GENERAL SEMICONDUCTOR, INC.
                       RESTATED 1999 ANNUAL INCENTIVE PLAN

                  1.     Purpose

                         The purpose of the 1999 Annual Incentive Plan is to
enhance the ability of General Semiconductor,  Inc. to attract, motivate, reward
and retain key employees,  to strengthen  their commitment to the success of the
Company and to align their interests with those of the Company's stockholders by
providing  additional  compensation  to designated  key employees of the Company
based on the achievement of performance objectives. To this end, the 1999 Annual
Incentive  Plan provides a means of annually  rewarding  participants  primarily
based on the  performance of the Company and its  subsidiaries  and  secondarily
based on the achievement of personal performance objectives.


                  2.     Eligibility

                         Participation in the Plan for a Performance Period
shall be limited to those key Employees who, because of their significant impact
on the current and future success of the Company, the CEO selects, in accordance
with  Section  4, to  participate  in the  Plan  for  that  Performance  Period.
Notwithstanding  the foregoing,  Officers shall participate in the Plan in every
Performance Period

                         To be eligible to participate in the Plan in any
Performance  Period an  Employee  shall have had at least  three  months  active
tenure during such Performance Period and be actively employed by the Company on
the Award payment date (except as provided in Sections 6 and 7).

                         Employees shall participate in only one annual cash or
sales incentive plan for any specific period in time. For example, an individual
may not  participate in both the Plan and the Company's  sales incentive plan at
the same time.  An  individual  may  participate  in this Plan and another  Plan
sequentially during any Performance Period because of promotion or reassignment,
provided  that  participation  in each such plan is pro-rated to reflect (to the
nearest weekly increment) the period during which he or she participated in each
plan.

                  3.     Administration

                         The administration of the Plan shall be consistent with
the purpose  and the terms of the Plan.  The Plan shall be  administered  by the
Committee  with  respect to  Officers  and by the CEO with  respect to all other
Participants.  The  Committee  and the CEO, as the case may be,  shall have full
authority  to  establish  the rules and  regulations  relating  to the Plan,  to
interpret the Plan and those rules and  regulations,  to select  Participants in
the Plan, to determine each  Participant's  Target Award Percentage,  to approve
all Awards,  to decide the facts in any case arising  under the Plan and to make
all other  determinations and to take all other actions necessary or appropriate
for the proper  administration  of the Plan,  including  the  delegation of such
authority  or  power,  where  appropriate;  provided,  however,  that  only  the
Committee  shall have authority to amend or terminate the Plan. The  Committee's
and  the  CEO's  administration  of the  Plan,  including  all  such  rules  and
regulations, interpretations,  selections, determinations, approvals, decisions,
delegations,  amendments,  terminations  and other  actions,  shall be final and
binding on the Company,  their respective  stockholders and all employees of the
Company, including the Participants and their respective beneficiaries.

                  4.     Determination of Awards

                         Prior to, or as soon as practicable following, the
commencement of each Performance Period, the CEO with respect to Employees other
than Officers  shall  determine the Employees who shall be  Participants  during
that Performance Period and determine each Participant's Target Award Percentage
and the Committee shall determine each Officer's  Target Award  Percentage.  The
Company shall prepare  schedules,  which will be treated as part of the Plan for
that  Performance  Period,  setting  forth  (a)  the  Participants  during  that
Performance  Period,  (b) each  Participant's  Target Award  Percentage for that
Performance  Period,  and (c) the EPS Target for that Performance  Period (which
shall be established  within 90 days after the  commencement of such Performance
Period).  The Company shall notify each  Participant  of his or her Target Award
Percentage.

                         A Participant earns an Award for a Performance Period
based on (i) the Company's  achievement of the EPS Target,  and (ii) in the case
of  Participants  other than Officers of the Company,  his or her achievement of
personal performance goals. An Award will be earned only if the Company achieves
at least 90% of the EPS Target  for the  Performance  Period.  The award of each
Participant  who is not an Officer shall be adjusted based on the  Participant's
achievement of his or her personal  performance goals. The calculation of Awards
is more fully set forth in this Section 5.

