enforcement of Section 5.06, a court or arbitrator holds that the
restrictions stated herein are unreasonable under the circumstances then
existing, the parties agree that the maximum period, scope or geographical area
reasonable under such circumstances shall be substituted for the stated period,
scope or area determined to be reasonable under the circumstances by such court
or arbitrator, as applicable.

 

Section 5.07.                         Confidential
Information.  Seller acknowledges and agrees that (i) it
has Confidential Information (as defined below) and that such Confidential
Information does and will constitute valuable, special and unique property of
Buyer from and after the Closing Date and (ii) for a period of seven (7) years
after the Closing Date, it will not, directly or indirectly, and will cause its
Affiliates not to, disclose, reveal, divulge or communicate to any Person other
than authorized officers, directors and employees of Buyer or employees or
agents of Seller with a need to know, provided such Confidential Information is
not used in violation of this Agreement, or use or otherwise exploit for its
own benefit or for the benefit of anyone other than Buyer, any Confidential
Information.  Seller shall not have any
obligation to keep confidential any Confidential Information if and to the
extent disclosure thereof is specifically required by Law; provided,
however, that in the event disclosure is required by applicable Law,
Seller  shall, to the extent reasonably
possible, provide Buyer with prompt notice of such requirement prior to making
any disclosure so that Buyer may seek an appropriate protective order.  For purposes of this Section 5.07, “Confidential
Information” shall mean any confidential information with respect to the
Business, including, without limitation, methods of operation, pending or
completed acquisitions of any company, division, product line or other business
unit, prices, fees, costs, plans, designs, technology, inventions, trade
secrets, know-how, software, marketing methods, policies, plans, personnel,
customers, suppliers, publishers, competitors, markets or other specialized
information or proprietary matters but shall not include any such information
to the extent that it relates to the business or operations of Seller, other
than the Business.  The term “Confidential
Information” does not include, and there shall be no obligation hereunder
with respect to, information that (a) is generally available to the public
on the date of this Agreement, (b) becomes generally available to the
public other than as a result of a disclosure by Seller  not
otherwise permissible thereunder or (c) Seller learns from other sources
where such sources have not violated their confidentiality obligation to
Buyer.  Nothing herein shall be construed
as a license or other grant to Seller or any of its Affiliates of permission to
use the Transferred Intellectual Property whether during or after the aforesaid
seven (7) year period.

 

Section 5.08.                         Vishay
Intellectual Property.  Seller
acknowledges that the Intellectual Property listed on Schedule 5.08 (the
“Vishay Intellectual Property”) is owned by Buyer Guarantor or an
Affiliate of Buyer Guarantor.  Seller
covenants not to, directly or indirectly, dispute, challenge, or impair the
validity or enforceability of, or any right, title or interest in or to, the
Vishay Intellectual Property, exclusively as it relates to wet tantalum capacitors
and has not expired under applicable Law.

 

19

 

Section 5.09.                         Access.  Each party
shall provide the other party reasonable access during regular business hours
to all records relating to the Business (with the right to photocopy at the
requesting party’s expense) in connection with any and all regulatory
compliance by either party or investigation by any Governmental Authority of
Seller or Buyer or the Business prior to or after the Closing (including, without
limitation, the Mexican Ministry of Treasury and Public Credit, the Mexican
Internal Revenue Service and environmental regulatory agencies) and pending or
threatened litigation matters to which Seller or Buyer may be or hereafter
becomes subject with respect to the Business.

 

ARTICLE VI

 

INDEMNIFICATION

 

Section 6.01.                         Survival.  The parties
hereto agree that the representations and warranties of the parties contained
in this Agreement, any schedule hereto or any certificate delivered pursuant
hereto, and the indemnification obligations in Sections 6.02(a)(i) and
6.02(b)(i) with respect to such representations and warranties, shall
terminate twelve (12) months after the Closing Date; provided that (a) the
representations and warranties contained in 3.18 (Taxes), 3.19 (Brokers and
Finders) and 4.05 (Brokers and Finders), and the indemnification obligations
related thereto, shall terminate thirty (30) days following the expiration of
the applicable statutory period of limitations and (b) the representations
and warranties contained in 3.05(a) (Transferred Intellectual Property),
and the indemnification obligations related thereto, shall terminate thirty-six
(36) months after the Closing Date, and (c) the representations and
warranties contain in Sections 3.01 (Organization and Authority of Seller),
3.05(c) (Title to Transferred Assets), 3.15 (Environmental Compliance) and
4.01 (Organization and Authority of Buyer), and the indemnification obligations
related thereto, shall survive the Closing indefinitely; provided that if a
claim shall have been made in good faith with respect to any representation or
warranty prior to the expiration of the applicable survival period such claim
shall continue to be subject to indemnification notwithstanding the expiration
of such period.  The covenants and
agreements of the parties contained in this Agreement shall survive and remain
in full force and effect for the applicable period specified therein, or if no
such period is specified, indefinitely. 
The provisions of this Article VI shall survive for so long as any
other Section of this Agreement shall survive.

 

Section 6.02.                         Indemnification
Obligations.

 

(a)                                  Seller shall
indemnify, defend and hold harmless Buyer and any subsidiary, associate,
Affiliate, director, officer, member, manager or agent of Buyer, and their
respective representatives, successors and permitted assigns (collectively, the
“Buyer Indemnified Parties”) from and against, and pay on behalf of or
reimburse such party in respect of, as and when incurred, any and all losses,
liabilities, demands, claims, Actions, costs, damages, judgments, debts,
settlements, assessments, deficiencies, Taxes, penalties, fines or expenses,
whether or not arising out of any claims by or on behalf of a third party,
including interest, penalties, reasonable attorneys’ fees and expenses and all
reasonable amounts paid in investigation, defense or settlement of any of the
foregoing (collectively, “Losses”) which any such party may suffer,
sustain or become subject to, as a result of, in connection with, or relating
to or by virtue of:

 

20

 

(i)                                     any
inaccuracy in, or breach of, any representation or warranty made by either
Seller under this Agreement, the Bill of Sale, Assignment and Assumption
Agreements, or the Escrow Agreement, including any certificate, exhibit or
schedule provided by Seller in connection with the transactions contemplated
herein;

 

(ii)                                  any
breach or non-fulfillment of any covenant or agreement on the part of Seller
under this Agreement, the Bill of Sale, Assignment and Assumption Agreements,
the Trademark License Agreement, or the Escrow Agreement;

 

(iii)                               the
ownership or operation of the Transferred Assets on or prior to the Closing
Date, or the conduct or operation of the Business on or prior to the Closing
Date, or the activities of Seller in connection with the Transferred Assets or
the Business on or prior to the Closing Date;

 

(iv)                              any
liabilities of Seller arising out of (x) any employee dispute or the
violation of any Mexican labor Law, rule or regulation or (y) the
violation of any Mexican Environmental Law, rule or regulation.

 

(v)                                 Seller’s
failure to comply with applicable bulk sale or bulk transfer laws as set forth
in Section 7.04;

 

(vi)                              any
fees, expenses or other payments incurred or owed by Seller to any agent,
broker, investment banker or other firm or Person retained or employed in
connection with the transactions contemplated by this Agreement; or

 

(vii)                           the
Retained Liabilities.

 

For the avoidance
of doubt, in no event will Seller be required to indemnify any Buyer
Indemnified Party for any Loss relating to the assignment of any Contract in
connection with this Agreement or the failure by Buyer or Seller to obtain a
third party consent to the assignment of any Contract in connection with this
Agreement, except to the extent of the obligations of Seller under Section 1.06.

 

(b)                                 Buyer
shall indemnify, defend and hold harmless Seller and any subsidiary, associate,
Affiliate, director, officer, stockholder or agent of Seller and their
respective representatives, successors and permitted assigns (collectively, the
“Seller Indemnified Parties”) from and against, and pay on behalf of or
reimburse such party in respect of, as and when incurred, any and all Losses which
any such party may suffer, sustain or become subject to, as a result of, in
connection with, or relating to or by virtue of:

 

(i)                                     any
inaccuracy in, or breach of, any representation or warranty made by Buyer under
this Agreement, the Bill of Sale, Assignment and Assumption Agreements, or the
Escrow Agreement, including any certificate or exhibit provided by Buyer in
connection with the transactions contemplated herein;

 

(ii)                                  any
breach or non-fulfillment of any covenant or agreement on the part of Buyer
under this Agreement, the Bill of Sale, Assignment and Assumption Agreements,
or the Escrow Agreement;

 

21

 

(iii)          the ownership or operation of the
Transferred Assets after the Closing Date, or the conduct or operation of the
Business after the Closing Date, or the activities of Buyer in connection with
the Transferred Assets or the Business after the Closing Date, except for the
Retained Liabilities and subject to the provisions of the Transitions Services
Agreement;

 

(iv)          any fees, expenses or other payments
incurred or owed by Buyer to any agent, broker, investment banker or other firm
or Person retained or employed in connection with the transactions contemplated
by this Agreement; or

 

(v)           the Assumed Liabilities.

 

(c)           The right to
indemnification or any other remedy based on any representation, warranty,
covenant or agreement hereunder shall not be affected by any investigation
conducted at any time, or any knowledge acquired (or capable of being acquired)
at any time, whether before or after the execution and delivery of this
Agreement or the Closing, with respect to the accuracy or inaccuracy of, or
compliance with, any such representation, warranty, covenant or agreement.  The waiver of any condition based on the
accuracy of any such representation or warranty, or on the performance of or
compliance with any such covenant or agreements, will not affect the right to
indemnification or any other remedy based on such representations, warranties,
covenants and agreements.

 

Section 6.03.        Indemnification Procedure.

 

(a)           If any Buyer
Indemnified Party or Seller Indemnified Party (collectively, the “Indemnified
Parties”) intends to seek indemnification pursuant to this Article VI,
such Indemnified Party shall promptly notify Seller, if the Indemnified Party
is a Buyer Indemnified Party (the “Seller Indemnifying Parties”), or
Buyer, if the Indemnified Party is a Seller Indemnified Party (the “Buyer
Indemnifying Parties” and, together with Seller Indemnifying Parties, the “Indemnifying
Parties”), in writing of such claim with reasonable particularity.  The Indemnified Party will provide the
Indemnifying Parties with prompt notice of any third party claim in respect of
which indemnification is sought.  The
failure to provide such notice will not affect any rights hereunder except to
the extent the Indemnifying Parties are materially prejudiced thereby.

