exhibit10-1.htm


     

     

     

     

     

     

    FORM OF

     

    MASTER SEPARATION AND DISTRIBUTION
AGREEMENT

     

    
between

     

    VISHAY INTERTECHNOLOGY,
INC.

     

    
and

     

    VISHAY PRECISION GROUP,
INC.

     

     

     

     

     

     

     

    

    
    


    TABLE OF CONTENTS

     

    
      	
            	
            	
            	
            	
            	Page
	ARTICLE I	DEFINITIONS	2
	       	 
	ARTICLE II	BUSINESS SEPARATION	14
	
            	Section 	  	2.1	Separation	14
	
            	Section 	
            	2.2	[Intentionally omitted]	14
	
            	Section 	
            	2.3	Transfer of Separated Assets; Assumption of Assumed
      Liabilities	15
	
            	Section 	
            	2.4	Separated Assets	15
	
            	Section 	
            	2.5	Liabilities	17
	
            	Section 	
            	2.6	Excluded Assumed Liabilities	19
	
            	Section 	
            	2.7	Deferred Separation Transactions	19
	
            	Section 	
            	2.8	Consents and Governmental Approvals	19
	
            	Section 	
            	2.9	Novation of the Assumed Liabilities	20
	
            	Section 	
            	2.10	Documents Relating to Transfers of the Separated Assets and
      Assumption of the Assumed Liabilities	21
	
            	Section 	
            	2.11	Termination of Agreements	22
	
            	Section 	
            	2.12	Release of Security Interest	22
	
            	Section 	
            	2.13	No Representation or Warranty	22
	
            	Section 	
            	2.14	Use of Cash	23
	
            	Section 	
            	2.15	Plan of Reorganization	23
	
            	Section 	
            	2.16	Assets Transferred to Vishay	23
	
            	Section 	
            	2.17	Net Cash	23
	
            	
            	
            	             	 	
            
	ARTICLE III	THE DISTRIBUTION AND ACTIONS PENDING THE DISTRIBUTION	24
	
            	Section 	
            	3.1	Transactions Prior to the Distribution	24
	
            	Section 	
            	3.2	Conditions Precedent to Consummation of the Distribution	25
	
            	Section 	
            	3.3	Documents to be Delivered by Vishay	27
	
            	Section 	
            	3.4	Documents to be Delivered by VPG	27
	
            	Section 	
            	3.5	Distribution	28
	
            	 
	ARTICLE IV	ADDITIONAL COVENANTS, FURTHER ASSURANCES AND OTHER
MATTERS	30
	
            	Section 	
            	4.1	Provision of Corporate Records	30
	
            	Section 	
            	4.2	Further Assurance	30
	
            	Section 	
            	4.3	Agreement For Exchange Of Information	31
	
            	Section 	
            	4.4	Production of Witnesses; Records; Cooperation	33
	
            	Section 	
            	4.5	Confidentiality	33
	
            	Section 	
            	4.6	Privileged Matters	34
	
            	Section 	
            	4.7	Cooperation with Respect to Know-how	36
	
            	Section 	
            	4.8	VPG Exchangeable Notes and VPG Warrants	36
	
            	Section 	
            	4.9	Tax Matters	36
	
            	Section 	
            	4.10	Employee Matters	37
	
            	Section 	
            	4.11	Intellectual Property	37 


    


    - i -

     

    

    
    


    
      	
            	Section 	
            	4.12	Services Support	37
	
            	Section 	
            	4.13	Real Property	37
	       	
            	 	             	 	
            
	ARTICLE V	SURVIVAL AND INDEMNIFICATION	37
	
            	Section 	
            	5.1	Mutual Release	37
	
            	Section 	
            	5.2	Indemnification by Vishay	39
	
            	Section 	
            	5.3	Indemnification by VPG	40
	
            	Section 	
            	5.4	Tax Indemnification	40
	
            	Section 	
            	5.5	Indemnification Obligations Net of Insurance Proceeds and Other
      Amounts	40
	
            	Section 	
            	5.6	Procedures for Indemnification of Third Party Claims	41
	
            	Section 	
            	5.7	Procedures for Indemnification of Direct Claims	43
	
            	Section 	
            	5.8	Payments 	43
	
            	Section 	
            	5.9	Contribution	43
	
            	Section 	
            	5.10	Remedies Cumulative	44
	
            	Section 	
            	5.11	Survival of Indemnities	44
	
            	 
	ARTICLE VI	CONTINGENT GAINS AND CONTINGENT LIABILITIES	44
	
            	Section 	
            	6.1	Contingent Gains	44
	
            	Section 	
            	6.2	Exclusive Contingent Liabilities	45
	
            	Section 	
            	6.3	Shared Contingent Liabilities	45
	
            	Section 	
            	6.4	Payments 	45
	
            	Section 	
            	6.5	Procedures to Determine Status of Contingent Liability or
      Contingent Gain	46
	
            	Section 	
            	6.6	Certain Case Allocation Matters	46
	
            	  
	ARTICLE VII	INSURANCE 	47
	
            	Section 	
            	7.1	Insurance Matters Generally	47
	
            	Section 	
            	7.2	Shared Insurance Policies	47
	
            	Section 	
            	7.3	Insurance for VPG Officers & Directors	48
	
            	Section 	
            	7.4	Director and Officer Indemnification	49
	
            	Section 	
            	7.5	VPG Insurance	49
	
            	 
	ARTICLE VIII	DISPUTE RESOLUTION	49
	
            	Section 	
            	8.1	Agreement to Resolve Disputes	49
	
            	Section 	
            	8.2	Dispute Resolution; Mediation	49
	
            	Section 	
            	8.3	Arbitration	51
	
            	Section 	
            	8.4	Continuity of Service and Performance	51
	
            	Section 	
            	8.5	Limitation of Liability	51
	
            	 
	ARTICLE IX	Termination	52
	
            	 
	ARTICLE X	MISCELLANEOUS	52
	
            	Section 	
            	10.1	Counterparts	52
	
            	Section 	
            	10.2	Entire Agreement	52
	
            	Section 	
            	10.3	Construction	52
	
            	Section 	
            	10.4	Assignability	53 


    


    - ii -

     

    

    
    


    
      	
            	Section	 	10.5	Third Party Beneficiaries	53
	
            	Section	 	10.6	Governing Law	54
	
            	Section	 	10.7	Notices 	54
	
            	Section	 	10.8	Severability	55
	
            	Section 	 	10.9	Nonrecurring Costs and Expenses	55
	
            	Section	 	10.10	Press Releases; Public Announcements	55
	
            	Section	 	10.11	Survival of Covenants	56
	
            	Section	 	10.12	Waiver of Default	56
	
            	Section	 	10.13	Amendments	56
	
            	Section	 	10.14	Specific Performance	56
	
            	Section	 	10.15	Consent to Jurisdiction	56
	
            	Section	 	10.16	Waiver of jury trial	57
	       	
            	 	             	
            	
            
	Annex A 	VPG Group Balance Sheet	
            
	
            	 
	SCHEDULES	
            	
            
	Schedule 1.1	Capital Allocation Transactions	
            
	Schedule 1.2	Exclusive Vishay Contingent Gain	
            
	Schedule 1.3	Exclusive Vishay Contingent Liability	
            
	Schedule 1.4	Exclusive VPG Contingent Gain	
            
	Schedule 1.5	Exclusive VPG Contingent Liability	
            
	Schedule 1.6	Separation Transactions	
            
	Schedule 1.7	Shared Contingent Gain	
            
	Schedule 1.8	Shared Contingent Liability	
            
	Schedule 1.9	VPG Contracts	
            
	Schedule 2.4(a)(iii)	Wholly-Owned Subsidiaries of VPG	
            
	Schedule 2.4(b)(i)	Excluded Assets	
            
	Schedule 2.5(a)(v) 	Assumed Liabilities	
            
	Schedule 2.5(a)(vi)	Environmental Liabilities	
            
	Schedule 2.5(b)(ii)	Excluded Assumed Liabilities	
            
	Schedule 2.16	Assets Being Transferred to Members of Vishay Group	
            
	Schedule 3.2(h)	Consents and Approvals	
            
	Schedule 3.3(b)	Director and Officer Resignations by Members of Vishay
    Group	
            
	Schedule 3.4(b)	Director and Officer Resignations by Members of VPG Group	
            
	Schedule 5.1(a)	Mutual Release	
            
	Schedule 6.5 (a)	Contingent Liability; Contingent Gain	
            
	
            	 
	EXHIBITS	
            	
            
	Exhibit A 	Employee Matters Agreement	
            
	Exhibit B 	IP License Agreement	
            
	Exhibit C 	Lease Agreements	
            
	Exhibit D 	Option Agreement	
            
	Exhibit E 	Patent License Agreement	
            
	Exhibit F 	RCK Manufacturing Agreement	
            
	Exhibit G 	RCK Supply Agreement	
            
	Exhibit H 	Secondment Agreement	
            
	Exhibit I 	Supply Agreement	
            
	Exhibit J 	Tax Matters Agreement	
            
	Exhibit K 	Trademark License Agreement	
            
	Exhibit L 	Transition Services Agreements	
            


    


    - iii -

     

    

    
    


    FORM OF

     

    MASTER SEPARATION AND DISTRIBUTION
AGREEMENT

     

         This Master Separation and Distribution Agreement (this “Agreement”) is entered into as of ___________ ___,
2010, by and between Vishay Intertechnology, Inc., a corporation organized under
the laws of the State of Delaware (“Vishay”), and Vishay Precision Group, Inc., a
corporation organized under the laws of the State of Delaware (“VPG”).

     

    RECITALS

     

         WHEREAS, the Board of Directors of Vishay (the “Vishay Board”) has determined it is appropriate and
desirable to separate Vishay and VPG into two publicly-traded companies by
separating from Vishay and transferring to VPG Vishay’s MGF Business (as defined
below), and related assets and liabilities, in a series of transactions on the
terms and conditions set forth herein. 

     

         WHEREAS, the Vishay Board has determined that it would be advisable and
in the best interests of Vishay and its stockholders for Vishay to distribute,
on a pro rata basis, (i) to the holders as of the Record Date (as defined below)
of the issued and outstanding shares of Vishay’s common stock, par value $0.10
per share (the “Vishay common stock”), all of the issued and outstanding shares
of VPG’s common stock, par value $0.10 per share (the “VPG common stock”), owned by Vishay as of the Distribution
Date (as defined below) and (ii) to the holders as of the Record Date of the
issued and outstanding shares of Vishay’s Class B common stock, par value $0.10
per share (the “Vishay Class B common stock”, together with the Vishay common stock, the
“Vishay Stock”), all of the issued and outstanding shares
of VPG’s Class B common stock, par value $0.10 per share (the “VPG Class B common stock”, together with VPG common stock, the
“VPG Stock”), owned by Vishay as of the Distribution
Date, in each case, as further described herein (collectively, the “Distribution”); 

     

         WHEREAS, Vishay and VPG intend that the Separation (as defined below) and
the Distribution will qualify for United States federal income tax purposes as
transactions that are generally tax free under, among other provisions, Sections
355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the
“Code”) and hereby adopt this Agreement as a
“plan of reorganization”; and 

     

         WHEREAS, the parties intend in this Agreement to set forth the principal
arrangements between them regarding the Separation and the Distribution and
certain other agreements that will govern the relationship of Vishay and VPG
following the Distribution. 

     

         NOW, THEREFORE, in consideration of the mutual promises, covenants,
agreements, representations and warranties contained herein, and for other good
and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree, intending to be legally bound, as
follows:

     

    

    
    


    ARTICLE I 

     

    DEFINITIONS 

     

         Capitalized terms used but not defined herein shall have the meanings set
forth in this Article I. 

     

         “AAA” has the meaning set forth in Section 8.3(a) of this Agreement. 

     

         “Action” means any claim, demand, action, suit,
counter suit, arbitration, inquiry, proceeding or investigation by or before any
Governmental Authority and shall include any negotiations in settlement of or in
lieu of an Action. 

     

         “Actual VPG Net Cash” has the meaning set forth in Section 2.17(a) of this Agreement.


     

         “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.


     

         “Agent” means the distribution agent to be appointed
by Vishay to distribute to the stockholders of Vishay pursuant to the
Distribution all of the shares of VPG Stock. 

     

         “Agreement” has the meaning set forth in the preamble of
this Agreement. 

     

         “Ancillary Agreements” means the (i) Tax Matters Agreement, (ii)
Transition Services Agreements, (iii) Employee Matters Agreement, (iv) License
Agreements, (v) Lease Agreements, (vi) RCK Agreements, (vii) Strain Gage
Agreements, (viii) Supply Agreements, and (ix) Secondment Agreements, and, in
the singular, means any one of them. 

     

         “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. 

     

         “Assets” means assets, properties and rights
(including goodwill), wherever located (including in the possession of vendors
or other third parties or elsewhere), whether real, personal or mixed, tangible,
intangible or contingent, in each case whether or not recorded or reflected or
required to be recorded or reflected on the books and records or financial
statements of any Person, including the following: 

     

         (i) all accounting and other books, records and files whether in paper,
microfilm, microfiche, computer tape or disc, magnetic tape or any other form;


     

         (ii) all computers and other electronic data processing equipment,
fixtures, machinery, equipment, furniture, office equipment, motor vehicles and
other transportation equipment, special and general tools, prototypes and models
and other tangible personal property, wherever located that are owned or leased
by the Person, together with any express or implied warranty by the
manufacturers, sellers or lessors of any item or component part
thereof;

     

    - 2 -

     

    

    
    


         (iii) all inventories, wherever located, including all finished goods,
(whether or not held at a location or facility or in transit), work in process,
raw materials, spare parts and all other materials and supplies to be used or
consumed in the production of finished goods; 

     

         (iv) all interests in real property of whatever nature, including any
Encumbrances thereto, whether as owner, mortgagee or holder of a Security
Interest in real property, lessor, sublessor, lessee, sublessee or otherwise;


     

         (v) all interests in any capital stock or other equity interests of any
Subsidiary or any other Person; all bonds, notes, debentures or other securities
issued by any Subsidiary or any other Person; all loans, advances or other
extensions of credit or capital contributions to any Subsidiary or any other
Person; and all other investments in securities of any Person; 

     

         (vi) all license agreements, leases of personal property, open purchase
orders for raw materials, supplies, parts or services, unfilled orders for the
manufacture and sale of products and other contracts, agreements or commitments;


     

         (vii) all deposits and prepaid expenses, letters of credit and
performance and surety bonds, claims for refunds and rights of set-off in
respect thereof; 

     

         (viii) all written technical Information, data, specifications, research
and development Information, engineering drawings, operating and maintenance
manuals, and materials and analyses whether prepared by Affiliates, by
consultants or other third parties; 

     

         (ix) all Intellectual Property and licenses from third Persons granting
the right to use any Intellectual Property; 

     

         (x) all computer applications, programs and other software (whether in
source code, object code or other form), including operating software, network
software, firmware, middleware, design software, design tools, compilations and
data, technology supporting the foregoing, systems documentation, and user and
training materials and instructions related to any of the foregoing;


     

         (xi) all cost Information, sales and pricing data, customer prospect
lists, supplier records, customer and supplier lists, customer and vendor data,
correspondence and lists, product literature, artwork, design, development and
manufacturing files, vendor and customer drawings, formulations and
specifications, quality records and reports and other books, records, studies,
surveys, reports, plans and documents; 

     

         (xii) all trade accounts and notes receivable and other rights to payment
from customers and all security for such accounts or rights to payment,
including all trade accounts receivable representing amounts receivable in
respect of goods shipped or products sold or otherwise disposed of or services
rendered to customers, (b) all other accounts and notes receivable and all
security for such accounts or notes, and (c) any claim, remedy or other right
relating to any of the foregoing;

     

    - 3 -

     

    

    
    


         (xiii) all rights under Contracts, all claims or rights against any
Person arising from the ownership of any Asset, all rights in connection with
any bids or offers and all claims, choses in action or similar rights, whether
accrued or contingent; 

     

         (xiv) all rights under insurance policies and all rights in the nature of
insurance, indemnification or contribution, including Insurance Proceeds;


     

         (xv) all licenses, permits, approvals and authorizations which have been
issued by any Governmental Authority; and 

     

         (xvi) cash or cash equivalents, bank accounts, lock boxes and other
deposit arrangements. 

     

         “Assumed Liabilities” has the meaning set forth in Section 2.5(a) of this Agreement. 

     

         “Auditor” has the meaning set forth in Section 2.17(b) of this Agreement. 

     

         “Business” means the Vishay Business or the MGF
Business, as the context requires. 

     

         “Business Day” means any day other than a Saturday, Sunday
or a day on which commercial banks are authorized or required to close in New
York, New York or in Philadelphia, Pennsylvania. 

     

         “Capital Allocation
Transactions” means the
repayment of outstanding indebtedness owed by one or more members of the VPG
Group to one or more members of the Vishay Group or by one or more members of
the Vishay Group to one or more members of the VPG Group or any dividend or
other distributions by one or more members of the VPG Group to one or more
members of the Vishay Group or a capital contribution by one or more members of
the Vishay Group to one or more members of the VPG Group, as described in
Schedule 1.1, and in the singular means any one such
transaction. The Capital Allocation Transactions are intended to proceed in
accordance with and pursuant to the steps set forth in the request for a private
letter ruling submitted by Vishay to the IRS on December 23, 2009, as amended
from time to time. 

     

         “Class B Common Stock Distribution
Ratio” has the meaning set
forth in Section 3.5(c)(iii) of this Agreement. 

     

         “Code” has the meaning set forth in the recitals to
this Agreement. 

     

         “Commission” means the Securities and Exchange
Commission. 

     

         “Common Stock Distribution
Ratio” has the meaning set
forth in Section 3.5(c)(iii) of this Agreement. 

     

    - 4 -

     

    

    
    


         “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, prior to or following the
Distribution Date, has been disclosed by Vishay or members of its Group on the
one hand, or VPG 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, including pursuant to the access
provisions of Section 4.3 hereof or any other provision of this
Agreement. 

     

         “Consents” means any consents, waivers or approvals, or
notification requirements. 

     

         “Contingent Claim Committee” means a committee composed of one
representative designated from time to time by each of Vishay and VPG that shall
be established in accordance with Section 6.5. 

