Portions of this exhibit were omitted and filed separately with the Secretary of
the
Securities and Exchange Commission pursuant to an application for confidential
treatment
filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under
the
Securities Exchange Act of 1934. Such portions are marked by [***].
 
 
 
 
 
 
 
 
 
 
 
MANUFACTURING AGREEMENT
 
by and between
 
Vishay S.A., a
French company,
 
as Manufacturer
 
 
 
and
 
Vishay Precision Foil VPG GmbH,
a German company,
 
as Buyer
 
Dated as of July 6, 2010
 

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          This MANUFACTURING AGREEMENT (this “Agreement”) is made as of July 6,
2010 by and between Vishay S.A., a French company (“Manufacturer”), and Vishay
Precision Foil VPG GmbH, a German company (“Buyer”). Manufacturer and Buyer each
may be referred to herein as a “Party” and collectively, as the “Parties”.
 
          WHEREAS, subject to the terms, conditions, commitments and
undertakings herein provided, Manufacturer is willing to manufacture those
products as set forth on Exhibit A hereto (as the same may be modified from time
to time pursuant to the provisions hereof, the “Products”) on a contract basis
on behalf of Buyer in such quantities as Buyer shall request , as provided in
this Agreement;
 
          NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties, intending
to be legally bound, agree as follows:
 
ARTICLE I
DEFINITIONS
 
          For purposes of this Agreement, the following terms shall have the
meanings specified in this Article I:
 
          “Affiliate” means, as applied to any Person, any other Person that,
directly or indirectly, controls, is controlled by, or is under common control
with that Person as of the date on which or at any time during the period for
when such determination is being made. For purposes of this definition,
“control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or other interests, by contract or
otherwise, and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.
 
          “Applicable Law” means any applicable law, statute, rule or regulation
of any Governmental Authority, or any outstanding order, judgment, injunction,
ruling or decree by any Governmental Authority.
 
          “Buyer” has the meaning set forth in the preamble of this Agreement.
 
          “Confidential Information” means all proprietary, design or
operational information, data or material including, without limitation: (a)
specifications, ideas and concepts for goods and services; (b) manufacturing
specifications and procedures; (c) design drawings and models; (d) materials and
material specifications; (e) quality assurance policies, procedures and
specifications; (f) customer, client, manufacturer and supplier information; (g)
computer software and derivatives thereof relating to design development or
manufacture of goods; (h) training materials and information; (i) inventions,
devices, new developments, methods and processes, whether patentable or
unpatentable and whether or not reduced to practice; (j) all other know-how,
methodology, procedures, techniques and Trade Secrets; (k) proprietary earnings
reports and forecasts; (l) proprietary macro-economic reports and forecasts; (m)
proprietary marketing, advertising and business plans, objectives and
strategies; (n) proprietary general market evaluations and surveys; (o)
proprietary financing and credit-related information; (p) other copyrightable or
patented works; (q) the terms of this Agreement;
 

--------------------------------------------------------------------------------

and (r) all similar and related information in whatever form; in each case, of
one party which has been disclosed by Manufacturer or members of its Group on
the one hand, or Buyer or members of its Group, on the other hand, in written,
oral (including by recording), electronic, or visual form to, or otherwise has
come into the possession of, the other Group.
 
          “DDU” has the meaning and usage assigned to such words in the
Incoterms rules published by the International Chamber of Commerce.
 
          “Ex Works” has the meaning and usage assigned to such words in the
Incoterms rules published by the International Chamber of Commerce.
 
          “Firm Order” means Buyer’s non-cancelable purchase order for Products
to be purchased by Buyer from Manufacturer pursuant to this Agreement for
delivery.
 
          “Forecast” means, with respect to any relevant period, a good faith
non-binding forecast, based on information available to Buyer at the time of
such forecast (which information, if reduced to writing, shall be made available
to Manufacturer upon reasonable request), of the Firm Order for each Product
that Buyer expects to deliver to Manufacturer for each calendar month during
such period.
 
          “Governmental Authority” means any U.S. or non-U.S. federal, state,
local, foreign or international court, arbitration or mediation tribunal,
government, department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority.
 
          “Group” means, with respect to any Person, each Subsidiary of such
Person and each other Person that is controlled directly or indirectly by such
Person.
 
          “Intellectual Property” means all domestic and foreign patents and
patent applications, together with any continuations, continuations-in-part or
divisional applications thereof, and all patents issuing thereon (including
reissues, renewals and re-examinations of the foregoing); design patents;
invention disclosures; mask works; all domestic and foreign copyrights, whether
or not registered, together with all copyright applications and registrations
therefor; all domain names, together with any registrations therefor and any
goodwill relating thereto; all domestic and foreign trademarks, service marks,
trade names, and trade dress, in each case together with any applications and
registrations therefor and all goodwill relating thereto; all Trade Secrets,
commercial and technical information, know-how, proprietary or Confidential
Information, including engineering, production and other designs, notebooks,
processes, drawings, specifications, formulae, and technology; computer and
electronic data processing programs and software (object and source code), data
bases and documentation thereof; all inventions (whether or not patented); all
utility models; all registered designs, certificates of invention and all other
intellectual property under the laws of any country throughout the world.
 
          “Last-Time Buy Order” has the meaning set forth in Section 4.6.
 