 

(b)           If such claim involves
a claim by a third party against the Indemnified Parties, the Indemnifying
Parties may, within thirty (30) calendar days after receipt of such notice and
upon notice to the Indemnified Parties, assume, through counsel of their own
choosing and at their own expense, the settlement or defense thereof, and the
Indemnified Parties shall reasonably cooperate with them in connection
therewith.  In the event the Indemnifying
Parties elect to assume the settlement or defense of such third party claim,
the Indemnified Parties shall be permitted to participate in such settlement or
defense through one counsel chosen (and one local counsel in any applicable
jurisdiction) by them, the expense of which will be the obligation of the
Indemnified Parties; unless an Indemnified Party is a named party to such
action or suit and the Indemnified Parties have reasonably determined that
there may be a conflict of interest between the Indemnifying Parties and such
Indemnified Party, then the Indemnifying Parties shall pay the reasonable fees
and expenses of one counsel chosen (and one 

 

22

 

local counsel in
any applicable jurisdiction) by the Indemnified Parties.  Notwithstanding anything in this Section 6.03
to the contrary, no Indemnifying Party may, without the prior written consent
of the Indemnified Parties, such consent not to be unreasonably withheld,
settle or compromise any action or consent to the entry of any judgment, unless
the terms of such settlement release the Indemnified Parties from any and all
liability with respect to such action or suit and do not contain any admission
of liability or culpability of the Indemnified Parties.  So long as the Indemnifying Parties are
contesting any such claim in good faith, the Indemnified Parties shall not pay
or settle any such claim without the Indemnifying Parties’ Consent, which
Consent shall not to be unreasonably withheld or delayed.  If the Indemnifying Parties do not give
notice within a reasonable time that they elect to assume the settlement or
defense of such claim or suit, then the Indemnified Parties may conduct and
control, through counsel of their own choosing and at the expense of the
Indemnifying Parties, the settlement or defense thereof, and the Indemnifying
Parties shall cooperate with it in connection therewith; provided, however,
that (i) the Indemnified Parties shall not consent to the entry of any
judgment or to any settlement of such claim without the prior written consent
of the Indemnifying Parties, not to be unreasonably withheld or delayed; and (ii) the
Indemnifying Parties shall have the right at any point to participate in the
Indemnified Parties’ defense, to attend meetings and conferences, and to review
such information and documents in the Indemnified Parties’ possession as they
may reasonably request concerning such action or suit except where such
participation, attendance or review would (x) void any claim of privilege
by an Indemnified Party or (y) materially impair any legal defense or claim
of an Indemnified Party.  The failure of
the Indemnified Parties to participate in, conduct or control such defense
shall not relieve the Indemnifying Parties of any obligation they may have
hereunder.

 

Section 6.04.        Indemnification
Amounts.

 

(a)                                  Basket. 
Notwithstanding anything contained herein to the contrary, an
Indemnifying Party shall not be liable for any claim for indemnification
pursuant to Section 6.02(a)(i) or 6.02(b)(i) hereto unless and
until the dollar amount of all indemnifiable Losses in the aggregate exceeds
$250,000 (the “Basket”), in which case the Indemnifying Party will be
obligated to indemnify the Indemnified Party for all indemnifiable Losses in
excess of $250,000.

 

(b)                                 Seller’s Cap. 
Subject to Section 6.04(d), (f), and (g), the maximum aggregate
liability of all Seller Indemnified Parties under Section 6.02(a)(i) for
all Losses shall be 30% of the Purchase Price (“Seller’s Cap”).

 

(c)                                  Buyer’s Cap. 
Subject to Section 6.04(e), (f), and (g), the maximum aggregate
liability of all Buyer Indemnified Parties under Section 6.02(b)(i) for
all Losses shall be 30% of the Purchase Price (“Buyer’s Cap”).

 

(d)                                 Exclusions from Seller’s Cap. 
Notwithstanding the foregoing, the following Losses shall not be subject
to the provisions of Seller’s Cap and a Buyer Indemnified Party shall be
entitled to indemnification with respect to such Losses in accordance with this
Article VI as though Seller’s Cap was not a part of this Agreement:

 

(i)            Losses relating to or caused by or
resulting from the breach of the representations and warranties contained in
Sections 3.01 (Organization and 

 

23

 

Authority of Seller), 3.05(d) (Title to
Transferred Assets) and 3.20 (Brokers and Finders); and

 

(ii)           Losses relating to, caused by or
resulting from the actual fraud or intentional misrepresentation of Seller
under this Agreement.

 

(e)                                  Exclusions from Buyer’s Cap. 
Notwithstanding the foregoing, the following Losses shall not be subject
to the provisions of Buyer’s Cap and a Seller Indemnified Party shall be
entitled to indemnification with respect to such Losses in accordance with this
Article VI as though Buyer’s Cap was not a part of this Agreement:

 

(i)                                     Losses relating to or caused by or
resulting from the breach of the representations and warranties contained in
Sections 4.01 (Organization and Authority of Buyer) and 4.05 (Brokers and
Finders); and

 

(ii)                                  Losses relating to, caused by or
resulting from the actual fraud or intentional misrepresentation of Buyer under
this Agreement.

 

(f)                                    Computation of Losses. 
The amount of any liability of Seller under Section 6.02(a) shall
be computed net of any tax benefit to Buyer Indemnified Parties actually
received by Buyer Indemnified Parties, net of any insurance proceeds actually
received by Buyer Indemnified Parties, and net of any indemnity, contribution,
or other similar payment actually received by any Buyer Indemnified Party with
respect to the matter out of which such liability arose.  The amount of any liability of Buyer under Section 6.02(b) shall
be computed net of any tax benefit to Seller Indemnified Parties actually
received by Seller Indemnified Parties, net of any insurance proceeds actually
received by Seller Indemnified Parties, and net of any indemnity, contribution,
or other similar payment actually received by any Seller Indemnified Party with
respect to the matter out of which such liability arose.

 

(g)                                 No Special Damages. 
Notwithstanding anything to the contrary contained herein, no
Indemnifying Party shall be liable or responsible to any Indemnified Party for
special, punitive, incidental, consequential, or multiplied damages or for lost
profits, except as reducing the value of the Business or the Transferred Assets
and except as required to be paid to a third-party claimant.

 

Section 6.05.        Tax Treatment of
Indemnification.  For all Tax purposes, the parties hereto
agree to treat (and shall cause each of their respective Affiliates to treat)
any indemnity payment under this Agreement as an adjustment to the Purchase
Price, except as otherwise required by applicable Law.

 

Section 6.06.        Escrow Amount. 
The obligation of Seller under Section 6.02(a) shall be
satisfied first from the Escrow Amount and, if the Escrow Amount is inadequate
to provide indemnification to Buyer as provided in Section 6.02(a), from
Seller, subject to the limitations set forth in Section 6.04(a), (b), (f) and
(g).

 

Section 6.07.        Exclusive Remedy. 
The right
to receive indemnification pursuant to this Article VI shall be the sole
and exclusive remedy of any Indemnified Party with respect to liability of
Seller and Buyer for a breach or inaccuracy of a representation or warranty or
the 

 

24

 

breach of any
covenant in this Agreement, the Bill of Sale, Assignment and Assumption
Agreements, the Trademark License Agreement, the Escrow Agreement, and any
certificate furnished hereunder, or conduct otherwise relating to the
negotiation and completion of the transactions contemplated in this Agreement; provided,
however, that nothing herein shall preclude a party from seeking specific
performance or injunctive relief or bringing an action for fraud or intentional
misrepresentation.

 

ARTICLE VII

GENERAL PROVISIONS

 

Section 7.01.        Publicity.  No publicity release or announcement
concerning this Agreement, the Ancillary Agreements or the transactions
contemplated hereby and thereby shall be issued without advance approval of the
form and substance thereof by Seller and Buyer, except as many otherwise be required
by applicable Law (in which case the party making such release or announcement
will provide concurrent or, if practicable, prior notice to the other parties
hereto).  Neither party shall take any action which
is intended, or could reasonably be expected, to harm, disparage, defame,
slander, or lead to unwanted or unfavorable publicity for the other party with
respect to the Business or the transactions contemplated by this Agreement, or
otherwise take any action which might detrimentally affect the reputation,
image, relationships or public view of the other party with respect to the
Business or the transactions contemplated by this Agreement.

 

Section 7.02.        Specific Performance.  The parties hereto agree that money damages
would not be a sufficient remedy for a breach of Sections 5.03, 5.04, 5.05,
5.06 and 7.01 of this Agreement by Seller or Buyer because of the difficulty of
ascertaining the amount of damage that will be suffered in connection
therewith, that each party would be irreparably damaged in the event any such
obligation of the other party is not performed in accordance with its specific
terms and that each party shall be entitled
to equitable relief (including injunction and specific performance) in any
action instituted in any court of the United States or any state thereof having
subject matter jurisdiction, as a remedy, for any breach or to prevent any
breach of such provisions.  Such remedies
shall not be deemed to be exclusive for a breach or anticipatory breach of this
Agreement, but shall be in addition to all other remedies available at law or
equity.  The parties waive any defense
that a remedy at law is adequate and any requirement to post bond or provide
similar security in connection with actions instituted for injunctive relief or
specific performance of this Agreement.

 

Section 7.03.        Expenses.  All costs and expenses,
including, without limitation, fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
costs and expenses, whether or not the Closing shall have occurred.

 

Section 7.04.        Bulk Transfer
Laws. 
Buyer hereby waives compliance by Seller with any applicable bulk sale
or bulk transfer laws of any jurisdiction in connection with the sale of the
Business to Buyer; provided, however, that nothing in this
Section 7.04 shall be construed (i) as an indication that Buyer or
Seller has determined that any bulk sale or 

 

25

 

transfer law is applicable to the sale of the Business or (ii) to
undermine Seller’s absolute obligation to pay the Retained Liabilities.

 

Section 7.05.        Notices.  All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made (i) as of the date delivered if delivered personally; (ii) five
(5) days after being mailed by registered or certified mail, postage
prepaid, return receipt requested; (iii) one (1) business day after
being sent via a nationally recognized overnight courier service; or (iv) upon
receipt of electronic or other confirmation of transmission if sent via
facsimile to the parties or their assignees at the following addresses and
facsimile numbers, or at such other addresses or facsimile numbers as the
parties may designate by written notice in accordance with this Section 7.05,
except that notices of changes of address shall be effective
upon receipt:

 

(a)           if to Seller:

 

KEMET Electronics Corporation 

2835 KEMET Way 

Simpsonville, SC 29681 

Tel:  (864) 963-6300
 Fax: (954) 766-2805

Attention:  R. James (“Jamie”)
Assaf, Esq., Vice President, General Counsel

 

with a copy to:

 

Wyche Burgess Freeman & Parham, P.A.