     

         “Contingent Gain” means any claim or right of any member of
the Vishay Group or the VPG Group, whenever arising, against any Person, other
than a Person released or intended to be released from a claim or other right
under Article V; provided, that (i) such claim or right
has accrued as of the Distribution Date, and (ii) the existence or scope of the
claim or right against such other Person was not acknowledged, fixed or
determined in any material respect as of the Distribution Date as a result of a
dispute or as a result of any other uncertainty due to the failure of such claim
or right to have been discovered or asserted as of the Distribution Date. For
purposes of the foregoing, a claim or right shall be deemed to have accrued as
of the Distribution Date if all the elements of the claim necessary for its
assertion shall have occurred on or prior to the Distribution Date such that the
claim or right, were it to have been asserted in an Action on or prior to the
Distribution Date, would not be dismissed by a court on ripeness or similar
grounds, regardless of whether there was any Action pending, threatened or
contemplated as of the Distribution Date with respect thereto. 

     

         “Contingent Liability” means any Liability of a member of the
Vishay Group or the VPG Group, whenever arising, against any Person unless that
Person has been released or the Liability to that Person is intended to be
released under Article V; provided, that (i) such Liability has accrued as of
the Distribution Date and (ii) the existence or scope of such Liability was not
acknowledged, fixed or determined in any material respect as of the Distribution
Date as a result of a dispute or as a result of any other uncertainty due to the
failure of such Liability to have been discovered or asserted as of the
Distribution Date. For purposes of the foregoing, a Liability shall be deemed to
have accrued as of the Distribution Date if all the elements necessary for the
assertion of a claim with respect to such Liability shall have occurred on or
prior to the Distribution Date such that the claim, were it to have been
asserted in an Action on or prior to the Distribution Date, would not be
dismissed by a court on ripeness or similar grounds.

     

    - 5 -

     

    

    
    


         “Contract” means any contract, agreement, lease,
purchase and/or commitment, license, consensual obligation, promise or
undertaking (whether written or oral and whether express or implied) that is
legally binding on any Person or any part of its property under Applicable Law,
including all claims or rights against any Person, choses in action and similar
rights, whether accrued or contingent with respect to any such contract,
agreement, lease, purchase and/or commitment, license, consensual obligation,
promise or undertaking, but excluding this Agreement and any Ancillary
Agreement, save as otherwise expressly provided in this Agreement or in any
Ancillary Agreement. 

     

         “Determination Date” has the meaning set forth in Section 2.17(b) of this Agreement. 

     

         “Determination Request” has the meaning set forth in Section 6.5(b) of this Agreement. 

     

         “Distribution” has the meaning set forth in the recitals to
this Agreement. 

     

         “Distribution Date” means the date determined by the Vishay
Board as the date on which the Distribution shall be effected. 

     

         “Dispute” has the meaning set forth in Section 8.2(a) of this Agreement. 

     

         “Dispute Notice” has the meaning set forth in Section 8.2(a) of this Agreement. 

     

         “Effective Time” has the meaning set forth in Section 3.5(b) of this Agreement. 

     

         “Employee Matters Agreement” means the Employee Matters Agreement
substantially in the form attached hereto as Exhibit A. From and after the Distribution Date, the
Employee Matters Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit A, as amended and/or modified from time to time
in accordance with its terms. 

     

         “Encumbrance” means, with respect to any Asset, mortgages,
liens, hypothecations, pledges, chares, security interests, easements,
encroachments, rights to acquire, use restrictions, transfer restrictions or
other encumbrances of any kind in respect of such Asset, whether or not filed,
recorded or otherwise perfected under Applicable Law. 

     

         “Environmental Law” means any federal, state, local, or foreign
law, regulation, order, judgment, decree, permit, authorization, common law or
agency requirement whether now existing or hereafter enacted or promulgated
relating to: (A) the protection, investigation, or restoration of the
environment, health, safety or natural resources; (B) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance; or
(C) noise, odor, indoor air, employee exposure, wetlands, pollution,
contamination or any injury or threat of injury to persons or property relating
to any Hazardous Substance; including but not limited to the Comprehensive
Environmental, Compensation and Liability Act of 1980 as amended, the Resource
Conservation and Recovery Act, the Clean Air Act as amended, the Toxic
Substances Control Act as amended, the Occupational Safety and Health Act of
1970 and comparable local, state and foreign statutes. As used herein,
“Hazardous Substance” means any substance that is: (A) listed, classified or
regulated pursuant to any Environmental Law; (B) any petroleum product or
by-product, asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyl, radioactive material or radon; and (C) any other
substance which is subject to regulatory Action by any Governmental Authority in
connection with any Environmental Law.

     

    - 6 -

     

    

    
    


         “Environmental Liabilities” means all Liabilities relating to, arising
out of or resulting from any Environmental Law or Contract relating to
environmental, health or safety matters (including all removal, remediation or
cleanup costs, investigatory costs, governmental response costs, natural
resources damages, property damages, personal injury damages, costs of
compliance with any product take back requirements or with any settlement,
judgment or other determination of Liability and indemnity, contribution or
similar obligations) and all costs and expenses, interest, fines, penalties or
other monetary sanctions in connection therewith. 

     

         “Exchange Act” means the Securities Exchange Act of 1934,
as amended, together with the rules and regulations promulgated thereunder.


     

         “Excluded Assets” has the meaning set forth in Section 2.4(b) of this Agreement. 

     

         “Excluded Assumed
Liabilities” has the
meaning set forth in Section 2.5(b) of this Agreement. 

     

         “Exclusive Vishay Contingent
Gain” means any Contingent
Gain if such Contingent Gain relates exclusively to the Vishay Business,
including the matters listed or described on Schedule 1.2 hereto, or if such Contingent Gain is
expressly assigned to any member of the Vishay Group pursuant to this Agreement
or any Ancillary Agreement. 

     

         “Exclusive Vishay Contingent
Liability” means any
Contingent Liability if such Contingent Liability relates exclusively to the
Vishay Business, including the matters listed or described on Schedule 1.3 hereto, or if such Contingent Liability is
expressly assigned to any member of the Vishay Group pursuant to this Agreement
or any Ancillary Agreement. 

     

         “Exclusive VPG Contingent
Gain” means any Contingent
Gain if such Contingent Gain relates exclusively to the MGF Business, including
the matters listed or described on Schedule 1.4 hereto, or if such Contingent Gain is
expressly assigned to any member of the VPG Group pursuant to this Agreement or
any Ancillary Agreement. 

     

         “Exclusive VPG Contingent
Liability” means any
Contingent Liability if such Contingent Liability relates exclusively to the MGF
Business, including the matters listed or described on Schedule 1.5 hereto, or if such Contingent Liability is
expressly assigned to any member of the VPG Group pursuant to this Agreement or
any Ancillary Agreement. 

     

         “final determination” has the meaning set forth in Section 5.8 of this Agreement. 

     

         “Form 10 Registration
Statement” means the
registration statement on Form 10 (including any and all exhibits filed thereto)
to be filed under the Exchange Act, pursuant to which the shares of VPG Stock to
be issued in VPG Distribution will be registered, together with all amendments
thereto.

     

    - 7 -

     

    

    
    


         “GAAP” has the meaning set forth in Section 2.4(a)(v) of this Agreement. 

     

         “Governmental Approvals” means any notices, reports or other filings
to be made, or any Consents, registrations, approvals, permits or authorizations
to be obtained from, any Governmental Authority. 

     

         “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 the Vishay Group or the VPG Group, as
the context requires. 

     

         “Indemnified Party” has the meaning set forth in Section 5.5(a) of this Agreement. 

     

         “Indemnifying Party” has the meaning set forth in Section 5.5(a) of this Agreement. 

     

         “Indemnity Payment” has the meaning set forth in Section 5.5(a) of this Agreement. 

     

         “Information” means information, whether or not patentable
or copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data, but in any case excluding back-up
tapes. 

     

         “Information Statement” means the information statement forming a
part of the Form 10 Registration Statement. 

     

         “Insurance Policy” means any insurance policies and insurance
Contracts, including without limitation general liability, property and
casualty, workers’ compensation, automobile, marine, directors & officers
liability, errors and omissions, employee dishonesty and fiduciary liability
policies and contracts, but excluding life and other benefits policies or
Contracts, whether in the nature of primary, excess, umbrella or self-insurance
overage, together with all rights, benefits and privileges thereunder.


     

         “Insurance Proceeds” means those monies (in each case net of any
costs or expenses incurred in the collection thereof and net of any applicable
premium adjustments (including reserves and retrospectively rated premium
adjustments)): (a) received by an insured from an insurance carrier; or (b) paid
by an insurance carrier on behalf of the insured, net of any applicable premium
deductible or self insured retention. 

     

         “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.

     

    - 8 -

     

    

    
    


         “IP License Agreement” means the IP License Agreement, between VPG,
as licensor, and Vishay or a Subsidiary of Vishay, as licensee relating to
certain Intellectual Property relating to the manufacture of strain gages,
substantially in the form of Exhibit B. From and after the Distribution Date, the IP
License Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit B, as amended and/or modified from time to time
in accordance with its terms. 

     

         “IRS” means the Internal Revenue Service.


     

         “Lease Agreements” means the real property lease agreements
between one or more members of the Vishay Group, on the one hand, and one or
more members of the VPG Group on the other hand, listed on Exhibit C, substantially in the forms attached to such
Exhibit. From and after the Distribution Date, the Lease Agreements shall refer
to the real property lease agreements substantially in the form attached to
Exhibit C, each as amended and/or modified from time to
time in accordance with its terms. 

     

         “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 obligations, exoneration
covenants, obligations under Contracts, controversies, doings, omissions,
variances, 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.


     

         “License Agreements” mean the Trademark License Agreement and the
Patent License Agreement. 

     

    - 9 -

     

    

    
    


         “MGF Business” means the measurements and foil resistor
business owned and operated, indirectly or directly, by Vishay prior to the
Distribution, to be owned and operated, directly or indirectly, by VPG after the
Distribution. 

     

         “NYSE” has the meaning set forth in Section 3.1(e) of this Agreement. 

     

         “Option Agreement” means the Option Agreement, between VPG, as
optionee, and Vishay or a Subsidiary of Vishay, as optionor relating to VPG’s
option to purchase assets relating to the strain gage business operated by a
Subsidiary of Vishay, substantially in the form of Exhibit D. From and after the Distribution Date, the IP
License Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit D, as amended and/or modified from time to time
in accordance with its terms. 

     

         “Party,” whether or not capitalized, means Vishay or
VPG. 

     

         “Patent License Agreement” means the Patent License Agreement, between
Vishay or a Subsidiary of Vishay, as licensor, and VPG, as licensee,
substantially in the form of Exhibit E. From and after the Distribution Date, the
Patent License Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit E, as amended and/or modified from time to time
in accordance with its terms. 

     

         “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. 

     

         “Privilege” has the meaning set forth in Section 4.6(a) of this Agreement. 

     

         “Privileged Information” has the meaning set forth in Section 4.6(a) of this Agreement. 

     

         “RCK Agreements” means the RCK Manufacturing Agreement and
the RCK Supply Agreement. 

     

         “RCK Manufacturing Agreement” means the Manufacturing Agreement, between
VPG or a Subsidiary of VPG, as buyer, and Vishay or a Subsidiary of Vishay, as
manufacturer, relating to the manufacture of specified RCK HR foil resistor
products, substantially in the form of Exhibit F. From and after the Distribution Date, the
RCK Manufacturing Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit F, as amended and/or modified from time to time
in accordance with its terms. 

     

         “RCK Supply Agreement” means the Supply Agreement, between VPG or a
Subsidiary of VPG, as supplier, and Vishay or a Subsidiary of Vishay, as buyer,
relating to the sale and manufacture of specified RCK foil resistor chips,
substantially in the form of Exhibit G. From and after the Distribution Date, the
RCK Supply Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit G, as amended and/or modified from time to time
in accordance with its terms.

     

    - 10 -

     

    

    
    


         “Record Date” means the close of business on the date to
be determined by Vishay’s Board in its sole and absolute discretion as the
record date for determining the stockholders of Vishay entitled to receive
shares of VPG Stock in the Distribution. 

     

         “Record Holder” mean a holder of record of Vishay Stock as
of the close of business on the Record Date. 

     

         “Registrar and Transfer
Agent” has the meaning set
forth in Section 3.5(c)(i) of this Agreement. 

     

         “Response” has the meaning set forth in Section 8.2(a) of this Agreement. 

     

         “Secondment Agreement” means the secondment agreement between one
or more members of the Vishay Group, as the seconding party, on the one hand,
and one or more members of the VPG Group on the other hand, listed on
Exhibit H, in the substantially in the forms attached
to such Exhibit. From and after the Distribution Date, the Secondment Agreement
shall refer to the secondment agreement substantially in the form attached to
Exhibit H, as amended and/or modified from time to time
in accordance with its terms. 

     

         “Senior Party Representative” has the meaning set forth in Section 8.2(a) of this Agreement. 

     

         “Separated Assets” has the meaning set forth in Section 2.4(a) of this Agreement. 

     

         “Separation” means the multi-step process described in
Article II, including the Separation Transactions and
the Capital Allocation Transactions, by which the MGF Business shall be
transferred, directly or indirectly, from Vishay and members of the Vishay Group
to VPG and members of the VPG Group. 

     

         “Separation Transactions” means the transfers of assets, shares and
other equity interests to be performed by Vishay, VPG and members of each
respective Group prior to the Distribution, in the manner described on
Schedule 1.6 hereto and, in the singular, means any one
such transaction. The Separation Transactions are intended to proceed in
accordance with and pursuant to the steps set forth in the request for a private
letter ruling submitted by Vishay to the IRS on December 23, 2009, as amended
from time to time. 

     

         “Shared Contingent Gain” means, without duplication, any Contingent
Gain that is not an Exclusive Vishay Contingent Gain or an Exclusive VPG
Contingent Gain and shared between the Groups, including the matters listed or
described on Schedule 1.7. 

     

         “Shared Contracts” means Contracts with a third party providing
for rights and obligations of both one or more members of the Vishay Group and
one or more members of the VPG Group. 

     

         “Shared Contingent Liability” means, without duplication, any Contingent
Liability that is not an Exclusive Vishay Contingent Liability or an Exclusive
VPG Contingent Liability and shared between the Groups, including the matters
listed or described on Schedule
1.8.

     

    - 11 -

     

    

    
    


         “Shared VPG Percentage” means the proportion of the Shared
Contingent Gain or the Shared Contingent Liability, as applicable, that relates
to the MGF Business, provided that, if such Shared Contingent Gain or Shared
Contingent Liability, as the case may be, cannot reasonably be allocated, then
the Shared VPG Percentage shall be 10%. 

     

         “Shared Percentage” means the Shared Vishay Percentage or the
Shared VPG Percentage, as the case may be. 

     

         “Shared Vishay Percentage” means the proportion of the Shared
Contingent Gain or the Shared Contingent Liability, as applicable, that relates
to the Vishay Business; provided that if such Shared Contingent Gain or Shared
Contingent Liability, as the case may be, cannot reasonably be allocated, then
the Shared VPG Percentage shall be 90%. 

     

         “Strain Gage Agreements” means the IP License Agreement and the
Option Agreement. 

     

         “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. 

     

         “Supply Agreements” means the Supply Agreements, between one or
more members of the Vishay Group, on the one hand, and one or more members of
the VPG Group, on the other hand, listed on Exhibit I, substantially in the form attached to such
Exhibit I. From and after the Distribution Date, the
Supply Agreement shall refer to the supply agreement substantially in the form
attached to Exhibit I, as amended and/or modified from time to time
in accordance with its terms. 

     

         “Taxes” has the meaning set forth in the Tax Matters
Agreement. 

     

         “Tax Matters Agreement” means the Tax Matters Agreement
substantially in the form attached hereto as Exhibit J. From and after the Distribution Date, the
Tax Matters Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit J, as amended and/or modified from time to time
in accordance with its terms. 

     

         “Third Party Claim” has the meaning set forth in Section 5.6(a) of this Agreement. 

     

         “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. 

     

    - 12 -

     

    

    
    


         “Trademark License Agreement” means the Trademark License Agreement,
between Vishay, as licensor, and VPG, as licensee, substantially in the form of
Exhibit K. From and after the Distribution Date, the
Trademark License Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit K, as amended and/or modified from time to time
in accordance with its terms. 

     

         “Transition Services
Agreements” means the
transition services agreements between on or more members of the Vishay Group,
on the one hand, and one or more members of the VPG Group, on the other hand,
listed on Exhibit L, substantially in the forms attached to such
Exhibit. From and after the Distribution Date, the Transition Services
Agreements shall refer to the transition services agreements substantially in
the form attached as Exhibit L, each as amended and/or modified from time to
time in accordance with its terms. 

     

         “Vishay” has the meaning set forth in the preamble of
this Agreement. 

     

         “Vishay Board” has the meaning set forth in the recitals to
this Agreement. 

     

         “Vishay Business” means, collectively, any and all businesses
other than the MGF Business owned and operated, directly or indirectly, by
Vishay. 

     

         “Vishay Class B common stock” has the meaning set forth in the recitals to
this Agreement. 

     

         “Vishay common stock” has the meaning set forth in the recitals to
this Agreement. 

     

         “Vishay Group” means Vishay and each Subsidiary of Vishay
and each other Person that is controlled directly or indirectly by Vishay
immediately after the Distribution. 

     

         “Vishay Indemnified Parties” has the meaning set forth in Section 5.3 of this Agreement. 

     

         “Vishay Stock” has the meaning set forth in the recitals to
this Agreement. 

     

         “VPG” has the meaning set forth in the preamble of
this Agreement. 

     

         “VPG Class B common stock” has the meaning set forth in the recitals to
this Agreement. 

     

         “VPG common stock” has the meaning set forth in the recitals to
this Agreement. 

     

         “VPG Contracts” means the following Contracts to which
Vishay or any member of the Vishay Group is a party or by which it or any of its
Assets is bound, whether or not in writing, except for any such Contract that is
explicitly retained by Vishay or any member of the Vishay Group pursuant to any
provision of this Agreement or any Ancillary Agreement: (i) any Contract entered
into in the name of, or expressly on behalf of, the MGF Business; (ii) any
Contract that relates exclusively to the MGF Business; (iii) the portion of any
Shared Contract to the extent attributable to VPG or the MGF Business; (iv) any
Contract that is otherwise expressly contemplated pursuant to this Agreement or
any of the Ancillary Agreements to be assigned to VPG or any member of the VPG
Group; (v) any guarantee, indemnity, representation, warranty or other Liability
of any member of the Vishay Group or the VPG Group in respect of any VPG
Contract, any Assumed Liability or the MGF Business (including guarantees of
financing incurred by customers or other third parties in connection with
purchases of products or services from the MGF Business); and (vi) any other
Contract identified on Schedule 1.9.

     

    - 13 -

     

    

    
    


         “VPG Group” means VPG, each Subsidiary of VPG and each
other Person that is controlled directly or indirectly by VPG immediately after
the Distribution. 

     

         “VPG Group Balance Sheet” means the unaudited pro forma combined and
consolidated balance sheet of the VPG Group at [March 31, 2010],
substantially in the form attached as Annex A. 

