Document:

exhibit10-2.htm

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    FORM OF TAX MATTERS AGREEMENT 

     

    BY AND AMONG 

     

    VISHAY INTERTECHNOLOGY, INC. AND 

     

    VISHAY PRECISION GROUP, INC. 

     

    [ ], 2010 

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    

    
    

    TAX MATTERS AGREEMENT 

     

         WHEREAS, Vishay Intertechnology, Inc. (“VSH”) and Vishay Precision Group,
Inc. (“VPG”), collectively the “Parties” entered into the Master Separation and
Distribution Agreement dated as of [ ], 2010 (the “Distribution Agreement”), pursuant to which (i) VSH will distribute to its stockholders all of
the stock of VPG (the “Distribution”); 

     

         WHEREAS, it is the intention of VSH and VPG that the Distribution
qualifies as a tax-free transaction described in Section 355 of the Internal
Revenue Code of 1986, as amended (the “Code”);

     

         WHEREAS, VSH has received a private letter ruling from the IRS regarding
certain tax aspects of the Distribution; and 

     

         WHEREAS, in contemplation of the Distribution pursuant to which VPG and
certain of its direct and indirect Subsidiaries will cease to be members of the
VSH Affiliated Group of which VSH is the common parent corporation, the Parties
desire to set forth their agreement on the rights and obligations with respect
to handling and allocating Taxes and related matters. 

     

         NOW, THEREFORE, in consideration of the foregoing and the terms,
conditions, covenants and provisions of this Agreement and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, hereby agree as
follows: 

     

    ARTICLE I 
DEFINITIONS 

     

              Section 1.1. Defined Terms. Capitalized terms used in this Agreement and
not defined herein shall have the meanings set forth in the Distribution
Agreement. For purposes of this Agreement, the following terms have the
following meanings: 

     

         “Affiliated Group”
means an affiliated group of corporations (as defined in Section 1504(a) of the
Code). 

     

         “Final Determination” means any final determination of liability in respect of a Tax that,
under Applicable Law, is not subject to further appeal, review or modification
through proceedings or otherwise (including the expiration of a statute of
limitations or a period for the filing of claims for refunds, amended returns or
appeals from adverse determinations), including a “determination” as defined in
Section 1313(a) of the Code or execution of an IRS Form 870AD. 

     

         “Income Tax” means
any U.S. federal, state, local or non-U.S. (i) Tax on or measured by net income
or (ii) franchise Tax. 

     

         “Interest” means
interest at a rate per annum equal to the Prime Rate as published in the
Wall Street Journal, Eastern Edition in effect
from time to time during the period such interest accrues. 

     

    

    
    

         “IRS” means the United States Internal Revenue
Service. 

     

         “Israeli Tax Returns”
means the Income Tax
Returns of VATL, Tedea Huntleigh
International, Tedea Huntleigh Technology and Tedea Huntleigh Industrial
Properties for 2008 and 2009 that are not filed prior to the Effective Time.

     

         “Post-Closing Tax Period” means any Tax period beginning after the Distribution Date; and, with
respect to a Tax period that begins on or before the Distribution Date and ends
thereafter, the portion of such Tax period beginning after the Distribution
Date. 

     

         “Pre-Closing Non-Income Taxes” means any Taxes of a VPG Entity other than
Income Taxes that are attributable to a Pre-Closing Tax Period, provided,
however, that it shall not include any such Taxes that are accrued as a current
liability (net of any prepaid taxes)on the balance sheet of the VPG Entity at
the Effective Time. 

     

         “Pre-Closing Tax Period” means any Tax period ending on or before the Distribution Date; and,
with respect to a Tax period that begins on or before the Distribution Date and
ends thereafter, the portion of such Tax period ending on the Distribution Date.

     

         “Proceeding” means
any claim, examination, suit, action, litigation, assessment or proceeding
(including any Tax audit), whether administrative or judicial. 

     

         “Tax” or “Taxes” means all U.S.
federal, state, local, or non-U.S. net or gross income, gross receipts, net
proceeds, sales, use, ad valorem, value added, franchise, , withholding,
payroll, employment, excise, property, deed, stamp, alternative or add-on
minimum, environmental, profits, windfall profits, , license, lease, service,
use, occupation, severance, energy, unemployment, social security, worker’s
compensation, capital, or other taxes, assessments, , or other similar
governmental charges, together with any interest, penalties, additions to tax,
or additional amounts with respect thereto. 

     

         “Tax Asset” means
any net operating loss, net capital loss, investment tax credit, foreign tax
credit, charitable deduction or any other credit or tax attribute that could be
carried forward or back to reduce Taxes (including without limitation deductions
and credits related to alternative minimum Taxes). 

     

         “Tax Item” means,
with respect to any Income Tax, any item of income, gain, loss, deduction or
credit. 

     

         “Treasury Regulations” means the U.S. federal income Tax regulations, as amended, including
temporary regulations, promulgated under the Code. 

     

         “VATL” means Vishay Advanced Technologies, Ltd and
its Subsidiaries after the Effective Time. 

     

         “VIL Assets” means the assets of Vishay Israel Limited
that are sold to VATL that are described in agreements between the parties that
refer to the transfer of the (i) Foil and Thermal Shroud business and (ii) the
Bonding business. 

     

    -2- 

     

    

    
    

         “VIL” means Vishay Israel Limited 

     

         “VPG Capital Stock”
means all classes or series of stock of VPG and all options, warrants,
derivatives, rights to acquire stock, and other interests and instruments taken
into account for purposes of determining a “50-percent or greater interest”
within the meaning of Section 355(d)(4) of the Code. 

     

         “VPG Entity” means
any member of the VPG Group that was also a Subsidiary of VSH prior to the
Distribution Date. 

     

         “VPG Group” means VPG and its Subsidiaries after the
Effective Time. 

     

         “VPG Separate Tax Return” means with respect to a VPG Entity, any state or local Income Tax Return
for periods that end prior to or on the Distribution Date that are not filed on
an affiliated, consolidated, combined or unitary basis with one or more members
of the VSH Group. 

     

         “VPG Straddle Period Tax Return” means any Income Tax Return required to be
filed that includes both a Pre-Closing Tax Period and a Post-Closing Tax Period
of any VPG Entity. 

     

         “VPG Tax Return”
means any Income Tax Return required to be filed by a member of the VPG Group,
other than a VSH Income Tax Return. 

     

         “VPG Taxes” mean
all Taxes of any member of the VPG Group that are attributable to a Post-Closing
Tax Period.

     

         “VSH Consolidated Group” means, with respect to U.S. federal Income Taxes, the Affiliated Group
of which VSH is a member, and with respect to any other Income Tax, any
affiliated, consolidated, combined or unitary group of which any member of the
VSH Group is a member. 

     

         “VSH Group” means
VSH and its Subsidiaries other than the VPG Entities. 

     

         “VSH Income Tax Return” means (i) any U.S. federal Income Tax Return and any state or local
Income Tax Return that has been or will be filed by or with respect to any VSH
Consolidated Group on an affiliated, consolidated, combined or unitary basis for
a period that ends prior to or on or includes the Distribution Date, and (ii)
any VPG Separate Tax Returns. 

     

         “VSH Income Taxes” means all Income Taxes of any member of the VSH Group and any VPG Entity
attributable to a Pre-Closing Tax Period, including, without limitation, (i) all
Income Taxes attributable to the Distribution or any transaction taken to
facilitate the Distribution, (ii) all Income Taxes resulting from the removal of
the VPG Entities from any consolidated, unitary or combined Income Tax Return
pursuant to the Distribution, and (iii) any Income Taxes (after reduction for
any foreign tax credit realized with respect to the inclusion) resulting from
the inclusion by a VPG Entity of income pursuant to Section 951(a)(1)(A) of the
Code for income of a non-U.S. VSH Group member or a VPG Entity that is
attributable to a Pre-Closing Tax Period; provided, however, that VSH Income
Taxes shall not include any Income Taxes for which there was an accrual for
current taxes (net of any prepaid taxes) on the balance sheet of the VPG Entity
at the Effective Time; and provided further that for purposes of this
definition, the inclusion under Section 951(a)(1)(A) of the Code shall include
only those amounts incurred through the normal operations of the business and
shall not include amounts attributable to extraordinary events or to material
changes in business operations.

     

    -3- 

     

    

    
    

    ARTICLE II 
ADMINISTRATIVE AND COMPLIANCE MATTERS 

     

              Section 2.1. Sole Tax Sharing Agreement. Any and all existing Tax Sharing Agreements,
whether written or unwritten, between any member of the VSH Group, on the one
hand, and any member of the VPG Group, on the other hand, shall be terminated as
of the Distribution Date as between such Parties. As of the Distribution Date,
neither the members of the VPG Group nor the members of the VSH Group shall have
any further rights or liabilities under any such agreement, and this Agreement
shall be the sole Tax Matters Agreement between the members of the VPG Group and
the members of the VSH Group. 

     

              Section 2.2. Designation of Agent. VPG and each member of the VPG Group, in
each case with respect to any VSH Consolidated Group of which such Person was a
member on or prior to the Distribution Date, hereby irrevocably authorizes VSH
to designate a member of VSH Group, or a successor of such member, as its agent,
coordinator, and administrator, for the purpose of taking any and all actions
(including the execution of waivers of applicable statutes of limitation) with
respect to any VSH Income Tax Return which are necessary or incidental to the
filing of any Tax Return, any amended Tax Return, or any claim for refund,
credit or offset of Tax (even where an item or Tax Asset giving rise to an
amended Tax Return or refund claim arises in a Post-Closing Tax Period) or to
any Proceedings, and for the purpose of making payments to, or collecting
refunds from, any Taxing Authority, in each case relating to any Pre-Closing Tax
Period. 

     

              Section 2.3. Preparation of VSH Income Tax
Returns. VSH and the
members of the VSH Group shall prepare or cause to be prepared, with assistance
as needed from the members of the VPG Group, and file or cause to be filed all
VSH Income Tax Returns. Such Tax Returns shall be prepared in a manner that is
consistent with the prior practice of the members of the VSH Group and the VPG
Entities, provided that an inconsistent position may be taken if such position
would not adversely impact any VPG Entity or is required by law, as reasonably
determined by VSH in good faith; provided however, for the avoidance of doubt,
the consolidated tax return that includes the Distribution Date shall include a
calculation of the overall foreign loss, as that term is defined in Section
904(d)(f), (“OFL”) for the group. 

     

                   (a) VSH shall provide to VPG for its comments a draft of (i) the calculation
of the OFL no later than 30 days prior to the due date for filing the 2010 U.S.
federal consolidated Tax Return, including any extensions thereof, for the
review and comment by VPG, and (ii) all VPG Separate Tax Returns and the
portions of each other VSH Income Tax Return that relate to the VPG Entities
(or, at VSH’s option, a pro forma Tax Return that relates solely to the VPG
Entities) no later than 15 days prior to the due date for filing such Tax
Return, including any extensions thereof, for the review and comments of VPG,
which comments shall be given due
regard, provided that any final decision with respect to the reporting of any
item on such Tax Return shall be made by VSH. 

     

    -4- 

     

    

    
    

              Section 2.4. General Allocation of VSH and VPG
Income. VSH will determine
the items of income, gain, loss, deduction and credit of the VPG Entities to be
included on each VSH Income Tax Return filed by a VSH Consolidated Group for any
taxable year in which any VPG Entity ceases to be a member of the VSH
Consolidated Group in good faith in accordance with Treasury Regulations Section
1.1502-76(b) (or any comparable provision of state or local law). VPG its
Affiliates shall file their respective Tax Returns for the taxable period
beginning on the first day after the Distribution Date consistently with such
determinations, except as otherwise required by law.. 

     

                   (a) Transaction Treated as Extraordinary
Items. For purposes of
preparing any federal, state or local Income Tax Return that is filed on a
consolidated, combined or unitary basis for a period that ends on the
Distribution Date, or starts on the day after the Distribution Date, in
determining the apportionment of income and Taxes between any Pre-Closing Tax
Period and Post-Closing Tax Period, any Tax Items relating to the Distributions
shall be treated as extraordinary items described in Treasury Regulations
Section 1.1502-76(b)(2)(ii)(C) and shall (to the extent occurring on or prior to
the Distribution Date) be allocated to Pre-Closing Tax Periods, and any Income
Taxes related to such items shall be treated under Treasury Regulations Section
1.1502-76(b)(2)(iv) as relating to such extraordinary item and shall (to the
extent occurring on or prior to the Distribution Date) be allocated to
Pre-Closing Tax Periods. 

     

                   (b) Apportionment of Earnings and Profits and Tax
Attributes. VSH and VPG
shall jointly determine the portion, if any, of any earnings and profits, Tax
Asset, or other consolidated, combined or unitary attribute to be allocated or
apportioned to the VPG Entities under applicable law and in accordance with the
private letter ruling received with respect to the Distribution from the IRS.
VPG and all members of the VPG Group shall prepare all Tax Returns in accordance
with such determination. In the event that any temporary or final amendments to
Treasury Regulations are promulgated after the date of this Agreement that
provide for any election to apply such regulations retroactively, then any such
election shall be made only to the extent that VSH and VPG collectively agree to
make such election. 

     

              Section 2.5. VPG Tax Returns. VPG and the members of the VPG Group shall
prepare or cause to be prepared, with the assistance of the members of the VSH
Group (to the extent necessary) and file or cause to be filed, all VPG Tax
Returns. VPG shall provide to VSH a draft of each VPG Straddle Period Tax Return
(and any VPG Tax Return with respect to a Pre-Closing Tax Period) (with copies
of any relevant schedules, work papers and other documentation then available)
no later than 15 days prior to the due date, including extensions, for the
filing of such Tax Return, for VSH’s review and approval, which approval shall
not be unreasonably withheld, delayed or conditioned. Any VPG Straddle Period
Tax Return (and any VPG Tax Return with respect to a Pre-Closing Tax Period)
shall be prepared in a manner consistent with the prior practice of the VSH
Group and the VPG Entities, unless otherwise required by law.

     

    -5- 

     

    

    
    

              Section 2.6. Preparation of other Tax Returns. Except as
limited by Section 2.7 below, any Tax Return required to be filed by VSH or its
Subsidiaries, or VPG or its Subsidiaries for which responsibility is not
specifically allocated in this Article II shall be prepared and filed by the
entity that is required to file the Tax Return; provided, however, that (i) such
Tax Returns shall be prepared in a manner consistent with past practice except
to the extent otherwise required by law and (ii) at the request of VPG, VSH
shall prepare the Israeli Income Tax Returns for filing in a timely manner by
VPG as mutually agreed by VSH and VPG (iii) and provided, further however, that,
at the request of VSH, VPG shall provide to VSH a copy of each such Tax Return
that is prepared by VPG with respect to Taxes for which VSH is liable hereunder
(with copies of any relevant schedules, work papers and other documentation then
available), and if practically feasible such Tax Return shall be provided to VSH
prior to the filing of such Tax Returns. 

     

              Section 2.7. Amended Returns. VPG shall not, and shall not permit any of
its Subsidiaries to, with respect to any VPG Entity, file an amended Tax Return,
or file a Tax Return in a jurisdiction in which the VPG Entity has not
previously filed a Tax Return for a Pre-Closing Period without the prior written
consent of VSH, which shall not be unreasonably withheld, delayed or
conditioned, except as required by law. 

     

    ARTICLE III 
LIABILITY FOR TAXES

     

              Section 3.1. Responsibility for Income
Taxes. Subject to the
indemnification provided for in Section 6.1 of this Agreement, VSH shall be
liable for and shall timely pay, or cause to be paid, to VPG, or at VPG’s
request, the applicable Taxing Authority all VSH Income Taxes, whether payable
at the time of the filing of the Tax Return, pursuant to an audit, or otherwise.
The tax liability for a period that begins before and ends after the
Distribution Date, shall be apportioned between VPG and VSH in a
manner that reasonably reflects the portion of such tax liability attributable
to VPG for the Post-Closing Tax Period, and the VPG Entities for the Pre-Closing
Tax Period, respectively, as if there had been a closing of the books on the
date of the Distribution. With respect to the apportionment of Income Taxes, any
amounts that are determined on an annual basis, such as depreciation, Section
951(a)(1)(A) inclusions, etc., shall be apportioned between VSH and VPG based on
the number of days in each of the Pre-Closing Tax Periods and the Post Closing
Tax Periods, respectively. Within 15 days prior to the filing of a VPG Straddle
Period Tax Return, VPG shall provide to VSH for its review and approval (which
shall not be unreasonably withheld, delayed or conditioned) written notice of
the Taxes allocable to VSH pursuant to this Section 3.1 and VSH shall promptly
reimburse VPG for such amounts to the extent the Income Taxes attributable to
the Pre-Closing Tax Periods constitute VSH Income Taxes.

     

              Section 3.2. Responsibility for Non-Income
Taxes. VPG and VSH will
each be responsible for one half of any Pre-Closing Non-Income Taxes that are
required to be paid after the Effective Time. 

     

    -6-

     

    

    
    

              Section 3.3. Responsibility for the Taxes that are Accrued.
VPG shall be liable for all Taxes that are accrued as a current liability (net
of any prepaid taxes) on the balance sheet of the VPG Entity at the Effective
Time. 

     

    ARTICLE IV 
REFUNDS AND OTHER MATTERS 

     

              Section 4.1. Refunds and Tax Benefits for
VSH. Except as otherwise
provided in Section 4.2, VSH shall be entitled to all refunds and
credits of any VSH Income Taxes, and one half of any refund or credit for any
Pre-Closing Non-Income Taxes, including any interest thereon, received by a VPG
Entity. VPG shall promptly pay or cause to be paid to VSH all such refunds
received by a VPG Entity. If in lieu of receiving any such refund a VPG Entity
reduces a Tax liability with respect to a Post-Closing Tax Period VPG shall
promptly pay or cause to be paid to VSH the amount of such reduction in Tax
liability when such reduction occurs. It is agreed that any amounts included as
prepaid taxes on the balance sheet of a VPG Entity on the Distribution Date,
whether separately stated or included in the accrual for current income taxes,
shall not constitute a tax refund or credit or benefit for purposes of this
Agreement. 

     

              Section 4.2. Carryforwards and
Carrybacks. To the extent
permitted by Applicable Law, VPG shall (or shall cause or permit the members of
the VPG Group to) elect to relinquish any carryback of a Tax Asset to any
Pre-Closing Tax Period. No Party shall be obligated to compensate any other
Party for the carryforward of Tax Assets from a Pre-Closing Tax Period to a
Post-Closing Tax Period or for the carryback of Tax Assets from a Post-Closing
Tax Period to a Pre-Closing Tax Period. For the avoidance of doubt, if a Tax
Asset arises in a Post-Closing Tax Period on a non-U.S separate company Tax
Return, and it is required by law that it be carried back to a Pre-Closing Tax
Period, such carryback will be permitted, and any resulting refund, credit or other benefit shall inure to VPG.

     

    ARTICLE V 
COVENANTS AND REPRESENTATIONS 

     

              Section 5.1. Representations of VSH. VSH represents that as of the date hereof,
and covenants that on the Distribution Date, it has no plan or intention to (i)
become a controlling shareholder or a ten-percent shareholder of VPG after the
Distribution Date within the meaning of Treasury Regulations Sections
1.355-7(d)(7) and (h) or (ii) take any action that would reasonably be expected
to prevent the Distribution from qualifying as a transaction described in
Section 355(a) of the Code, including any action inconsistent with the
information and representations furnished to the IRS in connection with the
request for a private letter ruling with respect to the Distributions or to Tax
counsel in connection with the preparation of the Tax Opinion. 

     

              Section 5.2. Representations of VPG. VPG and the other members of the VPG Group
represent that as of the date hereof, and covenants that on the Distribution
Date, it has no plan or intention to take any action that would reasonably be
expected to prevent the Distribution from qualifying as a transaction described
in Section 355(a) of the Code or the VPG Common Stock from being treated as
“qualified property” for purposes of Section 355(c)(2) or Section 361(c)(2) of
the Code, including any action inconsistent with the information and representations furnished to the IRS in
connection with the request for a private letter ruling with respect to the
Distributions or to Tax counsel in connection with the preparation of the Tax
Opinion. 

     

    -7- 

     

    

    
    

              Section 5.3. Covenant of VSH. VSH covenants that during the two-year period
following the Distribution Date it will not take any action that could prevent
the Distribution from qualifying as a transaction described in Section 355(a) of
the Code. 

     

              Section
5.4. Covenants of VPG Relating to the
Distribution.

     

                   (a) VPG covenants and agrees that: (i) during the two-year period following
the Distribution Date, no member of the VPG Group conducting an active trade or
business relied upon in connection with the Distribution and Separation, which
members are Tedea-Huntleigh International Ltd. and Vishay PM Onboard Ltd., will
liquidate, merge or consolidate with any other Person except for the merger of
Tedea-Huntleigh International Ltd. with its two wholly owned subsidiaries in
which Tedea-Huntleigh International Ltd. is the surviving entity, (ii) during the
two-year period following the Distribution Date, no member of the VPG Group will
sell or otherwise dispose of any of its assets, except in the ordinary course of
business, (iii) during the two-year period following the Distribution Date, VPG
will continue (independently from VSH and with separate employees, officers and
directors from VSH) the active conduct of the historic businesses relied upon in
connection with the Distribution and Separation that were conducted by VPG
throughout the five-year period prior to the Distributions, (iv) it will not
take, nor will it permit any member of the VPG Group to take, any action
inconsistent with the information and representations furnished to the IRS in
connection with the request for a private letter ruling with respect to the
Distribution and Separation or to Tax counsel pursuant to Section 4.3 of the
Distribution Agreement, (v) during the two-year period following the
Distribution Date, it will not, and will not permit any member of the VPG Group,
to purchase VPG Capital Stock, (vi) during the two-year period following the
Distribution Date, it will not issue VPG Capital Stock to any Person, other than
pursuant to the exercise of employee, director or consultant stock options,
stock awards, stock purchase rights or other employment related arrangement
under any stock incentive plan in existence immediately after the Mergers,
provided in each case that such stock issuance meets the requirements for the
safe harbor contained in Treasury Regulations Section 1.355-7(d)(8), (vii) it
will not enter into any transaction or, to the extent it has the right to
prohibit any such transaction, permit such transaction to occur, or enter into
negotiations to enter into any transaction that may cause the Distribution or
any Separation Transaction to be treated as part of a plan or series of related
transactions pursuant to which one or more persons acquire directly or
indirectly VPG Capital Stock representing a “50-percent or greater interest”
within the meaning of Section 355(d)(4) of the Code, and (viii) it will not take
any other action that would reasonably be expected to prevent (i) the
Distribution from qualifying as a transaction described in Section 355(a) of the
Code or (ii) the VPG Common Stock from being treated as “qualified property” for
purposes of Section 355(c)(2) or Section 361(c)(2) of the Code. 

     

    -8- 

     

    

    
    

    
                     (b) Notwithstanding the foregoing, a member of the VPG Group may take actions
inconsistent with the covenants contained in Section 5.04(a), if: 

       

    

              (i) VPG obtains a ruling from the IRS to the effect that such actions will
not result in the Distribution being taxable to VSH or their shareholders, or

     

              (ii) VPG obtains an opinion of counsel reasonably acceptable to VSH to the
same effect as Section 5.04(b)(i), provided that such opinion is reasonably
acceptable to VSH. 

     

              Section 5.5. Other Covenants of VPG. VPG covenants and agrees that (i) it will
not, and will not cause or permit any member of the VPG Group to (A) take any
action on the Distribution Date other than in the ordinary course of business or
(B) make or change any Tax election, take any Tax position on any Income Tax
Return, or take or omit to take any other action that results in any increased
Tax liability or reduction of any Tax Asset of the VSH or the VPG Entities in
respect of any Pre-Closing Tax Period or Post-Closing Tax Period. 

     

    ARTICLE VI 
INDEMNIFICATION

     

              Section 6.1. Indemnification of VSH by
VPG. VPG shall indemnify
the members of the VSH Group, and hold them harmless from and against any and
all damages, losses, liabilities and expenses (including reasonable expenses of
investigation and reasonable attorneys’ fees and expenses in connection with any
action, suit or proceeding) arising out of, without duplication: 

     

                   (a) Any Tax for which any member of the VPG Group is liable under this
Agreement; and 

     

                   (b) Any Tax attributable to a misrepresentation or a breach of any warranty,
covenant or obligation in this Agreement by any member of the VPG Group.

     

              Section 6.2. Indemnification of VPG by
VSH. VSH shall indemnify
the members of the VPG Group, and hold them harmless from and against any and
all damages, losses, liabilities and expenses (including reasonable expenses of
investigation and reasonable attorneys’ fees and expenses in connection with any
action, suit or proceeding) arising out of, without duplication: 

     

                   (a) Any Tax for which any member of the VSH Group is liable under this
Agreement; 

     

                   (b) any Tax attributable to a misrepresentation or a breach of any warranty,
covenant or obligation in this Agreement by any member of the VSH Group.

     

    ARTICLE VII 
PAYMENTS 

     

              Section 7.1. Payments under this
Agreement. Any payment
required to be made pursuant to this Agreement by one Party to another Party or
Person shall be made according to this Section 7.01. 

     

    -9- 

     

    

    
    

                   (a) In General. All payments shall be made within the time
prescribed for payment in this Agreement, or if no period is prescribed, within
twenty days after delivery of written notice of the payment due and owing (and
to the extent applicable, approval of the amount of such payment), together with
a schedule calculating in reasonable detail the amounts that are due and owing.
Payments shall be deemed made when received. Any payment that is not made when
due shall bear Interest, provided, however, to the extent the amount due and owing is
Taxes, such amount shall not begin to accrue Interest pursuant to this Section
7.01(a) until the later of the time prescribed for payment pursuant to this
Agreement or the time such Taxes are actually paid by the indemnified Party.

     

                   (b) Treatment of Payments. 

     

              (i) Payments made pursuant to this Agreement by any member of the VPG Group
to or on behalf of any member of the VSH Group shall be treated for all Tax
purposes as distributions by VPG to VSH occurring immediately before the
Distribution, and none of the Parties shall take any position inconsistent with
such treatment, except to the extent that a Final Determination with respect to
the recipient Party causes any such payment to not be so treated. 

     

              (ii) Payments made pursuant to this Agreement by any member of the VSH Group
to or on behalf of any member of the VPG Group shall be treated for all Tax
purposes as a reduction in the distribution occurring before the Distribution,
or a contribution to VPG by VSH immediately prior to the Distribution and none
of the Parties shall take any position inconsistent with such treatment, except
to the extent that a Final Determination with respect to the recipient Party
causes any such payment to not be so treated. 

     

                   (c) Except as provided in Article 9 of this Agreement, in calculating amounts
payable to an indemnified Party, the amount of indemnification payable pursuant
to this Agreement shall be computed net of any Tax benefit actually realized by
the indemnified Party or any of its Affiliates that is related or attributable
to such indemnification. 

     

                   (d) If any amount paid by an indemnifying Party pursuant to this Agreement
results in any increase in Tax liability or any reduction of a Tax Asset of the
indemnified Party, the indemnifying Party shall indemnify the indemnified Party
and hold it harmless from any interest or penalty attributable to such increased
Tax liability or reduced Tax Asset and shall pay to the indemnified Party, in
addition to amounts otherwise owed, an additional amount necessary to reflect
the Tax consequences of the receipt or accrual of the relevant payment.

     

    ARTICLE VIII 
PROCEEDINGS

     

              Section 8.1. Notice. Within ten Business Days after a Party
receives a written notice or other information from a Taxing Authority of the
existence of a Tax issue relating to the application of Section 355(e) to the
Distributions, relating to the qualification of the Distribution as tax-free
transactions described in Section 355 of the Code or that may require
indemnification pursuant to this Agreement (a “Tax Claim”) such
Party shall notify the other Party to
this Agreement of such issue, and thereafter shall promptly forward to the other
Parties copies of notices and material communications with any Taxing Authority
relating to the Tax Claim. The failure of one Party to notify the other Party of
any Tax matter shall not relieve such other Party of any liability and/or
obligation which it may have under this Agreement with respect to such Tax
matter, except to the extent that the indemnifying Party’s rights under this
Agreement are materially prejudiced by such failure. 

     

    -10- 

     

    

    
    

              Section
8.2. Proceedings Generally.

     

                   (a) Proceedings Relating to Income Taxes for
Pre-Closing Tax
Periods. VSH, at its
expense, shall control the defense and settlement of any Proceeding relating to
Income Taxes attributable to a Pre-Closing Tax Period, provided however, that
VPG shall be entitled to participate in the defense of such Proceeding at its
own cost and expense, including the right to attend (or participate in), any
meetings (or material conference calls with respect to which VSH has reasonable
advance notice) with Taxing Authorities or before any judicial authorities in
connection with such Proceeding; VSH shall in good faith keep VPG informed of
all developments relating to such Proceeding on a timely basis, shall in good
faith afford VPG the opportunity to review any submissions related to such
Proceeding, shall provide VPG with final copies of any submissions, and, to the
extent such Proceeding could reasonably result in adverse tax consequences to
the VPG Group with respect to Post-Closing Tax Periods, shall not unreasonably
reject any suggestions made by VPG with respect to such Proceeding, and VSH
shall not settle or compromise such Proceeding without the consent of VPG, which
consent shall not be unreasonably withheld, delayed or conditioned. VPG will
fully cooperate and assist VSH in a Proceeding that VSH controls pursuant to
this Section 8.2(a), including making available personnel and books and records
as reasonably requested by VSH. The Parties shall in good faith cooperate with
each other in connection with such Proceeding and provide such information to
each other as may be necessary or useful with respect to such Proceeding in a
timely manner. 

     

                   (b) Proceedings Relating to Non-Income Taxes for
Pre-Closing Periods. VPG, at its expense, shall control the defense and settlement of
any Proceeding relating to any Pre-Closing Non-Income Taxes, provided, however,
that VSH shall be entitled to participate in the defense of such Proceeding at
its own cost and expense including the right to attend (or participate in), any
meetings (or material conference calls with respect to which VPG has reasonable
advance notice) with Taxing Authorities or before any judicial authorities in
connection with such Proceeding; VPG shall keep VSH informed of all developments
relating to such Proceeding on a timely basis, shall in good faith afford VSH
the opportunity to review any submissions related to such Proceeding, shall not
unreasonably reject any suggestions made by VSH with respect to such Proceeding,
and shall provide VSH with final copies of any submissions; and VPG shall not
settle or compromise such Proceeding without the consent of VSH , which consent
shall not be unreasonably withheld, delayed or conditioned. VSH will fully
cooperate and assist VPG in a Proceeding that VPG controls pursuant to this
Section 8.2(a), including making available personnel and books and records as
reasonably requested by VPG. The Parties shall in good faith cooperate with each
other in connection with such Proceeding and provide such information to each
other as may be necessary or useful with respect to such Proceeding in a timely
manner. 

     

    -11- 

     

    

    
    

                   (c) If, with respect to any Proceeding described in this Article 8 the Party
responsible for controlling the Proceeding (the “Defaulting Party”) fails to
diligently prosecute, manage and defend the Tax Claim by failing to respond in a
timely manner to inquires by a Taxing Authority, or failing to meet a material
filing deadline or by a similar action or inaction and either the other Party
(the “Defending Party”) could reasonably be subject to adverse tax
consequences if such Tax Claim is not prosecuted, the Defending Party shall
thereafter have the right (but not the obligation) to defend or prosecute, at
the sole cost, expense and risk of the Defaulting Party, such Tax Claim. The
Defending Party shall have full control of such defense or prosecution and such
Proceedings, including any settlement or compromise thereof. If requested by the
Defending Party, the Defaulting Party shall cooperate in good faith with the
Defending Party and its authorized representatives in order to contest
effectively such claim. In the case of any claim with respect to Taxes that is
defended or prosecuted by the Defending Party pursuant to this Section 8.2(c),
the Defending Party shall, from time to time, be entitled to current payment
from the Defaulting Party with respect to costs and expenses incurred by the
Defending Party in connection with such defense or prosecution (including,
without limitation, reasonable attorneys’, accountants’, and experts’ fees and
disbursements, settlement costs, court costs, and any other costs or expenses
for investigating, defending or prosecuting such claim, in each case on an after
tax basis. 

     

    ARTICLE IX 
SPECIFIC COVENANT WITH RESPECT TO ASSET SALE 

     

              Section 9.1. Transaction. It is expected that the sale of the VIL
Assets to VATL (the “VIL Asset Sale”)
will not create any cash tax liability for VIL in Israel in the tax year of the
sale because of the ability to offset the any gain on the transaction against
the existing net operating loss (“NOL”) in
VIL.

     

              Section 9.2. Filing of Tax Return. VSH will
actively pursue obtaining an opinion or other acceptable form of advice from its
Israeli tax advisors that confirms at a “more likely than note” or higher level
of comfort that the NOL may be used by VIL to offset any gain on the sale of the
VIL Assets (the “Advice”). Provided that VSH receives such Advice, VSH agrees
that the Tax Return for VIL that includes the VIL Asset Sale shall be prepared
and filed on the assumption that the NOL of VIL offsets the gain on the VIL
Asset Sale and VSH shall not and shall not permit any member of the VSH Group to
take a different position on any Tax Return or in any discussion, whether
written or oral, with any Tax Authorities. 

     

              Section 9.3. Impact of
Transaction. If a Final
Determination is reached that the NOL cannot be used to offset the gain, (as
opposed to a determination that the NOL is not sufficiently large to offset the
gain, or some other reason), then VATL shall make a payment to VSH as follows:

     

                   (a) To the extent VATL has been able to amortize or depreciate the VIL Assets
and realize a reduction in its tax, the aggregate amount of such reduction
actually realized by the time of the Final Determination shall be paid by VATL
to VSH within 15 days of the Final Determination. 

     

    -12- 

     

    

    
    

                   (b)
To the extent the VIL Assets at
the time of the Final Determination have not been fully amortized or depreciated
for tax purposes by VATL, and a deferred tax asset is recorded on the books of
VATL for the future tax benefit of the amortization or depreciation of the VIL
Assets and there is no valuation allowance or similar impairment taken against
the deferred tax asset, within 30 days after the Final Determination VATL shall
pay to VSH the net present value of the deferred tax benefit. The net present
value shall be determined using a discount rate equal to the rate of Interest in
effect on the date of the Final Determination.

     

                   (c)
In no event shall the amount
payable by VPG pursuant to this Section 9.3 exceed the Tax liability of VIL that
arises solely by virtue of the inability to apply its NOL to offset the gain
recognized on the VIL Asset Sale. 

     

              Section 9.4. Advice Not Received If the Israeli tax advisors are unable to
render the Advice, and because of that the VIL Tax Return does not offset the
gain on the sale of the VIL Assets with the NOL, VATL shall make a payment to
VSH as follows: 

     

                   (a)
If a deferred tax asset is
recorded on the books of VATL for the future tax benefit of the amortization or
depreciation of the VIL Assets and there is no valuation allowance or similar
impairment taken against the deferred tax asset, within 30 days after the VSH
pays the Taxes due on the VIL Asset Sale VATL shall pay to VSH the net present
value of the deferred tax benefit. The net present value shall be determined
using a discount rate equal to the rate of Interest in effect on the date of the
Final Determination.

     

                   (b)
In no event shall the amount
payable by VPG pursuant to this Section 9.4 exceed the Tax liability of VIL that
arises solely by virtue of the inability to apply its NOL to offset the gain
recognized on the VIL Asset Sale. 

     

              Section 9.5. Audit Management. Notwithstanding anything to the contrary in
the this Agreement, if VSH or a VSH Group member receives notice, whether
written or otherwise, that the Israeli tax authorities may challenge the ability
to offset the gain on the VIL asset sale with the NOL, VSH shall promptly notify
VPG. The control of such Proceedings and the settlement shall be handled as
provided in section 8.2(a) of this Agreement.

     

    ARTICLE X 
MISCELLANEOUS PROVISIONS 

     

              Section 10.1. Cooperation. The Parties shall each cooperate fully (and
each shall cause its respective Affiliates to cooperate fully) with all
reasonable requests from the other Parties, or from an agent, representative or
advisor to such Parties, including the delivery of information, documents access
to employees etc, in connection with the preparation and filing of Tax Returns,
claims for refund, Proceedings, and other matters, in each case, related to
Taxes covered by this Agreement, and with respect to the preparation by VPG of a
claim for an R&D credit (as provided by Section 41 of the Code) with respect
to the first or second Post-Closing Tax Period following the Distribution
Date.

     

    -13- 

     

    

    
    

    if to VSH, to:

     

    Vishay Intertechnology, Inc. 
63 Lancaster Avenue 
Malvern, PA
19355-2120 
Attention: Dr.
Lior E. Yahalomi, Chief Financial Officer 
Facsimile: 610.889.2161

     

    with a copy (which shall
not constitute notice) to: 

     

    Kramer Levin Naftalis & Frankel LLP 
1177 Avenue of the Americas

New York, NY 10036 
Attention: Abbe L. Dienstag, Esq. 
Facsimile:
212.715.8000 

     

    if to VPG, to:

     

    Vishay Precision Group, Inc. 
[Address] 
Attention: William M. Clancy, Chief Financial
Officer 
Telephone: [____________] 
Facsimile: [____________]

     

    with a copy (which shall
not constitute notice) to: 

     

    Pepper Hamilton LLP 
3000 Two Logan Square 
18th & Arch Streets 
Philadelphia,
PA 19103 
Attention: Barry M.
Abelson, Esq. 
Facsimile No.: 215.689.4803

     

              Section 10.2. Notices. All notices, requests and other
communications to any Party hereunder shall be in writing (including facsimile
transmission) and shall be given, or to such other address or facsimile number
as such Party may hereafter specify for the purpose by notice to the other
Parties hereto. All such notices, requests and other communications shall be
deemed received on the date of receipt by the recipient thereof if received
prior to 5:00 p.m. on a Business Day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed to have been received on
the next succeeding Business Day in the place of receipt. 

     

              Section
10.3. Changes in Law. 

     

                   (a) Any reference to a provision of the Code, Treasury Regulations, or a law of another jurisdiction
shall include a reference to any applicable successor provision or law.

     

                   (b) If, due to any change in Applicable Law or regulations or their
interpretation by any court of law or other governing body having jurisdiction
subsequent to the date hereof,
performance of any provision of this Agreement or any transaction contemplated
hereby shall become impracticable or impossible, the Parties hereto shall use
their commercially reasonable best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such provision. 

     

    -14- 

     

    

    
    

              Section
10.4. Binding Effect; Benefit;
Assignment. 

     

                   (a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and assigns. No
provision of this Agreement is intended to confer any rights, benefits,
remedies, obligations or liabilities hereunder upon any Person other than the
Parties hereto and their respective successors and assigns. 

     

                   (b) No Party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of each other Party hereto.

     

              Section 10.5. Authority. Each of the Parties hereto represents to
each of the other Parties that (a) it has the corporate power (corporate or
otherwise) and authority to execute, deliver and perform this Agreement, (b) the
execution, delivery and performance of this Agreement by it have been duly
authorized by all necessary corporate or other action, (c) it has duly and
validly executed and delivered this Agreement, and (d) this Agreement is a
legal, valid and binding obligation, enforceable against it in accordance with
its terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally and
general equity principles. 

     

              Section 10.6. Entire Agreement. This Agreement, the Distribution Agreement,
and the other Ancillary Agreements constitute the entire agreement between the
Parties with respect to the subject matter of this Agreement and supersede all
prior agreements and understandings, both oral and written, between the Parties
with respect to the subject matter of this Agreement. 

     

              Section 10.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the conflicts of law rules of such state. 

     

              Section 10.8. Counterparts; Effectiveness. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each Party hereto shall have received a counterpart
hereof signed by all of the other Parties hereto. Until and unless each Party
has received a counterpart hereof signed by the other Party hereto, this
Agreement shall have no effect and no Party shall have any right or obligation
hereunder (whether by virtue of any other oral or written agreement or other
communication). 

     

              Section 10.9. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other Governmental Authority to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired or invalidated so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any Party. Upon such a
determination, the Parties shall negotiate in good faith to modify this
Agreement so as to affect the original intent of the Parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the fullest extent
possible. 

     

    -15- 

     

    

    
    

              Section
10.10. Waiver and Amendment. 

     

                   (a) Any provision of this Agreement may be amended or waived prior to the
Effective Time if, but only if, such amendment or waiver is in writing and is
signed, in the case of an amendment, by each Party to this Agreement or, in the
case of a waiver, by each Party against whom the waiver is to be effective.

     

                   (b) 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. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by Applicable Law. 

     

              Section
10.11. Interpretation. 

     

                   (a) When a reference is made in this Agreement to an Article or Section, such
reference shall be to an Article or Section of or to this Agreement unless
otherwise indicated. 

     

                   (b) Whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation.” 

     

                   (c) Unless the context requires otherwise, the terms “hereof,” “herein,”
“hereby,” “hereto” and derivative or similar words in this Agreement refer to
this entire Agreement. 

     

                   (d) Unless the context requires otherwise, words in this Agreement using the
singular or plural number also include the plural or singular, respectively, and
the use of any gender herein shall be deemed to include the other gender.

     

                   (e) Except as otherwise specifically provided herein, where any action is
required to be taken on a particular day and such day is not a Business Day and,
as a result, such action cannot be taken on such day, then this Agreement shall
be deemed to provide that such action shall be taken on the first Business Day
after such day. 

     

                   (f) This Agreement was prepared jointly by the Parties and no rule that it be
construed against the drafter will have any application in its construction or
interpretation. 

     

    -16- 

     

    

    
    

              Section 10.12. Headings. The headings contained in this Agreement are
inserted for convenience only and shall not be considered in interpreting or
construing any of the provisions contained in this Agreement. 

     

              Section 10.13. Exclusivity. Except as otherwise explicitly provided in
the Distribution Agreement, all matters related to Taxes or Tax Returns of the
Parties shall be governed by this Agreement. In the event of a conflict, this
Agreement shall govern and control. Notwithstanding any other provision of this
Agreement, in no event shall any Party or any other Person be liable for any
Taxes, expenses or any other losses or damages of any kind pursuant to this
Agreement or otherwise except as expressly set forth herein or in the
Distribution Agreement. 

     

              Section 10.14. Dispute Resolution. Any disputes arising under this Agreement
shall be resolved by applying Sections 8.2 and 8.3 of the Distribution
Agreement, provided however, that to the extent the dispute is to an amount of
Tax, or an amount or allocation of a Tax Asset, the mediator referenced in
Section 8.2(d) shall, to the extent possible, be a person with a national
reputation as an expert in U.S. federal income tax. 

     

              Section 10.15. Survival. The covenants and agreements of the Parties
hereunder (including indemnification of the Parties) shall survive until 90 days
following the expiration of the applicable statute of limitations (taking into
account all extensions thereof), if any, of the claim that gave rise to the
indemnification. Notwithstanding the foregoing, in the event of notice for
indemnification has been given within the applicable survival period, such
indemnification shall survive until such time as such claim is finally
resolved.

     

    -17- 

     

    

    
    

         IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written. 

     

    
      	
            	VISHAY INTERTECHNOLOGY, INC.  
	
            	 
	
            	 
	
            	Name:  
	
            	Title:  
	
            	
 
	
            	VISHAY PRECISION GROUP, INC.  
	
            	
 
	
            	Name:  
	
            	Title:exhibit10-4.htm

     

     

     

     

    FORM OF EMPLOYEE MATTERS
AGREEMENT

     

    by and between

     

    VISHAY INTERTECHNOLOGY,
INC.

     

    and

     

    VISHAY PRECISION GROUP,
INC.

     

    Dated ______, 2010

     

     

     

     

     

     

     

     

     

    

    
    

    EMPLOYEE MATTERS AGREEMENT

     

         This EMPLOYEE MATTERS AGREEMENT (the “Agreement”) is entered into _____, 2010, by and between
Vishay Intertechnology,
Inc., a Delaware
corporation (“Vishay”), and Vishay Precision Group, Inc., a Delaware corporation (“VPG”) (each a “Party” and together the “Parties”).

     

    RECITALS

     

         WHEREAS, the Board
of Directors of Vishay has determined that 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 measurement and foil resistor
businesses, and related assets and liabilities; 

     

         WHEREAS, to
effectuate the distribution, the Parties entered into that certain Master
Separation and Distribution Agreement, dated as of _____, 2010 herewith (the
“Separation Agreement”);
and

     

         WHEREAS, pursuant
to the Separation Agreement, Vishay and VPG have agreed to enter into this
Agreement for the purpose of allocating between them assets, liabilities and
responsibilities with respect to employee compensation and benefit plans and
arrangements;

     

         NOW, THEREFORE, in
consideration of the foregoing premises, the mutual promises and covenants
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:

     

    ARTICLE I
DEFINITIONS AND INTERPRETATION 

     

         Section 1.1 Definitions. The following terms shall have the meanings
assigned in this Section:

     

         “Account Transfer Date” means, with respect to any Vishay Benefit
Plan, the date on which accounts, assets and liabilities of such Vishay Benefit
Plan are transferred to the corresponding VPG Benefit Plan. 

     

         “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. 

     

         “Agreement” means this Employee Matters
Agreement.

     

         “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. 

     

    1

     

    

    
    

         “Benefit Plan” means, with respect to an entity, each plan,
program, policy, on-going arrangement, agreement, payroll practice, contract,
insurance policy or commitment that is an employment, consulting,
non-competition or deferred compensation agreement, or an executive
compensation, incentive bonus, pension, profit-sharing, savings, retirement,
supplemental retirement, stock option, restricted stock unit, phantom stock,
other equity-based compensation, severance pay, life, health, hospitalization,
sick leave, vacation pay, disability or accident insurance plan or other
employee benefit plan, program, arrangement, agreement or commitment that covers
employees sponsored or maintained by such entity.

     

         “COBRA” means the continuation coverage requirements
for “group health plans” pursuant to Code Section 4980B and ERISA Sections 601
through 608. 

     

         “COBRA Beneficiary” means an individual who is receiving or who
is entitled to receive COBRA coverage. 

     

         “Code” means the Internal Revenue Code of 1986, as
amended, including any proposed, temporary or final regulation and other
regulatory guidance in force under that provision.

     

         “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 the Separation
Agreement, save as otherwise expressly provided in this Agreement or in the
Separation Agreement. 

     

         “Distribution” means the distribution of all of the
outstanding shares of VPG Common Stock and VPG Class B Common Stock to the
holders of Vishay Common Stock and Vishay Class B Common Stock,
respectively.

     

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

     

         “ERISA” means the Employee Retirement Income
Security Act of 1974, as amended, including any proposed, temporary or final
regulation and other regulatory guidance in force under that
provision.

     

         “Existing VPG Benefit Plans” means the Benefit Plans sponsored or
maintained by members of the VPG Group in the United States as of December 31,
2009 which are listed on Schedule A to this Agreement. 

     

         “FSA Plan” means a health care flexible spending
account plan or dependent care flexible spending account plan. 

     

         “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. 

     

    2

     

    

    
    

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

     

         “Health and Welfare Plans” means benefit plans providing health, life,
dental, vision, prescription drug, short-term disability, long-term disability,
and/or educational assistance coverage. 

     

         “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.

     

         “Measurement Group” means Vishay Measurements Group, Inc., a
Wholly-owned Subsidiary of VPG. 

     

         “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. 

     

         “Parties” shall have the meaning assigned thereto in
the preamble to this Agreement.

     

         “Per Share Market Value” has the meaning assigned thereto in Section
5.2. 

     

         “Person” means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization or a Governmental
Authority. 

     

         “QDRO” has the meaning assigned thereto in Section
3.1(c). 

     

         “Separation” means the multi-step process described in
Article II of the Separation Agreement 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 Agreement” has the meaning assigned thereto in the
recitals to this Agreement.

     

    3

     

    

    
    

         “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. 

     

         “Taxes” has the meaning set forth in the Tax Sharing
Agreement, substantially in the form set forth as Exhibit E to the Separation
Agreement. 

     

         “Transfer Date” means, with respect to any Vishay Employee,
the date such Vishay Employee becomes a VPG Employee. In the case of employees
of the Measurements Group who participated in any Vishay Benefit Plans and who
cease to participate in such Vishay Benefit Plans and commence participation in
the corresponding VPG Benefit Plans, the date of such transfer to VPG Benefit
Plans shall be treated as such individuals’ Transfer Date.

     

         “Vishay” has the meaning assigned thereto in the
preamble to this Agreement.

     

         “Vishay 401(k) Plan” means the Vishay Employee Savings Plus Plan.

     

         “Vishay Benefit Plan” means, at any relevant time, any Benefit
Plan sponsored, maintained or contributed to by any member of the Vishay Group.

     

         “Vishay Class B Common Stock” means the outstanding shares of Class B
common stock, $0.10 par value, of Vishay. 

     

         “Vishay Common Stock” means the outstanding shares of common
stock, $0.10 par value, of Vishay.

     

         “Vishay Employee” means any individual who, at the relevant
time, is, or is expected to be, employed by Vishay or any member of the Vishay
Group, including active employees and employees on vacation and approved leave
of absence (including maternity, paternity, family, sick leave, qualified
military service under the Uniformed Services Employment and Reemployment Rights
Act of 1994, short- or long-term disability leave, leave under the Family
Medical Leave Act and other approved leave).

     

         “Vishay FSA Plan” has the meaning assigned thereto in Section
4.2(a).

     

         “Vishay Group” means Vishay and each Subsidiary of Vishay
and each other Person that is or is anticipated to be controlled directly or
indirectly by Vishay immediately after the Distribution, provided that the Vishay Group shall not include any
member of the VPG Group. 

     

         “Vishay KEWAP” means the Vishay Intertechnology, Inc.
Deferred Compensation Plan, also referred to as the Vishay Key Employee Wealth
Accumulation Plan. 

     

    4

     

    

    
    

         “Vishay NQDB Plan” means the Vishay Non-qualified Retirement
Plan. 

     

         “Vishay Participant” means a participant in a Vishay Benefit Plan
who, at the relevant time, is (i) a Vishay Employee, (ii) a former Vishay
Employee who is not a VPG Employee, or (iii) a beneficiary, dependent or
alternate payee of any of the foregoing.

     

         “Vishay Retirement Plan” means The Vishay Retirement Plan, a
qualified, defined benefit plan.

     

         “Vishay Service
Programs/Policies” means,
collectively, the Vishay vacation, short-term disability and other Vishay
programs and policies to the extent eligibility for or the level of benefits
thereunder depends on length of service.

     

         “Vishay Welfare Plan” has the meaning assigned thereto in Section
4.1(a).

     

         “VPG” has the meaning assigned thereto in the
preamble to this Agreement.

     

         “VPG 401(k) Plan” has the meaning assigned thereto in Section
3.1(b).

     

         “VPG Benefit Plan” means any Benefit Plan sponsored, maintained
or contributed to by any member of the VPG Group.

     

         “VPG Class B Common Stock” means the outstanding shares of Class B
common stock, $0.10 par value, of VPG. 

     

         “VPG Common Stock” means the outstanding shares of common
stock, $0.10 par value, of VPG.

     

         “VPG Employee” means any individual who, at the relevant
time, is employed by VPG or any member of the VPG Group, including active
employees and employees on vacation and approved leave of absence (including
maternity, paternity, family, sick leave, qualified military service under the
Uniformed Services Employment and Reemployment Rights Act of 1994, short- or
long-term disability leave, leave under the Family Medical Leave Act and other
approved leave).

     

         “VPG FSA Plans” has the meaning assigned thereto in Section
4.2(b).

     

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

     

         “VPG KEWAP” has the meaning assigned thereto in Section
3.2(b).

     

         “VPG NQDP Plan” has the meaning assigned thereto in Section
3.4(b). 

     

         “VPG Participant” means any individual who, at the relevant
time, is (i) a VPG Employee or (ii) a beneficiary, dependent or alternate payee
of a VPG Employee.

     

    5

     

    

    
    

         “VPG Service
Programs/Policies” means,
collectively, the VPG vacation, short-term disability and other VPG programs and
policies to the extent eligibility for or the level of benefits thereunder
depends on length of service.

     

         “VPG Stock Incentive Program” means the Vishay Precision Group, Inc. 2010
Stock Incentive Program. 

     

         “VPG Welfare Plan” has the meaning assigned thereto in Section
4.1(b). 

     

         “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
GENERAL
PRINCIPLES

     

         Section 2.1 Transfer of Employees. Prior to the Distribution Date, to the
extent not previously transferred, all Vishay Employees that are or as of the
Distribution Date are expected to be, primarily employed in the MGF Business, as
well as any other Vishay Employees that Vishay and VPG determine should become
VPG Employees, shall be transferred to the VPG Group, it being acknowledged that
most such employees who were not previously employed by the VPG Group were
transferred effective January 1, 2010. Notwithstanding the foregoing, any such
employees who are on an approved leave of absence (including maternity,
paternity, family, sick leave, qualified military service under the Uniformed
Services Employment and Reemployment Rights Act of 1994, short-term or long-term
disability leave, leave under the Family Medical Leave Act and other approved
leave) prior to and as of the Distribution Date shall not be transferred to VPG
or a member of the VPG Group unless and until they return to work. Such transfer
shall not be treated as a separation from service for purposes of any Vishay
Benefit Plan or any agreement (or any benefit thereunder) which is subject to
the provisions of Section 409A of the Code.

     

         Section 2.2 Assumption and Retention of
Liabilities. 

     

              (a) As of the Distribution Date, except as otherwise expressly provided for
in this Agreement or any other agreement by and between the Parties, and/or
their Affiliates, Vishay shall, or shall cause one or more other members of the
Vishay Group to, retain and Vishay hereby agrees to pay, perform, fulfill and
discharge, in due course in full: (i) all Liabilities under all Vishay Benefit
Plans with respect to the Vishay Employees; and (ii) any other Liabilities or
obligations expressly assigned to Vishay or any other member of the Vishay Group
under this Agreement.

     

              (b) From time to time after the Distribution Date, VPG shall promptly
reimburse Vishay, upon Vishay’s reasonable request and the presentation by
Vishay of such substantiating documentation as VPG shall reasonably request, for
the cost of any obligations or Liabilities satisfied or assumed by Vishay or the
Vishay Group following the Distribution Date that are, or that have been made
pursuant to this Agreement, the responsibility of VPG or the VPG Group. Except
as otherwise provided in this Agreement, any such request for reimbursement must be made by Vishay not later
than the first anniversary of the Distribution Date, unless the obligations and
Liabilities extend beyond the first anniversary.

     

    6

     

    

    
    

              (c) From time to time after the Distribution Date, Vishay shall promptly
reimburse VPG, upon VPG’s reasonable request and the presentation by VPG of such
substantiating documentation as Vishay shall reasonably request, for the cost of
any Liabilities satisfied or assumed following the Distribution Date by VPG or
the VPG Group that are, or that have been made pursuant to this Agreement, the
responsibility of Vishay or the Vishay Group. Except as otherwise provided in
this Agreement, any such request for reimbursement must be made by VPG not later
than the first anniversary of the Distribution Date, unless the obligations and
Liabilities extend beyond the first anniversary.

     

         Section 2.3 Existing VPG Benefit Plans. Anything to the contrary in this Agreement
notwithstanding, if a VPG Employee is a participant in an Existing VPG Benefit
Plan, including without limitation any Benefit Plan sponsored or maintained by
Measurements Group, then VPG or another member of the VPG Group may either
continue the participation of the VPG Employee in such Existing VPG Benefit Plan or transfer participation of
the VPG Employee, and the assets attributable to the VPG Employee’s
participation in such plan, to a comparable VPG Benefit Plan contemplated by
this Agreement, provided that the comparable VPG Benefit Plan shall have terms
and conditions no less favorable to the VPG Employee than under the Existing VPG
Benefit Plan. Except to the extent of transfers of participation contemplated in
the previous sentence, all Existing VPG Benefit Plans, including Benefit Plans
sponsored or maintained by Measurements Group, shall continue in effect as of
the Distribution Date, and no changes in any such Benefit Plans shall be made on
account of the Distribution. 

     

         Section 2.4 VPG Employee Participation in Vishay Benefit
Plans. Except as otherwise
expressly provided for in this Agreement or as otherwise expressly agreed to in
writing between the Parties, each Vishay Employee who becomes a VPG Employee
shall cease to actively participate in, be covered by, accrue benefits under, be
eligible to contribute to or have any rights as an active participant under any
Vishay Benefit Plan effective as of a date on or after such VPG employee’s
Transfer Date, but in no event later than the Distribution Date. 

     

         Section 2.5 Service Credit. VPG, directly or through one or more other
members of the VPG Group, shall cause the VPG Service Programs/Policies and the
VPG Benefit Plans to provide each Vishay Employee who becomes a VPG Employee
credit for all purposes, including eligibility, vesting, determination of
benefit levels, and benefit accruals under the applicable VPG Service
Programs/Policies and VPG Benefit Plans for such VPG Employee’s service with any
member of the Vishay Group to the same extent such service was recognized by the
corresponding Vishay Service Programs/Policies and Vishay Benefit Plans;
provided that such service shall not be recognized to the extent that such
recognition would result in the duplication of benefits.

     

         Section 2.6 Vacation and Other Time-Off
Benefits. VPG or another
applicable member of the VPG Group shall credit each individual who becomes a
VPG Employee on or before the Distribution Date with the amount of accrued but
unused vacation time and other time-off benefits as such VPG Employee had with
the Vishay Group on the applicable Transfer Date. The VPG Employees for whom VPG
provides vacation and other time-off credits as described above shall not have a right to a cash payment for their
accrued but unused vacation time (including banked vacation time) or other
time-off benefits as a result of their ceasing to be Vishay Employees.

     

    7

     

    

    
    

         Section 2.7 Measurements Group
Employees. Employees of
the Measurements Group that participated in any Vishay Benefit Plans will cease
to participate in such Vishay Benefit Plans and commence participation in the
corresponding VPG Benefit Plans as of or on a date prior to the Distribution
Date, and such date shall be treated as such individuals’ Transfer Date for the
purpose of this transfer to the VPG Benefit Plans. 

     

    ARTICLE III
RETIREMENT
PLANS

     

         Section 3.1 401(k) Plans. 

     

              (a) Vishay 401(k) Plan. Except as provided in Section 3.1(c) below,
following the Distribution Date the Vishay Group shall retain all obligations
and Liabilities under, or with respect to, the Vishay 401(k) Plan. 

     

              (b) VPG 401(k) Plan. Effective on or about March 1, 2010, VPG
has, or has caused another member of the VPG Group to, establish a qualified
defined contribution retirement plan and trust for the benefit of VPG
Participants (the “VPG 401(k) Plan”). VPG shall be responsible for taking all
necessary, reasonable and appropriate action to maintain and administer the VPG
401(k) Plan so that it is qualified under Code Section 401(a) and the trust
thereunder is and continues to be exempt under Code Section 501(a). VPG (acting
directly or through other members of the VPG Group) shall be responsible for any
and all Liabilities and other obligations with respect to the VPG 401(k) Plan.
As of the date of the establishment of the VPG 401(k) Plan and through the
Distribution Date, the VPG 401(k) Plan shall include terms that are
substantially the same as the terms of the Vishay 401(k) Plan. 

     

              (c) Transfer of Vishay 401(k) Plan
Assets. On an Account
Transfer Date within a reasonable period of time before the Distribution Date,
Vishay shall cause the accounts and underlying assets and Liabilities (including
any outstanding loan balances and any qualified domestic relations orders
(“QDROs”)) in the Vishay 401(k) Plan attributable to
VPG Employees who are employed by VPG as of the Account Transfer Date and all of
the assets in the Vishay 401(k) Plan trust related thereto to be transferred
(based on the investments in place on or as soon as administratively practicable
before the Account Transfer Date) to the VPG 401(k) Plan, and VPG shall cause
the VPG 401(k) Plan and trust to accept such transfer of accounts and underlying
assets, Liabilities, loans and QDROs. Effective as of the date of such transfer,
VPG shall cause the VPG 401(k) Plan to assume and to fully perform, pay and
discharge all obligations of the Vishay 401(k) Plan relating to the accounts of
VPG Participants as of the Account Transfer Date, to the extent the assets,
liabilities, loans and QDROs related to those accounts are actually transferred
from the Vishay 401(k) Plan to the VPG 401(k) Plan, and the VPG 401(k) Plan
shall satisfy all protected benefit requirements under the Code, ERISA and
Applicable Law with respect to the transferred accounts. The transfer of assets
shall be conducted in accordance with Code Section 414(l), Treasury Regulation
Section 1.414(1)-1, and ERISA Section 208. The Vishay 401(k) Plan accounts of
individuals who become VPG Employees
after the Account Transfer Date shall be governed by the terms of the Vishay
401(k) Plan.

     

    8

     

    

    
    

              (d) Continuation of Elections. The VPG 401(k) Plan shall recognize and
maintain Vishay 401(k) Plan elections or designations, including participant
deferral elections, investment elections, beneficiary designations, and the
rights of alternate payees under QDROs with respect to VPG Participants, to the
extent such elections or designations are available under the VPG 401(k) Plan
and continued pursuant to procedures adopted under the VPG 401(k) Plan.

     

              (e) Contributions through the Account Transfer
Date. All contributions,
including employer matching contributions, payable to the Vishay 401(k) Plan
through the applicable Transfer Date with respect to employee deferrals and
contributions for Vishay Employees who become VPG Employees on or before the
Account Transfer Date, determined in accordance with the terms and provisions of
the Vishay 401(k) Plan, ERISA and the Code, shall be paid by Vishay or another
member of the Vishay Group to the Vishay 401(k) Plan prior to the Account
Transfer Date. 

     

         Section 3.2 KEWAPs.

     

              (a) Vishay Key Employee Wealth Accumulation
Plan. Except as provided
in Section 3.2(c) below, following the Distribution Date the Vishay Group shall
retain all obligations and Liabilities under, or with respect to, the Vishay
KEWAP.

     

              (b) VPG Key Employee Wealth Accumulation
Plan. Effective on or
about January 1, 2010, VPG has, or has caused another member of the VPG Group
to, establish a non-qualified deferred compensation plan (the “VPG KEWAP”) to benefit, on a prospective basis, VPG
Employees who participated in the Vishay KEWAP immediately prior to their
transfer to the VPG Group and other eligible VPG Employees. Effective prior to
the Distribution Date, VPG will, or will cause another member of the VPG Group
to, establish a rabbi trust with respect to the VPG KEWAP. 

     

              (c) Transfer of Vishay KEWAP Accounts and Rabbi
Trust Amounts. On an
Account Transfer Date within a reasonable period of time before the Distribution
Date, Vishay shall cause the accounts in the Vishay KEWAP attributable to VPG
Employees who are employed as of the Account Transfer Date and the amounts in
the Vishay KEWAP rabbi trust related thereto to be transferred (based on the
investments in place on or as soon as administratively practicable before the
Account Transfer Date) to the VPG KEWAP. VPG shall cause the VPG KEWAP and the
VPG KEWAP rabbi trust to accept such transfer of accounts and associated amounts
and, effective as of the Account Transfer Date, to assume and to fully perform,
pay and discharge all obligations of the Vishay KEWAP relating to the accounts
of VPG Participants as of the Account Transfer Date, to the extent the amounts
related to those accounts are actually transferred from the Vishay KEWAP to the
VPG KEWAP. The account balances in the Vishay KEWAP of any Vishay Employee or
former Vishay Employee who becomes a VPG Employee after the Account Transfer
Date, shall remain in the Vishay KEWAP, and shall continue to be governed by the
terms of the Vishay KEWAP. 

     

    9

     

    

    
    

              (d) Continuation of Elections. The VPG KEWAP will recognize and maintain
Vishay KEWAP elections or designations, including participant deferral elections
(to the extent possible), investment elections, beneficiary designations, and
the rights of alternate payees under QDROs with respect to VPG Employees, to the
extent such elections or designations are available under the VPG KEWAP and
continued pursuant to procedures adopted under the VPG KEWAP. 

     

              (e) Credits and Contributions through the Transfer
Date. All amounts
scheduled to be credited to the Vishay KEWAP and contributed to the related
rabbi trust through the applicable Transfer Date with respect to Vishay
Employees who become VPG Employees on or before the Account Transfer Date,
determined in accordance with the terms and provisions of the Vishay KEWAP,
ERISA and the Code, shall be credited and paid by Vishay or another member of
the Vishay Group to the Vishay KEWAP and the related rabbi trust prior to the
Account Transfer Date. 

     

         Section 3.3 Vishay Retirement Plan. Following the Distribution Date, the Vishay
Group shall retain all obligations and Liabilities under, or with respect to,
the Vishay Retirement Plan. Any accrued benefits of VPG Employees under Vishay
Retirement Plan shall remain with the Vishay Retirement Plan and shall be
governed by the terms and conditions of the Vishay Retirement Plan. Vishay
Employees who separate from service with the Vishay Group to become VPG
Employees shall become eligible for distribution of their benefits under the
Vishay Retirement Plan in accordance with that plan’s terms and administrative
procedures. The Vishay Group shall be responsible for any notices, forms and
filings that are required to be furnished to a governmental agency as a result
of the Distribution.

     

         Section 3.4 NQDB Plans.

     

              (a) Vishay NQDB Plan. Except as provided in Section 3.4(c) below,
following the Distribution Date the Vishay Group shall retain all obligations
and Liabilities under, or with respect to, the Vishay NQDB Plan.

     

              (b) VPG NQDB Plan. Effective as of January 1, 2010, VPG
established a non-qualified defined benefit retirement plan (the “VPG NQDB
Plan”) to maintain the accounts of VPG Participants who had accounts in the
Vishay NQDB Plan immediately prior to the Distribution Date. Effective prior to
the Distribution Date, VPG will, or will cause another member of the VPG Group
to, establish a rabbi trust with respect to the VPG NQDB Plan. 

     

              (c) Transfer of Vishay NQDB Plan Accounts and
Rabbi Trust Amounts. On an
Account Transfer Date within a reasonable period of time before the Distribution
Date, Vishay shall cause the accounts in the Vishay NQDB Plan attributable to
VPG Employees who are employed by the VPG Group as of the Account Transfer Date
and the amounts in the Vishay NQDB Plan rabbi trust related thereto to be
transferred (based on the investments in place on or as soon as administratively
practicable before the Account Transfer Date) to the VPG NQDB Plan. VPG shall
cause the VPG NQDB Plan and the VPG NQDB Plan rabbi trust to accept such
transfer of accounts and associated amounts and, effective as of the Account
Transfer Date, to assume and to fully perform, pay and discharge all obligations
of the Vishay NQDB Plan relating to the accounts of VPG Participants as of the
Account Transfer Date, to the extent the amounts related to those accounts are actually
transferred from the Vishay NQDB Plan to the VPG NQDB Plan. The account balances
in the Vishay NQDB Plan of Vishay Employees or former Vishay Employees who
become VPG Employees after the Account Transfer Date shall remain in the Vishay
NQDB Plan, and shall continue to be governed by the terms of the Vishay NQDB
Plan. 

     

    10

     

    

    
    

    ARTICLE IV
HEALTH AND WELFARE PLANS

     

         Section 4.1 VPG Welfare Plans.

     

              (a) Vishay Welfare Plan. Following the Distribution Date, the Vishay
Group shall retain all obligations and Liabilities under, or with respect to,
the Health and Welfare Benefit Plans maintained for the benefit of Vishay
Employees (the “Vishay
Welfare Plans”). 

     

              (b) Establishment of VPG Welfare
Plans. Effective as of or
before the Distribution Date, VPG will, or will cause or a member of the VPG
Group to, establish one or more Health and Welfare Benefit Plans for the benefit
of eligible VPG Participants (the “VPG Welfare Plans”), who, as of the date of their transfer to
the VPG Group, are participants in the Vishay Welfare Plans. The VPG Welfare
Plans shall provide health, life, dental, vision, prescription drug, short-term
disability, long-term disability, and educational assistance coverage benefits
prior to and as of the Distribution Date on terms substantially the same as are
provided under the Vishay Welfare Plans. 

     

              (c) Terms of Participation in VPG Welfare
Plans. The VPG Welfare
Plans shall (i) waive all limitations as to preexisting conditions, exclusions,
and service conditions with respect to participation and coverage requirements
applicable to VPG Employees, other than limitations that were in effect with
respect to participants as of the applicable Transfer Date under the
corresponding Vishay Welfare Plan, (ii) waive any waiting period limitation or
evidence of insurability requirement that would otherwise be applicable to a VPG
Employee following the applicable Transfer Date to the extent such VPG
Participant had satisfied any similar limitation under the corresponding Vishay
Welfare Plan, and (iii) honor any deductibles, out-of-pocket maximums and
co-payments incurred by VPG Employees under the corresponding Vishay Welfare
Plan in satisfaction of the applicable deductibles, out-of-pocket expenses or
co-payments under such Vishay Welfare Plan for calendar year 2010. 

     

         Section 4.2 FSA Plans. 

     

              (a) Vishay FSA Plans. Except as provided in Section 4.2(c) below,
following the Distribution Date the Vishay Group shall retain all obligations
and Liabilities under, or with respect to, the FSA Plans of the Vishay Group
(the “Vishay FSA Plans”). 

     

              (b) VPG FSA Plans. Effective as of January 1, 2010, VPG has, or
has caused another member of the VPG Group to, establish one or more health care
and dependent care FSA Plans (the “VPG FSA Plans”). The VPG FSA Plans shall provide benefits
prior to and as of the Distribution Date that are substantially the same as
provided under the Vishay FSA Plans. 

     

    11

     

    

    
    

              (c) To the extent that the Transfer Date of a VPG Employee occurs between
January 1, 2010 and the Distribution Date, the VPG FSA Plans shall reimburse
medical expenses incurred by the VPG Employees at any time during the Vishay FSA
Plans’ plan year (including claims incurred but unpaid prior to the Distribution
Date), up to the amount of the individual’s election and reduced by amounts
previously reimbursed by the corresponding Vishay FSA Plan. The debit and credit
account balances, if any, of any such VPG Employee under the Vishay FSA Plans
shall be transferred within a reasonable period prior to the Distribution Date
to the VPG FSA Plans and shall thereafter be administered in accordance with the
terms of the VPG FSA Plans. If a VPG Employee whose account is transferred to
the VPG FSA Plans receives reimbursements that exceed the amount he or she has
contributed under the corresponding Vishay FSA Plan as of the applicable
Transfer Date, irrespective of whether such payment was made before or after
such Transfer Date, VPG or another member of the VPG Group shall collect that
VPG Employee’s payroll contributions in accordance with the VPG FSA Plans’
procedures and remit them on a monthly basis to Vishay until Vishay has recouped
the total reimbursements paid to or for that VPG Employee under the applicable
Vishay FSA Plan for the year; provided that such contributions and remittances shall
cease upon the VPG Employee’s cessation of participation in the applicable VPG
FSA Plan. Balances in any Vishay FSA Plan of any Vishay Employee who becomes a
VPG Employee after the Distribution Date will not be transferred to the
corresponding VPG FSA Plan and will be treated in accordance with the terms and
procedures of the Vishay FSA Plans. 

     

         Section 4.3 Claims. 

     

              (a) General. Vishay, acting directly or through any other
member of the Vishay Group, shall cause each Vishay Welfare Plan to fully
perform, pay and discharge, within the timeframes applicable under such plan,
all claims that arise with respect to VPG Participants under the Vishay Welfare
Plan until the applicable Transfer Date and (ii) VPG, acting directly or through
any other member of VPG Group, shall cause the corresponding VPG Welfare Plan to
fully perform, pay and discharge, within the timeframes applicable under such
plan, all claims that arise under such VPG Welfare Plan on and after the
applicable Transfer Date.

     

              (b) Claim Arisen Definition. For purposes of this Section 4.3, a claim is
deemed to arise (i) with respect to medical, dental and/or vision benefits, upon
the rendering of health services giving rise to such claim; (ii) with respect to
prescription drug benefits, upon the purchase of the prescription drug; (iii)
with respect to disability benefits, upon the date of an individual’s
disability, as determined by the disability benefit insurance carrier or claim
administrator, giving rise to such claim; (iv) with respect to a period of
continuous hospitalization, upon the date of admission to the hospital; and (v)
with respect to death benefits, on the date of death.

     

         Section 4.4 Advances. VPG shall reimburse Vishay for the amount of
any advances made by Vishay or any other member of the Vishay Group prior to the
applicable Transfer Date under any Benefit Plan or otherwise to the extent that
such advance relates to service on or after the applicable Transfer Date or that
under the terms of the Agreement is a Liability of the VPG Group. 

     

         Section 4.5 Workers’ Compensation
Liabilities. 

     

    12

     

    

    
    

              (a) Pre-Transfer Claims. The VPG Group shall be responsible for any
workers’ compensation Liability up to the amount accrued on its balance sheet on
the Transfer Date. The VPG Group shall not assume, retain or otherwise be
responsible for any workers' compensation Liability in excess of the amount
accrued relating to, arising out of, or resulting from a compensable injury or
disease of a VPG employee before the applicable Transfer Date. 

     

              (b) Post- Transfer Claims. All workers’ compensation Liabilities
relating to, arising out of, or resulting from any compensable injury or
occupational disease of a VPG Employee occurring on or after the applicable
Transfer Date shall be the responsibility of the VPG Group. 

     

              (c) General. For purposes of this Section 4.6, a
compensable injury shall be deemed to occur upon the occurrence of the event
giving rise to eligibility for workers’ compensation benefits and an occupation
disease shall be deemed to occur when it first becomes manifest. Vishay and VPG
shall cooperate in good faith with respect to the notification to appropriate
Governmental Authorities in order to facilitate the issuance of new, or the
transfer of existing, workers’ compensation insurance policies and claims
handling contracts occasioned by reason of the separation. 

     

    ARTICLE V
EQUITY AWARDS

     

         Section 5.1 Approval of VPG Plan by Vishay as Majority
Shareholder. Effective
prior to the Distribution Date, VPG shall adopt the VPG Stock Incentive Program.
Vishay, as VPG’s sole shareholder, shall approve the VPG Stock Incentive Program
prior to the Distribution Date. Vishay shall, or shall cause VPG to, register
all shares of VPG Common Stock issuable under the VPG Stock Incentive Program on
Form S-8 (or any successor form promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended) prior to the
Distribution Date. 

     

         Section 5.2 Phantom Stock and Restricted Stock
Units.

     

              (a) Number of Shares. Effective as of the Separation, Vishay shall
amend each outstanding grant of phantom stock granted pursuant to the Vishay
Intertechnology Inc. Senior Executive Phantom Stock Plan and each outstanding
grant of restricted stock units (both those subject to ordinary vesting and
those restricted stock units subject to performance-based vesting, sometimes
referred to as performance stock units) granted pursuant to the Vishay
Intertechnology, Inc. 2007 Stock Incentive Program, as amended and restated
effective April 2008, to increase the number of shares of phantom stock and the
number of restricted stock units applicable to such grants. The aggregate number
of shares of phantom stock and restricted stock units outstanding following the
Separation shall be determined according to the following formula:

     

              NVs = NV x [1 + r x PMs / PVs],

     

    where

     

    13

     

    

    
    

    
      	        	NVs	      	
              is the number of
      shares of Vishay Common Stock underlying the restricted stock units or
      phantom shares following the Distribution Date;

            
	
            	
            	
            	 
	
            	NV	
            	
              is the number of
      shares Vishay Common Stock underlying the restricted stock units
      or phantom shares prior to
      the Distribution Date;

            
	
            	
            	
            	 
	
            	PMs	
            	
              is the Per Share
      Market Value of VPG Common Stock following the Distribution Date;

            
	
            	
            	
            	 
	
            	PVs	
            	
              is the Per Share
      Market Value of Vishay Common Stock following the Distribution Date;
      and

            
	
            	
            	
            	 
	
            	r	
            	
              is the
      distribution ratio for the
Distribution.

            

    

     

    “Per Share Market Value” of the VPG Common Stock or the Vishay Common
Stock means the average Daily Market Price of the respective security for the
first ten (10) consecutive trading days following the Distribution Date.
“Daily Market Price” for a security on any trading day means the
volume-weighted average of the per share selling prices of the security on the
New York Stock Exchange or other principal United States securities exchange or
inter-dealer quotation system on which the security is then listed or quoted;
or, if there are no reported sales of the security on a trading day, the average
of the high bid and low ask price for the security on such trading day; or, if
there are no high bid and low ask prices on such trading day, the Daily Market
Price shall be the per share fair market value of the security as determined by
the board of directors of the issuer of the security in good faith.

     

              (b) Performance Goals. Effective as of the Separation, Vishay shall
amend each outstanding grant of performance stock units (restricted stock units
that are subject to performance-based vesting) granted pursuant to the Vishay
Intertechnology, Inc. 2007 Stock Incentive Program, as amended and restated
effective April 2008, to reduce by 10% the numeric value of each applicable
performance goal that applies to periods following the Separation. 

     

         Section 5.3 Stock Options. 

     

             
(a) Stock Options Held by Vishay
Employees. Effective as of
the Distribution Date, Vishay
will amend each outstanding grant of stock options made pursuant to the Vishay
Intertechnology, Inc. 1998 Stock Option Program, the Vishay Intertechnology,
Inc. 2007 Stock Incentive Program, as amended and restated effective April 2008,
and the Amended and Restated 1998 Long-Term Incentive Plan of General
Semiconductor, Inc. to reduce the exercise price of each of the stock options
and increase the number of shares issuable upon exercise of each of the stock
options according to the following formulas:

     

              EVs = EV x PVs / (PVs + r x PPs)

     

              and

     

              NVs = NV x EV / EVs 

     

    where 

     

    
      	        	EV	      	
              is the per share
      exercise price of the Vishay stock option prior to the Distribution
      Date;

            

    

     

    14

     

    

    
    

    
      	        	NV	      	
              is the number of
      shares of Vishay Common Stock issuable upon exercise of the stock option
      prior to the Distribution Date;

            
	
            	
            	
            	 
	
            	EVs	
            	
              is the per share
      exercise price of the Vishay stock option following the Distribution
      Date;

            
	
            	
            	
            	 
	
            	PVs	
            	
              is the Per Share
      Market Value of Vishay Common Stock following the Distribution
      Date;

            
	
            	
            	
            	 
	
            	NVs	
            	
              is the number of
      shares of Vishay Common Stock issuable upon exercise of the stock option
      following the Distribution Date;

            
	
            	
            	
            	 
	
            	PPs	
            	
              is the Per Share
      Market Value of VPG Common Stock following the Distribution Date;
      and

            
	
            	
            	
            	 
	
            	r	 	
              is the
      distribution ratio for the
Distribution.

            

    

     

    The other terms of the
Vishay stock options, including their remaining vesting schedule if any, shall
remain the same. 

     

         (b) Stock Options Held by VPG
Employees. Effective as of
the separation, VPG shall issue to VPG Employees who hold unvested Vishay stock
options that will be forfeited as a result of the Distribution stock options
under the VPG Stock Incentive Program in lieu of their Vishay stock options. In
addition, VPG shall offer to VPG Employees who hold vested Vishay stock options
the opportunity to replace those options with VPG stock options. In either case,
the exercise price of each of the VPG stock options and the number of shares of
VPG Common Stock issuable upon exercise of each of the stock options shall be
determined according to the following formulas:

     

              EPs = EV x PPs /(PVs + (r x PPs)) 

     

              and

     

              NPs = NV x EV / EPs

     

    where 

     

    
      	        	EPs	      	
              is the per share
      exercise price of the option to purchase VPG Common
  Stock;

            
	
            	
            	
            	 
	
            	NPs	
            	
              is the number of
      shares of VPG Common Stock issuable upon exercise of the stock
      .option;
  and

            

    

     

    the other symbols have
the same values as those assigned above with respect to the formulas for
treatment of Vishay stock options.

     

    The other terms of the
VPG stock options shall be the same as the Vishay stock options that they are
intended to replace. In the case of VPG stock options issued in lieu of
forfeited Vishay stock options, the vesting schedule for the VPG stock options
shall be the same as the remaining vesting schedule of the forfeited Vishay
stock options. If the exercise price of any VPG stock options is less than the
market value of VPG Common Stock on the date the stock options are issued, VPG may issue the VPG stock options
according to a different formula in order to comply with regulations under
Section 409A of the Code. 

     

    15

     

    

    
    

    ARTICLE VI
NON-U.S. EMPLOYEES AND BENEFITS

     

         As of or prior to the Distribution Date, to the extent not previously
transferred, all Vishay Employees that are resident outside of the United States
or otherwise are subject to non-U.S. law that are or as of the Distribution Date
are expected to be primarily employed in the MGF Business, as well as any other
such Vishay Employees that Vishay and VPG determine should become VPG Employees
shall be transferred to the VPG Group. Such transfers, as well as the transfer
of any related liabilities and Benefit Plans or accounts under Benefit Plans,
will be accomplished in accordance with applicable law and custom in each
location where such Vishay Employees are located. To the extent known as of the
date of this Agreement, Schedule B hereto sets forth the actions that shall be
taken in furtherance of the provisions of this Section in each applicable
jurisdiction. 

     

    ARTICLE VII
ADDITIONAL COMPENSATION MATTERS

     

         Section 7.1 Vishay Individual
Arrangements. Vishay
acknowledges and agrees that, except as otherwise provided herein, Vishay (or
another member of the Vishay Group) shall have full responsibility with respect
to any Liabilities and the payment or performance of any obligations arising out
of or relating to any employment, consulting, non-competition, retention or
other compensatory arrangement previously provided by any member of the Vishay
Group to any Vishay Participant, including life insurance policies not held in
any trust and covering any Vishay Participant. The Parties shall transfer or
assign to VPG or another member of VPG Group, and shall use commercially
reasonable efforts to cause their respective employees to consent to the
transfer or assignment of, the rights and Liabilities arising under any
agreements entered into between Vishay or another member of the Vishay Group and
VPG Employees who become VPG Employees prior to the Distribution Date and whose
agreements are not replaced with agreements with members of the VPG
Group.

     

         Section 7.2 Severance Benefits. Vishay and VPG acknowledge and agree that
the Separation and any transfer of employment from the Vishay Group to the VPG
Group by reason thereof will not constitute a termination of employment for
purposes of any policy, plan, program or agreement of Vishay or any member of
the Vishay Group that provides for the payment of severance, separation pay,
salary continuation or similar benefits in the event of a termination of
employment or a change in control. The Parties shall use their reasonable
commercial efforts to cause their respective employees to consent to the
amendment of any agreements entered into between Vishay or any other member of
the Vishay Group and VPG Employees who become VPG Employees prior to the
Distribution Date that are inconsistent with the preceding sentence.

     

         Section 7.3 Not a Change in Control. The Parties hereto acknowledge and agree
that the Separation will not constitute a “change in control” for purposes of
any Vishay Benefit Plan or VPG Benefit Plan.

     

    16

     

    

    
    

         Section 7.4 COBRA Coverage. Except to the extent provided otherwise on
Schedule C: 

     

              (a) VPG and the VPG Welfare Plan will assume responsibility for compliance
with COBRA with respect to any COBRA Beneficiary who is entitled to COBRA
coverage in respect of an individual who is a participant in a VPG Welfare Plan
on or before the Distribution Date. VPG and the VPG Welfare Plan will assume the
responsibility for such COBRA compliance effective as of the date that the VPG
Employee with respect of whom the COBRA Beneficiary is entitled to COBRA
coverage becomes covered by the applicable VPG Welfare Plan. 

     

              (b) VPG and the VPG Welfare Plan will assume responsibility for compliance
with COBRA with respect to any COBRA Beneficiary who is entitled to COBRA
coverage in respect of such COBRA Beneficiary’s employment with a member of the
VPG Group on or before the Distribution Date. VPG and the VPG Welfare Plan will
assume the responsibility for such COBRA compliance effective as of the date
that the VPG Welfare Plan is established. 

     

              (c) Vishay and the Vishay Welfare Plan will retain responsibility for
compliance with COBRA with respect to all other individuals who are receiving or
who are entitled to receive COBRA coverage. 

     

         Section 7.5 Tax Matters. 

     

              (a) Tax Deductions in General. Subject to the provisions of Section 7.5(b),
the Parties agree to take the actions that are necessary or desirable to enable
the Party responsible for any payment under this Agreement to receive, to the
extent possible, the benefit of any tax deduction related to such payment. If
one Party receives a tax benefit as a result of any payment or benefit funded by
the other Party under this Agreement, the first Party shall reimburse the other
Party for that tax benefit at the time and to the extent that such tax benefit
is realized. 

     

              (b) Equity-Based Compensation
Deductions.
Notwithstanding the provisions of Section 7.5(a), the Parties agree that, to the
extent permitted by law, tax deductions for equity-based compensation described
in Section 5.3 shall be allocated to and claimed by the member or members of the
Vishay Group or the VPG Group, as the case may be, that employed the individual
receiving the compensation during the relevant vesting period based on the
number of months of such individual’s employment with such entity or
entities.

     

              (c) The member or members of a Group claiming any tax deduction on account of
compensation paid to a VPG Employee shall be responsible for any tax reporting
obligations, including but not limited to the filing of any required form W-2,
and payment of any taxes imposed upon the employer in respect of the
corresponding amounts, in proportion to the amount claimed as a deduction. The
Party in control of the payment of any such amounts shall be responsible for
effecting the withholding of any applicable income and employment tax
withholding required to be effected from any such payment. The Parties shall
cooperate with each other to facilitate any required tax reporting obligations,
including sharing, as relevant, information regarding amounts withheld from the
payments to the employees. To the extent deductions cannot be claimed in the
manner referenced in this Section 7.5(c), or are disallowed or adjusted on audit, the entity that receives
the tax benefit shall reimburse the entity that would have received such tax
benefit pursuant to the preceding sentence as and when realized. To the extent
such reimbursement is treated as taxable income, the reimbursing party shall
gross-up the reimbursement amount for taxes.

     

    17

     

    

    
    

              (d) Code Section 409A. Notwithstanding anything in this Agreement
to the contrary, the Parties agree to cooperate to minimize the loss of
deductions and to utilize commercially reasonable best efforts to have the
applicable plans, programs and arrangements comply with Section 409A of the
Code.

     

    ARTICLE
VIII
INDEMNIFICATION

     

         Section 8.1 Indemnification by Vishay. Vishay shall indemnify, defend and hold
harmless VPG, each other 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
“VPG Indemnified Parties”), from and against any and all Liabilities
of the VPG Indemnified Parties relating to, arising out of or resulting from any
breach of, or failure to perform or comply with, any covenant, undertaking or
obligation of, this Agreement by Vishay or any other member of the Vishay Group.

     

         Section 8.2 Indemnification by VPG. VPG shall indemnify defend and hold harmless
Vishay, each of other 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
breach of, or failure to perform or comply with, any covenant, undertaking or
obligation of, this Agreement by VPG or any other member of the VPG Group.

     

         Section 8.3 Procedures for Indemnification of
Claims. Indemnification of
third party claims shall be governed by the procedures set forth in Section 5.6
of the Separation Agreement. Indemnification for direct claims shall be governed
by the procedures set forth in Section 5.7 of the Separation Agreement. Payment
shall be made in accordance with the provision of Section 5.8 of the Separation
Agreement. For the avoidance of doubt, the provisions of Section 5.5 of the
Separation Agreement shall not be applicable to claims under this Article 8.