44 
East Camperdown Way

Greenville, SC 29601-3512

Fax: (864) 235-8900

Attn:  Carl
F. Muller, Esq.

 

(b)           if
to Buyer:

 

Vishay
Intertechnology, Inc.

63
Lancaster Avenue

Malvern,
PA  19355 

Fax:  (610) 889-2161

Attn:  Dr. Lior Yahalomi, Chief
Financial Officer

 

with a copy to:

 

Kramer
Levin Naftalis & Frankel LLP

1177 Avenue of the Americas 

New York, New York 10036

Fax: (212) 715-8000

Attn:  Abbe L. Dienstag, Esq.

 

26

 

Section 7.06.        Headings.  The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

Section 7.07.        Severability.  If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party.  Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
greatest extent possible.

 

Section 7.08.        Assignment.  The rights and obligations of each party
under this Agreement may not be assigned by any party, whether by operation of
law or otherwise, without the express written consent of the other party
hereto, except that Buyer may assign its rights and obligations to a
wholly-owned subsidiary of Buyer Guarantor at any time.

 

Section 7.09.        Entire Agreement; No Third Party Beneficiaries. 
This Agreement (including the exhibits and schedules attached hereto)
and other documents delivered at the Closing pursuant hereto contain the entire
understanding of the parties in respect of its subject matter and supersede all
prior agreements and understandings (oral or written) between or among the
parties with respect to such subject matter. 
The parties agree that prior drafts of this Agreement shall not be
deemed to provide any evidence as to the meaning of any provision hereof or the
intent of the parties with respect thereto. 
The exhibits and schedules constitute a part hereof as though set forth
in full above.  Except for persons
expressly stated herein to be indemnitees or as otherwise expressly stated
herein, this Agreement is not intended to confer upon any Person, other than
the parties hereto, any rights or remedies hereunder.

 

Section 7.10.        Governing
Law.  This Agreement,
the schedules attached hereto and the Ancillary Agreements shall be governed
by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed and to be performed in that state, without
regard to principles of conflicts of laws.

 

Section 7.11.        Counterparts;
Effectiveness of Agreement. 
This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.

 

27

 

IN
WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be executed as
of the date first written above by their respective officers thereunto duly
authorized.

 

 

	
   

  	
  KEMET
  ELECTRONICS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  PER-OLOF LOOF

  
	
   

  	
   

  	
  Name:
  Per-Olof Loof

  
	
   

  	
   

  	
  Title:
    Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SILICONIX
  TECHNOLOGY C.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  STEVEN KLAUSNER

  
	
   

  	
   

  	
  Name:
  Steven Klausner

  
	
   

  	
   

  	
  Title:
    Assistant Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  On
  behalf of Siliconix incorporated, member

  of Vishay Siliconix LLC, General Partner of

  Siliconix Technology C.V.

  

 

 

GUARANTEE

 

Vishay Intertechnology, Inc. (“Buyer Guarantor”)
irrevocably guarantees each and every representation, warranty, covenant,
agreement and other obligation of Buyer, and/or any of their respective
permitted assigns (and where any such representation or warranty is made to the
knowledge of Buyer, such representation or warranty shall be deemed made to the
knowledge of Buyer Guarantor), and the full and timely performance of their
respective obligations under the provisions of the foregoing Agreement. This is
a guarantee of payment and performance, and not of collection, and Buyer
Guarantor acknowledges and agrees that this guarantee is full and
unconditional, and no release or extinguishment of Buyer’s obligations or
liabilities (other than in accordance with the terms of the Agreement), whether
by decree in any bankruptcy proceeding or otherwise, shall affect the
continuing validity and enforceability of this guarantee, as well as any provision
requiring or contemplating performance by Buyer Guarantor.

 

Buyer Guarantor hereby waives, for the benefit of Seller, (i) any
right to require Seller as a condition of payment or performance by Buyer
Guarantor, to proceed against Buyer or pursue any other remedy whatsoever and (ii) to
the fullest extent permitted by law, any defenses or benefits that may be
derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, except to the extent that any such defense is available
to Buyer.

 

Without limiting in any way the foregoing guarantee, Buyer Guarantor
covenants and agrees to take all actions to enable Buyer to adhere to each of
the provisions of the Agreement which requires an act or omission on the part
of Buyer Guarantor or any of its subsidiaries to enable Buyer to comply with
its obligations under the Agreement.

 

The provisions of Article VII of the Agreement are
incorporated herein, mutatis mutandis,
except that notices and other communications hereunder to Buyer Guarantor shall
be delivered to Vishay Intertechnology, Inc., 63 Lancaster Avenue,
Malvern, PA 19355, Attn: Lior Yahalomi, Chief Financial Officer, Fax No. (610)
889-2161 (with a copy as provided therefor in Section 7.05).

 

We understand that Seller is relying on this guarantee in entering into
the Agreement and may enforce this guarantee as if Buyer Guarantor were a party
thereto.

 

	
   

  	
  VISHAY
  INTERTECHNOLOGY INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ STEVEN
  KLAUSNER

  
	
   

  	
   

  	
  Name:  Steven Klausner

  
	
   

  	
   

  	
  Title:    Vice
  President and Treasurer

  

 

 

GUARANTEE

 

KEMET Corporation (“Seller Guarantor”) irrevocably guarantees
each and every representation, warranty, covenant, agreement and other
obligation of Seller, and/or any of their respective permitted assigns (and
where any such representation or warranty is made to the knowledge of Seller,
such representation or warranty shall be deemed made to the knowledge of Seller
Guarantor), and the full and timely performance of their respective obligations
under the provisions of the foregoing Agreement. This is a guarantee of payment
and performance, and not of collection, and Seller Guarantor acknowledges and
agrees that this guarantee is full and unconditional, and no release or
extinguishment of Seller’s obligations or liabilities (other than in accordance
with the terms of the Agreement), whether by decree in any bankruptcy
proceeding or otherwise, shall affect the continuing validity and
enforceability of this guarantee, as well as any provision requiring or
contemplating performance by Seller Guarantor.

 

Seller Guarantor hereby waives, for the benefit of Seller, (i) any
right to require Seller as a condition of payment or performance by Seller
Guarantor, to proceed against Seller or pursue any other remedy whatsoever and (ii) to
the fullest extent permitted by law, any defenses or benefits that may be
derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, except to the extent that any such defense is available
to Seller.

 

Without limiting in any way the foregoing guarantee, Seller Guarantor
covenants and agrees to take all actions to enable Seller to adhere to each of
the provisions of the Agreement which requires an act or omission on the part
of Seller Guarantor or any of its subsidiaries to enable Seller to comply with
its obligations under the Agreement.

 

The provisions of Article VII of the Agreement are
incorporated herein, mutatis mutandis,
except that notices and other communications hereunder to Seller Guarantor
shall be delivered to KEMET Corporation, 2835 KEMET Way, Simpsonville, SC
29606, Attn: William Lowe, Jr., Executive Vice President and Chief
Financial Officer, Fax No. (864) 963-6303 (with a copy as provided
therefor in Section 7.05).

 

We understand that Buyer is relying on this guarantee in entering into
the Agreement and may enforce this guarantee as if Seller Guarantor were a
party thereto.

 

	
   

  	
  KEMET
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PER-OLOF LOOF

  
	
   

  	
   

  	
  Name:  Per-Olof Loof

  
	
   

  	
   

  	
  Title:    Chief Executive Officer

  

 

 

EXHIBIT A

 

Definitions

 

As used in this Agreement, the following terms shall have the following
meanings (such definitions to be equally applicable to both the singular and
plural forms of the terms defined):

 

“Action” means any claim, action, suit, arbitration,
inquiry, proceeding or investigation by or before any court, any governmental
or other regulatory or administrative agency or commission
or any arbitration tribunal.

 

“Affiliate” with respect to
any specified person, means a person that directly or indirectly, through one
or more intermediaries, controls, or is controlled by, or is under common
control with, such specified person.

 

“Ancillary Agreements”
means the Trademark License Agreement, the Bill of Sale, Assignment and
Assumption Agreements, the Transitions Services Agreement, the Commodatum
Agreement and the Escrow Agreement.

 

“Arco Intellectual Property”
means all Intellectual Property (a) owned by Seller, (b) used or to
be used exclusively in the manufacture of wet tantalum capacitors and (c) purchased
from Blue Sky (Lux) S.à.r.l. pursuant to the Sale and Purchase Agreement, dated
August 10, 2007 by and between Seller and Blue Sky (Lux) S.à.r.l.

 

“Arco Tangible Assets”
means all fixed assets, machinery, equipment, tools and parts (a) owned by
Seller, (b) used or to be used in the manufacture of the wet tantalum
capacitors listed on Schedule 3.05(a)(ii) and (c) purchased
from Blue Sky (Lux) S.à.r.l. pursuant to the Sale and Purchase Agreement dated August 10,
2007 by and between Seller and Blue Sky (Lux) S.à.r.l., other than the
equipment listed on Schedule 1.01(b)(xiv).

 

“Assumed Liabilities” means
the liabilities of Seller that Buyer is assuming pursuant to the Assignment and
Assumption Agreement and Section 1.02(a).

 

“Basket” has the meaning assigned
to that term in Section 6.04(a).

 

“Bill of Sale, Assignment and
Assumption Agreements” means the Bills of Sale, Assignment and Assumption
Agreements, substantially in the forms as Exhibit C hereto, being
delivered simultaneously herewith pursuant to which Seller and Arcotronics are
conveying to Buyer the Transferred Assets and pursuant to which Buyer is
assuming the Assumed Liabilities.

 

“Business Accounting Principles”
means GAAP, except to the extent that the accounting principles used to determine
the financial statements of the Business are not consistent with GAAP, as shown
on Schedule 3.04(c).

 

“Buyer Indemnified Parties”
has the meaning assigned to that term in Section 6.02(a).

 

 

“Buyer Indemnifying Parties”
has the meaning assigned to that term in Section 6.03(a).

 

“Buyer’s Cap” has the
meaning assigned to that term in Section 6.04(c).