     

         “VPG Indemnified Parties” has the meaning set forth in Section 5.2 of this Agreement. 

     

         “VPG Information” has the meaning set forth in Section 4.6(a) of this Agreement. 

     

         “VPG Net Cash” means the amount of (i) all cash and cash
equivalents less, without duplication, the sum of (ii) all notes payable to
banks, (iii) all other indebtedness owed to third parties and (iv) the principal
amount of the exchangeable notes due 2102 of Vishay allocated to VPG, in the
case of clauses (i), (ii) and (iii) of VPG and its Subsidiaries on a
consolidated basis, and in each case as recorded in accordance with GAAP.


     

         “VPG Net Cash Statement” has the meaning set forth in Section 2.17(a) of this Agreement. 

     

         “VPG Stock” has the meaning set forth in the recitals to
this Agreement. 

     

         “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.


     

    ARTICLE II

     

    BUSINESS SEPARATION

     

         Section 2.1 Separation. Prior to the Distribution, each of Vishay
and VPG shall, and shall cause the applicable members of its Group to, complete
the Separation Transactions and the Capital Allocation Transactions and
otherwise take all actions necessary to implement the Separation on the terms
and subject to the conditions set forth in this Agreement. The parties
acknowledge that the Separation is intended to result in VPG, directly or
indirectly, operating the MGF Business, owning the Separated Assets and assuming
the Assumed Liabilities as set forth in this Article II. As promptly as practicable after the
Separation is complete and subject to the conditions set forth in Section 3.2, the parties shall take, or cause to be
taken, all actions that are necessary or appropriate to effectuate the
Distribution. 

     

         Section 2.2 [Intentionally
omitted] 

     

    - 14 -

     

    

    
    


         Section 2.3 Transfer of Separated Assets; Assumption of
Assumed Liabilities. (a)
Without limiting the generality of Section 2.1, on the terms and subject to the conditions
set forth in this Agreement, and in furtherance of the Separation, on or prior
to the Distribution Date: 

     

         (i) Vishay shall, and shall cause its applicable Subsidiaries to, cause the
Separated Assets to be contributed, assigned, transferred, conveyed and
delivered, directly or indirectly, to VPG and its Subsidiaries, as applicable,
and VPG shall, and shall cause its applicable Subsidiaries to, accept from
Vishay and its Subsidiaries, all of Vishay’s and its Subsidiaries’ rights, title
and interest in and to all of the Separated Assets, which will result in VPG
owning, directly or indirectly, the MGF Business. 

     

         (ii) VPG shall, and shall cause its applicable Subsidiaries to, accept, assume
and agree to faithfully perform, discharge and fulfill all of the Assumed
Liabilities in accordance with their respective terms. VPG shall, directly or
indirectly, be responsible for all of the Assumed Liabilities, regardless of
when or where such Assumed Liabilities arose or arise, or whether the facts on
which they are based occurred prior to or subsequent to the Distribution Date,
regardless of where or against whom such Assumed Liabilities are asserted or
determined or whether asserted or determined prior to the Distribution Date.


     

              (b) It is the intention of parties that the transfer of the Separated Assets
and the assumption of the Assumed Liabilities, as aforesaid, shall be
accomplished through the Separation Transactions, subject to the provisions of
Sections 2.7, 2.8, 2.9 and 2.10. 

     

         Section 2.4 Separated Assets. (a) For purposes of this Agreement,
“Separated Assets” means, without duplication, those Assets
used or contemplated to be used or held for use exclusively or primarily in the
ownership, operation or conduct of the MGF Business or relating exclusively or
primarily to the MGF Business, including the following: 

     

         (i) all Assets (including VPG Contracts) expressly identified in this
Agreement, in any Ancillary Agreement or in any Schedule hereto or thereto,
including those listed on Schedule 1.6, as Assets to be transferred to, or retained
by, VPG or any other member of the VPG Group; 

     

         (ii) any Exclusive VPG Contingent Gain or any Shared VPG Percentage of a
Shared Contingent Gain; 

     

         (iii) the outstanding capital stock, units or other equity interests of VPG’s
wholly owned Subsidiaries listed on Schedule 2.4(a)(iii) and the Assets owned by such Subsidiaries;


     

         (iv) all Assets properly reflected on the VPG Group Balance Sheet, excluding
Assets disposed of by Vishay or any other Subsidiary or entity controlled by
Vishay subsequent to the date of the VPG Group Balance Sheet; 

     

         (v) all Assets that have been written off, expensed or fully depreciated by
Vishay or any Subsidiary or entity controlled by Vishay that, had they not been
written off, expensed or fully depreciated, would have been reflected on the VPG
Group Balance Sheet in accordance with accounting principles generally accepted
in the United States (“GAAP”); 

     

    - 15 -

     

    

    
    


         (vi) all Assets acquired by Vishay or any Subsidiary or entity controlled by
Vishay after the date of the VPG Group Balance Sheet and that would be reflected
on the balance sheet of VPG as of the Distribution Date, if such balance sheet
were prepared in accordance with GAAP; 

     

         (vii) all Assets transferred to VPG or any member of the VPG Group pursuant to
Section 4.2; provided, however, that any such transfer shall take effect
under Section 4.2 and not under this Section 2.4; and 

     

         (viii) any and all Assets owned or held immediately prior to the Distribution
Date by Vishay or any other member of the Vishay Group that are used in the MGF
Business. The intention of this clause (viii) is only to rectify any inadvertent
omission of transfer or conveyance of any Assets that, had the parties given
specific consideration to such Asset as of the date hereof, would have otherwise
been classified as a Separated Asset. No Asset shall be deemed to be a Separated
Asset solely as a result of this clause (viii) if such Asset is within the
category or type of Asset expressly covered by the subject matter of an
Ancillary Agreement. In addition, no Asset shall be deemed a Separated Asset
solely as a result of this clause (viii) unless a claim with respect thereto is
made by VPG or a member of the VPG Group on or prior to the second anniversary
of the Distribution Date. 

     

         Notwithstanding anything to the contrary contained in this Section 2.4 or elsewhere in this Agreement, the Separated
Assets shall not in any event include the Excluded Assets referred to in
Section 2.4(b) below. 

     

              (b) The following Assets shall not form part of the Separated Assets and
shall remain the exclusive property of Vishay or the relevant member of the
Vishay Group on and after the Separation (the “Excluded Assets”): 

     

         (i) any Asset expressly identified on Schedule 2.4(b)(i) or Schedule 2.16; 

     

         (ii) the rights of any member of the Vishay Group under any Shared Contract;


     

         (iii) any Asset transferred to Vishay or to any other relevant member of the
Vishay Group pursuant to Section 4.2; provided, however, that any such transfers shall take effect
under Section 4.2 and not under this Section 2.4; 

     

         (iv) any Exclusive Vishay Contingent Gain or any Shared Vishay Percentage of a
Shared Contingent Gain; and 

     

    - 16 -

     

    

    
    


         (v) any and all Assets that are expressly contemplated by this Agreement or
any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be
retained by Vishay or any other member of the Vishay Group. 

     

         Section 2.5 Liabilities.

     

              (a) For the purposes of this Agreement, “Assumed Liabilities” shall mean
(without duplication): 

     

         (i) any and all Liabilities that are expressly contemplated by this Agreement
or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities
to be assumed by VPG or any member of the VPG Group, and all agreements,
obligations and Liabilities of any member of the VPG Group under this Agreement
or any of the Ancillary Agreements; 

     

         (ii) subject to the terms of Article VI, all Exclusive VPG Contingent Liabilities and
the Shared VPG Percentage of any Shared Contingent Liabilities; 

     

         (iii) all Liabilities to the extent relating to, arising out of or resulting
from any terminated, divested or discontinued businesses and operations of the
MGF Business; 

     

         (iv) all Liabilities reflected as liabilities or obligations of VPG or its
Subsidiaries in the VPG Group Balance Sheet, subject to any discharge of such
Liabilities subsequent to the date of the VPG Group Balance Sheet; 

     

         (v) any Liability which is expressly identified on Schedule 2.5(a)(v);

     

         (vi) all Environmental Liabilities (other than the Environmental Liabilities
under Section 2.5(b)(v)), whether arising prior to, on or after the
Distribution Date, to the extent arising out of or resulting from the use by the
MGF Business of any property owned, operated, used or leased in the course of
operating the MGF Business at any time or any other property where the MGF
Business contracted or arranged for disposal at any time; provided that, notwithstanding such general rule,
Environmental Liabilities for the facilities set forth on Schedule 2.5(b)(v) shall be the obligation and Liability of
Vishay as specified in such Schedule 2.5(b)(v). With respect to Environmental Liabilities
arising from any facility that was jointly used by VPG and Vishay, except as
otherwise specified on Schedule 2.5(a)(vi), if one party was the primary user of that
property, that party shall be responsible to administer any Action related
thereto, including providing any required defense, and the other party shall
cooperate in the administration and defense. Liabilities associated with any
such Action shall be shared equally by Vishay and VPG unless there is another
allocation methodology that more accurately and reasonably reflects the
appropriate allocation of responsibility as between Vishay and VPG (including,
for the avoidance of doubt, a reasonable estimation of relative fault or cause
of the Liabilities);

     

    - 17 -

     

    

    
    


         (vii) all other Liabilities (other than Taxes, which are allocated as set forth
in the Tax Matters Agreement and employee-related Liabilities, which are
allocated as set forth in the Employee Matters Agreement), in each case to the
extent relating to, arising out of or resulting from: 

     

              (A) the operation of the MGF Business, as
conducted at any time prior to, on or after the Distribution Date (including any
Liability relating to, arising out of or resulting from any act or failure to
act by any director, officer, employee, agent or representative (whether or not
such act or failure to act is or was within such Person’s authority)); or


     

              (B) any Separated Assets; 

     

    in any such case whether arising prior to, on or after the Distribution
Date; and 

     

         (viii) any inadvertent omission of transfer or assumption of Liability that, had
the parties given specific consideration to such Liability as of the date
hereof, would have otherwise been classified as an Assumed Liability.


     

         Notwithstanding the foregoing, the Assumed Liabilities shall not include
the Excluded Assumed Liabilities referred to in Section 2.5(b) below. 

     

              (b) For the purposes of this Agreement, “Excluded Assumed
Liabilities” shall mean:


     

         (i) any and all Liabilities that are expressly contemplated by this Agreement
or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities
to be retained or assumed by Vishay or any other member of the Vishay Group, and
all agreements and obligations of any member of the Vishay Group under this
Agreement or any of the Ancillary Agreements; 

     

         (ii) any Liability which is expressly identified on Schedule 2.5(b)(ii); 

     

         (iii) any and all liabilities relating to, arising out of or resulting from any
Excluded Assets; 

     

         (iv) subject to the terms of Article VI, all Exclusive Vishay Contingent Liabilities
and the Shared Vishay Percentage of any Shared Contingent Liabilities;


     

         (v) all Environmental Liabilities for the facilities set forth on
Schedule 2.5(b)(v) and all Environmental Liabilities that are
not Assumed Liabilities under Section 2.5(a)(vi); and 

     

         (vi) any inadvertent transfer, conveyance or assumption of any Liability that,
had the parties given specific consideration to such Liability as of the date
hereof, would have otherwise been classified as an Excluded Assumed Liability.


     

    - 18 -

     

    

    
    


         Section 2.6 Excluded Assumed
Liabilities. Vishay shall,
or shall cause, as applicable, its Subsidiaries, to be responsible for the
Excluded Assumed Liabilities regardless of when or where such Liabilities arose
or arise, regardless of where such Liabilities are asserted or determined or
regardless of whether asserted or determined prior to the Distribution Date.


     

         Section 2.7 Deferred Separation
Transactions.

     

              (a) Misallocated Assets. In the event that at any time or from time
to time (whether prior to, on or after the Distribution Date), any member of the
Vishay Group or any member of the VPG Group shall receive or otherwise possess
any Asset that is allocated to a member of the other Group pursuant to this
Agreement, any Ancillary Agreement or the Separation (including any remittances
from account debtors), Vishay shall or shall cause such member of the Vishay
Group or VPG shall or shall cause such member of the VPG Group, as the case may
be, to promptly transfer, or cause to be transferred, such Asset to the Person
so entitled thereto. Prior to any such transfer, the Person receiving or
possessing such Asset shall hold such Asset in trust for any such other Person.
Each party shall cooperate with the other party and use its commercially
reasonable efforts to set up procedures and notifications as are reasonably
necessary or advisable to effectuate the transfers contemplated by this
Section 2.7. 

     

              (b) Mistaken Assignments and
Assumptions. If at anytime
there exists (i) Assets that either party discovers were, contrary to the
agreements between the parties, by mistake or unintentional omission,
transferred to VPG or retained by Vishay or (ii) Liabilities that either party
discovers were, contrary to the agreements between the parties, by mistake or
unintentional omission, assumed by VPG or not assumed by VPG or retained by the
Vishay Group, then the parties shall cooperate in good faith to effect the
transfer or retransfer of misallocated Assets, and/or the assumption or
reassumption of misallocated Liabilities, to or by the appropriate Person and
shall not use the determination that remedial actions need to be taken to alter
the original intent of the parties with respect to the Assets to be transferred
to or Liabilities to be assumed by VPG or retained by Vishay. Each party shall
reimburse the other or make other financial adjustments or other adjustments to
remedy any mistakes or omissions relating to any of the Assets transferred
hereby or any of the Liabilities assumed or retained hereby. 

     

              (c) No Additional Consideration. For the avoidance of doubt, the transfer or
assumption of any Assets or Liabilities under this Section 2.7 shall be effected without any additional
consideration by either party. 

     

         Section 2.8 Consents and Governmental
Approvals.

     

              (a) Transfers not Consummated Prior to Separation
Date. If the transfer or
assignment of any Asset intended to be transferred or assigned hereunder is not
consummated prior to or on the Distribution Date, whether as a result of a
requisite Consent or Governmental Approval or for any other reason, then the
Person retaining such Asset shall thereafter hold such Asset for the use and
benefit, insofar as reasonably possible, of the Person entitled thereto until
the consummation of the transfer or assignment thereof (or as otherwise
determined by Vishay and VPG, as applicable). In addition, the Person retaining
such Asset shall take such other actions as may be reasonably requested by the
Person to whom such Asset is to be transferred in order to place such Person,
insofar as reasonably possible, in the same position as if such Asset had been
transferred as contemplated hereby and so that all the benefits and burdens
relating to such Asset, including possession, use, risk of loss, potential for
gain, and dominion, control and command over such Asset, are to inure from and
after the Distribution Date to the Person to whom such Asset is to be
transferred. Notwithstanding the foregoing, any such Asset shall still be
considered a Separated Asset or Excluded Asset, as applicable.

     

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              (b) Expenses. The Person retaining an Asset due to the
deferral of the transfer and assignment of such Asset shall not be obligated, in
connection with the foregoing, to expend any money in connection with the
maintenance of the Asset or otherwise unless the necessary funds are advanced by
the Person to whom such Asset is to be transferred, other than reasonable
out-of-pocket expenses, attorneys’ fees and recording or similar fees, all of
which shall be promptly reimbursed by the Person to whom such Asset is to be
transferred; provided, however, that the Person retaining such Asset shall
provide prompt notice to the Person to whom such Asset is to be transferred of
the amount of all such expenses and fees. 

     

              (c) No Additional Consideration. For the avoidance of doubt, the transfer of
any Assets under this Section 2.8 shall be effected without any additional
consideration by either party. 

     

         Section 2.9 Novation of the Assumed
Liabilities.

     

              (a) Reasonable Best Efforts. Each of Vishay and VPG, at the request of
the other and with the other’s reasonable best cooperation, shall use its
reasonable best efforts to obtain, or to cause to be obtained, any agreement,
instrument, Consent, substitution or amendment required to novate or assign all
rights and obligations under Contracts and other obligations or Liabilities of
any nature whatsoever that constitute Assumed Liabilities, or to obtain in
writing an unconditional release of all parties to such arrangements other than
any member of the VPG Group, so that, in any such case, VPG and the other
members of the VPG Group will be solely responsible for such Liabilities or, in
the case of Shared Contracts, to novate the rights and obligations under each
such Contract such that it is replaced with two separate Contracts, one of which
provides for the rights and obligations of a member or members of the Vishay
Group and the other of which provides for the rights and obligations of a member
or members of the VPG Group; provided, however, that neither the Vishay Group nor the VPG
Group shall be obligated to pay any consideration or assume any additional
obligation therefor to any third party from whom any such Consent, substitution
or amendment is requested. Each of Vishay and VPG, at the request of the other
and with the other’s reasonable best cooperation, shall use its reasonable best
efforts to obtain, or to cause to be obtained, any agreement, instrument,
Consent, substitution or amendment required to novate or assign all rights and
obligations under Contracts and other obligations or Liabilities of any nature
whatsoever that constitute Excluded Assumed Liabilities, or to obtain in writing
an unconditional release of all parties to such arrangements other than any
member of the Vishay Group, so that, in any such case, Vishay and the other
members of the Vishay Group will solely be responsible for such Liabilities or,
in the case of Shared Contracts, to novate the rights and obligations under each
such Contract such that it is replaced with two separate Contracts, one of which
provides for the rights and obligations of a member or members of the Vishay
Group and the other which provides for the rights and obligations of a member or
members of the VPG Group; provided, however, that neither the Vishay Group nor the VPG
Group shall be obligated to pay any consideration or assume any additional
obligation therefor to any third party from whom any such Consent, substitution
or amendment is requested.