                         Awards shall be earned by Participants in accordance
with the following formula:

                                                              Personal
                   Target              EPS                  Performance
Base               Award               Award                 Percentage
Salary     X       Percentage    X     Earned     X       (Other than Officers)

(a)  EPS Award Earned. The EPS Award Earned is determined in accordance with the
following table:


           EPS as                         EPS
          % of Plan                   Award Earned

             90%                          90%

            100%                          100%

            110%                          110%

            120%                          120%

            130%                          130%

            140%                          140%

            150%                          150%

Straight line  interpolation  shall be used to determine the EPS Award Earned
with respect to performance between the levels specified in the EPS Award Earned
Table.

(b)      Personal Performance Percentage.  Officers are not eligible for an
adjustment based on personal performance.  Other Participant's performance shall
be evaluated and a Personal Performance Percentage for such Participant shall be
recommended  to the CEO. The Personal  Performance  Percentage may range from 80
percent to 120 percent to reflect the achievement of the Participant's  personal
performance goals during the Performance  Period,  provided,  however,  that the
application  of this  Section 5(b) shall not result in the  Participant's  Award
exceeding  150 percent of his or her Base Salary  times his or her Target  Award
Percentage for the Performance Period.

                  5.     Changes to the Target

                         The Committee, with respect to Officers, and the CEO,
with  respect  to all  other  Participants,  may at any time  prior to the final
determination of Awards change the Target Award Percentage of any Participant or
assign a different  Target  Award  Percentage  to a  Participant  to reflect any
change in the Participant's  responsibility  level or position during the course
of the Performance Period.

                         The Committee, with respect to Officers, and the CEO,
with  respect  to all  other  Participants,  may at any time  prior to the final
determination  of Awards  change the EPS Target to reflect a change in corporate
capitalization,  such  as a  stock  split  or  stock  dividend,  or a  corporate
transaction,  such as a merger,  consolidation,  separation,  reorganization  or
partial or  complete  liquidation,  or to  equitably  reflect  changed  business
circumstances during the Performance Period, the occurrence of any extraordinary
event, any change in applicable  accounting  rules or principles,  any change in
the Company's method of accounting, any change in applicable law, any change due
to any merger, consolidation,  acquisition,  reorganization,  stock split, stock
dividend  combination  of shares or other  changes  in the  Company's  corporate
structure or shares, or any other change of a similar nature.

                  6.     Payment of Awards

                         As soon as practicable after the close of a Performance
Period,  the Committee,  with respect to Officers,  and the CEO, with respect to
all other  Participants,  shall  review and approve  each  Participant's  Award.
Subject to the provisions of Section 8, each Award to the extent earned shall be
paid in a single lump sum cash payment,  as soon as practicable  after the close
of the  Performance  Period,  but no later  than 120 days after the close of the
Performance  Period.  The Committee  shall certify in writing the amount of each
Officer's Award prior to payment thereof.

                         If a Change in Control occurs, the Company shall,
within 60 days thereafter, pay to each Participant in the Plan immediately prior
to the Change in Control (regardless of whether the Participant remains employed
after the Change in  Control)  an Award which is  calculated  assuming  that all
performance percentages are 100 percent, and such Award shall be prorated to the
date of the Change in Control based on the  Participant's  Base Salary earned to
the date of the Change in Control.

                  7.     Limitations on Rights to Payment of Awards

                         No Participant shall have any right to receive payment
of an Award  under the Plan for a  Performance  Period  unless  the  Participant
remains in the employ of the Company  through the Award payment date,  except as
provided in the last  paragraph of Section 6. However,  if the  Participant  has
active service with the Company for at least three months during any Performance
Period,  a  Participant's  employment  with the  Company  terminates  due to the
Participant's  death,  Disability  or  Retirement  (or,  in  the  event  of  the
Participant's death, the Participant's  estate,  beneficiary or beneficiaries as
determined  under Section 8) shall remain eligible to receive a prorated portion
of any  earned  Award,  based on the number of weeks  that the  Participant  was
actively employed and performed services during such Performance Period.