 

“Closing” has the meaning
assigned to that term in Section 2.01.

 

“Closing Date” has the
meaning assigned to that term in Section 2.01.

 

“Closing Date Cash Payment” has the meaning
assigned to that term in Section 1.04(a).

 

“Consent” means any
approval, consent, ratification, waiver, lapse of any waiting period or other
authorization.

 

“Confidential Information”
has the meaning assigned to that term in Section 5.07.

 

“Contract” means any note, bond, mortgage, indenture,
contract, agreement, permit, license, real property lease, equipment and other
personal property lease, purchase order, sales order, arrangement or other
commitment, obligation or understanding, written or oral, to which a Person is
a party or by which a Person or its assets or properties are bound.

 

“Customer Contracts” has the meaning assigned
to that term in Section 1.06(a).

 

“Distributor Contracts” has the meaning
assigned to that term in Section 1.06(a).

 

“EBITDA” means for any period, without
duplication, the total of the following for such Person, each calculated for
such period (on a consolidated basis): 
net income, plus interest expense, plus taxes, plus depreciation and
amortization in each case as determined in accordance with GAAP, consistently
applied in accordance with Seller’s past practices. An example of the
calculation of EBITDA is attached hereto as Schedule 3.04(b).

 

“Environmental Condition” means any violations,
non-compliance or non-conformance with a Mexican Environmental Law.

 

“Equipment” means all fixed assets, machinery,
equipment that are part of the Tangible Personal Property.

 

“Escrow Agreement” means an escrow agreement,
substantially in the form of Exhibit D hereto, being delivered
simultaneously herewith between Seller, Buyer and the escrow agent (the “Escrow
Agent”).

 

“Escrow Amount” has the meaning assigned to that term in Section 1.04(b)

 

“Excluded Assets” has the meaning assigned to that term in Section 1.01(b).

 

“GAAP” means generally accepted accounting
principles of the United States.

 

 

“Governmental Authority” means any federal,
state, local or foreign government or any subdivision, agency, instrumentality,
authority, department, commission, board or bureau thereof or any federal,
state, local or foreign court, tribunal, arbitrator or registrar.

 

“Indemnified Party” and “Indemnifying Party”
have the meanings assigned to those terms in Section 6.03(a).

 

“Intellectual Property”
means any and all present and future right, title and interest anywhere in the
world in and to (a) patents, design patents, invention certificates, industrial
designs, and utility models; (b) copyrights, mask works, and other rights
of authorship in any form or media (including computer software and source
codes); (c) trademarks, service marks, trade names, trade dress and all
goodwill related to the foregoing; (d) applications, registrations,
continuations, continuations-in-part, divisionals, reexaminations, reissues,
certifications, renewals, extensions and validations of or for any of the
foregoing; (e) inventions, discoveries and improvements and trade secrets,
related documentation and all intellectual property rights in the foregoing; (f) rights
to sue for any remedies for past, present or future violation,
misappropriation, or infringement of any of the foregoing; and (g) rights
of priority and protection of interests in any of the foregoing under the laws
of any jurisdiction.

 

“Interim Financial Statements” has the meaning assigned to that term in Section 3.04.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

 

“Inventory”
means finished goods inventory of wet tantalum capacitors owned by Seller
wherever located, including but not limited to in Matamoros, Mexico and
Victoria, Mexico, and all raw materials, components and supplies (except for
maintenance and process consumables) and work-in-progress owned by Seller
wherever located, including but not limited to in Matamoros, Mexico and
Victoria, Mexico, to the extent designated by Seller to make wet tantalum
capacitors including, without limitation, the Inventory listed in Schedule
1.01(a)(ii) provided that the Inventory listed in Schedule 1.01(a)(ii) shall
be subject to adjustment on account of any changes to such Inventory due to the
operation of the Business by Seller in the ordinary course with the consent,
and in accordance with the instructions of, Buyer on or after Monday, September 15,
2008.

 

“Knowledge” when used with respect to Seller means the actual knowledge
of the persons identified on Schedule 1.01 who have direct
responsibility for the Business of Seller.

 

“Laws” shall mean all federal, state, local or
foreign laws, orders, writs, injunctions, decrees, ordinances, awards,
stipulations, statutes, judicial or administrative doctrines, rules or
regulations enacted, promulgated, issued or entered by a Governmental
Authority.

 

“Liabilities” means any and
all debts, liabilities, losses, claims (including claims based on arrangements
for guaranteed sales), damages, costs, expenses and obligations, whether fixed
or contingent, or mature or unmatured, including, without limitation, those
arising under any law, rule, regulation, order or consent decree of any
governmental entity 

 

 

or any award of any arbitrator of
any kind, and those arising under any Contract, commitment, undertaking or
Action.

 

“Liens” has the meaning
assigned to that term in Section 3.05.

 

“Losses” has the meaning
assigned to that term in Section 6.02(a).

 

“Material Adverse Effect”
means any change or
effect that, taken as a whole, has been or would be reasonably expected to be
materially adverse to the business, assets (including intangible assets),
condition (financial or otherwise) or results of operations of the Business or
the Transferred Assets, whether or not covered by insurance, other than any
event arising out of or relating to (a) any changes in general economic,
business, regulatory or political conditions, including national or
international hostilities, acts of terror or acts of war, or changes therein; (b) any
changes in any applicable Law or Tax laws, rules, or regulations, or
interpretations thereof, or any changes in generally accepted accounting
principles, or interpretations thereof; (c) the execution of this
Agreement or the announcement or consummation of this Agreement or the
transactions contemplated hereby; or (d) compliance with the terms of or
the taking of such action required or contemplated by this Agreement or any
Ancillary Agreement.

 

“Mexican Environmental Law” means the General
Law of the Ecological Equilibrium and the Environmental Protection, its
Regulations and the Applicable Mexican Official Standards.

 

“Non-Compete Period” has
the meaning assigned to that term in Section 5.06.

 

“Other Customer Contracts”
has the meaning assigned to that term in Section 1.06(a).

 

“Permits” means municipal,
state, federal and foreign consents, orders, filings, franchises, permits,
licenses, agreements, waivers and authorizations.

 

“Permitted
Liens” has the meaning assigned to that term in Section 3.05.

 

“Person” includes any
individual, sole proprietorship, partnership, joint venture, trust,
incorporated organization, association, corporation, institution, party, entity
or governmental or regulatory authority.

 

“Purchase Price” has the
meaning assigned to that term in Section 1.04.

 

“Receivables” means trade
accounts receivable due to Seller arising from the sale of Inventory sold from
the Business in the ordinary course prior to the Closing Date.

 

“Retained Liabilities” has
the meaning assigned to that term in Section 1.03.

 

“Seller Indemnified Parties”
has the meaning assigned to that term in Section 6.02(b).

 

 

“Seller Indemnifying Parties”
has the meaning assigned to that term in Section 6.03(a).

 

“Seller’s Cap” has the
meaning assigned to that term in Section 6.04(b).

 

“Tangible Personal Property” means, wherever located, (i) all
manufacturing, production, maintenance, packaging and/or testing, machinery,
equipment (including tooling equipment), tools and spare parts owned by Seller
and used exclusively in the operation of the Business, including without
limitation the tangible assets listed on Schedule 1.01(a)(v) hereto,
(ii) without duplication, the Arco Tangible Assets; and (iii) the
equipment listed on Schedule 1.01(a)(v) hereto that is not used by
Seller exclusively in the operation of the Business.

 

“Tax” means any income, gross receipts,
transfer, gains, sales, use, employment, franchise, profits, property or other
taxes, fees, stamp taxes and duties, all federal, state and local Mexican
taxes, estimated taxes, including but not limited to, value added taxes,
employment and payroll related taxes, add valorem taxes, property taxes and
import/export taxes, assessments or charges of any kind whatsoever (whether
payable directly or by withholding), together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority with respect thereto.

 

“Trademark License Agreement”
has the meaning assigned to that term in Section 1.01(c).

 

“Transferred Agreements” has the meaning assigned to that term
in Section 1.06(b).

 

“Transferred Assets” has the meaning assigned to that term in
Section 1.01.

 

“Transferred Intellectual Property” has the
meaning assigned to that term in Section 1.01(a)(iv).

 

“Transition Services Agreement” has the meaning
assigned to that term in the Recitals.

 

“Vishay Intellectual Property” has the meaning
assigned to that term in Section 5.08.

 

 

EXHIBIT B

 

Form of
Trademark License Agreement

 

 

TRADEMARK
LICENSE AGREEMENT

 

This Trademark License Agreement (this “Agreement”) is
entered into and effective as of this 15th day of September, 2008 by
and between KEMET ELECTRONICS CORPORATION, a Delaware corporation (“Owner”) and
VISHAY INTERTECHNOLOGY, INC., a Delaware corporation (“User”)(collectively, the
“Parties”).

 

RECITALS

 

A.                                   Owner is the owner of the trademarks set
forth on Exhibit A in those certain countries set forth in Exhibit A,
which trademarks are used in connection with a variety of products, including,
but not limited to, wet tantalum capacitors (collectively, the “Marks”), and
has used and continues to use the Marks to brand wet tantalum capacitors.

 

B.                                     User is purchasing certain assets related
to the wet tantalum capacitors business of Owner pursuant to that certain Asset
Purchase Agreement of even date (the “Purchase Agreement”) and will receive
certain services pursuant to that certain Transition Services Agreement of even
date (the “Services Agreement”) from Licensor related to the transition of the
ownership and use of assets purchased pursuant to the Purchase Agreement.

 

C.                                     User desires to manufacture, distribute
and sell wet tantalum capacitors and User desires to use the Marks to brand wet
tantalum capacitors.

 

D.                                    Owner wishes to license the use of the
Marks to User on the terms and conditions of this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and
of the mutual promises hereinafter set forth, and of other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties agree as follows:

 

1.                                       Grant of License. 
Owner grants to User a world-wide exclusive, royalty-free, limited,
license to use the Marks on and in connection with the types of wet tantalum
capacitor products listed on Exhibit B hereto and on technical data
sheets, web pages, and other sales and marketing materials for such products,
subject to the terms and conditions of this Agreement (the “License”).  User may transfer or sublicense the License
to a person that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, User (User’s “Affiliates”);
provided, however, that use by any of User’s Affiliates will be deemed use by
User hereunder and User shall be liable for the User’s Affiliates’ compliance
herewith.