          “Liability” means, with respect to any Person, any and all losses,
claims, charges, debts, demands, Actions, causes of action, suits, damages,
obligations, payments, costs and expenses, sums of money, accounts, reckonings,
bonds, specialties, indemnities and similar
 
-2-
 

--------------------------------------------------------------------------------

obligations, exoneration covenants, obligations under contracts, guarantees,
make whole agreements and similar obligations, and other liabilities and
requirements, including all contractual obligations, whether absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, joint or several, whenever arising, and including
those arising under any Applicable Law, action, threatened or contemplated
action (including the costs and expenses of demands, assessments, judgments,
settlements and compromises relating thereto and attorneys’ fees and any and all
costs and expenses, whatsoever reasonably incurred in investigating, preparing
or defending against any such actions or threatened or contemplated actions) or
order of any Governmental Authority or any award of any arbitrator or mediator
of any kind, and those arising under any contract, in each case, whether or not
recorded or reflected or otherwise disclosed or required to be recorded or
reflected or otherwise disclosed, on the books and records or financial
statements of any Person, including any Liability for taxes.
 
          “Manufacturer” has the meaning set forth in the preamble of this
Agreement.
 
          “Manufacturer’s Other Manufacturing Obligations” means the
manufacturing obligations and commitments of Manufacturer to Persons other than
Buyer, including Manufacturer’s Affiliates.
 
          “Person” (whether or not initially capitalized) means any corporation,
limited liability company, partnership, firm, joint venture, entity, natural
person, trust, estate, unincorporated organization, association, enterprise,
government or political subdivision thereof, or Governmental Authority.
 
          “Product” has the meaning set forth in the preamble of this Agreement.
 
          “Product Warranty” has the meaning set forth in Section 6.1(a).
 
          “Raw Materials Cost” means the direct cost of material used in a
finished Product, including the normal quantity of material wasted in the
production process, purchasing costs, inbound freight charges and any applicable
subcontractor charges.
 
          “Subsidiary” of any Person means a corporation or other organization
whether incorporated or unincorporated of which at least a majority of the
securities or interests having by the terms thereof ordinary voting power to
elect at least a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such Person or by any one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries; provided,
however, that no Person that is not directly or indirectly wholly-owned by any
other Person shall be a Subsidiary of such other Person unless such other Person
controls, or has the right, power or ability to control, that Person.
 
          “Specifications” means, with respect to any Product, the design,
composition, dimensions, other physical characteristics, chemical
characteristics, packaging, unit count and trade dress of such Product.
 
          “Term” has the meaning set forth in Section 7.1.
 
-3-
 

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          “Trade Secrets” means information, including a formula, program,
device, method, technique, process or other Confidential Information that
derives independent economic value, actual or potential, from not being
generally known to the public or to other Persons who can obtain economic value
from its disclosure or use and is the subject of efforts that are reasonable,
under the circumstances, to maintain its secrecy.
 
          “Wholly-Owned Subsidiary” of a Person means a Subsidiary of that
Person substantially all of whose voting securities and outstanding equity
interest are owned either directly or indirectly by such Person or one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries.
 
          The terms “herein”, “hereof”, “hereunder” and like terms, unless
otherwise specified, shall be deemed to refer to this Agreement in its entirety
and shall not be limited to any particular section or provision hereof. The term
“including” as used herein shall be deemed to mean “including, but not limited
to.” The term “days” shall refer to calendar days unless specified otherwise.
References herein to “Articles”, “Sections” and “Exhibits” shall be deemed to
mean Articles, Sections of and Exhibits to this Agreement unless otherwise
specified.
 
ARTICLE II
PURCHASE AND SALE OF PRODUCTS
 
     SECTION 2.1. Agreement to Purchase and Sell Products.
 
          (a) During the Term, Manufacturer hereby agrees to manufacture and
supply on behalf of Buyer, and Buyer hereby agrees to purchase and accept from
Manufacturer, such amounts of Products, as from time to time shall be ordered by
Buyer.
 
          (b) All Products to be sold to Buyer pursuant to this Agreement shall
be manufactured by Manufacturer or an Affiliate of Manufacturer.
 
     SECTION 2.2. Raw Materials. Manufacturer shall be responsible for the
procurement of raw materials and container and packaging materials, in each case
consistent with the Manufacturer’s customary practices and necessary to
manufacture and package the Products, except that Buyer acknowledges that Vishay
Advanced Technologies, Ltd. (“VAT”), or an Affiliate of Buyer, shall supply foil
resistor chips on the terms described in the Supply Agreement between the
Manufacturer, as buyer, and VAT, as supplier, as may be amended or supplemented
from time to time (the “Supply Agreement”).
 
     SECTION 2.3. Product Specifications.
 
          (a) Manufacturer shall manufacture all Products according to the
Specifications in effect as of the date of this Agreement, with such changes or
additions to the Specifications of the Products related thereto as shall be
requested by Buyer in accordance with this Section or as otherwise agreed in
writing by the Parties, so long as and only to the extent that if such requested
change or addition requires a change or addition in the Specifications
applicable to the foil resistor chips to be supplied by VAT under the Supply
Agreement, VAT can supply the foil resistor chips with such change or addition
or Buyer is able to identify an appropriate alternative source of foil resistor
chips in the event that VAT is unable to provide
 
-4-
 

--------------------------------------------------------------------------------

such chips. All other Products shall be manufactured with such Specifications as
the Parties shall agree in writing.
 
          (b) Buyer may request changed or additional Specifications for any
Product by delivering written notice thereof to Manufacturer not less than one
hundred twenty (120) days in advance of the first Firm Order for such Product to
be supplied with such changed or additional Specifications. Notwithstanding the
foregoing, if additional advance time would reasonably be required in order to
implement the manufacturing processes for production of a Product with any
changed or additional Specifications, and to commence manufacture and delivery
thereof, Manufacturer shall so notify Buyer, and Manufacturer shall not be
required to commence delivery of such Product until the passage of such
additional time.
 