                  8.     Designation of Beneficiary

                         A Participant may designate a beneficiary or
beneficiaries who, in the event of the Participant's death prior to full payment
of any Award  hereunder,  shall receive payment of any Award due under the Plan.
Such  designation  shall be made by the  Participant on a form prescribed by the
Committee.  The Participant may, at any time, change or revoke such designation.
A beneficiary  designation,  or revocation of a prior  beneficiary  designation,
will  be  effective  only if it is made in  writing  on a form  provided  by the
Company, signed by the Participant and received by the Company's Human Resources
Department.  If  the  Participant  does  not  designate  a  beneficiary  or  the
beneficiary  dies prior to  receiving  any payment of an Award,  Awards  payable
under the Plan shall be paid to the Participant's estate.

<PAGE>

                 9.       Amendment and Termination

                           (a)      The Committee may at any time, or from time
to time,  amend,  in whole  or in part,  the  Plan.  However,  no  amendment  or
termination of the Plan shall  adversely  affect any  Participant's  right to or
interest  in an Award  earned  prior to the date of such  amendment,  unless the
Participant agrees in writing thereto.

                            (b)      The Committee may terminate the Plan, in
whole or in part; however, each Participant shall receive an amount equal to the
amount of the Award  that  would  have  been  paid for the  Performance  Period,
prorated for the number of weeks in the Performance  Period prior to the date of
termination of the Plan.

                  10.      Miscellaneous Provisions

                           (a)      This Plan is not a contract between the
Company and the Employees or the Participants. Neither the establishment of this
Plan, nor any action taken hereunder,  shall be construed as giving any Employee
or any  Participant  any right to be retained in the employ of the Company.  The
Company is under no obligation to continue the Plan.

                           (b)      A Participant's right and interest under the
Plan may not be  assigned or  transferred,  except as provided in Section 8, and
any  attempted  assignment  or  transfer  shall  be  null  and  void  and  shall
extinguish, in the Company's sole discretion, the Company's obligation under the
Plan to pay Awards with respect to the Participant.

                           (c)      The Plan shall be unfunded.  The Company
shall not be required to establish any special or separate  fund, or to make any
other segregation of assets, to assure payment of Awards.

                           (d)      The Company shall have the right to deduct
from Awards paid, any taxes or other amounts required by law to be withheld.

                           (e)      Nothing contained in the Plan shall limit
or affect in any manner or degree the  normal  and usual  powers of  management,
exercised by the Officers and the Board of Directors or committees  thereof,  to
change the duties or the  character of employment of any employee of the Company
or to remove the individual  from the employment of the Company at any time, all
of which rights and powers are expressly reserved.

(f)      The Plan and the rights of all persons claiming hereunder shall be
construed and  determined in accordance  with the laws of the State of New York,
without giving effect to conflict of law principles thereof.


<PAGE>

                  11.    Definitions

                         (a)         "Award" shall mean the incentive award
earned by a Participant under the Plan for any Performance Period.

                         (b)        "Base Salary" shall mean the Participant's
annual base salary, paid in the performance period.  Annual base salary does not
include Awards under the Plan,  long-term incentive awards,  imputed income from
such  programs as executive  life  insurance or  nonrecurring  earnings  such as
moving  expenses  and is based on salary  before  reductions  for such  items as
contributions under Sections 401(k) or 125 of the Internal Revenue Code of 1986,
as amended, and Company-sponsored deferred compensation arrangements.

                         (c)        "Beneficial Owner", "Beneficially Owned" and
"Beneficially  Owning"  shall  have the  meanings  applicable  under  Rule 13d-3
promulgated under the 1934 Act.

                         (d)         "Board" shall mean the Board of Directors
of the Company.

                         (e)         "CEO" shall mean the Chief Executive
Officer of the Company.