 

2.                                       Ownership of Marks.

 

a.             User
acknowledges the ownership of the Marks in Owner, agrees that it will do
nothing to challenge such ownership and that all use of the Marks by User
hereunder shall inure 

 

 

to the benefit of and be
on behalf of Owner, and agrees to assist Owner in recording this Agreement with
appropriate government authorities, if any, at Owner’s expense.  User agrees that nothing in this Agreement
shall give User any right, title or interest in the Marks other than as
expressly set forth in this Agreement and User agrees that it will not attack
the title of Owner to the Marks.

 

b.             User
agrees to notify Owner of any unauthorized use of the Marks by others promptly
after it comes to User’s attention. 
Owner shall have the sole right and discretion to bring infringement or
unfair competition proceedings involving the Marks.

 

3.                                       Intentionally omitted.

 

4.                                       Quality Control.

 

a.             User
agrees that the nature and quality of (i) all services rendered by User in
connection with the Marks, (ii) all goods sold by User under the Marks,
and (iii) all related advertising, promotional and other related uses of
the Marks by User shall conform to standards set by Owner as set forth in Exhibit C
and reasonably amended from time to time by Owner.  User agrees to cooperate with Owner in
facilitating Owner’s control of such quality and to provide Owner with access
to available specimens of all uses of the Marks upon reasonable request.  User shall comply with all applicable laws
and regulations and obtain all necessary government approvals pertaining to
User’s sale, distribution and advertising of goods and services covered by this
Agreement.

 

b.             User
agrees to use the Marks in the form and manner and with appropriate legends as
prescribed in Exhibit C and reasonably amended from time to time by Owner,
and not use any other trademark or service mark in combination with the Marks,
other than the trademarks and service marks of User, without prior written
approval of Owner.

 

5.                                       Indemnification.

 

a.             User
agrees to defend, indemnify and hold harmless Owner and its officers,
directors, members, shareholders, employees and representatives from, in
respect of and against any and all claims, losses, liabilities, expenses (including,
without limitation, reasonable attorneys’ fees and disbursements), judgments,
damages, demands, lawsuits or similar actions or proceedings (“Claims”) for
trademark infringement, dilution or unfair competition arising in any of the
countries in which Owner possesses rights as set forth in Exhibit A in the
Marks from User’s use of the Marks in a manner that is not authorized in this
Agreement, except to the extent Owner had notice of any asserted third party
rights prior to the effective date of this Agreement (a “User Claim”).  Owner agrees to notify User within a
reasonable time after it receives notice of any User Claim and User shall
promptly assume Owner’s defense thereof. 
Owner shall have the right to participate in the defense of any User Claim
with counsel of its choosing and at Owner’s expense.  Any settlement which affects the Marks or
otherwise contains a remedy other than the payment of money damages by User
(which in any way impacts upon Owner) must be approved in writing in advance by
Owner, which approval shall not be unreasonably withheld.

 

 

b.             Owner
agrees to defend, indemnify and hold harmless User and its officers, directors,
members, shareholders, employees and representatives from, in respect of and
against any and all Claims for trademark infringement, dilution or unfair
competition arising out of User’s authorized use of the Marks pursuant to this
Agreement or arising out of or related to the operation of Owner’s business in
connection with the Marks (an “Owner Claim”). 
User agrees to notify Owner within a reasonable time after it receives
notice of any Owner Claim and Owner shall promptly assume User’s defense
thereof.  User shall have the right to
participate in the defense of any Owner Claim with counsel of its choosing and at
User’s expense.  Owner shall have sole
discretion in the settlement of any Owner Claim except that any impact upon
User must be approved in writing in advance by User, which approval shall not
be unreasonably withheld.

 

c.             The
obligations of indemnification under this Section 5 shall survive
termination of this Agreement for six years from the termination date.

 

6.                                       Term and Termination.

 

a.             This
Agreement shall commence on the date first written above and shall terminate on
the two year anniversary of this Agreement (the “Term”).

 

b.             Either
Party has the right, on written notice to the other, to terminate this
Agreement if the other Party files a petition in bankruptcy, or is adjudicated
a bankrupt, or if a petition in bankruptcy is filed against it and is not
dismissed within 60 days, or if it becomes insolvent, or makes an assignment
for the benefit of creditors, or files a petition or otherwise seeks relief
under or pursuant to any federal or state bankruptcy, insolvency or
reorganization statute or procedure, or if a custodian, receiver or trustee is
appointed for it or a substantial portion of its business or assets (and such
receivership is not discharged within 60 days thereafter).

 

c.             Either
Party may terminate this Agreement following 45 days’ advance written notice to
the other Party specifying a material breach of this Agreement if the material
breach remains uncured at the end of the 45 day period.

 

d.             Upon
termination of this Agreement, User agrees, within 30 days, to discontinue all
trademark use, other than Fair Use, of the Marks, and any term confusingly
similar thereto, and, to delete the same from its corporate or business name,
and to provide reasonable cooperation, at Owner’s expense, to Owner or its
appointed agent in Owner’s application to the appropriate authorities to cancel
recording of this Agreement from all government records.  All rights in the Marks and the good will
connected therewith shall remain the property of the Owner.  “Fair Use” shall have the meaning as provided
under the trademark laws of the applicable jurisdiction.

 

7.                                       Limitation of Liability.  NEITHER
PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, INCIDENTAL, INDIRECT,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OF ANY KIND WHETHER BASED IN
CONTRACT, 

 

 

TORT, OR OTHERWISE, EVEN IF IT IS ADVISED OF OR AWARE OF THE
POSSIBILITY OF SUCH DAMAGES.

 

8.                                       Intentionally
omitted.

 

9.                                       General.

 

a.             Assignment.  User may not assign, delegate, or transfer
this Agreement or any of its rights or duties hereunder, without the prior
written consent of Owner (which consent shall not be unreasonably withheld),
except to User’s Affiliates or except in the event that User is required by any
governmental authority to transfer assets obtained under the Purchase
Agreement.  Any attempted assignment or
delegation in violation of this section shall be void.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties, their successors and
permitted assigns.

 

b.             Governing Law.  This Agreement shall be governed by the laws
of the State of New York applicable to a contract executed and performed in
such state (other than its conflicts of law principles).

 

c.             Independent Contractors.  In performing their respective duties under
this Agreement, each of the parties will be operating as an independent
contractor. Nothing contained herein will in any way constitute any
association, partnership, franchise, or joint venture between the parties
hereto, or be construed to evidence the intention of the parties to establish
any such relationship. Neither Party will have the power to bind the other
Party or incur obligations on the other Party’s behalf without the other Party’s
prior written consent.

 

d.             Modification and Waiver.  No modification to this Agreement, nor any
waiver of any rights, will be effective unless assented to in writing by the
Party to be charged, and the waiver of any breach or default shall not
constitute a waiver of any other right hereunder or any subsequent breach or
default.

 

e.             Notices. 
Notices under
this Agreement shall be in writing and shall be delivered by overnight courier,
delivered personally, or sent by facsimile transmission or electronic mail
(with confirmation of receipt) to the following addresses of the parties or to
such other addresses as may be hereafter designated in writing by the parties:

 

	
  KEMET ELECTRONICS
  CORPORATION

  	
   

  	
  VISHAY INTERTECHNOLOGY,
  INC.

  
	
  2835 KEMET Way

  	
   

  	
  63 Lancaster Avenue

  
	
  Simpsonville, SC 29681

  	
   

  	
  Malvern, PA 19355

  
	
  Attention: R. James
  (“Jamie”) Assaf, Esq.,

  	
   

  	
  Attn: Lior Yahalomi,
  Chief Financial Officer

  
	
  Vice President, General
  Counsel

  	
   

  	
   

  
	
  Fax: 

  	
   

  	
  Fax:(610) 889-2161  

  
	
  Email:
  jammieassaf@kemet.com

  	
   

  	
  Email: Lior.Yahalomi@Vishay.com

  

 

f.              Severability.  If for any reason any provision of this
Agreement shall be held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions of this Agreement shall remain in full
force and effect.

 

 

g.             Entire Agreement.  This Agreement and the exhibits attached
hereto, if any, constitute the entire and exclusive agreement between the
parties hereto with respect to the subject matter hereof and supersede any
prior agreements between the parties with respect to such subject matter.

 

h.             Construction.  Whenever the singular number is
used in this Agreement and when required by the context, the same shall include
the plural and vice versa, and the masculine gender shall include the feminine
and neuter genders and vice versa.

 

i.              Headings.  The headings in this Agreement are inserted
only as a matter of convenience and for reference and in no way define, affect,
limit, or describe the scope or intent of this Agreement.

 

j.              Counterparts.  This Agreement may be executed in
counterparts (including by facsimile), each of which shall be deemed an
original but all of which shall constitute one and the same instrument.

 

Signature
page follows.

 

 

Signature
Page of Trademark License Agreement

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.

 

 

	
   

  	
  KEMET ELECTRONICS

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VISHAY INTERTECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

EXHIBIT C

 

Bill of Sale, Assignment and Assumption Agreements

 

 

BILL OF SALE, ASSIGNMENT AND
ASSUMPTION AGREEMENT

 

This Bill of Sale,
Assignment and Assumption Agreement (this “Agreement”) is made as of September 15,
2008, by and between KEMET Electronics Corporation, a Delaware corporation (the
“Assignor”) and Siliconix Technology C.V., a company organized under the
laws of the Netherlands (the “Company”).

 

PRELIMINARY STATEMENT

 

Under the terms of
that certain Asset Purchase Agreement, dated as of September 15, 2008, by
and among the Assignor and the Company (the “Agreement”), the Company
desires to acquire and purchase and the Assignor desires to assign and transfer
substantially all the assets, and the Assignor desires to assign, and the Company
desires to assume, certain liabilities of the Assignor, for and in
consideration of the consideration contemplated by Section 1.04 of the
Agreement.  Capitalized terms used herein
and not defined shall have the meanings ascribed to them in the Agreement.

 

AGREEMENT

 

The parties, intending to be legally bound, agree as
follows:

 

1.             Sale
and Transfer of Assets. For good and valuable consideration, the receipt,
adequacy and legal sufficiency of which are hereby acknowledged, and as
contemplated by Section 1.01 of the Agreement, the Assignor hereby
conveys, assigns, transfers, grants and delivers to the Company, as of the
Closing Date, all the Assignor’s right, title and interest in and to all the
Transferred Assets; provided, however, that the Assignor does not
hereby sell, transfer, convey, assign and deliver to the Company any of the
Assignor’s right, title or interest in, and to, any Excluded Assets.

