Document:

Exhibit 4.1

 

 

REGISTRATION RIGHTS AGREEMENT

 

 

by and among

 

 

KEMET Corporation,

 

the guarantors party hereto,

 

 

and

 

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated, and

Deutsche Bank Securities Inc.

 

 

Dated as of March 27, 2012

 

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made and entered into as of March 27, 2012, by and among KEMET Corporation, a Delaware corporation (the “Company”), the guarantors party hereto (the “Guarantors”) and Merrill, Lynch, Pierce, Fenner & Smith Incorporated and Deutsche Bank Securities Inc. (collectively, the “Initial Purchasers”), each of whom has agreed to purchase pursuant to the Purchase Agreement (as defined below) $110,000,000 aggregate principal amount of the Company’s 101⁄2% Senior Notes due 2018 (the “Initial Notes”) which are fully and unconditionally guaranteed by the Guarantors (the “Guarantees”).  The Initial Notes and the Guarantees attached thereto are herein collectively referred to as the “Initial Securities.”  Merrill, Lynch, Pierce, Fenner & Smith Incorporated has agreed to act as representative of the several Initial Purchasers (the “Representative”) in connection with the offering and sale of the Initial Securities.

 

This Agreement is made pursuant to the Purchase Agreement, dated March 22, 2012 (the “Purchase Agreement”), among the Company, the Guarantors and the Initial Purchasers (i) for the benefit of the Initial Purchasers and (ii) for the benefit of the holders from time to time of the Initial Securities, including the Initial Purchasers.  In order to induce the Initial Purchasers to purchase the Initial Securities, the Company has agreed to provide the registration rights set forth in this Agreement.  The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers as set forth in Section 5(f) of the Purchase Agreement.

 

The parties hereby agree as follows:

 

SECTION 1.             Definitions.  As used in this Agreement, the following capitalized terms shall have the following meanings:

 

Additional Interest:  As defined in Section 5 hereof.

 

Advice:  As defined in the last paragraph of Section 6 hereof.

 

Broker-Dealer:  Any broker or dealer registered with the Commission under the Exchange Act.

 

Business Day:  Any day other than a Saturday, Sunday or U.S. federal holiday or a day on which banking institutions or trust companies located in New York, New York are authorized or obligated to be closed.

 

Closing Date:  The date of this Agreement.

 

Commission:  The Securities and Exchange Commission.

 

Consummate:  A registered Exchange Offer shall be deemed “Consummated” for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Securities to be issued in the Exchange Offer, (ii) the maintenance of such Registration Statement as being continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof and (iii) the delivery by the Company to the Registrar under the Indenture of Exchange Securities in the same aggregate principal amount as the aggregate principal amount of Transfer Restricted Securities that were validly tendered and not withdrawn by Holders thereof pursuant to the Exchange Offer prior to the expiration thereof.

 

 

Exchange Act:  The Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder.

 

Exchange Offer:  An offer registered under the Securities Act by the Company and the Guarantors pursuant to a Registration Statement pursuant to which the Company offers the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for Exchange Securities in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders.

 

Exchange Offer Registration Statement:  The Registration Statement relating to the Exchange Offer, including the related Prospectus.

 

Exchange Securities:  The 101⁄2% Senior Notes due 2018, of the same series under the Indenture as the Initial Notes, and the Guarantees attached thereto, to be issued to Holders in exchange for Transfer Restricted Securities pursuant to this Agreement.

 

Existing Exchange Securities:  The 101⁄2% Senior Notes due 2018, of the same series under the Indenture as the Existing Securities, which were issued to Holders in accordance with the terms of the Registration Rights Agreement, dated as of May 5, 2010.

 

Existing Securities:  The Company’s 101⁄2% Senior Notes due 2018 and the related guarantees thereof issued on May 5, 2010 under the Indenture.

 

FINRA:  Financial Industry Regulatory Authority, Inc., an independent regulatory organization.

 

Holders:  As defined in Section 2(b) hereof.

 

Indemnified Holder:  As defined in Section 8(a) hereof.

 

Indenture:  The Indenture, dated as of May 5, 2010, by and among the Company, the Guarantors and Wilmington Trust Company, in its capacity as trustee (the “Trustee”) and in its capacity as collateral agent, pursuant to which the Securities are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof.

 

Initial Notes: As defined in the preamble hereto.

 

Initial Placement:  The issuance and sale by the Company of the Initial Securities to the Initial Purchasers pursuant to the Purchase Agreement.

 

Initial Purchasers:  As defined in the preamble hereto.

 

Initial Securities:  As defined in the preamble hereto.

 

Interest Payment Date:  As defined in the Indenture and the Securities.

 

Person:  An individual, partnership, corporation, limited liability company, trust or unincorporated organization or other legal entity, or a government or agency or political subdivision thereof.

 

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Prospectus:  The prospectus included in a Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such prospectus.

 

Registration Default:  As defined in Section 5 hereof.

 

Registration Statement:  Any Exchange Offer Registration Statement or Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein.

 

Securities:  The Initial Securities and the Exchange Securities.

 

Securities Act:  The Securities Act of 1933, as amended, including the rules and regulations promulgated thereunder.

 

Shelf Filing Deadline:  As defined in Section 4(a) hereof.

 

Shelf Registration Statement:  As defined in Section 4(a) hereof.

 

Suspension Period: As defined in the final paragraph of Section 6 hereof.

 

Transfer Restricted Securities:  Each (i) Initial Security, until the earliest to occur of (a) the date on which such Initial Security is exchanged in the Exchange Offer for an Exchange Security entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Securities Act, (b) the date on which such Initial Security has been effectively registered under the Securities Act and disposed of in accordance with a Shelf Registration Statement, (c) the date on which such Initial Security is actually sold pursuant to Rule 144 (or any similar rule then in effect other than Rule 144A) under the Securities Act and (d) the date such Initial Security ceases to be outstanding and (ii) Exchange Security issued to a Broker Dealer until the date on which such Exchange Security is distributed by a Broker-Dealer pursuant to the “Plan of Distribution” contemplated by the Exchange Offer Registration Statement (including delivery of the Prospectus contained therein).

 

Trust Indenture Act:  The Trust Indenture Act of 1939, as amended, including the rules and regulations promulgated thereunder.

 

Underwritten Registration or Underwritten Offering:  A registration in which securities of the Company are sold to an underwriter for reoffering to the public.

 

SECTION 2.             Securities Subject to this Agreement.

 

(a)           Transfer Restricted Securities.  The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities.

 

(b)           Holders of Transfer Restricted Securities.  A Person is deemed to be a holder of Transfer Restricted Securities (each, a “Holder”) whenever such Person owns Transfer Restricted Securities.

 

SECTION 3.             Registered Exchange Offer.

 

(a)           Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures set forth in Section 6(a) hereof have been complied with), each of the Company

 

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and the Guarantors shall (i) use its commercially reasonable efforts to cause to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 120 days after the Closing Date (or if such 120th day is not a Business Day, the next succeeding Business Day) (such date, the “Filing Date”), a Registration Statement under the Securities Act relating to the Exchange Securities and the Exchange Offer, (ii) use its commercially reasonable efforts to cause such Registration Statement to become effective as promptly as possible, (iii) in connection with the foregoing, file (A) all pre-effective amendments to such Registration Statement as may be necessary in order to cause such Registration Statement to become effective, (B) if applicable, a post-effective amendment to such Registration Statement pursuant to Rule 430A under the Securities Act and (C) cause all necessary filings in connection with the registration and qualification of the Exchange Securities to be made under the state securities or blue sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer and (iv) upon the effectiveness of such Registration Statement, commence the Exchange Offer.  The Exchange Offer shall be on the appropriate form permitting registration of the Exchange Securities to be offered in exchange for the Transfer Restricted Securities and to permit resales of Initial Securities held by Broker-Dealers as contemplated by Section 3(c) hereof.