     

    ARTICLE IX
GENERAL AND ADMINISTRATIVE

     

         Section 9.1 Sharing of Information. Vishay and VPG, and the members of their
respective Groups, each shall provide to the other Party and its respective
agents and vendors all Information as the other may reasonably request to enable
the requesting Party to administer efficiently and accurately each of its
Benefit Plans and to determine the scope of, as well as fulfill, its obligations
under this Agreement. Such information shall, to the extent reasonably
practicable, be provided in the format and at the times and places requested,
but in no event shall the Party providing such information be obligated to incur
any out-of-pocket expenses not reimbursed by the Party making such request or
make such information available outside of its normal business hours and premises. Any information shared or exchanged
pursuant to this Agreement shall be subject to the confidentiality requirements
set forth in Sections 4.5 and 4.6 of the Separation Agreement. With respect to
personal health information (“PHI”) as defined in the administrative
regulations promulgated pursuant to the Health Insurance Portability and
Accountability Act of 1996, as amended, the Parties agree to comply with such
regulations, including, but not limited to, entering into any business associate
agreements that may be required for the sharing of PHI.

     

    18

     

    

    
    

         Section 9.2 Reasonable
Efforts/Cooperation. Each
of the Parties hereto will use its commercially reasonable efforts to promptly
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under Applicable Law and regulations to
consummate the transactions contemplated by this Agreement, including adopting
plans or plan amendments. Each of the Parties hereto shall provide reasonable
cooperation on any issue relating to the transactions contemplated by this
Agreement for which the other Party seeks a determination letter or private
letter ruling from the United States Internal Revenue Service, an advisory
opinion from the United States Department of Labor or any other filing, consent
or approval with respect to or by a Governmental Entity.

     

         Section 9.3 Employer Rights. Nothing in this Agreement shall prohibit VPG
or any other member of the VPG Group from amending, modifying or terminating any
VPG Benefit Plan at any time after the Distribution Date, within its sole
discretion. In addition, nothing in this Agreement shall prohibit Vishay or any
other member of the Vishay Group from amending, modifying or terminating any
Vishay Benefit Plan at any time, within its sole discretion.

     

         Section 9.4 Effect on Employment. Nothing in this Agreement is intended to
confer upon any employee or former employee of Vishay, VPG or any member of
their respective Group any right to continued employment, or any recall or
similar rights to an individual on layoff or any type of approved
leave.

     

         Section 9.5 Consent of Third Parties. If any provision of this Agreement requires
the consent of any third party, the Parties shall use their commercially
reasonable efforts to obtain such consent. If despite such efforts the consent
cannot be obtained, the Parties shall negotiate in good faith to modify the
applicable provision so as to effect the purposes and intents of this Agreement
to the extent reasonably possible notwithstanding the absence of such
consent.

     

         Section 9.6 Beneficiary Designation/Release of
Information/Right to Reimbursement. To the extent permitted by Applicable Law and except as otherwise
provided for in this Agreement, all beneficiary designations, authorizations for
the release of information and rights to reimbursement made by or relating to
VPG Employees under Vishay Benefit Plans shall be transferred to, and be in full
force and effect under, the corresponding VPG Benefit Plans until such
beneficiary designations, authorizations or rights are replaced or revoked by,
or no longer apply to, the applicable VPG Employee.

     

         Section 9.7 Fiduciary Matter. Vishay and VPG each acknowledge that the
transfer of account balances and assets from the Vishay 401(k) Plan to the VPG
401(k) Plan will be subject to fiduciary duties or standards of conduct under
ERISA or other Applicable Law, and no Party shall be deemed to be in violation
of this Agreement if it fails to comply with any provisions hereof based upon its good faith determination
(as supported by advice from counsel experienced in such matters) that to do so
would violate such a fiduciary duty or standard. Each Party shall be responsible
for taking such actions as are deemed necessary and appropriate to comply with
its own fiduciary responsibilities.

     

    19

     

    

    
    

    ARTICLE X
MISCELLANEOUS

     

         Section 10.1 Termination. Notwithstanding anything in this Agreement
to the contrary, if the Separation Agreement is not executed on or before
December 31, 2010 or if it terminates without the Separation having occurred,
this Agreement shall automatically terminate without the action of any Party,
and neither Party shall have any Liability or further obligation to the other
Party under this Agreement.

     

         Section 10.2 Relationship of Parties. This Agreement shall not be construed to
place the Parties in the relationship of legal representatives, partners, joint
venturers or agents of or with each other. No Party shall have any power to
obligate or bind the other Party in any manner whatsoever, except as
specifically provided herein. 

     

         Section 10.3 Groups. Each of Vishay and VPG shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth in this Agreement to be performed by the members of their
respective Groups.

     

         Section 10.4 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, facsimile number or e-mail address set
forth below (or at such other street address, facsimile number or e-mail address
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

     

    20

     

    

    
    

         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 

     

         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 10.5 Entire Agreement. This Agreement and the Exhibits hereto, as
well as any other agreements and documents referred to herein, 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 10.6 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. 

     

    21

     

    

    
    

         Section 10.7 Amendments. No provisions of this Agreement shall be
deemed amended, modified or supplemented by any Party, unless such amendment,
supplement or modification is in writing and signed by the authorized
representative of the Party against whom it is sought to enforce such amendment,
supplement or modification. 

     

         Section 10.8 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 10.9 Dispute Resolution. The procedures set forth in Article VIII of
the Separation Agreement shall apply to this resolution of all disputes arising
under this Agreement, provided, however, that the dispute resolution procedures set
forth in any Benefit Plan shall govern with respect to claims arising under such
Benefit Plan.

     

         Section 10.10 Construction. 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. 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: 

     

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

     

              (b) 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; 

     

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

     

              (d) 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; 

     

              (e) 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; 

     

              (f) “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; 

     

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

     

    22

     

    

    
    

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

     

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

     

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

     

         Section 10.11 Counterparts. This Agreement may be executed in more than
one counterpart, each of which shall be deemed an original instrument and all of
which together shall be considered one and the same agreement, and shall become
effective when one or more such counterparts have been signed by each of the
Parties and delivered to the other Parties. A facsimile or electronic signature
is deemed an original signature for all purposes under this Agreement.

     

         Section 10.12 Assignment. 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 10.12 shall be void. 

     

         Section 10.13 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any Party. Upon such determination, the Parties shall
negotiate in good faith in an effort to agree upon such a suitable and equitable
provision to effect the original intent of the Parties. 

     

         Section 10.14 Specific Performance. The Parties agree that the remedy at law for
any breach of this Agreement may be inadequate, and that, as between Vishay and
VPG, any Party by whom this Agreement is enforceable shall be entitled to
specific performance in addition to any other appropriate relief or remedy. Such
Party may, in its sole discretion, apply to a court of competent jurisdiction
for specific performance or injunctive or such other relief as such court may
deem just and proper in order to enforce this Agreement as between Vishay and
VPG, 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. 

     

    23

     

    

    
    

         Section 10.15 Waiver of Jury Trial. Subject to Section 10.9 and Section 10.14,
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 10.15. 

     

         Section 10.16 Consent to Jurisdiction. Subject to the provisions of Section 10.9,
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 10.4 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 10.16. Each of the Parties irrevocably waives any objection to
venue in the federal and state courts located in Philadelphia, Pennsylvania and
the City of New York, Borough of Manhattan of any Action, suit or proceeding
arising out of this Agreement, or the transactions contemplated hereby for which
it has submitted to jurisdiction pursuant to this Section 10.16, and waives any
claim that any such Action, suit or proceeding brought in any such court has
been brought in an inconvenient forum. 

     

         Section 10.17 Nonrecurring Costs and
Expenses. Notwithstanding
anything herein to the contrary, any nonrecurring costs and expenses incurred by
the Parties to effect the transactions contemplated hereby which are not
allocated pursuant to the terms of this Agreement shall be the responsibility of
the Party which incurs such costs and expenses. 

     

         Section 10.18 Press Releases; Public
Announcements. 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.

     

         Section 10.19 No Third-Party
Beneficiaries. Except for
the indemnification rights under this Agreement of any Vishay Indemnified Party
or any VPG Indemnified Party in their respective capacities as such: (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.

     

    24

     

    

    
    

    [SIGNATURE PAGE
FOLLOWS]

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    25 

     

    

    
    

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

     

     

     

    
      	VISHAY INTERTECHNOLOGY, INC.
	 
	 
	By:   	 
	
            	Name:
	
            	Title:
	 
	 
	 
	 
	VISHAY PRECISION GROUP, INC.
	 
	 
	By:	 
	
            	Name:
	
            	Title:

    

    

    
    

    SCHEDULE A

     

    Existing VPG Benefit Plans

     

    Measurements Group, Inc.
Tax Deferred Savings Plan

     

    

    
    

    SCHEDULE B

     

    A. Israel

     

         Section A.1 Israel. The following provisions apply to employees
resident in Israel or that otherwise are subject to Israeli law (an “Israeli
Employee”) 

     

              (a) Transfer of Employees. Prior to the Distribution Date, to the
extent not previously transferred, all Vishay Employees that are Israeli
Employees that are or as of the Distribution Date are expected to be, primarily
employed in the MGF Business, as well as any other Vishay Employees that are
Israeli Employees that Vishay and VPG determine should become VPG Employees,
including such employees who are on leave, shall be transferred to the VPG
Group. Each such employee is referred to as an “Israeli Transferring Employee.”

     

              (b) Consent to Transfer. Vishay or the applicable member of the
Vishay Group shall obtain from each Israeli Transferring Employee a written
consent to such transfer of employment.

     

              (c) Transfer of Liabilities. Each member of the VPG Group which employs
an Israeli Transferring Employee will assume all liabilities related to such
Israeli Transferring Employee, including all applicable Benefit Plans or
applicable accounts under such Benefit Plans, accrued sick and vacation days and
will credit each Israeli Transferring Employee with years of service with the
Vishay Group. Each member of the Vishay Group that is an employer of one or more
Israeli Transferring Employees shall enter into an agreement with the
corresponding member of the VPG Group to which such Israeli Transferring
Employee transferred employment, under which the member of the VPG Group agrees
to assume all liabilities relating to the Israeli Transferring Employee.

     

    B. Europe 

     

         Section B.1 The following provisions apply to employees resident in the United
Kingdom, France, Spain, Germany or Austria or that otherwise are subject to
applicable law of such countries (a “European Employee”) 

     

              (a) Transfer of Employees. Prior to the Distribution Date, to the
extent not previously transferred, all Vishay Employees that are European
Employees that are or as of the Distribution Date are expected to be, primarily
employed in the MGF Business, as well as any other Vishay Employees that are
European Employees that Vishay and VPG determine should become VPG Employees
shall be transferred to the VPG Group. Each such employee is referred to as a
“European Transferring Employee.” 

     

              (b) Benefits. All European Transferring Employees will
receive the same benefits from the applicable member of the VPG Group as such
individual received from the applicable member of the Vishay Group prior to his
or her Transfer Date. 

     

    

    
    

    C. Asia 

     

         Section C.1 The following provisions apply to employees resident in the Japan,
Taiwan, China or Singapore that otherwise are subject to applicable law of such
countries (an “Asian Employee”) 

     

              (a) Transfer of Employees. Prior to the Distribution Date, to the
extent not previously transferred, all Vishay Employees that are Asian Employees
that are or as of the Distribution Date are expected to be, primarily employed
in the MGF Business, as well as any other Vishay Employees that are Asian
Employees that Vishay and VPG determine should become VPG Employees shall be
transferred to the VPG Group. Each such employee is referred to as a “Asian
Transferring Employee.” 

     

              (b) Leased Employees. Prior to the Distribution Date, to the
extent not previously transferred, all Individuals are employed by an employment
agency and provide services to a member of the Vishay Group and who (i) would be
Asian Employees were they directly employed by the entity to which they provide
services and (ii) are or as of the Distribution Date are expected to be,
primarily providing services to the MGF Business, or (iii) whom Vishay and VPG
determine should provide services to the VPG Group, shall be referred to as
“Asian Leased Employees.” Each Asian Leased Employee, the applicable member of
the Vishay Group, the applicable member of the VPG Group and VPG shall enter
into an agreement under which the Asian Leased Employee will continue to be
employed by the employment agency, shall provide services to the VPG Group.

     

              (c) General. Except as set forth above, all Asian
Employees are employed by an entity that will be a member of the VPG Group.

     

    2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00173-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00173-of-00352.parquet"}]]