 

2.             Assumption
of Liabilities.  Pursuant to Section 1.02
of the Agreement, as of the Closing Date, the Company hereby assumes and agrees
to perform when due the Assumed Liabilities.

 

3.             Further
Actions. The Assignor covenants and agrees to take all commercially
reasonable actions reasonably requested by the Company for the purpose of (a) defending
the conveyance, assignment, transfer, grant and delivery of the Transferred
Assets hereby made against all persons whomsoever, and (b) establishing
the record of the Company’s title to the Transferred Assets, including the
execution and delivery of further instruments of transfer and assignment and
such other actions as the Company may reasonably request to more effectively
transfer and assign to and vest in the Company each of the Transferred
Assets.  In the event that the Assignor
fails to take any action requested by the Company pursuant to this Section 3
within ten (10) days of notice from the Company, the Company may take such
action on behalf of the Assignor for which purpose the Assignor hereby
irrevocably appoints the Company as its attorney-in-fact, which appointment is
coupled with an interest, but such appointment does not permit the Assignor to
incur any monetary obligation on behalf of the Assignor.

 

1

 

4.             Terms
of the Agreement.  The terms of the
Agreement, including but not limited to the representations and warranties of
the Seller relating to the Transferred Assets, are incorporated herein by this
reference and adopted by the Assignor. 
The Assignor acknowledges and agrees that the representations, warranties,
covenants, agreements and indemnities contained in the Agreement shall not be
superseded, merged, enlarged, modified or altered in any way hereby, but shall
remain in full force and effect to the full extent provided therein. In the
event of any conflict or inconsistency between the terms of the Agreement and
the terms hereof, the terms of the Agreement shall govern.

 

5.             Governing Law.  This Agreement shall be construed in
accordance with the laws of the State of New York without reference to the
conflicts of law principle thereof.

 

6.             Counterparts.  This Agreement may be executed in one or more
counterparts (including by facsimile), each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.

 

[Signature on
following pages]

 

2

 

IN WITNESS WHEREOF, the undersigned have
executed this Bill of Sale, Assignment and Assumption Agreement as of the date
first written above.

 

 

	
   

  	
  THE ASSIGNOR

  
	
   

  	
   

  
	
   

  	
  KEMET ELECTRONICS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  THE COMPANY

  
	
   

  	
   

  
	
   

  	
  SILICONIX TECHNOLOGY
  C.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
				

 

1

 

BILL OF SALE, ASSIGNMENT AND
ASSUMPTION AGREEMENT

 

This Bill of Sale,
Assignment and Assumption Agreement (this “Agreement”) is made as of September 15,
2008, by and between Arcotronics Italia S.p.A. (the “Assignor”), a
wholly-owned subsidiary of KEMET Electronics Corporation, a Delaware
corporation (“KEC”) and Siliconix Technology C.V., a company organized
under the laws of the Netherlands (the “Company”).

 

PRELIMINARY STATEMENT

 

Under the terms of
that certain Asset Purchase Agreement, dated as of September 15, 2008, by
and among KEC and the Company (the “Agreement”), the Company desires to
acquire and purchase and the Assignor desires to assign and transfer certain of
Assignor’s assets, and the Assignor desires to assign, and the Company desires
to assume, certain liabilities of the Assignor, for and in consideration of the
consideration contemplated by Section 1.04 of the Agreement.  Capitalized terms used herein and not defined
shall have the meanings ascribed to them in the Agreement.

 

AGREEMENT

 

The parties, intending to be legally bound, agree as
follows:

 

7.             Sale
and Transfer of Assets. For good and valuable consideration, the receipt,
adequacy and legal sufficiency of which are hereby acknowledged, and as
contemplated by Section 1.01 of the Agreement, the Assignor hereby
conveys, assigns, transfers, grants and delivers to the Company, as of the
Closing Date, all the Assignor’s right, title and interest in and to all the
Transferred Assets; provided, however, that the Assignor does not
hereby sell, transfer, convey, assign and deliver to the Company any of the
Assignor’s right, title or interest in, and to, any Excluded Assets.

 

8.             Assumption
of Liabilities.  Pursuant to Section 1.02
of the Agreement, as of the Closing Date, the Company hereby assumes and agrees
to perform when due the Assumed Liabilities.

 

9.             Further
Actions. The Assignor covenants and agrees to take all commercially
reasonable actions reasonably requested by the Company for the purpose of (a) defending
the conveyance, assignment, transfer, grant and delivery of the Transferred
Assets hereby made against all persons whomsoever, and (b) establishing
the record of the Company’s title to the Transferred Assets, including the
execution and delivery of further instruments of transfer and assignment and
such other actions as the Company may reasonably request to more effectively
transfer and assign to and vest in the Company each of the Transferred
Assets.  In the event that the Assignor
fails to take any action requested by the Company pursuant to this Section 3
within ten (10) days of notice from the Company, the Company may take such
action on behalf of the Assignor for which purpose the Assignor hereby
irrevocably appoints the Company as its attorney-in-fact, which appointment is
coupled with an interest, but such appointment does not permit the Assignor to
incur any monetary obligation on behalf of the Assignor.

 

2

 

10.           Terms
of the Agreement.  The terms of the
Agreement, including but not limited to the representations and warranties of
the Seller relating to the Transferred Assets, are incorporated herein by this
reference and adopted by the Assignor. 
The Assignor acknowledges and agrees that the representations,
warranties, covenants, agreements and indemnities contained in the Agreement
shall not be superseded, merged, enlarged, modified or altered in any way
hereby, but shall remain in full force and effect to the full extent provided
therein. In the event of any conflict or inconsistency between the terms of the
Agreement and the terms hereof, the terms of the Agreement shall govern.

 

11.           Governing Law.  This Agreement shall be construed in
accordance with the laws of the State of New York without reference to the
conflicts of law principle thereof.

 

12.           Counterparts.  This Agreement may be executed in one or more
counterparts (including by facsimile), each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.

 

[Signature on
following pages]

 

3

 

IN WITNESS WHEREOF, the undersigned have
executed this Bill of Sale, Assignment and Assumption Agreement as of the date
first written above.

 

 

	
   

  	
  THE ASSIGNOR

  
	
   

  	
   

  
	
   

  	
  ARCOTRONICS ITALIA
  S.P.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  THE COMPANY

  
	
   

  	
   

  
	
   

  	
  SILICONIX TECHNOLOGY
  C.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  On behalf of
  Siliconix incorporated,

  
	
   

  	
   

  	
  member of Vishay
  Siliconix LLC, General

  
	
   

  	
   

  	
  Partner of
  Siliconix Technology C.V.

  

 

1

 

BILL OF SALE, ASSIGNMENT AND
ASSUMPTION AGREEMENT

 

This Bill of Sale,
Assignment and Assumption Agreement (this “Agreement”) is made as of September 15,
2008, by and between Arcotronics Limited (the “Assignor”), a
wholly-owned subsidiary of Arcotronics Italia S.p.A., a wholly-owned subsidiary
of KEMET Electronics Corporation, a Delaware corporation (“KEC”) and
Siliconix Technology C.V., a company organized under the laws of the
Netherlands (the “Company”).

 

PRELIMINARY STATEMENT

 

Under the terms of
that certain Asset Purchase Agreement, dated as of September 15, 2008, by
and among KEC and the Company (the “Agreement”), the Company desires to
acquire and purchase and the Assignor desires to assign and transfer certain of
Assignor’s assets, and the Assignor desires to assign, and the Company desires
to assume, certain liabilities of the Assignor, for and in consideration of the
consideration contemplated by Section 1.04 of the Agreement.  Capitalized terms used herein and not defined
shall have the meanings ascribed to them in the Agreement.

 

AGREEMENT

 

The parties, intending to be legally bound, agree as
follows:

 

13.           Sale
and Transfer of Assets. For good and valuable consideration, the receipt,
adequacy and legal sufficiency of which are hereby acknowledged, and as
contemplated by Section 1.01 of the Agreement, the Assignor hereby
conveys, assigns, transfers, grants and delivers to the Company, as of the
Closing Date, all the Assignor’s right, title and interest in and to all the
Transferred Assets; provided, however, that the Assignor does not
hereby sell, transfer, convey, assign and deliver to the Company any of the
Assignor’s right, title or interest in, and to, any Excluded Assets.

 

14.           Assumption
of Liabilities.  Pursuant to Section 1.02
of the Agreement, as of the Closing Date, the Company hereby assumes and agrees
to perform when due the Assumed Liabilities.

 

15.           Further
Actions. The Assignor covenants and agrees to take all commercially
reasonable actions reasonably requested by the Company for the purpose of (a) defending
the conveyance, assignment, transfer, grant and delivery of the Transferred
Assets hereby made against all persons whomsoever, and (b) establishing
the record of the Company’s title to the Transferred Assets, including the
execution and delivery of further instruments of transfer and assignment and
such other actions as the Company may reasonably request to more effectively
transfer and assign to and vest in the Company each of the Transferred
Assets.  In the event that the Assignor
fails to take any action requested by the Company pursuant to this Section 3
within ten (10) days of notice from the Company, the Company may take such
action on behalf of the Assignor for which purpose the Assignor hereby
irrevocably appoints the Company as its attorney-in-fact, which appointment is
coupled with an interest, but such appointment does not permit the Assignor to
incur any monetary obligation on behalf of the Assignor.

 

2

 

16.           Terms
of the Agreement.  The terms of the
Agreement, including but not limited to the representations and warranties of
the Seller relating to the Transferred Assets, are incorporated herein by this
reference and adopted by the Assignor. 
The Assignor acknowledges and agrees that the representations,
warranties, covenants, agreements and indemnities contained in the Agreement
shall not be superseded, merged, enlarged, modified or altered in any way
hereby, but shall remain in full force and effect to the full extent provided
therein. In the event of any conflict or inconsistency between the terms of the
Agreement and the terms hereof, the terms of the Agreement shall govern.

 

17.           Governing Law.  This Agreement shall be construed in
accordance with the laws of the State of New York without reference to the
conflicts of law principle thereof.

 

18.           Counterparts.  This Agreement may be executed in one or more
counterparts (including by facsimile), each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.

 

[Signature on
following pages]

 

3

 

IN WITNESS WHEREOF, the undersigned have
executed this Bill of Sale, Assignment and Assumption Agreement as of the date
first written above.