          (c) Manufacturer shall be required to accommodate any change of, or
additions to, the Specifications for any Product, if and only if (i) in
Manufacturer’s good faith judgment, such changed or additional Specifications
would not require Manufacturer to violate good manufacturing practice, (ii) the
representation and warranty of Buyer deemed made pursuant to Subsection (e)
below is true and correct, (iii) Buyer agrees to reimburse Manufacturer for the
incremental costs and expenses incurred by Manufacturer in accommodating the
changed or additional Specifications, including the costs of acquiring any new
machinery and tooling, and (iv) to the extent applicable, a corresponding change
of, or addition to, the Specifications applicable to the materials supplied to
the Manufacturer under the Supply Agreement has been made. For the avoidance of
doubt, such costs and expenses shall be payable by Buyer separately from the
cost of Products at such time or times as Manufacturer shall request.
 
          (d) Manufacturer shall notify Buyer in writing within thirty (30) days
of its receipt of any request for changed or additional Specifications (i)
whether Manufacturer will honor such changed or additional Specifications, (ii)
if Manufacturer declines to honor such changed or additional Specifications, the
basis therefor and (iii) if applicable, the estimated costs and expenses that
Buyer will be required to reimburse Manufacturer in respect of the requested
changes or additions, as provided in Subsection (c) above. Buyer shall notify
Manufacturer in writing within fifteen (15) days after receiving notice of any
required reimbursement whether Buyer agrees to assume such reimbursement
obligation.
 
          (e) By its request for any changed or additional Specifications for
any Product, Buyer shall be deemed to represent and warrant to Manufacturer that
the manufacture and sale of the Product incorporating Buyer’s changed or
additional Specifications, as a result of such incorporation, will not and could
not reasonably be expected to (i) violate or conflict with any contract,
agreement, arrangement or understanding to which Buyer and/or any of its
Affiliates is a party, including this Agreement and any other contract,
agreement, arrangement or understanding with Manufacturer and/or its Affiliates,
(ii) infringe on any trademark, service mark, copyright, patent, trade secret or
other intellectual property rights of any Person, or (iii) violate any
Applicable Law. Buyer shall indemnify and hold Manufacturer and its Affiliates
harmless (including with respect to reasonable attorneys’ fees and
disbursements) from any breach of this representation and warranty.
 
-5-
 

--------------------------------------------------------------------------------

     SECTION 2.4. Manufacturer’s Supply Obligations. Manufacturer shall be
obligated to manufacture and sell Products to Buyer, in accordance with Buyer’s
Firm Orders, to the extent of Manufacturer’s then existing manufacturing
capacity, taking into account Manufacturer’s Other Manufacturing Obligations;
provided, however, the Manufacturer shall give equal priority to the orders of
Buyer, on the one hand, and Manufacturer’s Other Manufacturing Obligations, on
the other.
 
     SECTION 2.5. Product Changes. Manufacturer shall communicate any change in
the Specifications for any Product or its manufacture in accordance with
Manufacturer’s product change notification process. Buyer shall be deemed to
have accepted such change unless, within thirty (30) days after receipt of
notice from Manufacturer, Buyer informs Manufacturer that such change is not
acceptable. If Buyer informs Manufacturer that such change is not acceptable,
Manufacturer may by notice to Buyer either (x) continue to supply the Product in
accordance with the original Specifications and manufacturing procedures or (y)
terminate this Agreement with respect to such Product on a date specified by
Manufacturer in a notice of termination, which date shall not be earlier than
the earlier of one (1) year from the date of Buyer’s information that it does
not accept the change proposed by Manufacturer, subject to the right of the
Buyer to submit a Last-Time Buy Order in accordance with Section 4.5.
 
     SECTION 2.6. Product Discontinuation.
 
          (a) Discontinuation of Products. At any time, Manufacturer may notify
Buyer that Manufacturer is discontinuing the manufacture and sale of a Product.
Such discontinuation shall take effect on a date specified by Manufacturer in a
notice of discontinuation, which date shall not be earlier than one (1) year
from the date of the notice of discontinuation; subject to the right of the
Buyer to submit a Last-Time Buy Order in accordance with Section 4.5.
 
          (b) Discontinuation of Foil Chips Under Supply Agreement. To the
extent that a discontinuation by VAT under Section 2.5 of the Supply Agreement
causes Manufacturer to be unable to satisfy its obligations under this
Agreement, Manufacturer shall be released from any claims of breach of this
Agreement or the Supply Agreement; provided, that Manufacturer will give Buyer a
reasonable opportunity to find alternative sources of foil resistor chips.
 
     SECTION 2.7. Consultation and Support. At either Party’s reasonable
request, the Parties shall meet and discuss the nature, quality and level of
supply services contemplated by this Agreement. In addition, Manufacturer will
make available on a commercially reasonable basis and at commercially reasonable
times qualified personnel to provide knowledgeable support service with respect
to the Products. The Parties shall negotiate in good faith with respect to any
fees and other charges incurred by Manufacturer in providing other than routine
product support.
 
ARTICLE III
FORECASTS
 
     SECTION 3.1. Forecasts. As and where warranted, Buyer shall provide to
Manufacturer a Forecast of the Firm Orders Buyer expects in good faith to
deliver to Manufacturer for such period of time specified in such Forecast.
Manufacturer shall use such Forecasts for capacity and
 
-6-
 

--------------------------------------------------------------------------------

raw material planning purposes only and such Forecasts shall not constitute a
commitment of any type by Buyer to purchase the Products.
 
ARTICLE IV
ORDERS AND PAYMENT
 
     SECTION 4.1. Purchase Orders.
 
          (a) Buyer may place a Firm Order for the Products with Manufacturer at
any time and from time to time.
 