 

(b)           If an Exchange Offer Registration Statement is required to be filed by the Company pursuant to Section 3(a) above, the Company and the Guarantors shall cause the Exchange Offer Registration Statement to be effective continuously and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days after the date notice of the Exchange Offer is mailed to Holders.  The Company shall cause the Exchange Offer to comply with all applicable federal and state securities laws.  No securities other than the Exchange Securities shall be included in the Exchange Offer Registration Statement.  Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures set forth in Section 6(a) hereof have been complied with), the Company shall use its commercially reasonable efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 180 days after the Closing Date (or if such 180th day is not a Business Day, the next succeeding Business Day).

 

(c)           The Company shall indicate in a “Plan of Distribution” section contained in the Prospectus forming a part of the Exchange Offer Registration Statement that any Broker-Dealer who holds Initial Securities that are Transfer Restricted Securities and that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Company), may exchange such Initial Securities pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an “underwriter” within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the Exchange Securities received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement.  Such “Plan of Distribution” section shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such “Plan of Distribution” shall not name any such Broker-Dealer or disclose the amount of Initial Securities held by any such Broker-Dealer except to the extent required by the Commission.

 

If an Exchange Offer Registration Statement is required to be filed by the Company pursuant to Section 3(a) above, each of the Company and the Guarantors shall use its commercially reasonable efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) hereof to the extent necessary to ensure that it is available for resales of Initial Securities acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this

 

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Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period ending on the earlier of (i) 180 days from the date on which the Exchange Offer Registration Statement is declared effective and (ii) the date on which a Broker-Dealer is no longer required to deliver a prospectus in connection with market-making or other trading activities.

 

The Company shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such 180-day (or shorter as provided in the foregoing paragraph) period in order to facilitate such resales.

 

SECTION 4.             Shelf Registration.

 

(a)           Shelf Registration.  If (i) the Company is not required to file an Exchange Offer Registration Statement or permitted to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy (after the procedures set forth in Section 6(a) hereof have been complied with), (ii) for any reason the Exchange Offer is not Consummated within 180 days after the Closing Date (or if such 180th day is not a Business Day, the next succeeding Business Day), or (iii) with respect to any Holder of Transfer Restricted Securities, such Holder notifies the Company prior to the 20th calendar day following the Consummation of the Exchange Offer that: (A) such Holder is prohibited by applicable law or Commission policy from participating in the Exchange Offer, (B) such Holder may not resell the Exchange Securities acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder, or (C) such Holder is a Broker-Dealer and holds Initial Securities acquired directly from the Company or one of its affiliates, then, upon such Holder’s request, the Company and the Guarantors shall:

 

(x)           cause to be filed a shelf registration statement pursuant to Rule 415 under the Securities Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the “Shelf Registration Statement”), on or prior to the later of (i) 120 days following the Closing Date (or if such 120th day is not a Business Day, the next succeeding Business Day) and (ii) 90 days after such filing obligation arises (or if such 90th day is not a Business Day, the next succeeding Business Day (such date being the “Shelf Filing Deadline”)) (provided, however, that except where the Company is not required to file an Exchange Offer Registration Statement because the Exchange offer is not permitted by applicable law or Commission policy, no obligation to file a Shelf Registration Statement shall accrue until after the Exchange Offer Registration Statement has been filed), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities as to which the Holders thereof shall have provided the information required pursuant to Section 4(b) hereof; and

 

(y)           use their commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective by the Commission on or before the 180th day after such filing obligation arises (or if such 180th day is not a Business Day, the next succeeding Business Day).

 

Each of the Company and the Guarantors shall use its commercially reasonable efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Initial Securities by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years following the effective date of such Shelf Registration Statement (or shorter period that will terminate when all the Initial Securities covered by such Shelf Registration Statement have been sold pursuant to such Shelf Registration Statement or are otherwise no longer Transfer Restricted Securities).

 

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(b)           Provision by Holders of Certain Information in Connection with the Shelf Registration Statement.  No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 10 Business Days after receipt of a request therefor, such information as the Company may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein.  Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading.

 

SECTION 5.             Additional Interest.  If (i) the Company and the Guarantors fail to file with the Commission any of the Registration Statements required by this Agreement on or prior to the date specified for such filing in this Agreement, (ii) any Shelf Registration Statement required by this Agreement has not been declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement, (iii) the Company and the Guarantors fail to Consummate the Exchange Offer within 270 days of the Closing Date or (iv) any Registration Statement required by this Agreement is filed and declared effective but thereafter ceases to be effective or usable in connection with resales or exchanges, as applicable, of Transfer Restricted Securities during the periods required under this Agreement without being succeeded immediately by a post-effective amendment to such Registration Statement that cures such failure and that is itself immediately declared effective (each such event referred to in clauses (i) through (iv), a “Registration Default”), as liquidated damages for such Registration Default, the Company hereby agrees that the interest rate borne by the Transfer Restricted Securities shall be increased by 0.25% per annum during the first 90-day period immediately following the occurrence of any Registration Default and shall increase by 0.25% per annum at the end of each subsequent 90-day period (such increases, “Additional Interest”), but in no event shall such increases exceed 1.00% per annum in the aggregate.  Any amounts of Additional Interest due pursuant to this Section 5 will be paid in cash on the relevant Interest Payment Date to Holders of record of Transfer Restricted Securities on the relevant regular record date.  As of the earlier of (x) the cure of all Registration Defaults relating to any particular Transfer Restricted Securities and (y) the particular Transfer Restricted Securities having ceased to be Transfer Restricted Securities, the accrual of Additional Interest shall cease and the interest rate borne by the relevant Transfer Restricted Securities will be reduced to the original interest rate borne by such Transfer Restricted Securities; provided, however, that, if after any such reduction in interest rate, a different Registration Default occurs, the interest rate borne by the relevant Transfer Restricted Securities shall again be increased pursuant to the foregoing provisions.  Additional Interest will accrue and be payable only with respect to a single Registration Default at any given time, notwithstanding the fact that multiple Registration Defaults may exist at such time.  The accrual of Additional Interest shall be the sole and exclusive remedy available to the Holders of Transfer Restricted Securities for any Registration Default, and a Registration Default shall not constitute a default under the Indenture.

 

All obligations of the Company and the Guarantors set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full.

 

SECTION 6.             Registration Procedures.

 

(a)           Exchange Offer Registration Statement.  In connection with the Exchange Offer, the Company and the Guarantors shall comply with all of the applicable provisions of Section 6(c) hereof, shall use their commercially reasonable efforts to effect such exchange to permit the sale of Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof and shall comply with all of the following provisions.  As a condition to its participation in the Exchange

 

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Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Company, prior to the Consummation thereof, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate (within the meaning of Rule 405 under the Securities Act) of the Company, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any Person to participate in, a distribution (within the meaning of the Securities Act) of the Exchange Securities to be issued in the Exchange Offer and (C) it is acquiring the Exchange Securities in its ordinary course of business.  In addition, all such Holders of Transfer Restricted Securities shall otherwise cooperate in the Company’s preparations for the Exchange Offer.  Each Holder will be required to acknowledge and agree that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission’s letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters, and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of Exchange Securities obtained by such Holder in exchange for Transfer Restricted Securities acquired by such Holder directly from the Company.