                         (f)         "Change in Control" shall mean any of the
following:

                                    (1)     the acquisition by any Person, other
than Instrument  Partners or Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership-IV or any of their Affiliates  (collectively,  the
"Forstmann  Little  Companies")  of  Beneficial  Ownership of Voting  Securities
which,  when  added to the Voting  Securities  then  Beneficially  Owned by such
Person,  would result in such Person  Beneficially Owning (A) 33% or more of the
combined Voting Power of the  Corporation's  then outstanding  Voting Securities
and (B) a number of  Voting  Securities  greater  than the  aggregate  number of
Voting  Securities then  Beneficially  Owned by the Forstmann Little  Companies;
provided,  however,  that for purposes of this paragraph (1), a Person shall not
be deemed to have made an acquisition of Voting  Securities if such Person:  (i)
acquires Voting Securities as a result of a stock split, stock dividend or other
corporate  restructuring  in which all  stockholders of the class of such Voting
Securities are treated on a pro rata basis;  (ii) acquires the Voting Securities
directly from the Corporation; (iii) becomes the Beneficial Owner of 33% or more
of the  combined  Voting  Power of the  Corporation's  then  outstanding  Voting
Securities  solely as a result of the  acquisition  of Voting  Securities by the
Corporation or any Subsidiary which, by reducing the number of Voting Securities
outstanding,  increases the proportional  number of shares Beneficially Owned by
such Person, provided that if (x) a Person would own at least such percentage as
a result of the  acquisition by the  Corporation or any Subsidiary and (y) after
such  acquisition by the  Corporation or any  Subsidiary,  such Person  acquires
Voting Securities, then an acquisition of Voting Securities shall have occurred;
(iv) is the  Corporation or any  corporation or other Person of which a majority
of its  voting  power or its  equity  securities  or  equity  interest  is owned
directly or  indirectly  by the  Corporation  (a  "Controlled  Entity");  or (v)
acquires Voting  Securities in connection with a "Non-Control  Transaction"  (as
defined in paragraph (3) below); or

                                    (2)     the individuals who, as of the
Effective Date, are members of the Board (the  "Incumbent  Board") cease for any
reason to constitute at least two-thirds of the Board;  provided,  however, that
if either the election of any new director or the nomination for election of any
new  director by the  Corporation's  stockholders  was  approved by a vote of at
least  two-thirds of the Incumbent  Board prior to such election or  nomination,
such new  director  shall be  considered  as a member  of the  Incumbent  Board;
provided  further,  however,  that no individual shall be considered a member of
the Incumbent Board if such individual  initially  assumed office as a result of
either an actual or threatened  "Election  Contest" (as described in Rule 14a-11
promulgated  under the Exchange Act) or other actual or threatened  solicitation
of  proxies  or  consents  by or on behalf of a Person  other  than the Board (a
"Proxy  Contest")  including  by reason of any  agreement  intended  to avoid or
settle any Election Contest or Proxy Contest; or

                                    (3)     approval by stockholders of the
Corporation of:

                                            (A)      a merger, consolidation or
reorganization involving the Corporation (a "Business Combination"), unless

                                                     (i)      the stockholders
of the Corporation,  immediately before the Business Combination,  own, directly
or  indirectly  immediately  following  the  Business  Combination,  at  least a
majority of the combined  voting power of the outstanding  voting  securities of
the  corporation   resulting  from  the  Business  Combination  (the  "Surviving
Corporation")  in  substantially  the same  proportion as their ownership of the
Voting Securities immediately before the Business Combination, and

                                                     (ii)     the individuals
who were members of the Incumbent  Board  immediately  prior to the execution of
the  agreement  providing  for the Business  Combination  constitute  at least a
majority of the members of the Board of Directors of the Surviving  Corporation,
and

                                                     (iii)    no Person (other
than the  Corporation or any  Controlled  Entity,  a trustee or other  fiduciary
holding  securities under one or more employee benefit plans or arrangements (or
any trust forming a part thereof)  maintained by the Corporation,  the Surviving
Corporation or any Controlled  Entity,  or any Person who,  immediately prior to
the Business  Combination,  had Beneficial  Ownership of 33% or more of the then
outstanding  Voting  Securities) has Beneficial  Ownership of 33% or more of the
combined voting power of the Surviving  Corporation's  then  outstanding  voting
securities (a Business  Combination  satisfying  the  conditions of clauses (i),
(ii) and (iii) of this  subparagraph  (A) shall be referred to as a "Non-Control
Transaction");

                                            (B)      a complete liquidation or
 dissolution of the Corporation; or

                                            (C)      the sale or other
disposition of all or substantially all of the assets of the Corporation  (other
than a transfer to a Controlled Entity).

                         Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because 33% or more of the then  outstanding
Voting  Securities  is  Beneficially  Owned by (x) a trustee or other  fiduciary
holding  securities under one or more employee benefit plans or arrangements (or
any  trust  forming  a  part  thereof)  maintained  by  the  Corporation  or any
Controlled  Entity  or (y)  any  corporation  which,  immediately  prior  to its
acquisition  of  such   interest,   is  owned  directly  or  indirectly  by  the
stockholders  of the  Corporation in the same  proportion as their  ownership of
stock in the Corporation immediately prior to such acquisition.

                         (g)        "Committee" shall mean the Compensation
Committee of the Board.

                         (h)        "Company" shall mean General Semiconductor,
 Inc.,  and any Subsidiary which has adopted the Plan.


                         (i)        "Disability" shall mean permanent
disability, as defined in the Company's long-term disability plan.

                         (j)        "Earnings Per Share", for any Performance
Period,  shall  mean the  income per share of the  Company's  common  stock on a
diluted  basis,  before  extraordinary  items,  effects of changes in accounting
principles and other similar  adjustments,  as reflected in the Company's  final
consolidated financial statements for such Performance Period.

                          (k)      "Effective Date" shall mean January 1, 1999.

                          (l)       "Employee" shall mean any person (including
an officer)  employed by the Company or any of its  subsidiaries in a management
position on a full-time salaried basis.

                         (m)        "EPS Award Earned," for any Performance
Period,  shall mean the percentage based on the achievement of the EPS Target as
determined in accordance with the table set forth in Section 5(a).

                         (n)        "EPS Target," for any Performance Period,
shall  mean  the  Earnings  Per  Share  goal  for such  Performance  Period,  as
established by the Committee.


                         (o)        "1934 Act" shall mean the Securities
Exchange Act of 1934, as amended.

                         (p)        "Officer" shall mean the CEO and an
officer of the Company elected by the Board.

                         (q)        "Participant," for any Performance Period,
shall mean an Employee  selected to participate in the Plan for such Performance
Period.

                         (r)        "Performance Period" shall mean the fiscal
year of the Company or any other period designated by the Committee with respect
to which an Award is earned.

                         (s)        "Person" shall mean a person within the
meaning of Sections 13(d) and 14(d) of the 1934 Act.

                         (t)        "Personal Performance Percentage," with
respect to Participants (other than Officers) for any Performance Period,  shall
mean the percentage based on the achievement of personal  performance  goals, as
determined in accordance with Section 5(b).

                         (u)        "Plan" shall mean this General
Semiconductor, Inc. 1999 Annual Incentive Plan, as from time to time amended and
in effect.

                         (v)        "Retirement" shall mean retirement at or
after age 65 or early retirement with the prior written approval of the Company.

                         (w)        "Subsidiary" shall mean a corporation as
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended, with
the Company  being  treated as the  employer  corporation  for  purposes of this
definition.

                         (x)        "Target Award Percentage" for any
Participant with respect to any Performance Period, shall mean the percentage of
the  Participant's  Base Salary that the Participant  would earn as an Award for
that Performance Period if the EPS Target Award Earned and Personal  Performance
Percentage (if  applicable)  for that  Performance  Period is 100%, and shall be
determined by the Committee with respect to Officers and the CEO with respect to
all other Participants,  based on the Participant's  responsibility level or the
position or positions held during the Performance Period.

                         (y)        "Voting Power" shall mean the combined
voting power of the then outstanding Voting Securities.

                         (z)        "Voting Securities" shall mean, with
respect to the Company or any Subsidiary,  any securities  issued by the Company
or such Subsidiary,  respectively, which generally entitle the holder thereof to
vote  for  the  election  of  directors  of  the  Company  or  such  Subsidiary,
respectively.



Adopted:  July 21, 1999