          (b) Each Firm Order shall specify (i) number of units of the Product
to be purchased and (ii) the requested delivery date, provided that Buyer shall
request a delivery date with a lead delivery time that is customary for the
particular Product, unless otherwise agreed upon by the Parties. Manufacturer
agrees to provide Buyer prompt notice if it knows it cannot meet a requested
delivery date.
 
          (c) If Buyer requires a Product on an emergency basis and so informs
Manufacturer, and Manufacturer has the Product available in its uncommitted
inventory, Manufacturer agrees to use reasonable commercial efforts to fill the
emergency order as promptly as practicable. Buyer agrees to pay reasonable
incremental expenses related to any emergency order.
 
     SECTION 4.2. Shipment.
 
          (a) Products intended for customers within Europe will be shipped DDU
destination Manufacturer’s customers. Products intended for customers outside of
Europe will be shipped Ex Works Manufacturer’s factory.
 
          (b) Manufacturer shall package all Products so as to protect them from
loss or damage during shipment, in conformity with good commercial practice, the
Specifications and Applicable Law. Buyer shall be responsible, at its own cost
and expense, for the shipment (including, among other fees, costs and expenses,
transit and casualty insurance and third party fees) of all processed materials
by Buyer. Manufacturer shall cooperate with Buyer in assembling and coordinating
shipments, as reasonably requested by Buyer.
 
          (c) For the avoidance of doubt, title to and risk of loss or damage
will pass to Buyer upon Buyer’s pick up for transfer of the Products ordered.
 
     SECTION 4.3. Prices. Pricing for the Products shall be as set forth on
Exhibit A, as such Exhibit may be modified from time to time by agreement of the
Parties, which shall at all times equal the prices charged by Buyer to its
customers for its Products, less a 5% discount. If Buyer proposes to change the
prices for Products charged to its customers for any calendar year, the parties
will discuss the consequences of such change for the pricing of the Products
under this Agreement, including the annual adjustment, and shall agree in good
faith to make such change as shall preserve the intended economic benefits of
this Agreement to each of the Parties.
 
-7-
 

--------------------------------------------------------------------------------

     SECTION 4.4. Payment Terms.
 
          (a) Unless otherwise agreed to by the Parties in writing, Buyer shall
make payment separately for each Firm Order. Buyer shall pay the net amount of
all invoice amounts within sixty (60) days of the date of Manufacturer’s invoice
unless the terms of Manufacturer’s invoice permits later payment or allows for
prepayment with a discount. Invoices shall not be sent earlier than the date on
which the Products related thereto are delivered to Buyer.
 
          (b) The Parties hereby agree that Manufacturer shall be entitled to
realize a Gross Profit (as defined below) with respect to the Products invoiced
during each calendar year equal to 25% of the aggregate Operational Cost of such
Products during such calendar year (the “25% Markup”). If the actual aggregate
Gross Profit for the Products invoiced during any calendar year is less than 25%
of the aggregate Operational Cost for such Products, Buyer will pay to
Manufacturer an amount equal to the difference between (x) the aggregate
Operational Cost for such Products multiplied by 25% and (y) the actual
aggregate Gross Profit realized on such Products. If the actual aggregate Gross
Profit for the Products invoiced during each calendar year is greater than 25%
of the aggregate Operational Cost for such Products, Manufacturer will pay to
Buyer an amount equal to the difference between (x) the actual aggregate Gross
Profit realized on such Products and (y) the aggregate Operational Cost for such
Products multiplied by 25%.
 
          (c) Within thirty (30) calendar days of the end of each calendar year,
Manufacturer shall furnish Buyer with a calculation, on an aggregate basis, of
the Gross Profit and Operating Cost for the Products invoiced during such
calendar year, together with back-up for such calculation in reasonable detail,
and a statement of the amount due to, or payable by, Manufacturer in accordance
with the provisions of subsection (a) above (the “Gross Profit Statement”).
Thereafter, Manufacturer will provide Buyer and its accountants with access to
the records and employees of Buyer, to the extent reasonably related to Buyer’s
evaluation of the Gross Profit Statement, the calculation of the Gross Profit or
the resolution of any dispute with respect thereto. Within fifteen (15) calendar
days after Buyer’s receipt of the Gross Profit Statement, Buyer shall notify
Manufacturer in writing as to whether Buyer agrees or disagrees with the Gross
Profit Statement, which notice, in the case of a disagreement, shall set forth
in reasonable detail the particulars of such disagreement. In the event that
Buyer does not provide a notice of disagreement within such fifteen (15)
calendar day period, then Buyer shall be deemed to have accepted the
calculations and the amounts set forth in the Gross Profit Statement delivered
by Manufacturer, which shall be final, binding and conclusive for all purposes
hereunder. If any notice of disagreement is timely provided in accordance with
this Section 4.4(c), Buyer and Manufacturer shall each use commercially
reasonable efforts for a period of fifteen (15) calendar days thereafter (or
such longer period as they may mutually agree) to resolve any disagreements with
respect to the calculations in the Gross Profit Statement. If, at the end of
such period, Buyer and Manufacturer are unable to resolve any disagreements as
to items in the Gross Profit Statement, then the Parties shall engage KPMG LLP
(the “Auditor”) to resolve any remaining disagreements. The Auditor shall be
charged with determining as promptly as practicable, but in any event within
thirty (30) calendar days after the date on which such dispute is referred to
the Auditor, whether the actual Gross Profit as set forth in the Gross Profit
Statement was prepared in accordance with this Agreement whether and to what
extent the actual Gross Profit requires adjustment. The fees and expenses of the
Auditor shall be shared by
 
-8-
 

--------------------------------------------------------------------------------

     

Buyer and Manufacturer in inverse proportion to the relative amounts of the
disputed amounts determined in favor Buyer and Manufacturer, respectively. The
determination of the Auditor shall be final, binding and conclusive for all
purposes hereunder. The date on which the actual Gross Profit is finally
determined in accordance with this Section 4.4(c) is referred to as the
“Determination Date.”
 