 

 

	
   

  	
  THE ASSIGNOR

  
	
   

  	
   

  
	
   

  	
  ARCOTRONICS LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  THE COMPANY

  
	
   

  	
   

  
	
   

  	
  SILICONIX TECHNOLOGY
  C.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  On behalf of
  Siliconix incorporated,

  
	
   

  	
   

  	
  member of Vishay
  Siliconix LLC, General

  
	
   

  	
   

  	
  Partner of
  Siliconix Technology C.V.

  

 

1

 

EXHIBIT D

 

Form of Escrow Agreement

 

2

 

Escrow
Agreement

 

This Escrow Agreement is dated as of September 15,
2008 (the “Agreement”) and is among KEMET Electronics Corporation, a
Delaware corporation (“Seller”), Vishay Intertechnology, Inc., a
Delaware corporation (“Buyer Parent”), and Wells Fargo Bank, National
Association, a national banking association, as escrow agent (the “Escrow
Agent”).

 

WHEREAS, pursuant to the terms of that certain Asset Purchase
Agreement, dated the date hereof (the “Purchase Agreement”), between
Seller and Siliconix Technology C.V., a company organized under the laws of the
Netherlands and a wholly-owned subsidiary of Buyer Parent (“Buyer”),
Buyer Parent has agreed to deliver to the Escrow Agent One Million Five Hundred
Thousand Dollars ($1,500,000) (together with any interest, earnings and income
accrued thereon from time to time, collectively, the “Escrow Amount”).

 

WHEREAS, Buyer Parent is authorized to act on behalf of Buyer
for all purposes of this Agreement.

 

WHEREAS, the Escrow Amount shall be disbursed in accordance
with the terms of this Agreement.

 

NOW, THEREFORE, in consideration of the covenants and
agreements herein contained, and for other good, fair and valuable considerations
and reasonably equivalent value, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, the Escrow Agent , Seller and Buyer
Parent do agree as follows, intending to be legally bound:

 

Section 1.              Establishment of Escrow Account

 

(a)           Buyer Parent, on behalf of Buyer, hereby
deposits with the Escrow Agent via wire transfer of immediately available funds
the sum of One Million Five Hundred Thousand Dollars ($1,500,000) to be held in
escrow by the Escrow Agent.  The Escrow Agent
accepts said sum and agrees to establish and maintain a separate account (the “Escrow
Account”) therefore in its capacity as Escrow Agent pursuant to the terms
of this Agreement.

 

(b)           Seller and Buyer Parent shall each
furnish the Escrow Agent with a completed Form W-9, as applicable.

 

Section 2.              Investments

 

(a)           The Escrow Agent agrees to invest and
reinvest funds in the Escrow Account, but only upon its receipt of joint
written instructions and directions as may from time to time be provided to the
Escrow Agent from Buyer Parent and Seller.

 

(b)           The parties recognize and agree that the
Escrow Agent will not provide supervision, recommendations or advice relating
to either the investment of moneys held in the Escrow Account or the purchase,
sale, retention or other disposition of any permitted investment.

 

3

 

(c)           Interest and other earnings on permitted
investments shall be added to the Escrow Account.  Any loss or expense incurred as a result of
an investment will be borne by the Escrow Account.  In the event that the Escrow Agent does not
receive written direction to invest funds held in the Escrow Account, the
Escrow Agent shall invest such funds in the Wells Fargo Bank Money Market
Deposit Account (MMDA), or a successor or similar fund or account offered by
the Escrow Agent.  Amounts on deposit in
the MMDA are insured up to a total of $100,000 per depositor, per insured bank
(including principal and accrued interest) by the Federal Deposit Insurance Corporation
(FDIC), subject to the applicable rules and regulations of the FDIC.  The parties understand that deposits in the
MMDA are not secured.

 

(d)           The Escrow Agent is hereby authorized to
execute purchases and sales of permitted investments through the facilities of
its own trading or capital markets operations or those of any affiliated
entity.  The Escrow Agent shall send
statements to each of the parties hereto on a monthly basis reflecting activity
in the Escrow Account for the preceding month. 
Although Seller and Buyer Parent each recognizes that it may obtain a
broker confirmation or written statement containing comparable information at
no additional cost, Seller and Buyer Parent hereby agree that confirmations of
permitted investments are not required to be issued by the Escrow Agent for
each month in which a monthly statement is rendered.  No statement need be rendered for the Escrow
Account if no activity occurred for such month.

 

(e)           Seller and Buyer Parent acknowledge and
agree that the delivery of the escrowed property is subject to the sale and
final settlement of permitted investments. 
Proceeds of a sale of permitted investments will be delivered on the
business day on which the appropriate instructions are delivered to the Escrow
Agent if received prior to the deadline for same day sale of such permitted
investments.  If such instructions are
received after the applicable deadline, proceeds will be delivered on the next
succeeding business day.

 

Section 3.              Disbursement of Escrow Account

 

(a)           If Buyer Parent seeks payment from the
Escrow Amount on account of the indemnification obligations of Seller to Buyer
under Article VI of the Purchase Agreement, Buyer Parent shall deliver a
written notice (a “Buyer Parent Claim Notice”) to the Escrow Agent, with
a copy to Seller, stating (i) in reasonable detail the basis for its claim
for payment and (ii) the amount of such claim.

 

(b)           Within three (3) business days of
receipt of the Buyer Parent Claim Notice, the Escrow Agent shall notify the
Seller of receipt of the Buyer Parent Claim Notice, enclosing a copy of such
Buyer Parent Claim Notice.  If within
thirty (30) calendar days (any such period after the deemed receipt of a Buyer
Parent Claim Notice by the Escrow Agent, an “Objection Period”) after the
deemed receipt of the Buyer Parent Claim Notice by Seller, the Escrow Agent has
not received a written statement (any such statement disputing a Buyer Parent
Claim Notice, an “Objection Notice”) from Seller disputing Buyer Parent’s
right to indemnification (or disputing any portion of the claims in Buyer
Parents Claim Notice), the Escrow Agent shall promptly, and in any event within
three (3) business days, pay to Buyer Parent out of the Escrow Amount the
amount specified in the Buyer Parent Claim Notice.

 

4

 

(c)           If, during the Objection Period, Seller
objects to the Buyer Parent Claim Notice as aforesaid, Seller shall send an
Objection Notice to the Escrow Agent, with a copy to Buyer Parent, stating in
reasonable detail the basis for Seller’s objection and the amount of the claim
in the Buyer Parent Claim Notice that it disputes.  Upon receipt of the Seller’s Objection
Notice, the Escrow Agent shall retain the amount of the Buyer Parent Claim
Notice subject to dispute, and shall, in its sole discretion, (x) continue
to hold such amount pending receipt of joint instructions from Buyer Parent and
Seller or a final, non-appealable judgment of a court of competent jurisdiction
or (y) deposit such Escrow Amount with a court of competent
jurisdiction.  Following such time as the
Escrow Agent has deposited the disputed amount with a court of competent
jurisdiction as provided in this Section, the Escrow Agent shall have no further
obligations or responsibilities under this Escrow Agreement, with respect to
the portion of the Escrow Amount deposited with such court.

 

(d)           Within three (3) business days of March 15,
2010, the Escrow Agent shall disburse to Seller any remaining balance of the
Escrow Amount (the “Seller Escrow Balance”), less any amount that is
subject to a pending Buyer Parent Claim Notice as to which an Objection Notice
has been timely received or as to which the Objection Period has not lapsed,
which amount shall continue to be held by the Escrow Agent pursuant to this
Agreement, and less any amount that is subject to a pending Buyer Parent Claim
Notice as to which an Objection Notice has not been timely received and with
respect to which the Objection Period has lapsed, which amount shall be paid to
Buyer Parent.  Following such time as the
Escrow Agent has disbursed the full remaining amount of the Seller Escrow
Balance, the Escrow Agent shall have no further obligations or
responsibilities, with respect to the Escrow Amount, under this Escrow
Agreement.

 

(e)           In the event that the Escrow Agent shall
commence any proceeding to deposit an Escrowed Amount with a court of competent
jurisdiction, Buyer Parent and Seller hereby agree to submit to the personal
jurisdiction of such court and waive any and all rights to contests the
jurisdiction of said court.

 

Section 4.              Concerning the Escrow Agent

 

Notwithstanding any provision contained herein to the
contrary, the Escrow Agent including its officers, directors, employees and
agents, shall:

 

(a)           not be liable for any action taken or
omitted under this Agreement so long as it shall have acted in good faith and
without gross negligence;

 

(b)           have no responsibility to inquire
into or determine the genuineness, authenticity, or sufficiency of any
securities, checks, or other documents or instruments submitted to it in
connection with its duties hereunder;

 

(c)           be entitled to deem the signatories
of any documents or instruments submitted to it hereunder as being those
purported to be authorized to sign such documents or instruments on behalf of
the parties hereto, and shall be entitled to rely upon the genuineness of the
signatures of such signatories without inquiry and without requiring
substantiating evidence of any kind;

 

5

 

(d)           be entitled to refrain from taking
any action contemplated by this Agreement in the event that it becomes aware of
any disagreement between the parties hereto as to any facts or as to the
happening of any contemplated event precedent to such action;

 

(e)           have no responsibility or liability
for any diminution in value of any assets held hereunder which may result from
any investments or reinvestment made in accordance with any provision which may
be contained herein;

 

(f)            be entitled to compensation for its
services hereunder as per Exhibit A attached
hereto, which is made a part hereof, and for reimbursement of its out-of-pocket
expenses including, but not by way of limitation, the fees and costs of
attorneys or agents which it may find necessary to engage in performance of its
duties hereunder, all to be paid by Seller and Buyer Parent, and the Escrow
Agent shall have, and is hereby granted, a prior lien upon any property, cash,
or assets of the Escrow Account, with respect to its unpaid fees, non-reimbursed
expenses and unsatisfied indemnification rights, superior to the interests of
any other persons or entities;

 

(g)           be entitled and is hereby granted the
right to set off and deduct any unpaid fees, non-reimbursed expenses and
unsatisfied indemnification rights from amounts on deposit in the Escrow
Account;

 

(h)           be under no obligation to invest the
deposited funds or the income generated thereby until it has received a Form W-9,
as applicable, from Seller and Buyer Parent, regardless of whether such party
is exempt from reporting or withholding requirements under the Internal Revenue
Code of 1986, as amended;

 