     

    - 20 -

     

    

    
    


              (b) Inability to Obtain
Novation. If Vishay or VPG
is unable to obtain, or to cause to be obtained, any such required agreement,
instrument, Consent, release, substitution or amendment with respect to any such
Assumed Liability or Excluded Assumed Liability, as applicable, the applicable
member of the Vishay Group or the VPG Group, as applicable, shall continue to be
bound by such Contracts and other obligations and Liabilities and, unless not
permitted by Applicable Law or the terms thereof (except to the extent expressly
set forth in this Agreement or any Ancillary Agreement), Vishay, with respect to
any Excluded Assumed Liability, and VPG, with respect to any Assumed Liability,
shall, as agent or subcontractor for the other or such other Person, as the case
may be, pay, perform and discharge fully, or cause to be paid, transferred or
discharged all the obligations or other Liabilities of any member of the other’s
Group thereunder from and after the Distribution Date or, in the case of a
Shared Contract, such obligations or other Liabilities as pertain to the member
or members of its own Group. Notwithstanding the foregoing, any such Liability
shall still be considered an Assumed Liability or Excluded Assumed Liability, as
applicable; provided, however, that neither Vishay nor VPG shall (nor shall
either permit any member of its respective Group to), amend, renew, change the
term of, modify the obligations under, or transfer to a third Person, any such
Contract or other obligation or other Liability without the written consent of
the other. Each of Vishay and VPG shall each use reasonable best efforts to
provide prompt notice to the other of any request they receive from the
counterparty to any Contract for any such amendment, renewal, change,
modification or transfer. Vishay, with respect to any Assumed Liability and VPG,
with respect to any Excluded Assumed Liability, shall, without further
consideration, pay and remit, or cause to be paid or remitted, to the other or
its appropriate Subsidiary promptly all money, rights and other consideration
received by it or any member of its Group in respect of such performance (unless
any such consideration is, with respect to consideration received by Vishay or
any member of the Vishay Group, an Excluded Asset, or, with respect to
consideration received by VPG or any member of the VPG Group, a Separated
Asset). If and when any such agreement, instrument, Consent, release,
substitution or amendment shall be obtained or such Contract or other
obligations and Liabilities shall otherwise become assignable or able to be
novated, Vishay, for any Assumed Liability, and VPG, for any Excluded Assumed
Liability, shall thereafter assign, or cause to be assigned, all of its rights,
obligations and other Liabilities thereunder or any rights or obligations of any
member of its respective Group to the other without payment of further
consideration and the other shall, without the payment of any further
consideration, assume such rights, obligations and Liabilities. 

     

         Section 2.10 Documents Relating to Transfers of the
Separated Assets and Assumption of the Assumed Liabilities. In furtherance of the Separation and the
Distribution, including as contemplated by the Separation Transactions, (i)
Vishay shall execute and deliver, and shall cause its Subsidiaries to execute
and deliver, such bills of sale, stock powers, certificates of title,
assignments of Contracts and other instruments of transfer, conveyance and
assignment as and to the extent necessary to evidence the transfer, conveyance
and assignment of all of Vishay’s and its Subsidiaries’ right, title and
interest in and to the Separated Assets to VPG or its Subsidiaries and (ii) VPG
shall execute and deliver, and shall cause its Subsidiaries to execute and
deliver, to Vishay and its Subsidiaries such assumptions of Contracts and other
instruments of assumption as and to the extent necessary to evidence the valid
and effective assumption of the Assumed Liabilities by VPG. All conveyance and
assumption documents and instruments used to effectuate the Separation and the
Distribution shall be in form mutually satisfactory to Vishay and
VPG.

     

    - 21 -

     

    

    
    


         Section 2.11 Termination of Agreements.

     

              (a) Except as set forth in Section 2.11(b), in furtherance of the releases and other
provisions of Section 5.1, VPG and each member of the VPG Group, on the
one hand, and Vishay and each member of the Vishay Group, on the other hand,
effective as of the Distribution Date, shall terminate, any and all Contracts
(including any intercompany accounts payable or accounts receivable accrued as
of the Distribution Date that are reflected in the books and records of the
parties or otherwise documented in writing in accordance with past practices),
whether or not in writing, between or among VPG and/or any member of the VPG
Group, on the one hand, and Vishay and/or any member of the Vishay Group, on the
other hand, effective as of the Distribution Date. No such terminated Contracts
(including any provision thereof which purports to survive termination) shall be
of any further force or effect after the Distribution Date. Each party shall, at
the reasonable request of any other party, take, or cause to be taken, such
other actions as may be necessary to effect the foregoing. 

     

              (b) The provisions of Section 2.11(a) shall not apply to any of the following
Contracts (or to any of the provisions thereof) in: (i) this Agreement or the
Ancillary Agreements (and each other agreement or instrument expressly
contemplated by this Agreement or any Ancillary Agreement to be entered into by
any of the parties or any of the members of their respective Groups); (ii) any
Contracts to which any Person other than the parties and their respective
Affiliates is a party (it being understood that to the extent that the rights
and obligations of the parties and the members of their respective Groups under
any such Contracts constitute Separated Assets or Assumed Liabilities, they
shall be assigned or assumed, as the case may be, pursuant to Section 2.3); (iii) any Contracts to which any non-wholly
owned Subsidiary of Vishay or VPG, as the case may be, is a party (it being
understood that directors’ qualifying shares or similar interests will be
disregarded for purposes of determining whether a Subsidiary is wholly owned);
(iv) intercompany Contracts or accounts receivable entered into or generated in
the ordinary course of business; or (v) any other Contracts that this Agreement
or any Ancillary Agreement expressly contemplates will survive the Distribution
Date. 

     

         Section 2.12 Release of Security
Interest. Upon VPG’s
reasonable request, Vishay shall use its reasonable best efforts to obtain from
third parties the release of any Security Interest granted by Vishay (or any
member of its Group) on any Separated Asset. 

     

         Section 2.13 No Representation or
Warranty.

     

              (a) No party to this Agreement, any Ancillary Agreement, or any other
agreement or document contemplated by this Agreement, any Ancillary Agreement or
otherwise, is making any representation as to, warranty of or covenant, express
or implied, with respect to: (a) any of the Separated Assets, the MGF Business,
the Excluded Assets or the Assumed Liabilities, including any warranty of
merchantability or fitness for a particular purpose, or any representation or
warranty regarding any Consents or Governmental Approvals required in connection
therewith or their transfer, (b) the value or freedom from Encumbrances of, or
any other matter concerning, any Separated Asset or Excluded Asset, or regarding
the absence of any defense or right of setoff or freedom from counterclaim with
respect to any claim or other Separated Asset or Excluded Asset, including any
account receivable of either party, or (c) the legal sufficiency of any
assignment, document or instrument delivered hereunder to convey title to any
Separated Asset or Excluded Asset upon the execution, delivery and filing hereof
or thereof.

     

    - 22 -

     

    

    
    


              (b) EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY ANCILLARY
AGREEMENT, ALL ASSETS TO BE TRANSFERRED AS SET FORTH HEREIN OR IN ANY ANCILLARY
AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED HEREBY OR THEREBY
SHALL BE TRANSFERRED “AS IS, WHERE IS” (AND, IN THE CASE OF ANY REAL PROPERTY,
BY MEANS OF A QUITCLAIM OR SIMILAR FORM DEED OR CONVEYANCE) AND THE TRANSFEREE
SHALL BEAR THE ECONOMIC AND LEGAL RISK THAT ANY CONVEYANCE SHALL PROVE TO BE
INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD AND MARKETABLE TITLE, AND CLEAR OF ANY SECURITY
INTEREST OR ANY NECESSARY CONSENTS OR GOVERNMENTAL APPROVALS ARE NOT OBTAINED OR
THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.

     

         Section 2.14 Use of Cash. From the date hereof until the Distribution
Date, Vishay shall be entitled to use, retain or otherwise dispose of all cash
generated by the MGF Business and the Separated Assets in accordance with the
ordinary course of operation of Vishay. 

     

         Section 2.15 Plan of Reorganization. This Agreement shall constitute a plan of
reorganization for purposes of Section 368 of the Code. 

     

         Section 2.16 Assets Transferred to
Vishay. In connection with
the Separation, VPG shall, or shall cause the applicable members of the VPG
Group to, cause those assets identified on Schedule 2.16 (which are intended to be Excluded Assets) to
be contributed, assigned, transferred, conveyed and delivered, directly or
indirectly, to Vishay and one or more members of the Vishay Group, as
applicable, and Vishay shall, and shall cause the applicable members of the
Vishay Group to, accept from VPG and the applicable members of the VPG Group all
of their rights, title and interest in and to all such assets identified on
Schedule 2.16. The terms and provisions of Sections 2.7, 2.8, 2.10, 2.12, 2.13 and 4.2 as such terms and provisions relate to the
contribution, assignment, transfer, conveyance or delivery of assets from Vishay
or a member of the Vishay Group to VPG or a member of the VPG Group shall apply
to any contribution, assignment, transfer, conveyance or delivery of assets
contemplated by this Section 2.16, mutatis
mutandis. 

     

         Section 2.17 Net Cash.

     

              (a) No later than fifteen (15) Business Days following the Distribution Date,
VPG shall determine the VPG Net Cash as of the opening of business on the
Distribution Date (the “Actual VPG Net Cash”). As soon as reasonably practicable, but in
no event later than five (5) Business Days after making such determination, VPG
shall prepare and deliver to Vishay a calculation of the VPG Net Cash, together with reasonably detailed
supporting information (the “VPG Net Cash Statement”). 

     

    - 23 -

     

    

    
    


              (b) Thereafter, VPG will provide Vishay and its accountants with access to
the records and employees of VPG, to the extent reasonably related to Vishay’s
evaluation of the VPG Net Cash Statement, the calculation of the VPG Net Cash or
the resolution of any dispute with respect thereto. Within ten (10) Business
Days after Vishay’s receipt of the VPG Net Cash Statement, Vishay shall notify
VPG in writing as to whether Vishay agrees or disagrees with the VPG Net Cash
Statement, which notice, in the case of a disagreement, shall set forth in
reasonable detail the particulars of such disagreement. In the event that Vishay
does not provide a notice of disagreement within such ten (10) Business Day
period, then Vishay shall be deemed to have accepted the calculations and the
amounts set forth in the VPG Net Cash Statement delivered by VPG, which shall be
final, binding and conclusive for all purposes hereunder. If any notice of
disagreement is timely provided in accordance with this Section 2.17, VPG and Vishay shall each use commercially
reasonable efforts for a period of ten (10) Business Days thereafter (or such
longer period as they may mutually agree) to resolve any disagreements with
respect to the calculations in the VPG Net Cash Statement. If, at the end of
such period, VPG and Vishay are unable to resolve any disagreements as to items
in the VPG Net Cash 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) days after the date on which such dispute is referred
to the Auditor, whether the Actual VPG Net Cash as set forth in the VPG Net Cash
Statement was prepared in accordance with this Agreement whether and to what
extent the Actual VPG Net Cash requires adjustment. The fees and expenses of the
Auditor shall be shared by VPG and Vishay in inverse proportion to the relative
amounts of the disputed amounts determined in favor of VPG and Vishay,
respectively. The determination of the Auditor shall be final, binding and
conclusive for all purposes hereunder. The date on which the Actual VPG Net Cash
is finally determined in accordance with this Section 2.17 is referred to as the “Determination Date.” 

     

              (c) If the Actual VPG Net Cash, as determined in accordance with this Section
2.17, exceeds $71,500,000, VPG shall make a payment to Vishay in the amount of
the excess, which for all purposes shall be deemed a dividend to Vishay from VPG
made immediately prior to the Separation. If the Actual VPG Net Cash is less
than $58,500,000, Vishay shall make a payment to VPG in the amount of the
difference, which for all purposes shall be deemed a capital contribution by
Vishay to VPG made immediately prior to the Separation. Such payment by VPG or
Vishay, as the case may be, shall be made no later than five (5) Business Days
after the Determination Date by wire transfer of immediately available funds.


     

    ARTICLE III

     

    THE DISTRIBUTION AND ACTIONS PENDING THE
DISTRIBUTION 

     

         Section 3.1 Transactions Prior to the
Distribution. Subject to
the conditions specified in Section 3.2, Vishay and VPG shall use their reasonable
best efforts to consummate the Distribution. Such efforts shall include, without
limitation, those specified in this Section 3.1. 

     

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              (a) Separation Transactions and Capital Allocation
Transactions. Vishay and
VPG shall cooperate, and shall use their reasonable best efforts, to effect the
Separation Transactions and the Capital Allocation Transactions on or prior to
the Distribution Date. 

     

              (b) Form 10 Registration
Statement. Vishay and VPG
shall cooperate to cause the Form 10 Registration Statement heretofore filed
with the Commission to become and remain effective under Applicable Law,
including, without limitation, filing such amendments or supplements to the Form
10 Registration Statement as may be required by the Commission or federal, state
or foreign securities laws. 

     

              (c) Information Statement; Other
Materials. Vishay shall,
as soon as practicable after the Form 10 Registration Statement is declared
effective under the Exchange Act and the Vishay Board has approved the
Distribution, cause the Information Statement to be mailed to the Record
Holders. Vishay and VPG shall prepare and mail, on or prior to the Distribution
Date, to the holders of Vishay Stock, such other Information concerning VPG, the
MGF Business, operations and management, the Separation, the Distribution and
such other matters as Vishay in its sole and absolute discretion determines is
necessary or desirable or as may be required by Applicable Law.

     

              (d) Other Actions. Vishay and VPG shall take all other actions
as Vishay in its sole and absolute discretion determines are necessary or
appropriate under applicable federal or state securities or blue sky laws of the
United States (and any comparable laws under any foreign jurisdiction) in
connection with the Distribution. 

     

              (e) NYSE Listing. VPG shall prepare, file and use its
reasonable best efforts to obtain approval of, an application for listing of VPG
common stock on The New York Stock Exchange (“NYSE”), subject to official notice of
distribution. 

     

              (f) Accounting Matters. All prepaid items and reserves that have
been maintained by Vishay on a consolidated basis but related in part to
Separated Assets or Assumed Liabilities shall be allocated between Vishay and
VPG as determined by Vishay in its reasonable discretion. 

     

              (g) Corporate Matters. Vishay and VPG shall take all necessary
action (i) to adopt the Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws of VPG in the form filed as exhibits to the Form 10
Registration Statement and (ii) to cause the Board of Directors of VPG to
consist of the persons identified in the Information Statement as the directors
of VPG to be in office following the Separation. 

     

         Section 3.2 Conditions Precedent to Consummation of the
Distribution. The
obligation of Vishay to effect the Distribution is subject to the satisfaction
or the waiver by Vishay, in its sole and absolute discretion, of each of the
following conditions: 

     

              (a) Approval by Vishay’s Board. This Agreement and the transactions
contemplated hereby, including establishing the Record Date and the declaration
of the Distribution, shall have been duly taken and approved by the Vishay Board
in accordance with Applicable Law and the certificate of incorporation and
bylaws of Vishay. 

     

    - 25 -

     

    

    
    


              (b) Form 10 Registration
Statement. The Form 10
Registration Statement shall have been declared effective by the Commission, and
there shall be no stop-order in effect with respect thereto, and no proceeding
for that purpose shall have been instituted by the Commission. 

     

              (c) Other Actions. The actions and filings necessary or
appropriate under applicable federal and state securities laws and state blue
sky laws of the United States (and any comparable laws under any foreign
jurisdictions) in connection with the Distribution (including, if applicable,
any actions and filings relating to the Form 10 Registration Statement) and any
other necessary and applicable Consents shall have been taken, obtained and,
where applicable, have become effective or been accepted, each as the case may
be. 

     

              (d) NYSE Listing. VPG common stock to be distributed pursuant
to the Distribution shall have been approved for listing on NYSE, subject to
official notice of the Distribution. 

     

              (e) No Legal Restraints. No Governmental Authority of competent
jurisdiction shall have, after the date of this Agreement, enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order (whether temporary, preliminary or permanent),
which is in effect and prohibits or materially restricts or materially adversely
affects the consummation of the Separation or the Distribution or any of the
other transactions contemplated by this Agreement and the Ancillary Agreements.


     

              (f) Separation. The Separation shall have become effective
in accordance with the terms of this Agreement and the Separation Transactions
and the Capital Allocation Transactions. 

     

              (g) Private Letter Ruling and Opinion of Tax
Counsel. Vishay shall have
obtained a favorable private letter ruling from the IRS that the Distribution is
part of a reorganization within the meaning of Section 368(a)(1)(D) of the Code
and that the Distribution generally will not give rise to income or gain to
Vishay or, pursuant to Section 355, its shareholders, and such ruling shall
continue in effect, and Vishay shall have received an opinion of the law firm of
Pepper Hamilton LLP to the same effect. 

     

              (h) Approval from Israeli Tax
Authorities. Vishay shall
have received a ruling from the Israeli taxing authorities that the Separation
as it relates to the transfer to the VPG Group of Israeli Companies held by the
Vishay Group will not give rise to current Taxes under any Applicable Law in
Israel.

     

              (i) Consents and Approvals. Any and all Consents and Governmental
Approvals necessary to consummate the Separation and the Distribution shall have
been obtained and be in full force and effect, including the Consents and
Governmental Approvals set forth on Schedule 3.2(h), except where the failure to obtain such
consents or approvals would not have a material adverse effect on either (A) the
ability of the parties to complete the transactions contemplated by this
Agreement or any Ancillary Agreement or (B) the business, Assets, Liabilities,
condition or results of operations of VPG and its Subsidiaries, or Vishay and
its Subsidiaries, in each case, taken as a whole. 

     

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              (j) Ancillary Agreements; Performance of
Obligations. Vishay shall
have received duly executed counterparts of each Ancillary Agreement from the
members of the VPG Group party thereto, and VPG (and the applicable members of
the VPG Group) shall have fully performed its or their obligations hereunder and
thereunder which are required to be performed prior to or at the time of the
Distribution. 

     

              (k) Other Transactions. The parties shall have consummated any other
transactions in connection with the Distribution that are contemplated by the
Information Statement to be consummated prior to or at the time of the
Distribution and are not specifically referred to in this Agreement or the
Ancillary Agreements. 

     

              (l) No Other Events. No other events or developments shall have
occurred that, in the judgment of the Vishay Board, in its sole and absolute
discretion, would result in the Separation or the Distribution having a material
adverse effect on Vishay, its stockholders, the Vishay Business or the MGF
Business. 

     

         The foregoing conditions are for the sole benefit of Vishay and shall not
give rise to or create any duty on the part of Vishay or the Vishay Board to
waive or not to waive any such conditions or in any way limit Vishay’s right to
terminate this Agreement as set forth in Article IX or alter the consequences of any such
termination from those specified in Article IX. Any determination made by Vishay prior to
the Distribution concerning the satisfaction or waiver of any or all of the
conditions set forth in this Section 3.2 shall be conclusive. 

     

         Section 3.3 Documents to be Delivered by
Vishay. On or prior to the
Distribution Date, Vishay will deliver, or will cause its appropriate
Subsidiaries to deliver, to VPG all of the following: 

     

              (a) In each case where Vishay
or any other member of the Vishay Group is a party to any Ancillary Agreement, a
duly executed counterpart of such Ancillary Agreement; 

     

              (b) Resignations of each
individual listed on Schedule 3.3(b), who is a director and/or officer of any
member of the VPG Group; 

     

              (c) Any other agreements,
documents and instruments necessary to effectuate the Separation; and


     

              (d) Such other agreements,
documents or instruments as the parties may agree are necessary or desirable in
order to achieve the purposes hereof. 