          (d) Non-recurring Costs shall be charged by Manufacturer to Buyer as
incurred, and shall be paid by Buyer to Manufacturer within sixty (60) days of
receipt of the invoice therefore. Manufacturer shall provide such back-up and
detail with respect to any invoice for Non-recurring Costs as Manufacturer
reasonably requests.
 
          (e) As used in this section—
 
               i. “Gross Profit” means net sales minus Operational Costs.
 
               ii. “Operational Costs” means the sum of direct labor costs, raw
material costs and other variable costs, indirect expenses (including without
limitation indirect supervisory costs and allocated use of utilities, space and
similar items), and fixed costs (including without limitation costs of periodic
requalification with the European Space Agency or any other Governmental
Authority and depreciation costs of new tools and equipment), but excluding
Non-recurring Costs. For the avoidance of doubt, costs and expenses of shipping,
insurance and other costs and expenses incurred in connection with the shipment
of the Products, shall constitute Operational Costs (as defined below) subject
to the 25% Markup.
 
               iii. “Non-recurring Costs” means costs incurred in connection
with the manufacture of Products on a one-time or one-off basis and shall
include, without limitation, costs of Product requalification with the European
Space Agency (other than periodic requalification costs as set forth in Section
4.5), costs of complying with any change in specifications by the European Space
Agency, and costs of non-routine equipment maintenance (for example, other than
routine maintenance, including preventative maintenance, and calibration).
 
     SECTION 4.5. Last-Time Buy Order.
 
          (a) Buyer shall have a right to place a written last-time Firm Order
for a Product (a “Last-Time Buy Order”) if Manufacturer delivers to Buyer notice
of its intention to terminate this Agreement pursuant to Section 7.2. The right
of the Buyer to submit a Last-Time Buy Order shall entitle Buyer to purchase the
Products at the price in effect for the products as of the time of Buyer’s
exercise of such right.
 
          (b) A Last-Time Buy Order shall specify (i) number of units of the
Product to be purchased and (ii) the requested delivery date or dates for such
units. If Manufacturer informs Buyer that it cannot honor the requested delivery
dates because of capacity restraints or otherwise, the Parties shall negotiate
in good faith with respect to delivery dates mutually acceptable to Manufacturer
and Buyer.
 
          (c) The Parties hereby agree to use commercially reasonable efforts to
coordinate forecasting and ordering during the period between the date the
Last-Time Buy Order
 
-9-
 

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is delivered to Manufacturer and the final delivery date to allow for regular
supply of Products during such period.
 
ARTICLE V
CONFIDENTIALITY
 
     SECTION 5.1. Manufacturer and Buyer shall hold and shall cause each of
their respective affiliates, directors, officers, employees, agents,
consultants, advisors and other representatives to hold, in strict confidence
and not to disclose or release without the prior written consent of the other
party, any and all proprietary or confidential information, material or data of
the other party that comes into its possession in connection with the
performance by the parties of their rights and obligations under this Agreement.
The provisions of Section 4.5 of the Master Separation and Distribution
Agreement between Vishay Intertechnology, Inc. and Vishay Precision Group, Inc.
(the “Master Separation Agreement”) shall govern, mutatis mutandis, the
confidentiality obligations of the parties under this Section.
 
ARTICLE VI
QUALITY CONTROL; PRODUCT WARRANTY; LIMITATION OF LIABILITY
 
     SECTION 6.1. Quality Control. Manufacturer shall establish and maintain
such quality control and testing systems for the manufacture of Products for
sale by Buyer to the European Space Agency (“ESA”) as shall be required by that
customer, consistent with past practice. Manufacturer shall also designate a
technically competent employee who shall be responsible for the Manufacturer’s
quality control and testing systems and who shall be available to ESA and the
other customers of Buyer for Products to respond to technical inquiries
concerning the Products, inquiries and claims concerning the compliance or
non-compliance of Products with specifications and customer standards and
inquiries and claims concerning quality control and testing issues, including
product failure, with respect to the Products. Manufacturer shall notify Buyer
as promptly as practicable, to the extent reasonable in the circumstances, of
inquiries and claims received from customers of the Buyer as aforesaid.
 
     SECTION 6.2. Product Warranty; Merchantability Warranty.
 
          (a) Manufacturer warrants to Buyer that the Products shall, at the
time of delivery to Buyer in accordance with Section 4.2: (i) conform to the
Specifications therefor, as provided in Section 2.2; (ii) be free from material
defects; and (iii) be manufactured in accordance with good manufacturing
practice and Applicable Law (such warranty being referred to as the “Product
Warranty”), in each case, except to the extent any such material defect or
failure arises from an act or omission of VAT in manufacturing for, or supplying
foil resistor chips to, Buyer.
 
          (b) EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT, NO WARRANTIES,
OTHER THAN THE PRODUCT WARRANTY, ARE EXPRESSED OR IMPLIED IN RESPECT OF THE
PRODUCTS, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
 
-10-
 

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     SECTION 6.3. Defective or Non-Conforming Products; Recalls.
 
          (a) Claims by Buyer relating to the quantity of or damage to any
Product or the failure of any Product to conform to its Specifications must be
made within one (1) year of receipt of such Product and must be in writing,
specifying in reasonable detail the nature and basis of the claim and citing
relevant control or lot numbers or other information to enable identification of
the Product in question. Manufacturer’s liability to Buyer for damages for any
such claim shall be limited to a refund for the price of the defective Product
plus shipping costs or, at Buyer’s option, prompt replacement thereof with a
Product that complies with the Product Warranty. Such refund and shipping costs
or a replacement shall constitute Manufacturer’s sole and exclusive liability
for such claims. For the avoidance of doubt, nothing shall limit the obligations
of Manufacturer to Buyer in respect of third party claims against Buyer arising
from the failure of any Product to conform to its Specifications.
 