(i)            be, and hereby is, jointly and
severally indemnified and saved harmless by Seller and Buyer Parent from all
losses, liabilities, costs and expenses, including attorney fees and expenses,
which may be incurred by it as a result of its acceptance of the Escrow Account
or arising from the performance of its duties hereunder, unless such losses,
liabilities, costs and expenses shall have been finally adjudicated to have
been primarily caused by the bad faith or gross negligence of the Escrow Agent,
and such indemnification shall survive its resignation or removal, or the
termination of this Agreement;

 

(j)            in the event that (i) any
dispute shall arise between the parties with respect to the disposition or
disbursement of any of the assets held hereunder or (ii) the Escrow Agent
shall be uncertain as to how to proceed in a situation not explicitly addressed
by the terms of this Agreement whether because of conflicting demands by the
other parties hereto or otherwise, be permitted to interplead all of the assets
held hereunder into a court of competent jurisdiction, and thereafter be fully
relieved from any and all liability or obligation with respect to such
interpleaded assets.  The parties hereto
other than the Escrow Agent further agree to pursue any redress or recourse in
connection with such a dispute, without making the Escrow Agent a party to
same;

 

(k)           have only those duties as are
specifically provided herein, which shall be deemed purely ministerial in
nature, and shall under no circumstance be deemed a fiduciary for any of 

 

6

 

the parties to this
Agreement.  The Escrow Agent shall
neither be responsible for, nor chargeable with, knowledge of the terms and
conditions of any other agreement, instrument or document between the other
parties hereto, in connection herewith, including without limitation the
Purchase Agreement.  This Agreement sets forth
all matters pertinent to the escrow contemplated hereunder, and no additional
obligations of the Escrow Agent shall be inferred from the terms of this
Agreement or any other Agreement.  IN NO
EVENT SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (i) DAMAGES,
LOSSES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN
DAMAGES, LOSSES OR EXPENSES WHICH HAVE BEEN FINALLY ADJUDICATED TO HAVE
DIRECTLY RESULTED FROM THE ESCROW AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT,
OR (ii) SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR LOSSES OF ANY KIND
WHATSOEVER (INCLUDING WITHOUT LIMITATION LOST PROFITS), EVEN IF THE ESCROW
AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND
REGARDLESS OF THE FORM OF ACTION;

 

(l)            have the right, but not the
obligation, to consult with counsel of choice and shall not be liable for
action taken or omitted to be taken by Escrow Agent either in accordance with
the advice of such counsel or in accordance with any opinion of counsel to
Seller addressed and delivered to the Escrow Agent; and

 

(m)          have the right to perform any of its
duties hereunder through its agents, attorneys, custodians or nominees.

 

Any banking association
or corporation into which the Escrow Agent may be merged, converted or with
which the Escrow Agent may be consolidated, or any corporation resulting from
any merger, conversion or consolidation to which the Escrow Agent shall be a
party, or any banking association or corporation to which all or substantially all
of the corporate trust business of the Escrow Agent shall be transferred, shall
succeed to all the Escrow Agent’s rights, obligations and immunities hereunder
without the execution or filing of any instrument or any further act, deed or
conveyance on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.

 

Section 5.              Attachment of Escrow Account;
Compliance with Legal Orders

 

In the event that any
escrow property shall be attached, garnished or levied upon by any court order,
or the delivery thereof shall be stayed or enjoined by an order of a court, or
any order, judgment or decree shall be made or entered by any court order
affecting the property deposited under this Agreement, the Escrow Agent is
hereby expressly authorized, in its sole discretion, to obey and comply with
all writs, orders or decrees so entered or issued, which it is advised by legal
counsel of its own choosing is binding upon it, whether with or without
jurisdiction, and in the event that the Escrow Agent obeys or complies with any
such writ order or decree it shall not be liable to any of the parties hereto
or to any other person, firm of corporation, by reason of such compliance
notwithstanding such writ, order or decree by subsequently reversed, modified,
annulled, set aside or vacated.

 

7

 

Section 6.              Tax Matters

 

(a)           Reporting of Income.  The
Escrow Agent shall report to the Internal Revenue Service (the “IRS”),
as of each calendar year-end, and to Seller, all income earned from the
investment of any sum held in the Escrow Account against Seller, as and to the
extent required under the provisions of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder (the “Code”).

 

(b)           Preparations and Filing of Tax Returns.  The
Seller is required to prepare and file any and all income or other tax returns
applicable to the Escrow Account with the IRS and all required state and local
departments of revenue in all years income is earned in any particular tax year
to the extent required under the provisions of the Code.

 

(c)           Payment of Taxes.  Any
taxes payable on income earned from the investment of any sums held in the
Escrow Account shall be paid by Seller, whether or not the income was
distributed by the Escrow Agent during any particular year and to the extent
required under the provisions of the Code.

 

(d)           Unrelated Transactions.  The
Escrow Agent shall have no responsibility for the preparation and/or filing of
any tax or information return with respect to any transactions, whether or not
related to the Agreement, that occurs outside the Escrow Account.

 

Section 7.              Resignation or Removal of Escrow
Agent

 

The Escrow Agent may
resign as such following the giving of thirty (30) calendar days prior written
notice to the other parties hereto. 
Similarly, the Escrow Agent may be removed and replaced following the
giving of thirty (30) days prior written notice to the Escrow Agent by the
other parties hereto.  In either event,
the duties of the Escrow Agent shall terminate (30) days after receipt of such
notice (or as of such earlier date as may be mutually agreeable); and the
Escrow Agent shall then deliver the balance of the moneys or assets then in its
possession to a successor escrow agent as shall be appointed by the other
parties hereto as evidenced by a written notice filed with the Escrow Agent.

 

If the other parties
hereto have failed to appoint a successor prior to the expiration of thirty
(30) calendar days following receipt of the notice of resignation or removal,
the Escrow Agent may appoint a successor or petition any court of competent
jurisdiction for the appointment of a successor escrow agent or for other
appropriate relief, and any such resulting appointment shall be binding upon
all of the parties hereto.

 

Section 8.              Termination

 

This Agreement shall
terminate on the earlier of (a) the date upon which the Escrow Amount is
fully and finally disbursed in accordance with Section 3 above, or (b) the
date which the Escrow Agent receives a letter, in a form substantially similar
to that attached hereto as Exhibit B,
signed on behalf of Seller and Buyer Parent by authorized representatives
thereof, and the investments held in the Escrow Account are disbursed pursuant
thereto.

 

8

 

Section 9.              Notices

 

Any notice, consent or request to be given in
connection with any of the terms or provisions of this Agreement shall be in
writing and be given in person, by facsimile transmission, courier delivery
service or by mail, and shall become effective (a) on delivery if given in
person, (b) on the date of delivery if sent by facsimile or by courier
delivery service, or (c) four business days after being deposited in the
mail, with proper postage for first-class registered or certified mail,
prepaid.

 

Notices shall be
addressed as follows:

 

(i)                                     if to Seller:

 

KEMET
Electronics Corporation 

2835 KEMET Way 

Simpsonville, SC 29681 

Tel:  (864) 963-6300
 Fax: (954) 766-2805

Attention:  R. James (“Jamie”)
Assaf, Esq., Vice President, General Counsel

 

with a copy to:

 

Wyche Burgess Freeman &
Parham, P.A.

44  East Camperdown Way

Greenville,
SC 29601-3512

Fax: (864) 235-8900

Attn:  Carl F. Muller, Esq.

 

 

(ii)                                  if to Buyer Parent:

 

Vishay Intertechnology, Inc.

63 Lancaster Avenue

Malvern, PA  19355 

Tel:  (610) 644-1300

Fax:  (610) 889-2161

Attn:  Lior Yahalomi, Chief Financial
Officer

 

with a
copy to:

 

Kramer Levin Naftalis &
Frankel LLP

1177 Avenue of the Americas 

New York, New York 10036

Tel:  (212) 715-9100

Fax: (212) 715-8000

Attn:  Abbe L. Dienstag, Esq.

 

9

 

(iii)                               if to the Escrow Agent:

 

Wells Fargo Bank,
National Association

230 W. Monroe Street

Corporate Trust Dept.; 29th
Floor

Chicago, IL 60606

Tel:  (312) 726-2137

Fax: (312) 726-2158

Attn:  Timothy P. Martin

 

Section 10.            Governing Law, Counterparts

 

This Agreement shall be construed in accordance with
the laws of the State of Illinois.  It
may be executed in several counterparts, each one of which shall constitute an
original and all collectively shall constitute but on instrument.

 

Section 11.            Amendment, Modification or Waiver

 

This Agreement may be amended or modified and any term
of this Agreement may be waived if such amendment, modification or waiver is in
writing and signed by all parties.

 

Section 12.            Assignments of Interests

 

No assignment of the interest of any of the parties
hereto shall be binding upon the Escrow Agent unless and until written notice
of such assignment shall be filed with and acknowledged by the Escrow Agent.

 

10

 

IN WITNESS WHEREOF, the
parties have duly executed this Escrow Agreement as of the date first above
written.

 

 

	
   

  	
  KEMET Electronics Corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Vishay
  Intertechnology, Inc.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Wells Fargo Bank, National
  Association,

  as Escrow Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Its:

  	
   

  

 

11

 

EXHIBIT A

 

SCHEDULE OF ESCROW
AGENT FEES

 

Annual Charge                                   $

 

Any out-of-pocket expenses, or extraordinary fees or
expenses such as attorney’s fees or messenger costs, are additional and are not
included in the above schedule.

 

These fees cover a full year, or any part thereof, and
thus are not prorated in the year of termination.  The annual fee is billed in advance and
payable prior to that year’s service.

 

12

 

EXHIBIT B

 

           ,
20   

 

Wells Fargo Bank,
National Association

230 W. Monroe Street

29th Floor,
Corporate Trust Dept.

Chicago, IL 60606

Attn: Timothy P. Martin

 

Re:                               Escrow Account No.                   
among

KEMET Electronics
Corporation, Vishay Intertechnology, Inc. and Wells Fargo Bank, National
Association, as Escrow Agent (the “Escrow Agent”)

 

Please sell all
investments held in the Escrow Account and distribute the full balance and
proceeds thereof by (wire transfer) (cashier’s check) to
                                    
(if wire transfer – name of bank, bank’s ABA number, customer’s name and
account number for credit) or as                                      
shall otherwise direct.

 

 

	
   

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KEMET Electronics
  Corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Vishay
  Intertechnology, Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
								

 

13

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