 

(b)           Shelf Registration Statement.  In connection with any Shelf Registration Statement required by this Agreement, each of the Company and the Guarantors shall comply with all the provisions of Section 6(c) hereof and shall use its commercially reasonable efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto each of the Company and the Guarantors will, within the time periods required by Section 4(a)(x), prepare and file with the Commission a Shelf Registration Statement relating to the registration on any appropriate form under the Securities Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof.

 

(c)           General Provisions.  In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Transfer Restricted Securities by Broker-Dealers), each of the Company and the Guarantors shall:

 

(i)      use its commercially reasonable efforts to keep such Registration Statement continuously effective and provide all requisite financial statements (including, if required by the Securities Act or any regulation thereunder, financial statements of the Guarantors for the period specified in Section 3 or 4 hereof, as applicable) upon the occurrence of any event that would cause any such Registration Statement, or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company shall file promptly an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use its commercially reasonable efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter;

 

(ii)     prepare and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep such Registration

 

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Statement effective for the applicable period set forth in Section 3 or 4 hereof, as applicable, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold or otherwise cease to be Transfer Restricted Securities; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus;

 

(iii)    during the applicable period set forth in Section 3 or 4 hereof, advise the underwriter(s) or Broker-Dealer(s) who have requested copies of the Prospectus included in any Registration Statement, if any, and selling Holders named in any Shelf Registration Statement promptly and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to such Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to such Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in such Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in such Registration Statement or the Prospectus in order to make the statements therein (with respect to the Prospectus, in light of the circumstances under which they were made) not misleading.  If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or blue sky laws, each of the Company and the Guarantors shall use its commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest possible time;

 

(iv)    furnish without charge to each of the Initial Purchasers, each selling Holder named in any Shelf Registration Statement, and each of the underwriter(s), if any, five Business Days before filing with the Commission, copies of any Shelf Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the reasonable review and comment of such Holders and underwriter(s) in connection with such sale, if any, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which an Initial Purchaser of Transfer Restricted Securities covered by such Registration Statement or the underwriter(s), if any, shall reasonably object in writing within five Business Days after the receipt thereof (such objection to be deemed timely made upon confirmation of telecopy transmission within such period).  The objection of an Initial Purchaser, a Holder, or underwriter, if any, shall be deemed to be reasonable if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission.  This clause (iv) shall not apply to any filing by the Company or the Guarantors of any annual

 

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report on Form 10-K, quarterly report on Form 10-Q or Current Report on Form 8-K with respect to matters unrelated to the Transfer Restricted Securities and the offering thereof or exchange therefor;

 

(v)     in the case of a Shelf Registration Statement, make available at reasonable times for inspection by the Initial Purchasers, the managing underwriter(s), if any, participating in any disposition pursuant to such Registration Statement and any attorney or accountant retained by such Initial Purchasers or any of the underwriter(s), all financial and other records, pertinent corporate or limited liability company documents, as applicable, and properties of each of the Company and the Guarantors and cause the Company’s and the Guarantors’ officers, directors and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration Statement subsequent to the filing thereof and prior to its effectiveness, or any post-effective amendment thereto, and to participate in meetings with investors to the extent reasonably requested by the managing underwriter(s), if any;

 

(vi)    if reasonably requested by any selling Holder named in a Shelf Registration Statement or the underwriter(s), if any, promptly incorporate in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information relating to the “Plan of Distribution” of the Transfer Restricted Securities, information with respect to the principal amount of Transfer Restricted Securities being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment;

 

(vii)   use commercially reasonable efforts to cause the Transfer Restricted Securities covered by the Registration Statement to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of Initial Securities covered thereby or the underwriter(s), if any;

 

(viii)  in the case of a Shelf Registration Statement, furnish to each Initial Purchaser, each selling Holder and the underwriter(s), if any, without charge, at least one copy of the Shelf Registration Statement, as first filed with the Commission, and of each amendment thereto, including financial statements and schedules, all documents incorporated by reference therein (upon request) and all exhibits (including exhibits incorporated therein by reference), which requirements shall be deemed satisfied through the filing with the Commission on EDGAR;

 

(ix)    deliver to each selling Holder and each of the underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; each of the Company and the Guarantors hereby consents to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto;

 

(x)     to the extent the offering under the Shelf Registration Statement is an Underwritten Registration, enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in Underwritten Registrations of debt securities similar to the Initial Securities, as may be appropriate under the circumstances), and make such customary representation

 

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sentations and warranties, and take all such other actions, all to such extent as may be reasonably requested by any Initial Purchaser or by any Holder of Transfer Restricted Securities or underwriter in connection with any sale or resale pursuant to any Shelf Registration Statement contemplated by this Agreement; and whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, each of the Company and the Guarantors shall:

 

(A)          furnish to each Initial Purchaser, each selling Holder and each underwriter, if any, in such substance and scope as they may reasonably request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the effectiveness of the Shelf Registration Statement:

 

(1)           a certificate, dated the date of effectiveness of the Shelf Registration Statement, signed by (y) the Chairman of the Board of Directors, the Chief Executive Officer, the President or any Vice President and (z) a principal financial or accounting officer of each of the Company and the Guarantors, confirming, as of the date thereof, matters similar to those set forth in Section 5(e) of the Purchase Agreement and such other matters as such parties may reasonably request;

 

(2)           an opinion, dated the date of effectiveness of the Shelf Registration Statement, of counsel for the Company and the Guarantors, covering matters similar to those set forth in Section 5(c) of the Purchase Agreement; and

 

(3)           a customary comfort letter, dated the date of effectiveness of the Shelf Registration Statement, from the Company’s independent accountants, in the customary form and covering matters of the type customarily requested to be covered in comfort letters by underwriters in connection with primary underwritten offerings, and covering or affirming matters similar to those set forth in the comfort letters delivered pursuant to Section 5(a) of the Purchase Agreement, without exception;

 

(B)          set forth in full or incorporate by reference in the underwriting agreement, if any, the indemnification provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and

 

(C)          deliver such other documents and certificates as may be reasonably requested by the Initial Purchasers, the underwriters, if any, and the Holders of a majority in aggregate principal amount of Initial Securities to evidence compliance with Section 6(c)(x)(A) hereof and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company or any of the Guarantors pursuant to this Section 6(c)(x), if any.

 

If at any time the representations and warranties of the Company and the Guarantors contemplated in Section 6(c)(x)(A)(1) hereof cease to be true and correct, the Company or the Guarantors shall so advise the Initial Purchasers and the underwriter(s), if any, and each selling Holder promptly;

 

(xi)          prior to any public offering of Transfer Restricted Securities, use commercially reasonable efforts to cause the registration and qualification of the Transfer Restricted Securities under the state securities or blue sky laws of such jurisdictions as the selling Holders or underwriter(s),

 

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if any, may reasonably request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Shelf Registration Statement; provided, however, that neither the Company nor the Guarantors shall be required to register or qualify as a foreign entity where it is not then so qualified or to take any action that would subject it to service of process in suits or to taxation in any jurisdiction where it is not then so subject;

 

(xii)         shall issue, upon the request of any Holder of Initial Securities covered by the Shelf Registration Statement, Exchange Securities having an aggregate principal amount equal to the aggregate principal amount of Initial Securities surrendered to the Company by such Holder in exchange therefor or being sold by such Holder; such Exchange Securities to be registered in the name of such Holder or in the name of the purchaser(s) of such Securities, as the case may be; in return, the Initial Securities held by such Holder shall be surrendered to the Company for cancellation;

 

(xiii)        in the case of a Shelf Registration Statement, cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request, at least two Business Days prior to any sale of Transfer Restricted Securities made by such Holders or underwriter(s);

 

(xiv)        use its commercially reasonable efforts to cause the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in Section 6(c)(xi) hereof;

 

(xv)         if any fact or event contemplated by Section 6(c)(iii)(D) hereof shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein in light of the circumstances under which they were made not misleading;