          (b) Any notifications to either Party pursuant to Section 6.3(a) shall
be subject to the confidentiality provisions of Article V above.
 
          (c) In the event of a recall of a Product resulting from a breach of
this Agreement by Manufacturer of this Agreement or the gross negligence of
Manufacturer, Manufacturer shall be responsible for all costs associated with
such recall. Except as otherwise provided in the immediately preceding sentence,
Buyer shall be responsible for all costs associated with the recall of a
Product.
 
     SECTION 6.4. Indemnification.
 
          (a) Subject to Section 6.5, Manufacturer shall indemnify and hold
Buyer harmless from and against any Liability, including reasonable attorney’s
fees and disbursements, arising out of any third party claim for death, injury
or damage to property resulting from (i) Manufacturer’s breach of this
Agreement; or (ii) any claim that a Product purchased from Manufacturer
infringes any intellectual property right of a third party, except to the extent
such claim relates to intellectual property transferred to Vishay Precision
Group, Inc. or any of its subsidiaries prior to the Distribution Date (as such
term is defined in the Master Separation Agreement).
 
          (b) Buyer shall indemnify and hold harmless Manufacturer from and
against any Liability, including reasonable attorneys’ fees and disbursements,
arising out of any third party claim for death, injury or damage to property
resulting from use of any of the Products based upon Buyer’s breach of this
Agreement.
 
          (c) Any Party seeking indemnification pursuant to this Section 6.4
shall promptly notify the other Party of the claim as to which indemnification
is sought, shall afford the other Party, at the other Party’s sole expense, the
opportunity to defend or settle the claim (in which case the indemnifying Party
shall not be responsible for the attorneys’ fees of the indemnified Party with
respect such claim) and shall cooperate to the extent reasonably requested by
the other Party in the investigation and defense of such claim; provided,
however, that any settlement of any such claim that would adversely affect the
rights of the indemnified Party shall require the written approval of such
indemnified Party; and provided further that an
 
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indemnified Party shall not settle any such claim without the written approval
of the indemnifying Party.
 
          (d) The foregoing indemnification obligations shall survive any
termination or expiration of this Agreement, in whole or in part, or the
expiration or termination of the Term.
 
     SECTION 6.5. Limitation of Liability. In no event shall any Party be liable
for any special, consequential, indirect, collateral, incidental or punitive
damages or lost profits or failure to realize expected savings or other
commercial or economic loss of any kind, arising out of any breach of this
Agreement, including breach of the Product Warranty, or any other obligations of
any Party hereunder, or any use of the Products, and each Party hereby knowingly
and expressly waives any claims or rights with respect thereto; provided,
however, that in the event a Party is required to pay to a third-party claimant
any special, consequential, indirect, collateral, incidental or punitive damages
or lost profits or failure to realize expected savings or other commercial or
economic loss on any claim with respect to which such Party is indemnified by
the other Party pursuant to this Agreement, such Party shall be entitled to
indemnification from the other Party with respect to such third-party special,
consequential, indirect, collateral, incidental or punitive damages or lost
profits or failure to realize expected savings or other commercial or economic
loss to the extent resulting from the indemnifiable acts or omissions of the
other Party.
 
     SECTION 6.6. Insurance. Each of the Parties shall maintain general
liability insurance covering their activities under this Agreement in accordance
with prudent and customary commercial practices, in such amounts as shall be
agreed upon from time to time by the Parties.
 
ARTICLE VII
TERM OF AGREEMENT; RENEWAL TERM; TERMINATION
 
     SECTION 7.1. Term of Agreement. Unless earlier terminated pursuant to
Section 7.2, the term of this Agreement shall be perpetual.
 
     SECTION 7.2. Termination. Either Party may terminate this Agreement at any
time upon prior written notice to the other at least one (1) year prior to the
requested date of termination.
 
     SECTION 7.3. Rights Upon Termination. Following a termination of this
Agreement, (a) all further rights and obligations of the Parties under this
Agreement shall terminate, and (b) Buyer shall pay Manufacturer an amount equal
to the remaining book value (determined in accordance with accounting principles
generally accepted in the United States) of any equipment and tools purchased by
Manufacturer after the Distribution Date for the purpose of complying with this
Agreement. Notwithstanding the foregoing, the termination of this Agreement
shall not affect the rights and obligations of the Parties arising prior to such
expiration or termination; and provided further that the Parties shall not be
relieved of (i) their respective obligations to pay monies due or which become
due as of or subsequent to the date of expiration or termination, and (ii) any
other respective obligations under this Agreement which specifically survive or
are to be performed after the date of such expiration or termination, including
the provisions of Article V and Section 6.3. Any Firm Order, including a
Last-Time Buy Order, submitted prior to
 
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the expiration or termination of this Agreement shall be filled by Manufacturer
pursuant to the terms hereof even if the delivery date is after expiration or
termination
 
ARTICLE VIII
DISPUTE RESOLUTION
 
     SECTION 8.1. The terms and provisions of Article VIII of the Master
Separation Agreement, relating to the procedures for resolution of any disputes
between the parties, shall apply to all disputes, controversies or claims
(whether sounding in contract, tort or otherwise) that may arise out of or
relate to or arise under or in connection with this Agreement, or the
transactions contemplated hereby, mutatis mutandis.
 