     

         Section 3.4 Documents to be Delivered by
VPG. On or prior to the
Distribution Date, VPG will deliver, or will cause its appropriate Subsidiaries
to deliver, to Vishay all of the following: 

     

              (a) In each case where VPG or
any other member of the VPG Group is a party to any Ancillary Agreement, a duly
executed counterpart of such Ancillary Agreement; 

     

              (b) Resignations of each
individual listed on Schedule 3.4(b) who is a director and/or officer of any
member of the Vishay Group; and 

     

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              (c) Any other agreements,
documents and instruments necessary to effectuate the Separation; and


     

              (d) Such other agreements,
documents or instruments as the parties may agree are necessary or desirable in
order to achieve the purposes hereof. 

     

         Section 3.5 Distribution. 

     

              (a) Sole Discretion. Vishay shall, in its sole and absolute
discretion, determine whether or not to proceed with all or part of the
Distribution, determine the Distribution Date and determine whether to modify or
change the terms of the Distribution, including, without limitation, the form,
structure and terms of any transaction(s) to effect the Distribution (including
the Separation Transactions, the Capital Allocation Transactions and any other
transactions provided for in this Agreement) or the timing of and conditions to
the consummation of the Distribution. VPG shall cooperate with Vishay in all
respects to accomplish the Distribution and shall, at Vishay’s direction,
promptly take any and all actions reasonably necessary or desirable in Vishay’s
sole and absolute discretion to effect the Distribution. 

     

              (b) Effective Time. The Distribution shall be effective at 12:01
a.m., Eastern Time, on the Distribution Date (the “Effective Time”). 

     

              (c) Actions in Connection with
Distribution. Unless
Vishay has previously determined not to proceed with the Separation, Vishay and
VPG will cause to be taken the following actions in connection with the
Distribution: 

     

         (i) VPG shall appoint a
registrar and transfer agent (the “Registrar and Transfer Agent”) for the purpose of recording the ownership
and transfer of record of the holders of VPG common stock and VPG Class B common
stock. Such record of ownership and transfer shall be maintained in book entry
form only, and no physical certificates evidencing the ownership of the VPG
common stock or VPG Class B common stock shall be issued. 

     

         (ii) On or prior to the
Distribution Date, VPG shall issue to Vishay and Vishay shall deliver to Agent,
in each case by appropriate entry on the books and records of the Registrar and
Transfer Agent, a sufficient number of shares of VPG common stock and VPG Class
B common stock for distribution on the Distribution Date to the Record Holders
of Vishay common stock and Vishay Class B common stock, respectively.


     

         (iii) On the Distribution Date,
(x) each Record Holder of Vishay common stock will be entitled to receive in the
Distribution a number of shares of VPG common stock equal to the number of
shares of Vishay common stock held by such Record Holder on the Record Date
multiplied by the distribution ratio to be determined by the Vishay Board when
it declares the Distribution (the “Common Stock Distribution
Ratio”), and (y) each
Record Holder of Vishay Class B Common Stock will be entitled to receive in the
Distribution a number of shares of VPG Class B Common Stock equal to the number
of shares of Vishay Class B
Common Stock held by such Record Holder on the Record Date multiplied by the
distribution ratio to be determined by the Vishay Board when it declares the
Distribution (the “Class B Common Stock Distribution
Ratio”). The Vishay Board
shall have the right to adjust the Common Stock Distribution Ratio and/or the
Class B Common Stock Distribution Ratio at any time prior to the Distribution.


     

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         (iv) As promptly as
practicable after the Distribution Date, the Registrar and Transfer Agent will
send to each Record Holder, at the address of such Record Holder as it appears
on the books and records of the registrar and transfer agent for the Vishay
common stock and the Vishay Class B common stock, as the case may be, an account
statement showing the number of shares of VPG common stock and VPG Class B
common stock held by such Record Holder as of the Distribution Date.


     

         (v) Vishay and VPG, as the
case may be, will provide to the Agent and the Registrar and Transfer Agent all
authorizations and other documentation and any Information required in order to
complete the Distribution on the basis set forth in this Section 3.5. No action will be necessary for any Record
Holder of Vishay to receive VPG common stock and/or VPG Class B Common Stock, as
applicable, or cash in lieu of fractional shares in the Distribution.


     

              (d) Fractional Shares. No fractional shares of VPG common stock or
VPG Class B common stock will be issued. Instead, Record Holders will receive
cash in lieu of any fractional shares, in accordance with the following
procedures.

     

         (i) Vishay shall direct the
Agent to determine the number of fractional shares of VPG common stock and VPG
Class B Common Stock allocable to each Record Holder of Vishay common stock and
Vishay Class B Common Stock, as applicable.

     

         (ii) The Agent shall aggregate
all fraction shares of VPG common stock and sell the whole shares obtained
thereby in open market transactions or otherwise as soon as practicable on or
after the Distribution Date at then prevailing trading prices and shall cause to
be distributed to each Record Holder of Vishay common stock, in lieu of any
fractional share of VPG common stock, such Record Holder’s ratable share of the
proceeds of such sale. Solely for purposes of computing fractional share
interests pursuant to this Section 3.5(d)(ii), the beneficial owner of Vishay Stock held of
record in the name of a nominee in any nominee account, if and to the extent
Vishay is advised in writing of such nominee relationship prior to the
Distribution Date, shall be treated as the Record Holder with respect to such
shares. 

     

         (iii) Vishay shall cause to be
delivered to the Agent cash in an amount equal to the total of all fractional
shares of VPG Class B common stock multiplied by the amount of cash per share of
VPG common stock distributed to Record Holders of Vishay common stock in lieu of
fractional shares. The Agent shall cause to be distributed to each Record Holder
of Vishay Class B common stock, in lieu of any fractional share of VPG Class B
common stock, such holder’s ratable share of the cash provided by
Vishay.

     

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         (iv) All cash in lieu of
fractional shares shall be delivered to the Record Holders by check delivered to
the address of such holder as it appears on the books and records of the
registrar and transfer agent for the Vishay common stock and the Vishay Class B
common stock, as the case may be, or by such other means as the Record Holder
and the Agent shall agree. 

     

    ARTICLE IV

     

    ADDITIONAL COVENANTS, FURTHER ASSURANCES AND
OTHER MATTERS

     

         Section 4.1 Provision of Corporate
Records. Prior to or as
promptly as practicable after the Distribution Date, each of Vishay and VPG
shall deliver or make available to the other all corporate books and records of
the other Group in its possession, and complete and accurate copies of all
relevant portions of all corporate books and records of the Vishay Group
relating directly and primarily to the other’s Business (and, in the case of
VPG, relating to the Separated Assets or the Assumed Liabilities), including, in
each case, all active agreements, active litigation files, government filings
and returns or reports relating to Taxes for all open periods. Subject to
Section 4.5 and Section 4.6, each party may retain complete and accurate
copies of such books and records. From and after the Distribution Date, all such
books, records and copies shall be the property of the other party. The costs
and expenses incurred in the provision of records or other Information to a
party shall be paid for by the receiving party, or as the parties shall
otherwise agree. 

     

         Section 4.2 Further Assurance.

     

              (a) In addition to the
actions specifically provided for elsewhere in this Agreement (such as
Section 2.7 and Section 2.11(a)), Vishay and VPG agree to execute or cause to
be executed by the appropriate parties and deliver, as appropriate, such other
agreements, instruments and other documents as may be necessary or desirable in
order to effect the purposes of this Agreement and the Ancillary Agreements.


     

              (b) Without limiting the
generality of the foregoing, at the request of VPG, and without further
consideration, Vishay will execute and deliver, and will cause the applicable
members of the Vishay Group to execute and deliver, to VPG and the applicable
members of the VPG Group such other instruments of transfer, conveyance,
assignment, substitution, confirmation or other documents and take such action
as VPG may reasonably deem necessary or desirable in order to more effectively
transfer, convey and assign to VPG and the applicable members of the VPG Group
and confirm VPG’s and the applicable members’ of the VPG Group title to all of
the assets, rights and other things of value contemplated to be transferred to
VPG and the applicable members of the VPG Group pursuant to this Agreement, the
Ancillary Agreements, and any documents referred to herein or therein, to put
VPG and the applicable members of the VPG Group in actual possession and
operating control thereof and to permit VPG and the applicable members of the
VPG Group to exercise all rights with respect thereto (including, without
limitation, rights under Contracts and other arrangements as to which the
consent of any third party to the transfer thereof shall not have previously
been obtained). Without limiting the generality of the foregoing, at the request
of Vishay and without further consideration, VPG will execute and deliver, and
will cause the applicable members of the VPG Group to execute and deliver, to
Vishay and the applicable members of the Vishay Group all instruments,
assumptions, novations, undertakings, substitutions or other documents and take
such other action as Vishay may reasonably deem necessary or desirable in order
to have VPG and the applicable members of the VPG Group fully and
unconditionally assume and discharge the liabilities contemplated to be assumed
by VPG and the applicable members of the VPG Group under this Agreement, any
Ancillary Agreement or any document in connection herewith or therewith and to
relieve the Vishay and the applicable members of the Vishay Group of any
liability or obligation with respect thereto and evidence the same to third
parties.

     

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              (c) Neither Vishay nor VPG
shall be obligated, in connection with this Section 4.2, to expend money other than reasonable
out-of-pocket expenses, attorneys’ fees and recording or similar fees, unless
reimbursed by the other party. 

     

              (d) Furthermore, each party,
at the request of the other party, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of the transactions
contemplated hereby. 

     

         Section 4.3 Agreement For Exchange Of
Information.

     

              (a) Generally. Each of Vishay and VPG, on behalf of its
respective Group, agrees to provide, or cause to be provided, to the other
party’s Group and its authorized accountants, counsel and other designated
representatives, at any time after the Distribution Date, reasonable access
during normal business hours and as soon as reasonably practicable after written
request therefor, (i) all Information regularly provided by such respective
Group to the other Group prior to the Distribution Date, and (ii) any
Information in the possession or under the control of such respective Group that
the requesting party reasonably needs (A) to comply with reporting, disclosure,
filing or other requirements imposed on the requesting party (including under
applicable securities and tax laws) by a Governmental Authority having
jurisdiction over the requesting party, (B) for use in any other judicial,
regulatory, administrative or other proceeding or in order to satisfy audit,
accounting, claims, regulatory, litigation or other similar requirements, in
each case, other than claims or allegations that one party to this Agreement has
against the other, (C) to comply with its obligations under this Agreement or
any Ancillary Agreement, (D) to comply with reporting, filing and disclosure
obligations, (E) for the preparation of financial statements or completing an
audit, (F) for use in compensation, benefit or welfare plan administration or
other bona fide business purposes or (G) for the conduct of the ongoing
businesses of Vishay or VPG, as the case may be; provided, however, that in the event that either Vishay or VPG
determines that any such provision of or access to Information would be
commercially detrimental in any material respect, violate any Applicable Law or
agreement or waive any Privilege, the parties shall take all reasonable measures
to permit the compliance with such obligations in a manner that avoids any such
harm or consequence and shall comply with the applicable provisions of this
Agreement. Each of Vishay and VPG agree to make their respective personnel
available during normal business hours to discuss the Information exchanged pursuant to this Section 4.3 provided, that such access does not interfere with the
day-to-day operations of the applicable party.

     

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              (b) Financial Information. Without limiting the generality of
Section 4.3(a), until the end of the first full VPG fiscal
year occurring after the Distribution Date (and for a reasonable period of time
afterwards as required for each party to prepare consolidated financial
statements or complete a financial statement audit for the fiscal year during
which the Distribution Date occurs), each party shall use its commercially
reasonable efforts, to cooperate with the other party’s Information requests to
enable the other party to meet its timetable for dissemination (in accordance
with applicable securities laws) of its earnings releases and financial
statements and to enable such other party’s auditors to timely complete their
audit of the annual financial statements and review of the quarterly financial
statements of such party. 

     

              (c) Ownership of Information. Any Information owned by a party that is
provided to the other party pursuant to this Section 4.3 shall be deemed to remain the property of the
party that owned and provided such Information. Unless specifically set forth
herein, nothing contained in this Agreement shall be construed as granting or
conferring rights of license or ownership in any Information owned by one party
hereunder to the other party hereunder. 

     

              (d) Record Retention. Except with respect to Information for which
a different retention policy is specified in an Ancillary Agreement, to
facilitate the exchange of Information contemplated by this Section 4.3 and other provisions of this Agreement after
the Distribution Date, each party agrees to, and to use its reasonable best
efforts to cause the members of its Group to, retain all Information related to
the MGF Business in their respective possession or control on the Distribution
Date in accordance with the record retention and destruction policies of the
applicable Business, as in effect immediately prior to the Distribution Date or
such other policies and procedures as may reasonably be adopted by the
applicable party after the Distribution Date as provided herein. No party will
destroy, or permit any member of its Group to destroy, any Information which the
other party may have the right to obtain pursuant to this Agreement without
first notifying the other party of the proposed destruction and giving the other
party the opportunity to take possession of such Information prior to such
destruction; provided, however, that no party will destroy, or permit any
member of its Group to destroy, any Information required to be retained by
Applicable Law. 

     

              (e) Limitation of Liability. Each party will use its reasonable best
efforts to ensure that Information provided to the other party is accurate and
complete; provided, however, that, except as otherwise provided in any
Ancillary Agreement, in the absence of gross negligence or willful misconduct by
the party providing such Information, no party shall have any liability to any
other party in the event that any Information exchanged or provided pursuant to
this Section 4.3 is found to be inaccurate. No party shall
have any liability to the other party if any Information is destroyed after
commercially reasonable efforts by such party to comply with the provision of
this Section 4.3. 

     

              (f) Other Agreements Providing for Exchange of
Information. The rights
and obligations granted under this Section 4.3 are subject to any specific limitations,
qualifications or additional provisions on the sharing, exchange or confidential
treatment of Information set forth in this Agreement and any Ancillary
Agreement. 

     

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              (g) Compensation for Providing
Information. The party
requesting Information agrees to reimburse the other party for the reasonable
out-of-pocket costs and expenses, if any, of creating, gathering and copying
such Information, to the extent that such costs and expenses are incurred for
the benefit of the requesting party. 

     

         Section 4.4 Production of Witnesses; Records;
Cooperation.

     

              (a) Subject to Section 4.6, after the Distribution Date, except in the
case of any Action by one or more members of one Group against one or more
members of the other Group, each party shall use its reasonable best efforts to
make available to the other party, upon written request, the former, current and
future directors, officers, employees, other personnel and agents of the members
of its respective Group as witnesses and any books, records or other documents
within its control or which it otherwise has the ability to make available, to
the extent that any such Person (giving consideration to business demands of
such directors, officers, employees, other personnel and agents) or books,
records or other documents may reasonably be required in connection with any
Action in which the requesting party may from time to time be involved,
regardless of whether such Action is a matter with respect to which
indemnification may be sought hereunder. The requesting party shall reimburse
the other party for its reasonable out-of-pocket cost and expenses in connection
with requests made under this Section 4.4. 

     

              (b) Without limiting the
forgoing but subject to Section 4.6, the parties shall cooperate and consult to
the extent reasonably necessary with respect to any Action, except in the case
of an adversarial Action by one or more members of one Group against one or more
members of the other Group. 

     

         Section 4.5 Confidentiality.

     

              (a) Subject to Section 4.6, which shall govern Privileged Information,
from and after the Distribution Date, Vishay and VPG shall hold and shall cause
each member of their respective Groups to hold, and shall each cause their
respective 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
Confidential Information of the other party’s Group; provided, that each party may disclose, or may permit
disclosure of, Confidential Information (i) to its respective auditors,
attorneys, financial advisors, bankers and other appropriate consultants and
advisors who have a need to know such Confidential Information and are informed
of such party’s obligation to hold such Information confidential to the same
extent as is applicable to the parties and in respect of whose failure to comply
with such obligations, VPG or Vishay, as the case may be, will be responsible,
(ii) if such party or any of the members of such party’s respective Group is
compelled to disclose any such Information by judicial or administrative process
or, in the opinion of independent legal counsel, by other requirements of
Applicable Law, (iii) if any such Information is or becomes generally available
to the public other than as a result of a disclosure in violation of this
Agreement or (iv) if such Information was or becomes available to either VPG or
Vishay or any member of their respective Group on a non-confidential basis and
from a source (other than a party to this Agreement or any Affiliate, director,
officer, employee, agent, consultant, advisor and other representative of such
party) that is not known after actual inquiry to be bound by a confidentiality
obligation. Notwithstanding the foregoing, in the event that any demand or
request for disclosure of Confidential Information is made pursuant to clause
(ii) above, Vishay or VPG, as the case may be, shall promptly notify the other
of the existence of such request or demand and shall provide the other a
reasonable opportunity to seek an appropriate confidentiality agreement,
protective order or other remedy at the reasonable cost and expense of the
disclosing party and which both parties will cooperate in obtaining. In the
event that such appropriate protective order or other remedy is not obtained,
the party whose Confidential Information is required to be disclosed shall, or
shall cause to be, furnished, only that portion of the Confidential Information
that is legally required to be disclosed.

     

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              (b) Notwithstanding anything
herein to the contrary, Vishay and the members of its Group, on the one hand,
and VPG and the members of its Group, on the other hand, shall be deemed to have
satisfied their obligations hereunder with respect to Confidential Information
if they exercise the same degree of care (but no less than a reasonable degree
of care) as they take to preserve confidentiality for their own similar
Information. 

     

              (c) Nothing in this Agreement
shall be construed to limit or prohibit either party from independently creating
or developing (or having created or developed for it), or from acquiring from
third parties, any Information similar to or competitive with the Information
contemplated by or embodied in the other party’s Confidential Information,
provided that in connection with such creation,
development or acquisition such party does not violate any of its obligations
under this Agreement, any Ancillary Agreement or any other agreement with the
other party. Notwithstanding the foregoing, neither party shall, nor shall it
assist others to, disassemble, decompile, reverse engineer, or otherwise attempt
to recreate, the other party’s Confidential Information. 

     

         Section 4.6 Privileged Matters.