 

(xvi)        provide a CUSIP number for all Securities not later than the effective date of the Registration Statement covering such Securities and provide the Trustee under the Indenture with printed certificates for such Securities which are in a form eligible for deposit with the Depository Trust Company and take all other action necessary to ensure that all such Securities are eligible for deposit with the Depository Trust Company. The Company and the Guarantors shall use commercially reasonable efforts to cause the Existing Exchange Securities and the Exchange Securities to have the same CUSIP number;

 

(xvii)       cooperate and assist in any filings required to be made with the FINRA and in the performance of any due diligence investigation by any underwriter (including any “qualified independent underwriter” as defined within the rules and regulations of the FINRA) that is required to be retained in accordance with the rules and regulations of the FINRA;

 

(xviii)      otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as

 

11

 

soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 under the Securities Act (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm commitment or best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of such Registration Statement;

 

(xix)        [Reserved.];

 

(xx)         cause all Securities covered by such Registration Statement to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed if requested by the Holders of a majority in aggregate principal amount of Initial Securities or the managing underwriter(s), if any; and

 

(xxi)        provide promptly to each Holder upon request each document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act, which requirement shall be deemed satisfied upon filing with the Commission on EDGAR.

 

Notwithstanding the foregoing, the Company may suspend the offering and sale under the Shelf Registration Statement (the “Suspension Period”) for a period or periods if (i) the board of directors reasonably determines that the continued use of such Registration Statement would (A) require the Company to make a public disclosure of material non-public information, which disclosure in the good faith judgment of the board of directors of the Company (1) would be required to be made in such Registration Statement so that such Registration Statement would not be materially misleading and (2) would not be required to be made at such time but for the continued use of such Registration Statement or (B) would in the good faith and judgment of the board of directors of the Company be expected to have a material adverse effect on the Company or its business or on the Company’s ability to effect a planned or proposed acquisition, disposition, financing, reorganization, recapitalization or similar transaction and (ii) the Company notifies the underwriters, if any, and the Holders of Transfer Restricted Securities within five days after the board of directors makes the relevant determination set forth in clause (i); provided that the period or periods of suspension under clause (i) above shall not exceed, in the aggregate, 90 days in any twelve-month period during which the Shelf Registration Statement is required to be effective. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof or any Suspension Period, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof, or until it is advised in writing (the “Advice”) by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus.  If so directed by the Company, each Holder will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice.  In the event the Company shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(iii)(D) hereof or notice of any Suspension Period to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof or shall have received the Advice; provided, however, that no such extension shall be taken into account in determining whether Additional Interest is due pursuant to Section 5 hereof or the amount of such Additional Interest, it being agreed that the Company’s option to suspend use of a

 

12

 

Registration Statement pursuant to this paragraph shall be treated as a Registration Default for purposes of Section 5 hereof.

 

SECTION 7.             Registration Expenses.

 

(a)           All expenses incident to the Company’s and the Guarantors’ performance of or compliance with this Agreement will be borne by the Company and the Guarantors, jointly and severally, regardless of whether a Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees and expenses (including filings made by any Initial Purchaser or Holder with the FINRA (and, if applicable, the fees and expenses of any “qualified independent underwriter” and its counsel that may be required by the rules and regulations of the FINRA)); (ii) all fees and expenses of compliance with federal securities and state securities or blue sky laws; (iii) all expenses of printing (including printing certificates for the Exchange Securities to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all reasonable fees and disbursements of counsel for the Company and the Guarantors, and, subject to Section 7(b) hereof, the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing the Exchange Securities on a securities exchange or automated quotation system pursuant to the requirements thereof; and (vi) all fees and disbursements of independent certified public accountants of the Company and the Guarantors (including the expenses of any special audit and comfort letters required by or incident to such performance).

 

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

 

Notwithstanding the foregoing, the Holders of Transfer Restricted Securities being registered shall pay all agency fees and commissions and underwriting discounts and commissions, if any, and transfer taxes, if any, attributable to the sale of such Transfer Restricted Securities, and the fees and disbursements of any counsel or other advisors or experts retained by such Holders (severally or jointly), other than the counsel and experts specifically referred to above or below.

 

(b)           In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Company and the Guarantors, jointly and severally, will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities being tendered in the Exchange Offer and/or resold pursuant to the “Plan of Distribution” contained in the Exchange Offer Registration Statement or registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel for the Holders of Transfer Restricted Securities and the Initial Purchasers, who shall be Cahill Gordon & Reindel LLP or such other counsel as may be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared.

 

SECTION 8.             Indemnification.

 

(a)           The Company and the Guarantors, jointly and severally, agree to indemnify and hold harmless (i) each Holder and (ii) each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any Holder (any of the Persons referred to in this clause (ii) being hereinafter referred to as a “controlling person”) and (iii) the respective officers, directors, partners, employees, representatives and agents of any Holder or any controlling person (any Person referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an “Indemnified Holder”), to the fullest

 

13

 

extent lawful, from and against any and all losses, claims, damages, liabilities, judgments, actions and expenses (including, without limitation, and as incurred, reimbursement of all reasonable costs of investigating, preparing, pursuing, settling, compromising, paying or defending any claim or action, or any investigation or proceeding by any governmental agency or body, commenced or threatened, including the reasonable fees and expenses of counsel to any Indemnified Holder), joint or several, directly or indirectly caused by, related to, based upon, arising out of or in connection with any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (or any amendment or supplement thereto), or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, not misleading, except insofar as such losses, claims, damages, liabilities or expenses are caused by an untrue statement or omission or alleged untrue statement or omission that is made in reliance upon and in conformity with information relating to any of the Holders furnished in writing to the Company by any of the Holders expressly for use therein.  This indemnity agreement shall be in addition to any liability which the Company or any of the Guarantors may otherwise have.

 

In case any action or proceeding (including any governmental or regulatory investigation or proceeding) shall be brought or asserted against any of the Indemnified Holders with respect to which indemnity may be sought against the Company or the Guarantors, such Indemnified Holder (or the Indemnified Holder controlled by such controlling person) shall promptly notify the Company and the Guarantors in writing; provided, however, that the failure to give such notice shall not relieve any of the Company or the Guarantors of its obligations pursuant to this Agreement except to the extent they are prejudiced (through the forfeiture of substantive rights or defenses) by such failure.  Such Indemnified Holder shall have the right to employ not more than one counsel of its own choosing in any such action and the reasonable and documented fees and expenses of such counsel shall be paid, as incurred, by the Company and the Guarantors, subject to the limitations on the Company’s and the Guarantors’ indemnification obligations set forth in the preceding paragraph.  The Company and the Guarantors shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for such Indemnified Holders, which firm shall be designated by the Holders.  The Company and the Guarantors shall be liable for any settlement of any such action or proceeding effected with the Company’s and the Guarantors’ prior written consent, which consent shall not be withheld unreasonably, and each of the Company and the Guarantors agrees to indemnify and hold harmless any Indemnified Holder from and against any loss, claim, damage, liability or expense by reason of any settlement of any action effected with the written consent of the Company and the Guarantors. The Company and the Guarantors shall not, without the prior written consent of each Indemnified Holder, settle or compromise or consent to the entry of judgment in or otherwise seek to terminate any pending or threatened action, claim, litigation or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not any Indemnified Holder is a party thereto), unless such settlement, compromise, consent or termination includes an unconditional release of each Indemnified Holder from all liability arising out of such action, claim, litigation or proceeding.