ARTICLE IX
MISCELLANEOUS
 
     SECTION 9.1. Assignment. This Agreement and the rights and obligations of a
Party hereunder shall be assignable or delegable, in whole or in part, (i) by
Manufacturer without the consent of Buyer, to a Wholly-Owned Subsidiary of
Manufacturer that succeeds to the conduct of the foil resistor business
responsible for supplying the Products; (ii) by Buyer without the consent of
Manufacturer, to a Wholly-Owned Subsidiary of Buyer; or (iii) by either Party,
to any Person who is not a Wholly-Owned Subsidiary of a Party only with the
prior written consent of the other Party; provided, however, that no such
assignment shall relieve the assigning Party of liability for its obligations
hereunder. The following actions shall not be deemed an assignment of this
Agreement: (1) assignment or transfer of the stock of a Party, including by way
of a merger, consolidation, or other form of reorganization in which outstanding
shares of a Party are exchanged for securities, or (2) any transaction effected
primarily for the purpose of (A) changing a Party’s state of incorporation or
(B) reorganizing a Party into a holding company structure such that, as a result
of any such transaction, such Party becomes a Wholly-Owned Subsidiary of a
holding company owned by the holders of such Party’s securities immediately
prior to such transaction. Any attempted assignment other than as provided
herein shall be void. The provisions of this Agreement shall be binding upon,
and shall inure to the benefit of, the successors and permitted assigns of the
Parties.
 
     SECTION 9.2. Force Majeure. The Parties shall not be liable for the failure
or delay in performing any obligation under this Agreement (except pursuant to
Section 6.4) if and to the extent such failure or delay is due to (i) acts of
God; (ii) weather, fire or explosion; (iii) war, invasion, riot or other civil
unrest; (iv) governmental laws, orders, restrictions, actions, embargoes or
blockages; (v) action by any regulatory authority which prohibits the
manufacture, sale or distribution of the Products, except to the extent due to
Manufacturer’s breach of its obligations hereunder; (vi) regional, national or
foreign emergency; (vii) injunction, strikes, lockouts, labor trouble or other
industrial disturbances; (viii) shortage of adequate fuel, power, materials, or
transportation facilities; or (ix) any other event which is beyond the
reasonable control of the affected Party; provided, however, that the Party
affected shall promptly notify the other Party of the force majeure condition
and shall exert its reasonable commercial efforts to eliminate, cure or overcome
any such causes and to resume performance of its obligations as soon as
possible.
 
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     SECTION 9.3. Intellectual Property. All Intellectual Property owned or
created by a Party shall remain its sole and exclusive property, and the other
Party shall not acquire any rights therein by reason of this Agreement.
 
     SECTION 9.4. Entire Agreement. This Agreement and the Exhibits hereto
constitute the entire agreement between the Parties with respect to the subject
matter hereof and thereof and supersede all previous agreements, negotiations,
discussions, understandings, writings, commitments and conversations between the
parties with respect to such subject matter. No agreements or understandings
exist between the parties other than those set forth or referred to herein or
therein. If any provision of this Agreement or the application thereof to any
Party or circumstance shall be declared void, illegal or unenforceable, the
remainder of this Agreement shall be valid and enforceable to the extent
permitted by Applicable Law. In such event, the Parties shall use their best
efforts to replace the invalid or unenforceable provision with a provision that,
to the extent permitted by Applicable Law, achieves the purposes intended under
the invalid or unenforceable provision.
 
     SECTION 9.5. Governing Law. This Agreement and the legal relations between
the parties shall be governed by and construed in accordance with the laws of
the State of New York, without regard to the conflict of laws rules thereof to
the extent such rules would require the application of the law of another
jurisdiction.
 
     SECTION 9.6. Consent to Jurisdiction. Subject to the provisions of Article
VIII, each of the Parties irrevocably submits to the jurisdiction of the federal
and state courts located in Philadelphia, Pennsylvania and the City of New York,
Borough of Manhattan for the purposes of any suit, action or other proceeding to
compel arbitration, for the enforcement of any arbitration award or for specific
performance or other equitable relief pursuant to Section 9.16. Each of the
parties further agrees that service of process, summons or other document by
U.S. registered mail to such parties address as provided in Section 9.10 shall
be effective service of process for any action, suit or other proceeding with
respect to any matters for which it has submitted to jurisdiction pursuant to
this Section 9.6. Each of the parties irrevocably waives any objection to venue
in the federal and state courts located in Philadelphia, Pennsylvania and the
City of New York, Borough of Manhattan of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby for which it has
submitted to jurisdiction pursuant to this Section 9.6, and waives any claim
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
 
     SECTION 9.7. Independent Contractor. Nothing contained in this Agreement
shall constitute a Party as a partner, employee or agent of the other Party, nor
shall any Party hold itself out as such. Neither Party shall have the right or
authority to incur, assume or create, in writing or otherwise, any warranty,
Liability or other obligation of any kind, express or implied, in the name or on
behalf of the other Party, and each Party is and shall remain an independent
contractor, responsible for its own actions. Except as otherwise explicitly
provided herein, each Party shall be responsible for its own expenses incidental
to its performance of this Agreement.
 
     SECTION 9.8. Set-Off. The obligation of Buyer to pay the purchase price for
Products shall be unconditional, except as provided in this Agreement, and shall
not be subject to any defense, setoff, counterclaim or similar right against
Manufacturer or any of its Affiliates that
 
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could be asserted by Buyer or any of its Affiliates under any other contract,
agreement, arrangement or understanding or otherwise under Applicable Law.
 
     SECTION 9.9. Waivers. No claim or right arising out of or relating to a
breach of any provision of this Agreement can be discharged in whole or in part
by a waiver or renunciation of the claim or right unless the waiver or
renunciation is supported by consideration and is in writing signed by the
aggrieved Party. Any failure by any Party to enforce at any time any provision
under this Agreement shall not be considered a waiver of that Party’s right
thereafter to enforce each and every provision of this Agreement.
 
