UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported):  August 29, 2014
KEMET Corporation
(Exact name of registrant as specified in its charter)
 
 
 
 
 
Delaware
 
1-15491
 
57-0923789
(State or other
 
(Commission File Number)
 
(IRS Employer
jurisdiction)
 
 
 
Identification No.)
 
 
 
 
 
2835 KEMET Way, Simpsonville, SC
 
29681
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code:  (864) 963-6300
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o            Written communications pursuant to Rule 425 under the Securities Act (17 CRS 230.425)
o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4c))
 






Item 1.01 Entry into a Material Definitive Agreement.
On August 29, 2014, KEMET Electronics Corporation (“KEC”), a subsidiary of KEMET Corporation (“KEMET”), and NEC Corporation (“NEC”) entered into Amendment No. 1 to Option Agreement dated as of August 29, 2014 (“Amendment No. 1”), which amended the Option Agreement dated as of March 12, 2012 (the “Agreement”), between the same parties. The Agreement, among other things, provides a right to KEC to elect to purchase additional shares of NEC TOKIN Corporation’s (“NEC TOKIN”) common stock (the “First Call Option”), or to purchase all of the outstanding shares of NEC TOKIN common stock and NEC TOKIN preferred stock from its other shareholders, NEC and NEC Capital Solutions Limited (“NECAP”), a subsidiary of NEC (the “Second Call Option”). Under certain circumstances, NEC can require KEC to purchase all of the outstanding shares of NEC TOKIN common stock and NEC TOKIN preferred stock from NEC and NECAP (the “Put Option”).
Amendment No. 1 extends the date by which KEC may provide written notice of its election to exercise the First Call Option from August 31, 2014, to April 30, 2015. By providing written notice of the exercise of the First Call Option by April 30, 2015, KEC may also elect to provide written notice of the exercise of the Second Call Option until May 31, 2018. NEC’s indemnity obligations under the Agreement in connection with the exercise of the First Call Option have also been conformed to these dates, and generally will expire 7 months after the closing date of the First Call Option Closing Date, but no later than April 30, 2016. Other than those changes, the terms of the First Call Option and the Second Call Option remain unchanged.
Amendment No. 1 also extends the earliest date when NEC may provide written notice of its election to exercise the Put Option from August 1, 2014, to April 1, 2015. In the event that KEMET issues new debt securities principally to refinance its outstanding 10½% senior notes due 2018 and its currently outstanding credit agreement, including amounts to pay related fees and expenses and to use for general corporate purposes (“Refinancing Notes”), prior to NEC’s delivery of its notification of exercise of the Put Option, then the earliest date NEC may exercise the Put Option is automatically further extended to the day immediately following the final scheduled maturity date of such Refinancing Notes, or in the event such Refinancing Notes are redeemed in full prior to such final scheduled maturity date, then on the day immediately following the date of such full redemption, but in any event beginning no later than November 1, 2019. In that event, the Put Option will expire on October 31, 2023.
Corresponding amendments were made to extend until May 1, 2015, the earliest date that NEC may convert its existing NEC TOKIN preferred stock into NEC TOKIN common stock under the Agreement and the related Stockholders Agreement, dated as of March 12, 2012, by and among KEC, NEC TOKIN and NEC (the “SHA”).
Pursuant to Amendment No. 1, it is expected that NEC TOKIN will repay to NEC on April 30, 2015, solely out of NEC TOKIN’s then-available cash, at least 2 billion Japanese yen of the currently outstanding amount of 25.5 billion Japanese yen of the debt obligation NEC TOKIN owes to NEC, and KEC has agreed to take actions under the SHA to permit that repayment. In no event, however, will KEC or any of its affiliates (other than NEC TOKIN) be required to use, expend or advance any funds to NEC TOKIN in connection with such repayment.
This description of Amendment No. 1 is qualified in its entirety by the text of Amendment No. 1 which is attached hereto as Exhibit 99.1 and incorporated by reference.
This Current Report on Form 8-K does not constitute an offer to sell or buy, nor the solicitation of an offer to sell or buy, any of the securities referred to herein and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful.
Item 9.01     Financial Statements and Exhibits.
(d)    Exhibits

1




Exhibit No.
Description of Exhibit
10.1
Amendment No. 1 to Option Agreement, dated as of August 29, 2014, between KEMET Electronics Corporation and NEC Corporation.
99.1
Press Release, dated September 4, 2014, issued by the Company


2




Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: September 4, 2014
KEMET Corporation
 
 
 
 
 
/s/ WILLIAM M. LOWE, JR.
 