     

              (a) Vishay and VPG agree that
their respective rights and obligations to maintain, preserve, assert or waive
any or all privileges belonging to either party or the respective members of
their respective Group with respect to the Vishay Business or the MGF Business,
including but not limited to the attorney-client, work product privileges or any
other applicable privileges (individually, a “Privilege”), shall be governed by the provisions of
this Section 4.6. With respect to Privileged Information of
Vishay, Vishay shall have sole authority in perpetuity to determine whether to
assert or waive any or all Privileges, and VPG shall take no action (nor permit
any member of its Group to take action) without the prior written consent of
Vishay that could result in any waiver of any Privilege that could be asserted
by Vishay or any member of its Group under Applicable Law and this Agreement.
With respect to Privileged Information of VPG, VPG shall have sole authority in
perpetuity to determine whether to assert or waive any or all Privileges, and
Vishay shall take no action (nor permit any member of its Group to take action)
without the prior written consent of VPG that could result in any waiver of any
Privilege that could be asserted by VPG or any member of its Group under
Applicable Law and this Agreement. The rights and obligations created by this
Section 4.6 shall apply to all Information (“Privileged Information”) as to which Vishay or VPG or their
respective Groups would be entitled to assert or have asserted a Privilege
without regard to the effect, if any, of the Separation and the Distribution.
Privileged Information of Vishay and its Group includes but is not limited to
(w) any and all Information satisfying the criteria of the preceding sentence
regarding the Vishay Business and its Group (other than Information satisfying
the criteria of the preceding
sentence relating to the MGF Business (“VPG Information”)), whether or not such Information (other
than VPG Information) is in the possession of VPG or any member of its Group;
and (x) all communications subject to a Privilege between counsel for Vishay
(including any Person who, at the time of the communication, was an employee of
Vishay or its Group in the capacity of in-house counsel, regardless of whether
such employee is or becomes an employee of VPG or any member of its Group) and
any Person who, at the time of the communication, was an employee of Vishay,
regardless of whether such employee is or becomes an employee of VPG or any
member of its Group. Privileged Information of VPG and its Group includes but is
not limited to (x) any and all VPG Information, whether or not it is in the
possession of Vishay or any member of its Group; and (y) all communications
subject to a Privilege occurring after the Distribution between counsel for the
MGF Business (including in-house counsel and former in-house counsel who are
employees of Vishay) and any Person who, at the time of the communication, was
an employee of VPG, any member of its Group or the MGF Business regardless of
whether such employee was, is or becomes an employee of Vishay or any member of
its Group. 

     

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              (b) Upon receipt by Vishay or
VPG, or any of the members of the respective Groups, as the case may be, of any
subpoena, discovery or other request from any third party that actually or
arguably calls for the production or disclosure of Privileged Information of the
other or if Vishay or VPG, or any of members of their respective Groups, as the
case may be, obtains knowledge that any current or former employee of Vishay or
VPG, as the case may be, receives any subpoena, discovery or other request from
any third party that actually or arguably calls for the production or disclosure
of Privileged Information of the other, Vishay or VPG, as the case may be, shall
promptly notify the other of the existence of the request and shall provide the
other a reasonable opportunity to review the Information and to assert any
rights it may have under this Section 4.6 or otherwise to prevent the production or
disclosure of Privileged Information. Vishay or VPG, as the case may be, will
not, and will cause the members of their respective Groups to not, produce or
disclose to any third party any of the other’s Privileged Information under this
Section 4.6 unless (i) the non-disclosing party has
provided its express written consent to such production or disclosure or (ii) a
court of competent jurisdiction has entered an order not subject to
interlocutory appeal or review (or for which the period for appeal or review has
lapsed) finding that the Information is not entitled to protection from
disclosure under any applicable privilege, doctrine or rule, in which case, such
Information shall be subject to Section 4.5. 

     

              (c) Vishay’s transfer of
books and records pertaining to the MGF Business and other Information to VPG,
Vishay’s agreement to permit VPG to obtain Information existing prior to the
Distribution, VPG’s transfer of books and records pertaining to the Vishay
Business, if any, and other Information to Vishay and VPG’s agreement to permit
Vishay to obtain Information existing prior to the Distribution are made in
reliance on Vishay’s and VPG’s respective agreements, as set forth in
Section 4.5 and this Section 4.6, to maintain the confidentiality of such
Information and to take the steps provided herein for the preservation of all
Privileges that may belong to or be asserted by Vishay or VPG, as the case may
be. The access to Information, witnesses and individuals being granted pursuant
to Sections 4.3 and 4.4 and the disclosure to VPG and Vishay of
Privileged Information relating to the MGF Business or the Vishay Business
pursuant to this Agreement in connection with the Separation and Distribution
shall not be asserted by Vishay or VPG to constitute, or otherwise deemed, a
waiver of any Privilege that has
been or may be asserted under this Section 4.6 or otherwise. Nothing in this Agreement shall
operate to reduce, minimize or condition the rights granted to Vishay and VPG
in, or the obligations imposed upon Vishay and VPG by, this Section 4.6. 

     

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         Section 4.7 Cooperation with Respect to
Know-how. Neither party
shall knowingly utilize or incorporate into its products or services the
confidential know-how or other proprietary technical information of the other
party without the express, prior written consent of the other party. The parties
agree that if a party reasonably believes that the other party has or may have
an interest or expectation of ownership in know-how or other technical
information that has come to the attention of the personnel of the first party
and that the first party proposes to utilize in its products, services or other
aspects of its business, the first party shall bring this to the attention of
the other party. Thereafter, the parties shall discuss in good faith the use of
such know-how or other technical information to determine whether such
information is the exclusive property of one of the parties or if it is
information in which both parties have an interest or expectation of ownership.
If it is determined that the know-how or other technical information is the
exclusive property of one of the parties, the other party may request a license
to utilize such information for development of or incorporation into its
products and services or in other aspects of its business. In such case, the
other party shall in good faith consider the request for a license, including
the financial arrangements and other terms that the first party proposes for
such a license. Nothing, however, shall require a party to enter into such a
license or to act against its commercial interests as determined by such party.
For the purpose of the discussions contemplated by this Section 4.7, each party shall at all times designate by
notice to the other party one or more individuals at a level equal to or above
divisional P&L leader who shall be available to engage in such discussions
at the request of the other party. 

     

         Section 4.8 VPG Exchangeable Notes and VPG
Warrants. VPG agrees to
take the following actions: 

     

              (a) Issue notes exchangeable
for shares of VPG common stock (the “VPG Exchangeable Notes”) to such Persons, in such amounts, upon such
terms and at such time as required by that certain Put and Call Agreement dated
as of December 13, 2002, by and between Vishay and each of the holders of the
Notes due December 31, 2102 issued by Vishay. 

     

              (b) Issue warrants to acquire
VPG common stock (the “VPG Warrants”) to such Persons, in such amounts, upon such
terms and at such time as required by that certain Warrant Agreement dated as of
December 13, 2002, by and between Vishay and American Stock Transfer and Trust
Company. 

     

              (c) Register the shares of
VPG common stock issuable upon (i) exchange of the VPG Exchangeable Notes or
(ii) exercise of the VPG Warrants, on a resale registration statement on such
terms and within such time periods as required by that certain Securities
Investment and Registration Rights Agreement dated as of December 13, 2002, by
and among Vishay, Phoenix Acquisition Company S.a.r.l., Phoenix Bermuda, LP and
certain other persons as set forth therein. 

     

         Section 4.9 Tax Matters. All matters relating to Taxes shall be
governed exclusively by the Tax Matters Agreement, except as may be expressly
stated herein or therein. In the event of any inconsistency with respect to such
matters between the Tax Matters Agreement and this Agreement or any other
Ancillary Agreement, the Tax Matters Agreement shall govern to the extent of the
inconsistency.

     

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         Section 4.10 Employee Matters. All matters relating to or arising out of
any employee benefit, compensation or welfare arrangement in respect of any
present and former employee of the Vishay Group or the VPG Group shall be
governed by the Employee Matters Agreement. In the event of any inconsistency
with respect to such matters between the Employee Matters Agreement and this
Agreement or any Ancillary Agreement, the Employee Matters Agreement shall
govern to the extent of the inconsistency; provided, however, that
notwithstanding anything to the contrary herein or in the Employee Matters
Agreement, for the period from and after the Distribution Date, Vishay shall
have no responsibility for the compensation or benefits of any of the executives
or other employees of VPG, including those who were employed by Vishay prior to
the Separation. 

     

         Section 4.11 Intellectual Property. All matters relating to the ownership and
right to use Intellectual Property shall be governed exclusively by the License
Agreements, as applicable, except as may be expressly stated herein or therein.
In the event of any inconsistency with respect to such matters between a
particular License Agreement and this Agreement or any Ancillary Agreement, such
particular License Agreement shall govern to the extent of the inconsistency.


     

         Section 4.12 Services Support. All matters relating to the provision of
support and other services by one Group to the other Group after the Effective
Time, covered by the Transition Services Agreements, shall be governed
exclusively by the respective Transition Services Agreements, except as may be
expressly stated herein or therein. In the event of any inconsistency with
respect to such matters between a particular Transition Services Agreement and
this Agreement or any other Ancillary Agreement, such particular Transition
Services Agreement shall govern to the extent of the inconsistency.


     

         Section 4.13 Real Property. All matters relating to real property to be
leased, subleased, occupied, or shared either Group after the Effective Time
shall be governed by the Lease Agreements, except as may be expressly stated
herein or therein. In the event of any inconsistency with respect to such
matters between a particular Lease Agreements and this Agreement or any
Ancillary Agreement, such particular Lease Agreement shall govern to the extent
of the inconsistency. 

     

    ARTICLE V

     

    SURVIVAL AND INDEMNIFICATION


     

         Section 5.1 Mutual Release.

     

              (a) Effective as of the
Distribution Date and except as otherwise specifically set forth in the
Ancillary Agreements or on Schedule 5.1(a), each of Vishay, on behalf of itself and each
member of the Vishay Group, on the one hand, and VPG, on behalf of itself and
each member of the VPG Group, on the other hand, hereby unequivocally,
unconditionally and irrevocably releases and forever discharges the other party
and the members of such party’s Group, and its and their respective current and
former directors, officers, managers or other Persons acting in a similar
capacity, agents, record and beneficial security holders (including trustees and
beneficiaries of trusts holding such securities), advisors, accountants,
attorneys and other representatives (in each case, in their respective
capacities as such) and their respective heirs, executors, administrators,
successors and assigns, of and from, all Liabilities whatsoever of every name
and nature, whether at law or in equity (including any right of contribution),
whether arising under any Contract, by operation of law or otherwise, existing
or arising from any acts or events occurring or failing to occur or alleged to
have occurred or to have failed to occur or any conditions existing or alleged
to have existed on or before the Distribution Date, whether or not known on the
Distribution Date, whether fixed or contingent, and whether or not concealed or
hidden, including in connection with the transactions and all other activities
to implement the Separation and the Distributions.

     

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              (b) Nothing contained in
Section 5.1(a) shall impair any right of any party (or any
of the respective members of such party’s Group) to enforce this Agreement, any
Ancillary Agreement or any other Contracts that are contemplated by Section 2.11(b) or the applicable
Schedules thereto, nor shall anything contained in those sections be interpreted
as terminating as of the Distribution Date any rights under any such Contracts.
For purposes of clarification, nothing contained in Section 5.1(a) shall release any Person from: 

     

         (i) any Liability provided in
or resulting from any agreement among any member of the Vishay Group or the VPG
Group that is specified in Section 2.11(b) or the applicable Schedules thereto as not to
terminate as of the Distribution Date, or any other Liability specified in such
Section 2.11(b) as not to terminate as of the Distribution
Date; 

     

         (ii) any Liability, contingent
or otherwise, assumed, transferred, assigned or allocated to the Group of which
such Person is a member in accordance with, or any other Liability of any member
of any Group under, this Agreement or any Ancillary Agreement; 

     

         (iii) any Liability for the
sale, lease, construction or receipt of goods, property or services purchased,
obtained or used in the ordinary course of business by a member of one Group
from a member of any other Group prior to the Distribution Date; 

     

         (iv) any Liability for unpaid
amounts for products or services or refunds owing on products or services due on
a value-received basis for work done by a member of one Group at the request or
on behalf of a member of another Group; 

     

         (v) any Liability that the
parties may have with respect to indemnification or contribution pursuant to
this Agreement for claims brought against the parties by third Persons, which
Liability shall be governed by the provisions of this Article V and Article VI and, if applicable, the appropriate
provisions of the Ancillary Agreements; or 

     

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         (vi) any Liability the release
of which would result in the release of any Person other than a Person released
pursuant to this Section 5.1. 

     

         In addition, nothing contained in Section 5.1(a) shall release any party from honoring its
existing obligations to indemnify any director, officer or employee of either
Group who was a director, officer or employee of such party on or prior to the
Distribution Date, to the extent that such director, officer or employee becomes
a named defendant in any litigation involving such party and was entitled to
such indemnification pursuant to then existing obligations. 

     

              (c) Neither Vishay nor VPG
shall make, nor shall either permit any other member of its Group to make, any
claim or demand, or commence any Action asserting any claim or demand, including
any claim of contribution or any indemnification, against the other or any
member of the other Group or any other Person released pursuant to Section 5.1(a), with respect to any Liabilities released
pursuant to Section 5.1(a).

     

              (d) It is the intent of
Vishay and VPG by virtue of the provisions of this Section 5.1 to provide for a full and complete release
and discharge of all Liabilities existing or arising from all acts and events
occurring or failing to occur or alleged to have occurred or to have failed to
occur and all conditions existing or alleged to have existed on or before the
Distribution Date, between or among Vishay or any member of the Vishay Group, on
the one hand, and VPG or any member of the VPG Group, on the other hand
(including any contractual agreements or arrangements existing or alleged to
exist between or among any such members on or before the Distribution Date),
except as expressly set forth in Section 5.1(b). At any time, at the
request of any other party, each party shall cause each member of its respective
Group to execute and deliver releases reflecting the provisions hereof.


     

         Section 5.2 Indemnification by Vishay. Vishay shall indemnify, defend and hold
harmless VPG, each member of the VPG Group and each of their respective current
and former directors, officers and employees, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the “VPG Indemnified Parties”), from and against any and all Liabilities
of VPG Indemnified Parties relating to, arising out of or resulting from any of
the following items (without duplication): 

     

              (a) the failure of Vishay or
any other member of the Vishay Group or any other Person to pay, perform or
otherwise promptly discharge any Liabilities of the Vishay Group other than the
Assumed Liabilities whether prior to or after the date hereof; 

     

              (b) the conduct of the Vishay
Business;

     

              (c) any Liability of the
Vishay Group (including the Excluded Assumed Liabilities) other than the Assumed
Liabilities; 

     

              (d) any Environmental
Liabilities under Section
2.5(b)(v); 

     

              (e) any breach of, or failure
to perform or comply with, any covenant, undertaking or obligation of, this
Agreement or any Ancillary Agreements, by Vishay or any member of the Vishay
Group; and 

     

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              (f) any untrue statement or
alleged untrue statement of material fact or omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent relating to Vishay
Group contained in the Form 10 Registration Statement, the Information Statement
or any other registration statements filed by VPG or Vishay in connection with
the Distribution. 

     

         Section 5.3 Indemnification by VPG. VPG shall indemnify defend and hold harmless
Vishay, each member of the Vishay Group and each of their respective current and
former directors, officers and employees, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the “Vishay Indemnified Parties”) from and against any and all Liabilities of
the Vishay Indemnified Parties relating to, arising out of or resulting from any
of the following items (without duplication): 

     

              (a) the failure of VPG or any
other member of the VPG Group or any other Person to pay, perform or otherwise
promptly discharge any Assumed Liabilities in accordance with their respective
terms, whether prior to or after the date hereof; 

     

              (b) the conduct of the MGF
Business; 

     

              (c) any Assumed Liability;


     

              (d) any Environmental
Liabilities under Section
2.5(a)(vi); 

     

              (e) any breach of, or failure
to perform or comply with, any covenant, undertaking or obligation of, this
Agreement or any Ancillary Agreements, by VPG or any member of the VPG Group;
and 

     

              (f) any untrue statement or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent relating to the
VPG Group contained in the Form 10 Registration Statement, the Information
Statement or any other registration statements filed by VPG in connection with
the Distribution. 

     

         Section 5.4 Tax Indemnification. Notwithstanding anything herein to the
contrary, indemnification for matters subject to the Tax Matters Agreement shall
be governed by the terms, provisions and procedures of the Tax Matters Agreement
and not by this Article V. 

     

         Section 5.5 Indemnification Obligations Net of Insurance
Proceeds and Other
Amounts.

     

              (a) The parties intend that
any Liability subject to indemnification or reimbursement pursuant to this
Article V or Article VI will be net of Insurance Proceeds that
actually reduce the amount of the Liability. Accordingly, the amount which any
party (an “Indemnifying Party”) is required to pay to any Person entitled
to indemnification hereunder (an “Indemnified Party”) will be reduced by any Insurance Proceeds
theretofore actually received, realized or recovered by or on behalf of the
Indemnified Party in reduction of the related Liability. If an Indemnified Party
receives a payment (an “Indemnity Payment”) required by this Agreement from an
Indemnifying Party in respect of any Liability and subsequently receives
Insurance Proceeds that actually reduce the amount of the Liability, then the
Indemnified Party will pay to the Indemnifying Party an amount equal to the
excess of the Indemnity Payment received over the amount of the Indemnity
Payment that would have been due if the Insurance Proceeds had been received,
realized or recovered before the Indemnity Payment was made.

     

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              (b) In the case of any Shared
Contingent Liability, any Insurance Proceeds actually received, realized or
recovered by any party in respect of the Shared Contingent Liability will be
shared among the parties in such manner as may be necessary so that the
obligations of the parties for such Shared Contingent Liability, net of such
Insurance Proceeds, will remain in proportion to their respective Shared
Percentages, regardless of which party or parties may actually receive, realize
or recover such Insurance Proceeds. 

     

              (c) An insurer who would
otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto or, solely by virtue of the indemnification
provisions hereof, have any subrogation rights with respect thereto, it being
expressly understood and agreed that no insurer or any other third party shall
be entitled to a “wind-fall” ( i.e., a benefit they would not be entitled to
receive in the absence of the indemnification provisions) by virtue of the
indemnification provisions hereof. Nothing contained in this Agreement or in any
Ancillary Agreement shall obligate any member of any Group to seek to collect or
recover any Insurance Proceeds; provided, that such member is capable of fulfilling
and meeting any of its obligations as an Indemnifying Party under this Agreement
(including, but not limited to the ability to make a full payment on any
indemnification obligation). 

     

         Section 5.6 Procedures for Indemnification of Third Party
Claims.

     

              (a) If an Indemnified Party
shall receive notice or otherwise learn of the assertion by a Person (including
any Governmental Authority) who is not a member of the Vishay Group or the VPG
Group of any claim or of the commencement by any such Person of any Action
(collectively, a “Third Party Claim”) with respect to which an Indemnifying Party
may be obligated to provide indemnification to such Indemnified Party pursuant
to Section 5.2 or Section 5.3 or any other section of this Agreement or any
Ancillary Agreement, such Indemnified Party shall give such Indemnifying Party
written notice thereof within twenty (20) days after becoming aware of such
Third Party Claim. Any such notice shall describe the Third Party Claim in
reasonable detail. If any Person shall receive notice or otherwise learn of the
assertion of a Third Party Claim which may reasonably be determined to be a
Shared Contingent Liability, such Person shall give the other party to this
Agreement written notice thereof within twenty (20) days after becoming aware of
such Third Party Claim. Any such notice shall describe the Third Party Claim in
reasonable detail. Notwithstanding the foregoing, the failure of any Indemnified
Party or other Person to give notice as provided in this Section 5.6(a) shall not relieve the related Indemnifying
Party of its obligations under this Article V, except to the extent that such Indemnifying
Party is actually prejudiced by such failure to give notice. 