 

(b)           Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantors and their respective directors and officers who sign a Registration Statement, and any Person controlling (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company or any of the Guarantors, and the respective officers, directors, partners, employees, representatives and agents of each such Person, to the same extent as the foregoing indemnity from the Company and the Guarantors to each of the Indemnified Holders, but only with respect to claims and actions based on information relating to such Holder furnished in writing by such Holder expressly for use in any Registration Statement.  In case any action or proceeding shall be brought against the Company, the Guarantors or their respective directors or officers or any such controlling

 

14

 

person in respect of which indemnity may be sought against a Holder of Transfer Restricted Securities, such Holder shall have the rights and duties given to the Company and the Guarantors, and the Company, the Guarantors and their respective directors and officers and such controlling person shall have the rights and duties given to each Holder by the preceding paragraph.

 

(c)           If the indemnification provided for in this Section 8 is unavailable to an indemnified party under Section 8(a) or (b) hereof (other than by reason of exceptions provided in those Sections) in respect of any losses, claims, damages, liabilities, judgments, actions or expenses referred to therein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors, on the one hand, and the Holders, on the other hand, from the Initial Placement (which in the case of the Company and the Guarantors shall be deemed to be equal to the total net proceeds (before deducting expenses) to the Company and the Guarantors from the Initial Placement), the amount of Additional Interest which did not become payable as a result of the filing of the Registration Statement resulting in such losses, claims, damages, liabilities, judgments actions or expenses, and such Registration Statement, or if such allocation is not permitted by applicable law, the relative fault of the Company and the Guarantors, on the one hand, and the Holders, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations.  The relative fault of the Company and the Guarantors, on the one hand, and of the Indemnified Holder, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or any of the Guarantors, on the one hand, or the Indemnified Holders, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The amount paid or payable by a party as a result of the losses, claims, damages, liabilities or expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 8(a) hereof, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.

 

The Company, the Guarantors and each Holder of Transfer Restricted Securities agree that it would not be just and equitable if contribution pursuant to this Section 8(c) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph.  The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 8, none of the Holders (and its related Indemnified Holders) shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total discount received by such Holder with respect to the Initial Securities exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.  The Holders’ obligations to contribute pursuant to this Section 8(c) are several in proportion to the respective principal amount of Initial Securities held by each of the Holders hereunder and not joint.

 

SECTION 9.             Rule 144A.  Each of the Company and the Guarantors hereby agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding, to make available to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any

 

15

 

prospective purchaser of such Transfer Restricted Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A under the Securities Act.

 

SECTION 10.          Participation in Underwritten Registrations.  No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder’s Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements.

 

SECTION 11.          Selection of Underwriters.  The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering.  In any such Underwritten Offering, the investment banker(s) and managing underwriter(s) that will administer such offering will be selected by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering; provided, however, that such investment banker(s) and managing underwriter(s) must be reasonably satisfactory to the Company.

 

SECTION 12.          Miscellaneous.

 

(a)           Remedies.  Each of the Company and the Guarantors hereby agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate.

 

(b)           No Inconsistent Agreements.  Each of the Company and the Guarantors will not on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.  Other than the Registration Rights Agreement, dated as of November 1, 2006, by and among the Company, Credit Suisse Securities (USA) LLC, and Deutsche Bank Securities Inc., neither the Company nor any of the Guarantors has previously entered into any agreement granting any registration rights with respect to its debt securities to any Person.  The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company’s or any of the Guarantors’ securities under any agreement in effect on the date hereof.

 

(c)           Adjustments Affecting the Securities.  The Company will not take any action, or permit any change to occur, with respect to the Initial Securities that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer.

 

(d)           Amendments and Waivers.  The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Company has (i) in the case of Section 5 hereof and this Section 12(d)(i), obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding any Transfer Restricted Securities held by the Company or its Affiliates).  Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to such Exchange Offer may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities being tendered or registered; provided, however, that, with respect to any matter that directly or indirectly affects the rights of any Initial

 

16

 

Purchaser hereunder, the Company shall obtain the written consent of each such Initial Purchaser with respect to which such amendment, qualification, supplement, waiver, consent or departure is to be effective.

 

(e)           Notices.  All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), facsimile or air courier guaranteeing overnight delivery:

 

(i)            if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Trustee under the Indenture; and

 

(ii)           if to the Company:

 

	
 
    	
KEMET Corporation
    
	
 
    	
2835 KEMET Way
    
	
 
    	
Simpsonville, South Carolina 29681
    
	
 
    	
Facsimile: (864) 228-4161
    
	
 
    	
Attention: Chief Financial Officer
    
	
 
    	
 
    
	
With a copy to:
    
	
 
    	
 
    
	
 
    	
Kirkland & Ellis LLP
    
	
 
    	
300 North LaSalle Street
    
	
 
    	
Chicago, Illinois 60654
    
	
 
    	
Facsimile: (312) 862-2200
    
	
 
    	
Attention: H. Kurt von Moltke, P.C.
    

 

All such notices and communications shall be deemed to have been duly given:  at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if sent by facsimile; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery.

 

Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture.

 

(f)            Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without limitation, and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder.

 

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

 

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

 

17

 

(i)            Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW RULES THEREOF.

 

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

 

(k)           Entire Agreement.  This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Transfer Restricted Securities.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

(l)            Waiver of Jury Trial.  EACH OF THE PARTIES HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

[Signature Pages Follow]

 

18

 

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

 

	
 
    	
KEMET   CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William M. Lowe, Jr.
    
	
 
    	
 
    	
Name:   
    	
William   M. Lowe, Jr.
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President and
    
	
 
    	
 
    	
 
    	
Chief   Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
Guarantors:
    
	
 
    	
 
    
	
 
    	
KEMET   Electronics Corporation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William M. Lowe, Jr.
    
	
 
    	
 
    	
Name:   
    	
William   M. Lowe, Jr.
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President and
    
	
 
    	
 
    	
 
    	
Chief   Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
KEMET   Foil Manufacturing, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Steve Lane
    
	
 
    	
 
    	
Name:   
    	
Steve   Lane
    
	
 
    	
 
    	
Title:
    	
Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
KEMET   Services Corporation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Conrado Hinojosa
    
	
 
    	
 
    	
Name:   
    	
Conrado   Hinojosa
    
	
 
    	
 
    	
Title:
    	
President
    

 

[Registration Rights Agreement]

 

 

	
 
    	
KRC   Trade Corporation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William M. Lowe, Jr.
    
	
 
    	
 
    	
Name:   
    	
William   M. Lowe, Jr.
    
	
 
    	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
The   Forest Electric Company
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles C. Meeks, Jr.
    
	
 
    	
 
    	
Name:   
    	
Charles   C. Meeks, Jr.
    
	
 
    	
 
    	
Title:
    	
President
    

 

[Registration Rights Agreement]

 

 

The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written:

 

MERRILL LYNCH, PIERCE, FENNER & SMITH

INCORPORATED

Acting on behalf of itself and as the

Representative of the several Initial Purchasers

 

By:         Merrill Lynch, Pierce, Fenner & Smith

Incorporated

 

	
By:
    	
/s/   W. H. Pegler, Jr.
    	
 
    
	
 
    	
Name:   
    	
W.   H. Pegler, Jr.
    	
 
    
	
 
    	
Title:
    	
Managing   Director
    	
 
    

 

[Registration Rights Agreement]Exhibit 10.36

 

SUPREME INDUSTRIES, INC.

OWNERSHIP TRANSACTION INCENTIVE PLAN

 

This SUPREME INDUSTRIES, INC. OWNERSHIP TRANSACTION INCENTIVE PLAN (the “Plan”) was adopted by the Board of Directors of  SUPREME INDUSTRIES, INC., a Delaware corporation (the “Company”), effective as of October 25, 2011 (the “Effective Date”).

 

ARTICLE 1

PURPOSE

 

The purpose of the Plan is to advance the interests of the Company and its stockholders and motivate and retain certain key employees in order to maximize the proceeds received in a potential Change of Control by providing these key employees with certain bonus opportunities in the event a Change of Control occurs.  This Plan is intended to be compliant with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations or other applicable guidance issued thereafter, including, without limitation, Treas. Reg. section 1.409A-3(i)(5)(iv)(A).

 

ARTICLE 2

DEFINITIONS

 

For the purpose of the Plan, unless the context requires otherwise, the following terms shall have the meanings indicated:

 

2.1           “Base Price” means the amount established by the Board, in its sole discretion, as the base measurement price with respect to a share of Common Stock for purposes of determining the Value in connection with a Change of Control.  The “Base Price” may be the Fair Market Value, or any other amount established by the Board, provided, however, in no event may the Base Price be less than the Base Price established for the first grant made pursuant to the Plan.

 

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

 

2.3           “Cause” for termination means “cause” as defined in any employment agreement then in effect between the Company and the Participant, or if no such agreement is in effect (or cause is not defined in such agreement), then (i) the Participant’s breach or violation of a material term of this Agreement or other agreement to which the Participant and the Company are parties (including the Disclosure and Invention Agreement), which the Participant failed to cure within thirty (30) days after receiving written notice detailing the allegations from the Board; (ii) the Participant’s material failure or refusal to perform his or her job duties or responsibilities, which the Participant failed to cure within thirty (30) days after receiving written notice from the Board (or the board of directors of any Subsidiary); (iii) the Participant’s gross negligence, willful misconduct, willful breach of fiduciary duty, dishonesty, fraud, embezzlement or theft, which the Company, in its sole discretion, consider materially damaging to, or which materially discredits, the Company; and (iv) the Participant’s conviction, commission, or plea of nolo contendere to any felony or other crime involving dishonesty or moral turpitude.  Upon the giving of notice of termination of the Participant’s employment for Cause, the Company shall have no further obligation or liability to the Participant hereunder.

 

2.4           “Change of Control”  means a change in (i) the Company’s ownership; or (ii) the ownership of a substantial portion of its assets, as follows:

 

 

(i)            Change in Ownership.  A change in ownership of the Company occurs on the date that any “Person” (as defined in paragraph (iii) below), other than (1) the current stockholders of the Company or their respective Affiliates, (2) the Company or any of its subsidiaries; (3) a trustee or other fiduciary holding securities either on behalf of a current stockholder or pursuant to an employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates; or (4) an underwriter temporarily holding stock pursuant to an offering of such stock, acquires ownership (either directly, or indirectly through application of the attribution of stock ownership rules described in Treasury Regulation §1.409A-3(i)(5)(iii)) of the Company’s stock that, together with stock held by such Person, constitutes more than 50% of the total fair market value or total voting power of the Company’s stock (including, Common Stock and any other equity securities then outstanding).  However, if any Person is considered to own already more than 50% of the total fair market value or total voting power of the Company’s stock (either directly or indirectly through application of the attribution of stock ownership rules described in Treasury Regulation §1.409A-3(i)(5)(iii)), the acquisition of additional stock by the same Person is not considered to be a Change of Control; or

 

(ii)           Change in Ownership of Substantial Portion of Assets.  A change in the ownership of a substantial portion of the Company’s assets occurs on the date that a Person acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person) total assets of the Company (including the stock of its consolidated subsidiaries), that have a total gross fair market value equal to at least 80% of the total gross fair market value of all of the Company’s assets (including the stock of its consolidated subsidiaries) immediately before such acquisition or acquisitions.  However, there is no Change of Control when there is such a transfer to an entity that is controlled by the current stockholders of the Company immediately after the transfer, through a transfer to (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock; (2) an entity, at least 50% of the total value or voting power of the stock of which is owned, directly or indirectly, by the Company; (3) a Person that owns directly or indirectly, at least 50% of the total value or voting power of the Company’s outstanding stock; or (4) an entity, at least 50% of the total value or voting power of the stock of which is owned by a Person that owns, directly or indirectly, at least 50% of the total value or voting power of the Company’s outstanding stock.

 

(iii)          For purposes of paragraphs (i) and (ii):

 

(1)           “Person” would have the meaning given in Section 7701(a)(1) of the Code.  Person would include more than one Person acting as a group as defined by the Final Treasury Regulations issued under Section 409A of the Code.

 

(2)           “Affiliate” would have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Securities Exchange Act of 1934, as amended.

 

Notwithstanding the foregoing, a Change of Control shall not be deemed to include any equity financing of the Company, or the transactions contemplated thereby or executed in connection therewith (including but not limited to preferred stock equity financings with venture capital operating companies)..

 

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

 

2.6           “Committee” shall have the meaning given to such term in Section 3.1 below.

 

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2.7           “Common Stock” means all classes of common stock of the Company which the Company is currently authorized to issue or may in the future be authorized to issue (including, without limitation, the Class A and Class B common stock).

 

2.8           “Company” means Supreme Industries, Inc., a Delaware corporation, and any successor entity thereto.

 

2.9           “Employee” means a common law employee (as defined in accordance with the Regulations and Revenue Rulings then applicable under Section 3401(c) of the Code) of any Employer.

 

2.10         “Employer” means the Company or its Subsidiaries.

 

2.11         “Fair Market Value” means (i) for purposes of the establishing the Base Price, the fair market value of a share of Common Stock as determined by the Committee in good faith, from time to time, by any reasonable means; and (ii) for purposes of establishing the Value in connection with a Change of Control, the per share of Common Stock fair market value of the consideration received by the Company (or the stockholders).

 

2.12         “Incentive Payment” means the compensation awarded by the Committee to a Participant in connection with a Change of Control in accordance with Section 5.2 below.

 

2.13         “Incentive Pool” means the aggregate number of shares of Common Stock outstanding immediately prior to a Change of Control, multiplied by the sum of (i) 7% multiplied by any Value up to $5.00, plus (ii) 8% multiplied by any Value above $5.00 and less than or equal to $7.00, plus (iii) 9% multiplied by Value above $7.00.  By way of example, if the Common Stock’s Base Price is equal to $2.50 on the effective date of the Plan, and, a Change of Control occurs where the Common Stock is sold for $9.00 per share, then the Incentive Pool shall be equal to the number of  shares of all Common Stock outstanding on the date of the Change of Control multiplied by $.52 (which is the sum of (i) 7% multiplied by $2.50 (the Value up to $5.00); (ii) 8% multiplied by $2.00 (the Value between $5.00 and $7.00) and (iii) 9% multiplied by $2.00 (the Value over $7.00)).

 

2.14         “Incentive Pool Percentage”  means the percentage of the Incentive Pool allocated to each Employee.  The Incentive Pool Percentage for certain Participants shall be as set forth on Exhibit A hereto.  The remaining 12.0% of the Incentive Pool may be allocated by the Committee among those Employees it designates as Participants; provided that in the event any portion of this percentage remains unallocated as of a Change of Control, then the unallocated portion shall be reallocated on a pro rata basis among the Participants employed as of the date of the Change of Control.  Further, in the event a Participant forfeits his or her Incentive Pool Percentage prior to a Change of Control, and the Committee has not reallotted such Incentive Pool Percentage by the date of such Change of Control, then such forfeited Incentive Pool Percentage shall be reallocated pro rata to all of the Participants employed as of the date of the Change of Control.

 

2.15         “Participant” means those Employees set forth on Exhibit A and any other Employee who satisfies the eligibility requirements of Article 4 of the Plan and who is selected by the Committee to participate in the Plan.

 

2.16         “Permanent Disability” means, a Participant meets one of the following requirements: (A) the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (B) the Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to

 

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last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.  The Company, at its own option and expense, may retain a physician to confirm the existence of such incapacity or disability, and the determination of such physician shall be binding upon the Company and the Participant.

 

2.17         “Plan” means this Supreme Industries, Inc. Ownership Transaction Incentive Plan, as amended from time to time.

 

2.18         “Subsidiary” means (i) any corporation in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing a majority of the total combined voting power of all classes of stock in one of the other corporations in the chain, (ii) any limited partnership, if the Company or any corporation described in item (i) above owns a majority of the general partnership interest and a majority of the limited partnership interests entitled to vote on the removal and replacement of the general partner, and (iii) any partnership or limited liability company, if the partners or members thereof are composed only of the Company, any corporation listed in item (i) above or any limited partnership listed in item (ii) above.  “Subsidiaries” means more than one of any such corporations, limited partnerships, partnerships or limited liability companies.

 

2.19         “Termination of Service” means a Participant ceases to serve as an Employee of the Company and its Subsidiaries, for any reason, provided that such cessation constitutes a “separation from service” within the meaning of Section 409A of the Code.

 

2.20         “Value” means, for each Award granted pursuant to this Plan, the difference between (i) the per share value of the total cash proceeds or the per share Fair Market Value of any other consideration received by the Company or the Company’s stockholders in connection with a Change of Control, as determined by the Committee, in its sole discretion, less (ii) the Base Price.

 

ARTICLE 3

 

ADMINISTRATION OF THE PLAN

 

3.1           Committee’s Establishment and Organization.  Subject to the terms of this Article 3, the Plan shall be administered by the Board, or such committee of the Board as is designated by the Board to administer the Plan, which committee shall consist of at least three members (the “Committee”).  If a committee is so designated, any member of the committee may be removed at any time, with or without cause, by resolution of the Board, and any vacancy occurring in the membership of the committee may be filled by appointment of the Board.  At any time there is no committee to administer the Plan, any references in this Plan to the Committee shall be deemed to refer to the Board.  Notwithstanding the foregoing, if at any time there are no longer any Class B shares of common stock outstanding (or the Class B shares of common stock no longer have the authority to elect 2/3rds of the directors on the Board), the Board shall make such provisions as they, in their discretion, deem appropriate to cause one or more persons to exercise the powers of the Committee hereunder, prior to any Change of Control or other event the result of which will be the cessation of control (by virtue of their not constituting a majority of directors) of the Board by the individuals who (x) at the date of this Plan were directors or (y) become directors after the date of this Plan and whose election or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then in office who were directors at the date of this Plan or whose election or nomination for election was previously so approved.

 

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3.2           Committee Action.  At any time there is no committee to administer the Plan, any action of the Board with respect  to the Plan shall be taken in the same fashion as any other Board action, and shall be subject to the same procedural requirements as any other Board action.  In the event a committee is designated by the Board in accordance with Section 3.1, the following shall apply:

 

(i)            A majority of the committee shall constitute a quorum, and the act of a majority of the members of the committee present at a meeting at which a quorum is present shall be the act of the committee;

 

(ii)           Any action taken by the committee may be taken without a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by a majority of the members of the committee; and

 

(iii)          Prompt notice of the taking of any action by members of the committee without a meeting by less than unanimous consent shall be given to the members who did not consent in writing to the action.

 

3.3           Committee’s Powers.  The Committee shall have the power, in its discretion, to take such actions as may be necessary to carry out the provisions and purposes of the Plan and shall have the authority to control and manage the operation and administration of the Plan.  In order to effectuate the purposes of the Plan, the Committee shall have the discretionary power and authority to construe and interpret the Plan, to supply any omissions therein, to reconcile and correct any errors or inconsistencies, to decide any questions in the administration and application of the Plan, and to make equitable adjustments for any mistakes or errors made in the administration of the Plan.  All such actions or determinations made by the Committee, and the application of rules and regulations to a particular case or issue by the Committee, in good faith, shall not be subject to review by anyone, but shall be final, binding and conclusive on all persons ever interested hereunder.

 

In construing the Plan and in exercising its power under provisions requiring the Committee’s approval, the Committee shall attempt to ascertain the purpose of the provisions in question, and when the purpose is known or reasonably ascertainable, the purpose shall be given effect to the extent feasible.  Likewise, the Committee is authorized to determine all questions with respect to the individual rights of all Participants under this Plan (which need not be identical), including, but not limited to, all issues with respect to eligibility.  The Committee shall have all powers necessary or appropriate to accomplish its duties under this Plan including, but not limited to, the power and duty to:

 

(i)            designate the employees of the Company and its Subsidiaries who shall participate in the Plan;

 

(ii)           maintain complete and accurate records of all plan transactions and other data in the manner necessary for proper administration of the Plan;

 

(iii)          adopt rules of procedure and regulations necessary for the proper and efficient administration of the Plan, provided the rules and regulations are not inconsistent with the terms of the Plan as set out herein.  The Committee shall exercise its discretion hereunder in a nondiscriminatory manner;

 

(iv)          enforce the terms of the Plan and the rules and regulations it adopts;

 

(v)           review claims and render decisions on claims for benefits under the Plan;

 

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(vi)          furnish the Company or the Participants, upon request, with information that the Company or the Participants may require for tax or other purposes;

 

(vii)         employ agents, attorneys, accountants or other persons (who also may be employed by or represent the Company) for such purposes as the Committee considers necessary or desirable in connection with its duties hereunder; and

 

(viii)        perform any and all other acts necessary or appropriate for the proper management and administration of the Plan.

 

ARTICLE 4

ELIGIBILITY

 

In addition to those Employees set forth on Exhibit A hereto, the Committee may, but shall not be obligated to, select the particular Employees who may be Participants and their respective Incentive Pool Percentages.  In the event a Participant does not vest in the Participant’s Incentive Payment in accordance with the provisions of Article 6, the Committee may, but shall not be obligated to, designate one or more additional Employees as Participants or designate any forfeited Incentive Pool Percentages to the Participants.  Participants may also participate in other incentive or benefit plans of the Company or any Subsidiary, subject to the terms and conditions of such plans.  The compensation payable pursuant to this Plan is in addition to, and not in lieu of, any other compensation, including severance payments, that a Employee may be entitled to pursuant to his or her employment agreement with the Company, or pursuant to any other plan, program or compensation arrangement of the Company.

 

ARTICLE 5

DETERMINATION OF INCENTIVE POOL AND INCENTIVE PAYOUTS

 

5.1           Determination of Incentive Pool.  On the closing date (or, if later, the effective time) of a Change of Control, the Committee shall determine the Value to be received in connection with the Change of Control and shall determine the amount of the Incentive Pool available with respect to such Change of Control.

 

5.2           Determination of Incentive Payments.  Each Participant shall be eligible for an Incentive Payment in an amount equal to the Participant’s Incentive Pool Percentage multiplied by the Incentive Pool approved by the Committee in connection with a Change of Control.

 

5.3           Form and Time of Payment.  Incentive Payments to the Participants under the Plan shall be payable as employee compensation, prior in right to any payment to the Company’s stockholders.  Incentive Payments to the Participants under the Plan shall be payable in the same form (e.g., cash, securities or other property), on the same schedule, and subject to the same terms and conditions, as that of the consideration paid to the Company or, in the case of a transaction described in Section 2.4(i) above, to the Company’s stockholders in connection with the Change of Control; provided that, (i) at the Committee’s election, the Company may pay any amount payable in securities or other property, in cash in lieu thereof, the amount of which shall be equal to the Fair Market Value of such securities or other property (as determined by the Committee); and (ii) a Participant’s Incentive Payment shall be paid no later than the date that is five (5) years from the closing of the Change of Control, as required by Treas. Reg. section 1.409A-3(i)(5)(iv)(A).

 

5.4           Allocation of Amounts to the Incentive Pool. No amounts will be allocated to the Incentive Pool or the Plan until a transaction is consummated and the Committee has determined, in its

 

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sole discretion, that the transaction constitutes a Change of Control and the Committee has determined that amount of the Value.

 

5.5           Committee Discretion.  The Committee shall have the sole authority for valuing the proceeds to be received in a Change of Control transaction for purposes of determining the Value, the Incentive Pool and any Incentive Payments.  The Committee shall utilize such methods as they in their discretion deem appropriate in determining the Value.  The Committee shall have the sole discretion at any time prior to the Vesting Date to increase, but not decrease, the amount of any Incentive Pool Percentage of any Participant prior to the effective date of a Change of Control; provided, however, in the event any Participant fails to vest in accordance with the provisions of Section 6.2, such Participant’s Incentive Pool Percentage shall automatically be reduced to zero.

 

ARTICLE 6

VESTING

 

6.1           No Right to Benefits.  No Participant shall have a right to any benefit under this Plan prior to the date that a determination is made by the Committee that a Change of Control has occurred.

 

6.2           Vesting.  Except as otherwise provided by Section 6.3 below, any Participant who is a current Employee upon the effective date of a Change of Control shall become one hundred percent (100%) vested in his or her Incentive Payment.

 

6.3           Forfeiture.  If a Participant voluntarily resigns employment or is terminated by the Company for Cause prior to a Change of Control, then such Participant shall immediately forfeit any right to receive any Incentive Payment upon his or her Termination of Service.  If a Participant’s employment is terminated without Cause prior to a Change of Control, then his or her Incentive Pool Percentage shall be forfeited on the date that is six (6) months (twelve (12) months with respect to the Company’s Chief Executive Officer) from the date of the Participant’s Termination of Service without Cause.

 

ARTICLE 7

AMENDMENT AND TERMINATION

 

7.1           Term.  The Effective Date of the Plan shall be as of October 25, 2011 and, unless sooner terminated by action of the Board, the Plan will terminate on December 31, 2014 (“Termination Date”); provided, however, the term may be extended by the adoption of a resolution by the Board extending the term prior to the Termination Date.  If the Plan is not extended by the Board, then on the Termination Date, all rights of Participants under this Plan shall terminate, provided, however, than in the event a definitive, legally binding agreement has been entered into by the Company with respect to a Change of Control prior to the Termination Date, then the term of this Plan automatically shall be extended solely with respect to such Change of Control until the closing date of the Change of Control or the termination or revocation of such agreement without the consummation of the Change of Control (as determined by the Board in its sole discretion)(the “Extended Term”), and any Participants holding Incentive Pool Percentages as of the Termination Date shall be entitled to payment pursuant to this Plan upon the closing date of such Change of Control to the extent it closes during the Extended Term.

 

7.2           Amendment and Termination.  The Company may at any time and from time to time amend, in whole or in part, any or all of the provisions of this Plan or terminate the Plan by the adoption of a resolution by the Board, provided, however, that no amendment or termination of this Plan shall, without the consent of the affected Participant, decrease the amount of any Incentive Pool Percentage of the Participant prior to the effective date of a Change of Control.

 

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ARTICLE 8

MISCELLANEOUS PROVISIONS

 

8.1           Non-Assignability.  A Participant may not alienate, assign, pledge, encumber, transfer, sell or otherwise dispose of any rights or benefits awarded hereunder prior to the actual receipt thereof; and any attempt to alienate, assign, pledge, sell, transfer or assign prior to such receipt, or any levy, attachment, execution or similar process upon any such rights or benefits shall be null and void.

 

8.2           No Right to Continue In Employment.  Nothing in the Plan confers upon any employee the right to continue in the employ of the Company or any Subsidiary, or interferes with or restricts in any way the right of the Company and its Subsidiaries to discharge any employee at any time, including without limitation, before or after any Vesting Date.

 

8.3           Indemnification Of Committee.  No member of the Committee nor any director, officer or employee of the Company acting on behalf of the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee and each director, officer or employee of the Company acting on its behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action, determination or interpretation.

 

8.4           No Plan Funding.  The Plan shall at all times be entirely unfunded and no provision shall at any time be made with respect to segregating assets of the Company for payment of any amounts hereunder.  No Participant, beneficiary, or other person shall have any interest in any particular assets of the Company by reason of the right to receive a Performance Bonus under the Plan.  Participants and beneficiaries shall have only the rights of a general unsecured creditor of the Company.

 

8.5           Governing Law.  This Plan shall be construed in accordance with the laws of the State of Delaware and the rights and obligations created hereby shall be governed by the laws of the State of Delaware.

 

8.6           Binding Effect.  This Plan shall be binding upon and inure to the benefit of the Company, its successors and assigns, and the Participants, and their heirs, successors, assigns, and personal representatives.

 

8.7           Construction of Plan.  The captions used in this Plan are for convenience only and shall not be construed in interpreting the Plan.  Whenever the context so requires, the masculine shall include the feminine and neuter, and the singular shall also include the plural, and conversely.

 

8.8           Integrated Plan.  This Plan constitutes the final and complete expression of agreement among the parties hereto with respect to the subject matter hereof.

 

8.9           FMLA Leave.       This Plan shall be administered to comply with the Family and Medical Leave Act of 1993, as amended (“FMLA”).  Any employee of the Company or a Subsidiary who takes leave that satisfies the requirements of the FMLA shall, for purposes of Article 6 only, be considered actively working with the Company or a Subsidiary during such FMLA leave; provided, however, that nothing herein shall be construed to credit such employee with working full time if such employee was not otherwise actually working full time prior to such FMLA leave.

 

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8.10         Accounting of Compensation.  Unless otherwise specifically provided in such benefit plan, any Performance Bonus paid to a Participant hereunder shall not be treated as compensation paid to such Participant for the purposes of any other benefit plan.

 

ARTICLE 9

EFFECT OF THE PLAN

 

Neither the adoption of this Plan nor any action of the Board or the Committee shall be deemed to give any Participant any right to be granted an Incentive Payment or any other rights.  In addition, nothing contained in this Plan and no action taken pursuant to its provisions shall be construed to (a) give any Participant any right to any compensation, except as expressly provided herein; (b) be evidence of any agreement, contract or understanding, express or implied, that the Company or any Subsidiary will employ a Participant in any particular position; (c) give any Participant any right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations hereunder; or (d) create a trust of any kind or a fiduciary relationship between the Company and a Participant or any other person.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company has caused this instrument to be executed as of October 25, 2011, by its Chief Executive Officer pursuant to prior action taken by the Board.

 

	
 
    	
SUPREME INDUSTRIES, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   KIM KORTH
    
	
 
    	
 
    	
Name:   Kim Korth
    
	
 
    	
 
    	
Title:   President and Chief Executive Officer
    

 

Signature Page to OTIP

 

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EXHIBIT A

 

·      Kim Korth (CEO) will receive 24% of the bonus pool.

 

·      Matt Long (CFO) will receive 17.00% of the bonus pool.

 

·      Bob Besse (VP Sales & Marketing) will receive 11.75% of the bonus pool.

 

·      Mike Oium (VP Operations) will receive 11.75% of the bonus pool.

 

·      Tom Beard (VP Systems Management) will receive 11.75% of the bonus pool.

 

·      Jackie Daniels (VP of HR) will receive 11.75% of the bonus pool.

 

·      12% of the bonus pool will be reserved for future grant.

 

Exhibit A to OTIP

 

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