William M. Lowe, Jr.
 
Executive Vice President and
Chief Financial Officer



3





EXHIBIT INDEX

Exhibit No.
Description of Exhibit
10.1
Amendment No. 1 to Option Agreement, dated as of August 29, 2014, between KEMET Electronics Corporation and NEC Corporation.
99.1
Press Release, dated September 4, 2014, issued by the Company


4


EX10.1 NEC TOKIN Option Amendment


AMENDMENT NO. 1 TO OPTION AGREEMENT


This AMENDMENT NO. 1 TO OPTION AGREEMENT (this “Amendment”) is entered into and effective as of August 29, 2014, by and between NEC Corporation, a Japanese corporation with its principal place of business at 7-1, Shiba 5-chome, Minato-ku, Tokyo 108-8001, Japan (“NEC Corporation”), and KEMET Electronics Corporation, a Delaware corporation with its principal place of business at 2835 Kemet Way, Simpsonville, South Carolina 29681 (“Purchaser”). NEC Corporation and Purchaser may hereafter be referred to collectively as the “Parties,” or individually as a “Party.”
RECITALS:

WHEREAS, the Parties entered into a Stock Purchase Agreement, dated as of March 12, 2012 (the “Stock Purchase Agreement”), as amended by Amendment No. 1 thereto dated as of December 12, 2012, by and among NEC Corporation, Purchaser and NEC TOKIN Corporation, a Japanese corporation with its principal place of business at 7-1, Kohriyama 6-chome, Taihaku-ku, Sendai-shi, Miyagi 982-8510, Japan (the “Company”); and
WHEREAS, the Parties entered into an Option Agreement dated as of March 12, 2012 (the “Option Agreement”); and
WHEREAS, the Parties hereto desire to amend the Option Agreement as set forth herein.
AGREEMENT:

In consideration of the mutual promises, covenants and conditions hereinafter set forth, the Parties mutually agree as follows:
1.     “Section 1. Definitions” of the Option Agreement is hereby amended as follows:
Section 1 of the Option Agreement is hereby amended to include the following definition:
“KEMET Existing Bonds” means the currently outstanding 10.5% Senior Notes due May 1, 2018, issued by KEMET Corporation.
“KEMET Refinancing Bonds” means the new bonds or senior notes to be issued by KEMET Corporation after the date hereof principally to refinance the amounts currently outstanding under the KEMET Existing Bonds and its currently outstanding credit agreement, in an amount necessary to repay in full the KEMET Existing Bonds and other outstanding indebtedness of KEMET Corporation under the credit agreement, pay related fees and expenses of the offering of the KEMET Refinancing Bonds and to use any remaining net proceeds for general corporate purposes.”
2.    “Section 2. Call Options; Put Options” of the Option Agreement is hereby amended as follows:
(a)    Section 2.1(b) is hereby amended by deleting the first sentence in its entirety, by deleting the words, “Notwithstanding the foregoing” in the second sentence, by capitalizing the initial “at” in the second sentence, and by replacing the date “August 31, 2014” in the second sentence with the date “April 30, 2015.”
(b)    Section 2.2(a) is hereby amended by replacing the date “August 31, 2014” in the first sentence with the date “April 30, 2015.”
(c)    Section 2.2(c) is hereby amended by replacing the date “August 1, 2014” with the date “April 1, 2015” and “August 31, 2014” with the date “April 30, 2015.”