     SECTION 9.10. Notices. All notices, demands and other communications
required to be given to a Party hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered, sent by a nationally
recognized overnight courier, transmitted by facsimile, or mailed by registered
or certified mail (postage prepaid, return receipt requested) to such Party at
the relevant street address or facsimile number set forth below (or at such
other street address or facsimile number as such Party may designate from time
to time by written notice in accordance with this provision):
 
          If to Manufacturer, to:
 
               Vishay S.A. 
               c/o Vishay Intertechnology, Inc. 
               63 Lancaster Avenue 
               Malvern, PA 19355-2120 

                Attention:  Dr. Lior E. Yahalomi  Telephone:  610-644-1300  
Facsimile:  610-889-2161 

 
          with a copy to:
 
               Kramer Levin Naftalis & Frankel LLP 
               1177 Avenue of the Americas 
               New York, NY 10036 

                Attention:  Ernest S. Wechsler, Esq.  Telephone:  212-715-9100  
Facsimile:  212-715-8000 

 
          If to Buyer, to:
 
               Vishay Precision Foil VPG GmbH 
               c/o Vishay Precision Group, Inc. 
               3 Great Valley Parkway 
               Malvern, PA 19355-1307 

                Attention:  William M. Clancy   Telephone:  (484)-321-5300  
Facsimile:  (484)-321-5301 

 
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          with a copy to:
 
               Pepper Hamilton LLP 
               3000 Two Logan Square 
               Eighteenth and Arch Streets 
               Philadelphia, Pennsylvania 19103-2799

                Attention:  Barry Abelson, Esq.  Telephone:  215-981-4000 
Facsimile:  215-981-4750 

 
          Any notice, demand or other communication hereunder shall be deemed
given upon the first to occur of: (i) the fifth (5th) day after deposit thereof,
postage prepaid and addressed correctly, in a receptacle under the control of
the United States Postal Service; (ii) transmittal by facsimile transmission to
a receiver or other device under the control of the party to whom notice is
being given; (iii) actual delivery to or receipt by the party to whom notice is
being given or an employee or agent thereof; or (iv) one (1) day after delivery
to an overnight carrier.
 
     SECTION 9.11. Headings. The headings contained herein are included for
convenience of reference only and do not constitute a part of this Agreement.
 
     SECTION 9.12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which when so executed and delivered or transmitted by
facsimile, e-mail or other electronic means, shall be deemed to be an original
and all of which taken together shall constitute but one and the same
instrument. A facsimile or electronic signature is deemed an original signature
for all purposes under this Agreement.
 
     SECTION 9.13. Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination, the Parties shall
negotiate in good faith in an effort to agree upon such a suitable and equitable
provision to effect the original intent of the Parties.
 
     SECTION 9.14. Waiver of Default.
 
          (a) Any term or provision of this Agreement may be waived, or the time
for its performance may be extended, by the party or the parties entitled to the
benefit thereof. Any such waiver shall be validly and sufficiently given for the
purposes of this Agreement if, as to any party, it is in writing signed by an
authorized representative of such party.
 
          (b) Waiver by any party of any default by the other party of any
provision of this Agreement shall not be construed to be a waiver by the waiving
party of any subsequent or other default, nor shall it in any way affect the
validity of this Agreement or any party hereof or prejudice the rights of the
other party thereafter to enforce each and ever such provision. No
 
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failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
 
     SECTION 9.15. Amendments. No provisions of this Agreement shall be deemed
amended, modified or supplemented by any Party, unless such amendment,
supplement or modification is in writing and signed by the authorized
representative of the Party against whom it is sought to enforce such amendment,
supplement or modification.
 
     SECTION 9.16. Specific Performance. The Parties agree that the remedy at
law for any breach of this Agreement may be inadequate, and that, as between
Manufacturer and Buyer, any Party by whom this Agreement is enforceable shall be
entitled to seek temporary, preliminary or permanent injunctive or other
equitable relief with respect to the specific enforcement or performance of this
Agreement. Such Party may, in its sole discretion, apply to a court of competent
jurisdiction for such injunctive or other equitable relief as such court may
deem just and proper in order to enforce this Agreement as between Manufacturer
and Buyer, or the members of their respective Groups, or prevent any violation
hereof, and, to the extent permitted by Applicable Law, as between Manufacturer
and Buyer, each Party waives any objection to the imposition of such relief.
 
     SECTION 9.17. Waiver of jury trial. Subject to Article VIII, each of the
Parties hereby waives to the fullest extent permitted by Applicable Law any
right it may have to a trial by jury with respect to any court proceeding
directly or indirectly arising out of and permitted under or in connection with
this Agreement or the transactions contemplated hereby. Each of the Parties
hereby (a) certifies that no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such other party would not,
in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it has been induced to enter into this agreement and the
transactions contemplated by this agreement, as applicable, by, among other
things, the mutual waivers and certifications in this Section 9.17.
 
[SIGNATURE PAGE FOLLOWS]
 
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     IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their respective duly authorized representatives as of the date first written
above.
 

MANUFACTURER:   VISHAY S.A.   By:   /s/ Denis Maugest   Name: Denis Maugest
Title: Directeur General    
    BUYER:   VISHAY PRECISION FOIL GMBH   By: /s/ Kai Karstensen   Name: Kai
Karstensen Title: General Manager

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EXHIBIT A
 
Products: Finished RCK Hi rel foil resistor products
 
[***]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portions of this exhibit were omitted and filed separately with the Secretary of
the
Securities and Exchange Commission pursuant to an application for confidential
treatment
filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under
the
Securities Exchange Act of 1934. Such portions are marked by [***].
 
A-1
 

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