     

              (b) If the Indemnifying Party
receiving any notice pursuant to Section 5.6(a) or the Indemnified Party believes that the
Third Party Claim is or may be a Shared Contingent Liability, such party may
make a Determination Request with respect thereto. Vishay shall be entitled (but
not obligated) to assume the defense of such Third Party Claim as if it were the
Indemnifying Party hereunder until a determination on whether such Third Party
Claim is a Shared Contingent
Liability. In any such event, Vishay shall be entitled to reimbursement of all
the costs and expenses of such defense once a final determination or
acknowledgment is made as to the status of the Third Party Claim; provided, that, if such Third Party Claim is
determined to be a Shared Contingent Liability, such costs and expenses shall be
shared as provided in Section 5.6(c). If it is determined by the parties or the
Contingent Claim Committee that the Third Party Claim is a Shared Contingent
Liability, the Indemnifying Party determined to have a majority of the Shared
Percentage of such Shared Contingent Liability shall assume the defense of such
Third Party Claim; provided, that such Indemnifying Party is solvent. If
the Indemnifying Party with a majority of the Shared Contingent Liability is
insolvent, the Indemnifying Party with less than a majority of the Shared
Contingent Liability shall be entitled (but not obligated) to assume the defense
of such Third Party Claim. 

     

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              (c) The costs and expenses of
assuming the defense of any Third Party Claim that is a Shared Contingent
Liability (subject to Section 5.6(b)), and/or seeking to settle or compromise
(subject to Section 5.6(g)) shall be included in the calculation of the
amount of the applicable Shared Contingent Liability in determining the
reimbursement obligations of the other parties with respect thereto pursuant to
Section 6.3. Any Indemnified Party in respect of a Shared
Contingent Liability shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but all fees and expenses of such counsel shall be the expense of such
Indemnified Party. 

     

              (d) Other than in the case of
a Shared Contingent Liability, an Indemnifying Party may elect to defend (and,
unless the Indemnifying Party has specified any reservations or exceptions, to
seek to settle or compromise), at such Indemnifying Party’s own expense and by
such Indemnifying Party’s own counsel, any Third Party Claim. Within thirty (30)
days after the receipt of notice from an Indemnified Party in accordance with
Section 5.6(a) (or sooner, if the nature of such Third Party
Claim so requires), the Indemnifying Party shall notify the Indemnified Party of
its election whether the Indemnifying Party will assume responsibility for
defending such Third Party Claim, which election shall specify any reservations
or exceptions. After notice from an Indemnifying Party to an Indemnified Party
of its election to assume the defense of a Third Party Claim, such Indemnified
Party shall have the right to employ separate counsel and to participate in (but
not control) the defense, compromise, or settlement thereof, but the fees and
expenses of such counsel shall be the expense of such Indemnified Party.


     

              (e) Other than in the case of
a Shared Contingent Liability, if an Indemnifying Party elects not to assume
responsibility for defending a Third Party Claim, or fails to notify an
Indemnified Party of its election as provided in Section 5.6(d), such Indemnified Party may defend such Third
Party Claim at the cost and expense of the Indemnifying Party. 

     

              (f) Unless the Indemnifying
Party has failed to assume the defense of the Third Party Claim in accordance
with the terms of this Agreement, no Indemnified Party may settle or compromise
any Third Party Claim that is not a Shared Contingent Liability without the
consent of the Indemnifying Party. No Indemnified Party may settle or compromise
any Third Party Claim that is a Shared Contingent Liability without the consent
of the Indemnifying Party that is entitled to or has assumed the defense of such
Third Party Claim. 

     

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              (g) In the case of a Third
Party Claim that is not a Shared Contingent Liability, no Indemnifying Party
shall consent to entry of any judgment or enter into any settlement of the Third
Party Claim without the consent of the Indemnified Party if the effect thereof
is to permit any injunction, declaratory judgment, other order or other
nonmonetary relief to be entered, directly or indirectly against any Indemnified
Party. In the case of a Third Party Claim that is a Shared Contingent Liability,
the Indemnifying Party that has assumed the defense of such Third Party Claim
shall not consent to entry of any judgment or enter into any settlement of the
Third Party Claim without the consent of the Indemnified Party if the effect
thereof is to permit any injunction, declaratory judgment, other order or other
nonmonetary relief to be entered, directly or indirectly, against any
Indemnified Party; provided, however, the Indemnifying Party shall not need to
obtain the consent of the Indemnified Party if the Indemnified Party is
insolvent. 

     

         Section 5.7 Procedures for Indemnification of Direct
Claims. Any claim for
indemnification made directly by the Indemnified Party against the Indemnifying
Party that does not result from a Third Party Claim shall be asserted by written
notice from the Indemnified Party to the Indemnifying Party specifically
claiming indemnification hereunder. Such Indemnifying Party shall have a period of forty-five (45) days after the
receipt of such notice within which to respond thereto. If such Indemnifying
Party does not respond within such forty-five (45) day period, such Indemnifying
Party shall be deemed to have accepted responsibility to make payment and shall
have no further right to contest the validity of such claim. If such
Indemnifying Party does respond within such forty-five (45) day period and
rejects such claim in whole or in part, such Indemnified Party shall be free to
pursue resolution as provided in Article VIII. 

     

         Section 5.8 Payments. The Indemnifying Party shall pay all amounts
payable pursuant to this Article V by wire transfer of immediately available
funds, promptly following receipt from an Indemnified Party of a statement
therefor, together with all accompanying reasonably detailed backup
documentation, for a Liability that is the subject of indemnification hereunder,
unless the Indemnifying Party in good faith disputes the Liability, in which
event it shall so notify the Indemnified Party. In any event, the Indemnifying
Party shall pay to the Indemnified Party, by wire transfer of immediately
available funds, the amount of any Liability for which it is liable hereunder no
later than ten (10) Business Days following any final determination of such
Liability and the Indemnifying Party’s liability therefor. A “final determination” shall exist when (a) the parties to the
dispute have reached an agreement in writing, (b) a court of competent
jurisdiction shall have entered a final and non-appealable order or judgment or
(c) an arbitration or like panel shall have rendered a final non-appealable
determination with respect to disputes the parties have agreed to submit
thereto. 

     

         Section 5.9 Contribution. If the indemnification provided for in this
Article V shall, for any reason, be unavailable or
insufficient to hold harmless an Indemnified Party hereunder in respect of any
Liability, then the Indemnifying Party shall, in lieu of indemnifying such
Indemnified Party, contribute to the amount paid or payable by such Indemnified
Party as a result of such Liability, in such proportion as shall be sufficient
to place the Indemnified Party in the same position as if such Indemnified Party
were indemnified hereunder, the parties intending that their respective
contributions hereunder be as close as possible to the indemnification under
Section 5.2 and Section 5.3. If the contribution provided for in the
previous sentence shall, for any
reason, be unavailable or insufficient to put the Indemnified Party in the same
position as if it were indemnified under Section 5.2 or Section 5.3, as the case may be, then the Indemnifying
Party shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Liability, in such proportion as shall be appropriate to
reflect the relative benefits received by and the relative fault of the
Indemnifying Party on the one hand and the Indemnified Party on the other hand
with respect to the matter giving rise to the Liability. 

     

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         Section 5.10 Remedies Cumulative. The rights and remedies provided in this
Article V shall be cumulative and, subject to the
provisions of Article VIII, shall not preclude assertion by any
Indemnified Party of any other rights or the seeking of any and all other
remedies against any Indemnifying Party. 

     

         Section 5.11 Survival of Indemnities. The rights and obligations of each of Vishay
and VPG and their respective Indemnified Parties under this Article V shall survive the distribution, sale or other
transfer by any party of any Assets or the delegation or assignment by it of any
Liabilities. 

     

    ARTICLE VI 

     

    CONTINGENT GAINS AND CONTINGENT LIABILITIES


     

         Section 6.1 Contingent Gains.

     

              (a) Each of Vishay and VPG
shall have the sole and exclusive right to any benefit received with respect to
any Exclusive Vishay Contingent Gain and any Exclusive VPG Contingent Gain,
respectively. Each of Vishay and VPG shall have the sole and exclusive authority
to commence, prosecute, settle, manage, control, conduct, waive, forego,
release, discharge, forgive and otherwise determine all matters whatsoever with
respect to any such Exclusive Vishay Contingent Gain or Exclusive VPG Contingent
Gain, as the case may be. 

     

              (b) Any benefit that may be
received from any Shared Contingent Gain shall be shared between Vishay and VPG
in proportion to the Shared Vishay Percentage and the Shared VPG Percentage,
respectively, and shall be paid in accordance with Section 6.4. If it is determined by the parties or the
Contingent Claim Committee that a Contingent Gain is a Shared Contingent Gain,
the party determined to have a majority of the Shared Percentage of such Shared
Contingent Gain shall have the sole and exclusive authority to commence,
prosecute, settle, manage, control, conduct, waive, forgo, release, discharge,
forgive and otherwise determine all matters whatsoever with respect to such
Shared Contingent Gain. The party with a minority interest in such Shared
Contingent Gain shall not take, or permit any member of its Group to take, any
action (including commencing any Action) that would interfere with such rights
and powers of the other party. The party with a majority of the Shared
Percentage of such Shared Contingent Gain shall use its reasonable best efforts
to notify the other party in the event that it commences an Action with respect
to a Shared Contingent Gain; provided, that the failure to provide such notice
shall not give rise to any rights on the part of the other party against such
party or affect any other provision of this Section 6.1. The party with a majority of the Shared
Percentage of such Shared Contingent Gain may elect not to pursue any Shared
Contingent Gain for any reason whatsoever (including a different assessment of
the merits of any Action, claim or right than the other party or any business
reasons that are in the best interests of such party or a member of such party’s
Group, without regard to the best interests of any member of the other Group)
and no member of the Group with a majority interest in such Shared Contingent
Gain shall have any liability to any Person (including any member of the other
Group) as a result of any such determination.

     

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              (c) In the event of any
dispute as to whether any claim or right is a Contingent Gain or whether any
Contingent Gain is a Shared Contingent Gain, an Exclusive Vishay Contingent Gain
or an Exclusive VPG Contingent Gain, Vishay may, but shall not be obligated to,
commence prosecution or other assertion of such claim or right pending
resolution of such dispute. In the event that Vishay commences any such
prosecution or assertion and, upon resolution of the dispute, it is determined
hereunder that VPG has the exclusive right to such claim or right, Vishay shall,
promptly upon the request of VPG, discontinue the prosecution or assertion of
such right or claim and transfer the control thereof to VPG. In such event, VPG
will reimburse Vishay for all costs and expenses, reasonably incurred prior to
resolution of such dispute in the prosecution or assertion of such claim or
right. 

     

         Section 6.2 Exclusive Contingent
Liabilities. Each
Exclusive Contingent Liability shall constitute a Liability for which
indemnification is provided by Vishay or VPG, as the case may be, pursuant to
Article V and shall be subject to the procedures set
forth in Article V with respect thereto. 

     

         Section 6.3 Shared Contingent
Liabilities.

     

              (a) As set forth in
Section 5.6(c) and subject to Section 5.6(g), any Third Party Claim that is a Shared
Contingent Liability, and the costs and expenses thereof, shall be included in
the calculation of the amount of the applicable Shared Contingent Liability in
determining the reimbursement obligations of the other parties with respect
thereto pursuant to this Section 6.3. 

     

              (b) Each of Vishay and VPG
shall be responsible for its Shared Percentage of any Shared Contingent
Liability. It shall not be a defense to any obligation by any party to pay any
amount in respect of any Shared Contingent Liability that such party was not
consulted in the defense thereof, that such party’s views or opinions as to the
conduct of such defense were not accepted or adopted, that such party does not
approve of the quality or manner of the defense thereof or that such Shared
Contingent Liability was incurred by reason of a settlement rather than by a
judgment or other determination of liability (even if, subject to Section 5.6(g), such settlement was effected without the
consent or over the objection of such party). 

     

         Section 6.4 Payments. Any amount owed in respect of (i) any Shared
Contingent Liabilities (including reimbursement for the cost or expense of
defense of any Third Party Claim that is a Shared Contingent Liability), or (ii)
any Shared Contingent Gains (including reimbursement for the costs or expenses
to commence, prosecute or settle matters with respect to a Shared Contingent
Gain), pursuant to this Article VI shall be remitted promptly after the party
entitled to such amount provides an invoice (including reasonable supporting
Information with respect thereto) to the party owing such amount. 

     

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         Section 6.5 Procedures to Determine Status of Contingent
Liability or Contingent Gain. 

     

              (a) With respect to the
Actions set forth on Schedule 6.5(a), and with respect to any other matters not
set forth on Schedules 1.2, 1.3, 1.4, 1.5, 1.7 or 1.8 (regardless of whether such matters are
currently pending but not set forth on such Schedules or are asserted or filed
hereafter), Vishay and VPG will form the Contingent Claim Committee for (x) the
purpose of resolving whether: 

     

         (i) any claim or right is a
Contingent Gain; 

     

         (ii) any Contingent Gain is a
Shared Contingent Gain, an Exclusive Vishay Contingent Gain or an Exclusive VPG
Contingent Gain; 

     

         (iii) any Liability is a
Contingent Liability; or 

     

         (iv) any Contingent Liability
is a Shared Contingent Liability, an Exclusive Vishay Contingent Liability or an
Exclusive VPG Contingent Liability. 

     

    and (y) for the purpose
of determining the Shared VPG Percentage and the Shared Vishay Percentage in
connection with Shared Contingent Gains and Shared Contingent
Liabilities.

     

              (b) (i) The parties shall
refer any Shared Contingent Gain or Shared Contingent Liability to the
Contingent Claim Committee to determine the Shared VPG Percentage and the Shared
Vishay Percentage in connection with such Shared Contingent Gain or Shared
Contingent Liability and (ii) any of the parties may refer any potential
Contingent Gains or Contingent Liabilities to the Contingent Claim Committee for
resolution as described in Section 6.5(a) (any such request described in clause (i) or
clause (ii), a “Determination Request”). If the Contingent Claim Committee reaches
a determination (which shall be made within thirty (30) days of such referral on
a matter submitted to the Contingent Claim Committee by any of the parties),
then that determination shall be binding on all of the parties and their
respective successors and assigns. In the event that the Contingent Claim
Committee cannot reach a determination as to (i) the appropriate allocation of
Contingent Gains or Contingent Liabilities between the parties in connection
with Shared Contingent Gains or Shared Contingent Liabilities, respectively, or
(ii) as to the nature or status of any such Contingent Liabilities or Contingent
Gains, within thirty (30) days after such referral, then the issue will be
submitted to the respective Senior Party Representative of Vishay and VPG for
determination. If the Senior Party Representatives cannot reach a determination,
then the procedures set forth in Article VIII of this Agreement shall govern. 

     

         Section 6.6 Certain Case Allocation
Matters. The parties agree
that if any Action not set forth on Schedules 1.2, 1.3, 1.4, 1.5, 1.7 or 1.8 involves separate and distinct claims that,
if not joined in a single Action, would constitute separate Exclusive Contingent
Liabilities of two or more parties, they will use their reasonable best efforts
to segregate such separate and distinct claims so that the Liabilities
associated with each such claim (including all costs and expenses) shall be
treated as Exclusive Contingent Liabilities of the appropriate party and so that
each party shall have the rights and obligations with respect to each such claim
(including pursuant to Article V) as would have been applicable had such
claims been commenced as separate Actions. Notwithstanding the foregoing provisions, this
Section 6.6 shall not apply to any separate and distinct
claim that is de minimis or frivolous in nature. 

     

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    ARTICLE VII 

     

    INSURANCE 

     

         Section 7.1 Insurance Matters Generally.

     

              (a) VPG does hereby, for
itself and each other member of the VPG Group, agree that no member of the
Vishay Group or any Vishay Indemnified Party shall have any liability whatsoever
as a result of the insurance policies and practices of Vishay and its Affiliates
as in effect at any time prior to the Effective Time, including as a result of
the level or scope of any such insurance, the creditworthiness of any insurance
carrier, the terms and conditions of any policy, the adequacy or timeliness of
any notice to any insurance carrier with respect to any claim or potential
claim, the bankruptcy or insolvency of any insurance carrier or otherwise.


     

              (b) The Separated Assets
shall include any and all Insurance Policies which are owned or maintained by or
on behalf of VPG or any member of the VPG Group or which are owned or maintained
by or on behalf of Vishay or any member of the Vishay Group and which relate
exclusively to the MGF Business and which are by their terms assignable to VPG
or any member of the VPG Group. All other Insurance Policies shall be subject to
the provisions of Section 7.2. 

     

         Section 7.2 Shared Insurance Policies.

     

              (a) Vishay agrees to use its
reasonable best efforts to cause the interest and rights of VPG and the other
members of the VPG Group as of the Effective Time as insureds, additional named
insureds or beneficiaries or in any other capacity under occurrence-based
Insurance Policies of Vishay or any other member of the Vishay Group in respect
of periods prior to the Effective Time (and under claims-made policies and
programs to the extent a claim has been submitted prior to the Effective Time)
to survive the Effective Time for the period for which such interests and rights
would have survived without regard to the transactions contemplated hereby to
the extent permitted by such Insurance Policies; provided however that Vishay
shall be required to maintain tail or extended coverage for the benefit of the
VPG Group with respect to certain Insurance Policies in effect prior to the
Effective Time as described in Schedule 1.8 and Schedule 2.5(b)(v). For the
avoidance of doubt, except as otherwise provided in Schedule 1.8 or Schedule
2.5(b)(v), Vishay shall not be required to maintain any tail or extended
coverage for the benefit of the VPG Group with respect to Insurance Policies in
effect prior to the Effective Time.

     

              (b) Following the Effective
Time, Vishay, at its sole option, cost and expense, shall continue to administer
the Insurance Policies, including on behalf of VPG and the other members of the
VPG Group. Vishay’s retention of the administrative responsibilities for the
Insurance Policies shall not relieve VPG or any member of the VPG Group
submitting any insurance claim of the responsibility to report such claim
accurately, completely and in a timely manner or limit the authority of VPG or
such other member of the VPG Group to settle any such insurance claim within the
limits of the relevant Insurance Policy. Vishay may discharge its administrative
responsibilities under this Section 7.2(b) by contracting for the provision of
services by one or more independent parties.