(d)    Section 2.2(e)(ii)(A) is hereby amended by replacing the date “August 31, 2014” with the date “April 30, 2015.”
(e)    Section 2.3(a) is hereby amended by replacing the date “August 1, 2014,” in the first and second sentences with the date “April 1, 2015”. In addition, if the KEMET Refinancing Bonds are issued, and NEC Corporation has not previously delivered the Put Option Notice to the Purchaser, Section 2.3(a) shall be deemed amended by replacing the paragraph in its entirety with the following: “NEC Corporation shall have the right during the period beginning on the day immediately following the day of the final scheduled maturity date of the KEMET Refinancing Bonds, or in the event the KEMET Refinancing Bonds are redeemed in full prior to the final scheduled maturity date, then on the day immediately following the date of such redemption in full of the KEMET Refinancing Bonds, but in any event beginning no later than November 1, 2019, and continuing to October 31, 2023, to deliver a written demand (the “Put Option Notice”) to the Company and Purchaser that requires Purchaser to purchase all of the Shares then held by NEC Corporation and NECAP and specifies the Put Option Closing Date (the “Put Option”) .”
(f)    If the KEMET Refinancing Bonds are issued, and NEC Corporation has not previously delivered the Put Option Notice to the Purchaser, Section 2.3(e)(ii)(B) shall be deemed amended by deleting it in its entirety.
(g)    Section 2.5 is hereby amended by replacing the date “September 1, 2014” with the date “May 1, 2015.” The Parties also hereby agree that the immediately preceding sentence of the Option Agreement, as amended by this Amendment, shall supersede Section 3.3 of the Stockholders’ Agreement with respect to the first date that NEC Corporation may convert the shares of Preferred Stock, and the date in the second sentence of Section 3.3 of the Stockholders’ Agreement is hereby amended by replacing the date “September 1, 2014” with the date “May 1, 2015.”
3.    Section 7. 1 is hereby amended by replacing “15 month anniversary” with “7 month anniversary” in the first sentence and adding “but the ending date shall be no later than April 30, 2016” after “First Call Option Closing Date” in the second place it occurs.

4.    Purchaser shall take actions under the Transaction Documents to cause and permit the Company to repay on April 30, 2015, solely out of the Company’s then-available cash, to NEC Corporation at least 2 billion Japanese Yen of the outstanding amount of NEC Debt Obligation; provided, that for the avoidance of doubt, in no event shall Purchaser or any of its Affiliates (other than the Company) be required to use, expend or advance any funds to the Company in connection with such repayment .

5.    Miscellaneous.

5.1    Governing Law. This Amendment shall be governed in all respects by the laws of Japan without regards to the principles of conflicts of laws thereof.
5.2    No Other Amendment or Waiver. Except as expressly set forth herein, all of the terms and provisions of the Option Agreement shall remain in full force and effect and the Parties hereto make no other amendment, alteration or modification of the Option Agreement nor do they, nor does any of them, by executing this Amendment, waive any provision of the Option Agreement or any right that they or it may have thereunder or waive any provision of any other agreement between the Parties, or waive any other rights they or it may have under such other agreements.
5.3    Defined Terms. Capitalized terms used but not defined herein shall have the meanings set forth in the Option Agreement.
5.4    Counterparts. This Amendment may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each Party and delivered to the other Party; provided that a facsimile signature or portable document format (pdf.) or equivalent



signature attached to an e-mail shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or pdf. or equivalent signature.


<signature page follows>





IN WITNESS WHEREOF, each of NEC Corporation and Purchaser has executed this Agreement as of the day first above written.

NEC CORPORATION

By: /s/ TAKAYUKI MORITA    
Name: Takayuki Morita
Title: Executive Vice President

Address for Notice: 7-1, Shiba 5-chome, Minato-ku, Tokyo 108-8001, Japan
E-mail: y-matsumoto@dv.jp.nec.com
Attn: General Manager, Affiliated Company Division
NEC Corporation


KEMET ELECTRONICS CORPORATION

By: /s/ PER-OLOF LOOF    
Name: Per-Olof Loof
Title: Chief Executive Officer

Address for Notice: 101 NE 3rd Ave., Ste. 1700
Fort Lauderdale, FL 33301 USA

E-mail: jamieassaf@kemet.com
Attn: Senior Vice President and General Counsel    



991-NECOptionAmendmentPressRelease


FOR IMMEDIATE RELEASE                                            
Contact:    William M. Lowe, Jr.
Executive Vice President and Chief Financial Officer
williamlowe@KEMET.com
864-963-6484        
        


KEMET and NEC Sign Amendment to Option Agreement


Greenville, South Carolina (September 4, 2014) – KEMET Corporation (NYSE: KEM) (“KEMET”), a leading global supplier of electronic components, today announced that its wholly-owned subsidiary, KEMET Electronics Corporation (“KEC”), and NEC Corporation (“NEC”) have entered into an amendment to the parties’ March 12, 2012 Option Agreement.

“This Amendment provides KEMET with additional flexibility in managing our capital structure,” stated Per Loof, Chief Executive Officer of KEMET. “It allows us greater opportunity to benefit from improving economic conditions and the improved financial performance by KEMET while maintaining our options to increase our investment in NEC TOKIN.”

The Amendment extends the date by which KEC can exercise its first option to purchase additional shares of common stock of NEC TOKIN Corporation (“NEC TOKIN”) until April 30, 2015, and also extends the beginning date by which KEC can exercise its second option to purchase all of the outstanding shares of NEC TOKIN common stock. The amendment also delays the date when NEC can require KEC to purchase all of the outstanding shares of NEC TOKIN common stock (the “Put Option”) by a minimum of eight months until April 1, 2015, and in the event that KEMET issues new debt securities to refinance its outstanding 10½% senior notes due 2018 prior to NEC’s delivery of its notification to exercise the Put Option, then the earliest date on which NEC may exercise the Put Option is further extended beyond the scheduled maturity date or redemption in full of such new debt securities, but in any event not beyond November 1, 2019. In that event, the Put Option will expire on October 31, 2023.

Additional provisions of this amendment specify the date by which NEC’s indemnification obligations under the Option Agreement expire; extend until May 1, 2015, the earliest date that NEC may convert a portion of its existing NEC TOKIN preferred stock into NEC TOKIN common stock; and require KEC to permit the repayment by NEC TOKIN to NEC on April 30, 2015 of at least 2 billion Japanese yen of the currently outstanding amount of 25.5 billion Japanese yen of the debt obligation NEC TOKIN owes to NEC. Additional details can be found in KEMET’s Current Report on Form 8-K (File No. 1-15491) filed on September 4, 2014.


KEMET and NEC Sign Amendment to Option Agreement
September 4, 2014
Page 2


About KEMET

The Company's common stock is listed on the NYSE under the ticker symbol "KEM" (NYSE: KEM). At the Investor Relations section of our web site at http://www.kemet.com/IR, users may subscribe to KEMET news releases and find additional information about our Company. KEMET offers our customers the broadest selection of capacitor technologies in the industry, along with an expanding range of electromechanical devices, electromagnetic compatibility solutions and supercapacitors. Our vision is to be the preferred supplier of electronic component solutions demanding the highest standards of quality, delivery and service. Additional information about KEMET can be found at http://www.kemet.com.

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

Certain statements included herein contain forward-looking statements within the meaning of federal securities laws about the Company's financial condition and results of operations that are based on management's current expectations, estimates and projections about the markets, in which the Company operates, as well as management's beliefs and assumptions. Words such as "expects," "anticipates," "believes," "estimates," variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's judgment only as of the date hereof. The Company undertakes no obligation to update publicly any of these forward-looking statements to reflect new information, future events or otherwise.

Factors that may cause actual outcome and results to differ materially from those expressed in, or implied by, these forward-looking statements include, but are not necessarily limited to the following: (i) adverse economic conditions could impact our ability to realize operating plans if the demand for our products declines, and such conditions could adversely affect our liquidity and ability to continue to operate; (ii) continued net losses could impact our ability to realize current operating plans and could materially adversely affect our liquidity and our ability to continue to operate; (iii) adverse economic conditions could cause the write down of long-lived assets or goodwill; (iv) an increase in the cost or a decrease in the availability of our principal or single-sourced purchased materials; (v) changes in the competitive environment; (vi) uncertainty of the timing of customer product qualifications in heavily regulated industries; (vii) economic, political, or regulatory changes in the countries in which we operate; (viii) difficulties, delays or unexpected costs in completing the restructuring plan; (ix) equity method investment in NEC TOKIN expose us to a variety of risks; (x) acquisitions and other strategic transactions expose us to a variety of risks; (xi) inability to attract, train and retain effective employees and management; (xii) inability to develop innovative products to maintain customer relationships and offset potential price erosion in older products; (xiii) exposure to claims alleging product defects; (xiv) the impact of laws and regulations that apply to our business, including those relating to environmental matters; (xv) the impact of international laws relating to trade, export controls and foreign corrupt practices; (xvi) volatility of financial and credit markets affecting our access to capital; (xvii) the need to reduce the total costs of our products to remain competitive; (xviii) potential limitation on the use of net operating losses to offset possible future taxable income; (xix) restrictions in our debt agreements that limit our flexibility in operating our business; and (xx) additional exercise of the warrant by K Equity which could potentially result in the existence of a significant stockholder who could seek to influence our corporate decisions.