     

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              (c) If any insurer does not
promptly acknowledge insurance coverage in connection with any insured Assumed
Liabilities, then, with respect to such insured Assumed Liabilities, VPG, on an
as-incurred basis (i) shall advance all amounts expended by Vishay for or with
respect to such insured Assumed Liabilities, including all costs and expenses in
connection with the defense and settlement and in satisfaction of any judgment
incurred, and amounts sufficient to cover any Liabilities required to be paid by
Vishay or any member of the Vishay Group, and (ii) shall pay all costs incurred
in connection with pursuing and recovering Insurance Proceeds with respect to
the insured Assumed Liabilities, but, in the case of each of clauses (i) and
(ii) above, only to the extent Vishay is taking action in respect therewith at
the request of VPG, which shall be entitled to direct all such defense,
settlement and recovery efforts, subject, however to the provisions of Article
V. Any Insurance Proceeds received by Vishay or any other member of the Vishay
Group after the Effective Time under such policies and programs in respect of
VPG and the other members of the VPG Group shall be for the benefit of and shall
promptly be paid over to VPG and the other members of the VPG Group.
Notwithstanding anything herein to the contrary, neither Vishay nor any member
of the Vishay Group shall be liable for the satisfaction of any claim by VPG or
any member of the VPG Group out of any self-insurance program maintained by a
member of the Vishay Group to the extent relating to an Assumed Liability.


     

              (d) Except as otherwise
provided in Schedule 1.8 or Schedule 2.5(b)(v), Vishay and VPG agree that the
aggregate amount of any deductible paid shall be borne by the parties in the
same proportion as the Insurance Proceeds received by each such party bears to
the total Insurance Proceeds received under the applicable Insurance Policy, and
any party that has paid more than its allocable share of the deductible shall be
entitled to receive from the other party an amount such that each party will
only bear its allocable share. 

     

              (e) This Agreement is not
intended as an attempted assignment of any policy of insurance or as a contract
of insurance and shall not be construed to waive any right or remedy of any
member of the Vishay Group in respect of any insurance policy or any other
contract or policy of insurance. 

     

              (f) The parties agree to use
their reasonable best efforts to cooperate with respect to the insurance matters
contemplated by this Agreement. In the event that both parties have insurance
claims relating to the same occurrence, the parties shall jointly defend and
waive any conflict necessary to the conduct of a joint defense. 

     

              (g) Nothing in this Agreement
shall be deemed to restrict any member of the VPG Group from acquiring at its
own expense any other insurance policy in respect of any Liabilities or covering
any period. 

     

         Section 7.3 Insurance for VPG Officers &
Directors. Vishay shall
use its reasonable best efforts to provide insurance to those individuals who at
and immediately following the Effective Time are officers, directors, employees,
fiduciaries or agents of VPG and who immediately prior to the Effective Time were insured persons under the
current Vishay Directors & Officers Liability Insurance Policy (such
individuals, the “VPG Officers &
Directors”) with material
terms and conditions no less favorable to the VPG Officers & Directors than
is available to the officers, directors, employees, fiduciaries or agents of
Vishay under the Vishay Directors & Officers Liability Insurance Policy in
effect at such time, except that such insurance shall exclude coverage for
wrongful acts, errors or omissions occurring after the Distribution
Date.

     

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         Section 7.4 Director and Officer
Indemnification. For a
period of six (6) years from the Effective Time, the provisions of the Amended
and Restated Certificate of Incorporation and Amended and Restated By-laws of
Vishay to the extent providing for indemnification of persons who were officers,
directors, employees, fiduciaries or agents immediately prior to the Effective
Time shall not be amended in any manner that would adversely affect the rights
of persons who at the Effective Time were directors, officers, employees,
fiduciaries or agents of any member of the VPG Group, unless such modification
shall be required by, and then only to the minimum extent required by,
Applicable Law. 

     

         Section 7.5 VPG Insurance. Effective as of the Distribution Date,
except as expressly provided herein, Vishay shall not be obligated to maintain
insurance coverage with respect to the business, affairs, operations, assets or
liabilities of the VPG Group, and VPG shall indemnify and hold the Vishay Group
harmless from any Liabilities arising by reason of the VPG Group to maintain
such insurance. 

     

    ARTICLE VIII

     

    DISPUTE RESOLUTION

     

         Section 8.1 Agreement to Resolve
Disputes. Except as
otherwise specifically provided in any Ancillary Agreement, the procedures for
discussion, negotiation and dispute resolution set forth in this Article VIII 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 any
Ancillary Agreement, or the transactions contemplated hereby or thereby
(including all actions taken in furtherance of the transactions contemplated
hereby or thereby on or prior to the date hereof), or the commercial or economic
relationship of the parties relating hereto or thereto, between or among any
member of the Vishay Group on the one hand and the VPG Group on the other hand.
Each party agrees on behalf of itself and each member of its respective Group
that the procedures set forth in this Article VIII shall be the sole and exclusive remedy in
connection with any dispute, controversy or claim relating to any of the
foregoing matters and irrevocably waives any right to commence any Action in or
before any Governmental Authority, except as otherwise required by Applicable
Law. 

     

         Section 8.2 Dispute Resolution;
Mediation.

     

              (a) Either party may commence
the dispute resolution process of this Section 8.2 by giving the other party written notice (a
“Dispute Notice”) of any controversy, claim or dispute of
whatever nature arising out of or relating to or in connection with this
Agreement, any Ancillary Agreement or the breach, termination, enforceability or
validity thereof (a “Dispute”) which has not been resolved in the normal course of business or as
provided in the relevant Ancillary Agreement. The parties shall attempt in good
faith to resolve any Dispute by negotiation between executives of each party
(“Senior Party
Representatives”) who have
authority to settle the Dispute and, unless discussions between the parties are
already at a senior management level, who are at a higher level of management
than the Persons who have direct responsibility for the administration of this
Agreement or the relevant Ancillary Agreement. Within fifteen (15) days after
delivery of the Dispute Notice, the receiving party shall submit to the other a
written response (the “Response”). The Dispute Notice and the Response shall
include (i) a statement setting forth the position of the party giving such
notice and a summary of arguments supporting such position and (ii) the name and
title of such party’s Senior Party Representative and any other Persons who will
accompany the Senior Party Representative at the meeting at which the parties
will attempt to settle the Dispute. Within thirty (30) days after the delivery
of the Dispute Notice, the Senior Party Representatives of both parties shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the Dispute. The parties shall
cooperate in good faith with respect to any reasonable requests for exchanges of
Information regarding the Dispute or a Response thereto. 

     

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              (b) If the Dispute has not
been resolved within sixty (60) days after delivery of the Dispute Notice, or if
the parties fail to meet within thirty (30) days after delivery of the Dispute
Notice as hereinabove provided, the parties shall make a good faith attempt to
settle the Dispute by mediation pursuant to the provisions of this Section 8.2 before resorting to arbitration contemplated
by Section 8.3 or any other dispute resolution procedure
that may be agreed by the parties. 

     

              (c) All negotiations,
conferences and discussions pursuant to this Section 8.2 shall be confidential and shall be treated as
compromise and settlement negotiations. Nothing said or disclosed, nor any
document produced, in the course of such negotiations, conferences and
discussions that is not otherwise independently discoverable shall be offered or
received as evidence or used for impeachment or for any other purpose in any
current or future arbitration. 

     

              (d) Unless the parties agree
otherwise, the mediation shall be conducted in accordance with the CPR Institute
for Dispute Resolution Model Procedure for Mediation of Business Disputes in
effect on the date of this Agreement by a mediator mutually selected by the
parties. 

     

              (e) Within thirty (30) days
after the mediator has been selected as provided above, both parties and their
respective attorneys shall meet with the mediator for one (1) mediation session,
it being agreed that each party representative attending such mediation session
shall be a Senior Party Representative with authority to settle the Dispute. If
the Dispute cannot be settled at such mediation session or at any mutually
agreed continuation thereof, either party may give the other and the mediator a
written notice declaring the mediation process at an end. 

     

              (f) Costs of the mediation
shall be borne equally by the parties involved in the matter, except that each
party shall be responsible for its own expenses. 

     

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              (g) Any Dispute regarding the
following matters is not required to be negotiated or mediated prior to seeking
relief from an arbitrator or, if applicable, from a court pursuant to
Section 10.14: (i) breach of any obligation of
confidentiality or waiver of Privilege; and (ii) any other claim where interim
relief is sought to prevent serious and irreparable injury to one of the
parties. However, the parties to the Dispute shall make a good faith effort to
negotiate and mediate such Dispute, according to the above procedures, while
such arbitration is pending. 

     

         Section 8.3 Arbitration.

     

              (a) Subject to Section 8.3(b), if for any reason a Dispute is not resolved
within one hundred eighty (180) days from delivery of the Dispute Notice in
accordance with the dispute resolution process described in Section 8.2, the parties agree that such Dispute shall be
settled by binding arbitration before a single arbitrator under the auspices of
the American Arbitration Association (“AAA”) in Philadelphia, Pennsylvania pursuant to
the Commercial Rules of the AAA. The arbitrator selected to resolve the Dispute
shall be bound exclusively by the laws of the State of New York without regard
to its choice of law rules. Any decisions of award of the arbitrator will be
final and binding upon the parties and may be entered as a judgment by the
parties. Any rights to appeal or review such award by any court or tribunal are
hereby waived to the extent permitted by Applicable Law. 

     

              (b) Costs of the arbitration
shall be borne equally by the parties involved in the matter, except that each
party shall be responsible for its own expenses, except as otherwise determined
by the arbitrator. 

     

              (c) The parties agree to
comply and cause the members of their applicable Group to comply with any award
made in any arbitration proceeding pursuant to this Section 8.3, and agree to enforcement of or entry of
judgment upon such award in any court of competent jurisdiction, including any
federal or state court located in Philadelphia, Pennsylvania or the City of New
York, Borough of Manhattan. The arbitrator shall be entitled to award any remedy
in such proceedings, including monetary damages, specific performance and all
other forms of legal and equitable relief; provided, however, that the arbitrator shall not be entitled to
award punitive, exemplary, treble or any other form of non-compensatory monetary
damages unless in connection with indemnification for a Third Party Claim, to
the extent of such claim. 

     

         Section 8.4 Continuity of Service and
Performance. Unless
otherwise agreed in writing, the parties will continue to provide service and
honor all other commitments under this Agreement and each Ancillary Agreement
during the course of dispute resolution pursuant to the provisions of this
Article VIII with respect to all matters not subject to
such Dispute. 

     

         Section 8.5 Limitation of Liability. In no event shall any member of the Vishay
Group or the VPG Group be liable to any member of the other Group 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, however caused and on any theory of liability
(including negligence) arising in any way out of this Agreement, whether or not
such Person has been advised of the possibility of any such damages;
provided, however, that the foregoing limitations shall not
limit either party’s indemnification obligations for Liabilities with respect to
Third Party Claims as set forth in Article V. The provisions of Article V, Article VIII and Section 10.14 shall be the parties’ sole recourse for any
breach hereof or any breach of the Ancillary Agreements, except as may be
explicitly provided in any Ancillary Agreement. 

     

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    ARTICLE IX

     

    TERMINATION

     

         Without limiting the generality of Section 3.5(a), (i) this Agreement and the Ancillary
Agreements may be terminated, (ii) the Separation may be abandoned and (iii) the
Distribution may be abandoned, in each case at any time prior to the Effective
Time by and in the sole and absolute discretion of Vishay without the approval
of VPG. In the event of such termination, neither party shall have any Liability
of any kind to the other party. 

     

    ARTICLE X 

     

    MISCELLANEOUS 

     

         Section 10.1 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 10.2 Entire Agreement. This Agreement, the Ancillary Agreements,
and any Annexes, Schedules and Exhibits hereto and thereto, as well as any other
agreements and documents referred to herein and therein, 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.


     

         Section 10.3 Construction.

     

              (a) Any uncertainty or
ambiguity with respect to any provision of this Agreement shall not be construed
for or against any party based on attribution of drafting by either
party.

     

              (b) The headings contained
herein are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. In this Agreement, unless a clear
contrary intention appears: 

     

         (i) the singular number
includes the plural number and vice versa; 

     

         (ii) reference to any Person
includes such Person’s successors and assigns but, if applicable, only if such
successors and assigns are not prohibited by this Agreement, and reference to a
Person in a particular capacity excludes such Person in any other capacity or
individually; 

     

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         (iii) reference to any gender
includes each other gender; 

     

         (iv) reference to any
agreement, document or instrument means such agreement, document or instrument
as amended, modified, supplemented or restated, and in effect from time to time
in accordance with the terms thereof subject to compliance with the requirements
set forth herein; 

     

         (v) reference to any
Applicable Law means such Applicable Law as amended, modified, codified,
replaced or reenacted, in whole or in part, and in effect from time to time,
including rules and regulations promulgated thereunder, and reference to any
section or other provision of any Applicable Law means that provision of such
Applicable Law from time to time in effect and constituting the substantive
amendment, modification, codification, replacement or reenactment of such
section or other provision; 

     

         (vi) “herein,” “hereby,”
“hereunder,” “hereof,” “hereto” and words of similar import shall be deemed
references to this Agreement as a whole and not to any particular article,
section or other provision hereof or thereof; 

     

         (vii) “including” (and with
correlative meaning “include”) means including without limiting the generality
of any description preceding such term; 

     

         (viii) the Table of Contents and
headings are for convenience of reference only and shall not affect the
construction or interpretation hereof or thereof; 

     

         (ix) with respect to the
determination of any period of time, “from” means “from and including” and “to”
means “to but excluding;” and 

     

         (x) references to documents,
instruments or agreements shall be deemed to refer as well to all addenda,
exhibits, schedules or amendments thereto. 

     

         Section 10.4 Assignability. This Agreement shall be binding upon and
inure to the benefit of the parties, and their respective successors and
permitted assigns; provided, however, that no party may assign, delegate or
transfer (by merger, operation of law or otherwise) its respective rights or
delegate its respective obligations under this Agreement without the express
prior written consent of the other party. Notwithstanding the foregoing, either
party may assign its rights and obligations under this Agreement to any
Wholly-owned Subsidiary; provided, however, that each party shall at all times remain
liable for the performance of its obligations under this Agreement by any such
Wholly-owned Subsidiary. Any attempted assignment or delegation in violation of
this Section 10.4 shall be void. 

     

         Section 10.5 Third Party Beneficiaries. Except for (x) the indemnification rights
under this Agreement of any Vishay Indemnified Party or any VPG Indemnified
Party in their respective capacities as such under Article V and for the release under Section 5.1 of any Person provided therein and (y) the
rights to insurance of VPG Officers and Directors under Section 7.3: (i) the provisions of this Agreement are
solely for the benefit of the parties and their respective successors and
permitted assigns, and are not intended to confer upon any Person, except the
parties and their respective successors and permitted assigns, any rights or
remedies hereunder; (ii) there are no third party beneficiaries of this
Agreement; and (iii) this Agreement shall not provide any third party with any
remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement.

     

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         Section 10.6 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 10.7 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 Vishay, to: 

     

         Vishay Intertechnology, Inc.
     63 Lancaster
Avenue
     Malvern, PA
19355-2120
     Attention: Dr. Lior E. Yahalomi, Chief
Financial Officer
     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: Abbe L. Dienstag,
Esq.
     Telephone:
212-715-9100
     Facsimile: 212-715-8000


     

         If to VPG, to: 

     

         Vishay Precision Group, Inc.
     3 Great Valley
Parkway
     Malvern, PA
19355-1307
     Attention: William M. Clancy, Chief Financial
Officer
     Telephone:
484-321-5300
     Facsimile: 484-321-5300

     

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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; or
(iii) actual delivery to or receipt by the party to whom notice is being given
or an employee or agent thereof. 

     

         Section 10.8 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 10.9 Nonrecurring Costs and
Expenses. Vishay shall pay
for all reasonable documented out-of-pocket fees, costs and expenses incurred by
the VPG Group prior to the Effective Time in connection with the Separation and
the Distribution. 

     

         Section 10.10 Press Releases; Public
Announcements. Prior to
the Distribution Date, Vishay shall be responsible for issuing any press
releases or otherwise making public statements with respect to this Agreement,
the Ancillary Agreements, the Separation, the Distribution or any of the other
transactions contemplated hereby and thereby, and VPG shall not make such
statements without the prior written consent of Vishay. Prior to the
Distribution Date, Vishay and VPG shall each consult with the other prior to
making any filings with any Governmental Authority with respect to any of the
foregoing, but no such filing shall be made without the approval of Vishay, and
Vishay shall be permitted to make any filings as it deems necessary or
appropriate. Following the Effective Time, neither party shall issue any release
or make any other public announcement concerning this Agreement or the
transactions contemplated hereby without the prior written approval of the other
party, which approval shall not be unreasonably withheld, delayed or
conditioned; provided, however, that either party shall be permitted to make
any release or public announcement that in the opinion of its counsel it is
required to make by law or the rules of any national securities exchange of
which its securities are listed; provided further that it has made efforts that are reasonable
in the circumstances to obtain the prior approval of the other party.


     

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         Section 10.11 Survival of Covenants. Except as expressly set forth in this
Agreement or any Ancillary Agreement, any covenants, representations or
warranties contained in this Agreement or any Ancillary Agreement shall survive
the Separation and Distribution and shall remain in full force and effect.


     

         Section 10.12 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 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 10.13 Amendments. This Agreement may be amended, supplemented,
modified or abandoned at any time prior to the Distribution Date by and in the
sole and absolute discretion of Vishay without the approval of VPG or of the
stockholders of Vishay. After the Effective Time, 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 10.14 Specific Performance. The parties agree that the remedy at law for
any breach of this Agreement or any Ancillary Agreement may be inadequate, and
that, as between Vishay and VPG, any party by whom this Agreement or any
Ancillary 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 or any Ancillary
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 or any Ancillary
Agreement as between Vishay and VPG, or the members of their respective Groups,
or prevent any violation hereof, and, to the extent permitted by Applicable Law,
as between Vishay and VPG, each party waives any objection to the imposition of
such relief. 

     

         Section 10.15 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 10.14. 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 10.7 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 10.15. 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 any Ancillary Agreement, or the
transactions contemplated hereby or thereby for which it has submitted to
jurisdiction pursuant to this Section 10.15, and waives any claim that any such Action,
suit or proceeding brought in any such court has been brought in an inconvenient
forum.

     

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         Section 10.16 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 by this agreement. 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 10.16. 

     

    [SIGNATURE PAGE FOLLOWS]

     

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         WHEREFORE, the
parties have signed this Separation Agreement effective as of the date first set
forth above.

     

    
      	
              VISHAY
      INTERTECHNOLOGY, INC.

            
	 
	 
	Name:
	Title:



      	
              VISHAY PRECISION
      GROUP, INC.

            
	 
	 
	Name:
	Title: