FORM OF MASTER SEPARATION AND DISTRIBUTION AGREEMENT between VISHAY INTERTECHNOLOGY, INC. and VISHAY PRECISION GROUP, INC.
FORM OF
between
VISHAY INTERTECHNOLOGY,
INC.
and
TABLE OF CONTENTS
Page | |||||
ARTICLE I | DEFINITIONS | 2 | |||
ARTICLE II | BUSINESS SEPARATION | 14 | |||
Section | 2.1 | Separation | 14 | ||
Section | 2.2 | [Intentionally omitted] | 15 | ||
Section | 2.3 | Transfer of Separated Assets; Assumption of Assumed Liabilities | 15 | ||
Section | 2.4 | Separated Assets | 15 | ||
Section | 2.5 | Liabilities | 17 | ||
Section | 2.6 | Excluded Assumed Liabilities | 19 | ||
Section | 2.7 | Deferred Separation Transactions | 19 | ||
Section | 2.8 | Consents and Governmental Approvals | 19 | ||
Section | 2.9 | Novation of the Assumed Liabilities | 20 | ||
Section | 2.10 | Documents Relating to Transfers of the Separated Assets and Assumption of the Assumed Liabilities | 21 | ||
Section | 2.11 | Termination of Agreements | 22 | ||
Section | 2.12 | Release of Security Interest | 22 | ||
Section | 2.13 | No Representation or Warranty | 23 | ||
Section | 2.14 | Use of Cash | 23 | ||
Section | 2.15 | Plan of Reorganization | 23 | ||
Section | 2.16 | Assets Transferred to Vishay | 23 | ||
Section | 2.17 | Net Cash | 24 | ||
ARTICLE III | THE DISTRIBUTION AND ACTIONS PENDING THE DISTRIBUTION | 25 | |||
Section | 3.1 | Transactions Prior to the Distribution | 25 | ||
Section | 3.2 | Conditions Precedent to Consummation of the Distribution | 26 | ||
Section | 3.3 | Documents to be Delivered by Vishay | 27 | ||
Section | 3.4 | Documents to be Delivered by VPG | 28 | ||
Section | 3.5 | Distribution | 28 | ||
ARTICLE IV | ADDITIONAL COVENANTS, FURTHER ASSURANCES AND OTHER MATTERS | 30 | |||
Section | 4.1 | Provision of Corporate Records | 30 | ||
Section | 4.2 | Further Assurance | 30 | ||
Section | 4.3 | Agreement For Exchange Of Information | 31 | ||
Section | 4.4 | Production of Witnesses; Records; Cooperation | 33 | ||
Section | 4.5 | Confidentiality | 33 | ||
Section | 4.6 | Privileged Matters | 34 | ||
Section | 4.7 | Cooperation with Respect to Know-how | 36 | ||
Section | 4.8 | VPG Exchangeable Notes and VPG Warrants | 36 | ||
Section | 4.9 | Tax Matters | 37 | ||
Section | 4.10 | Employee Matters | 37 | ||
Section | 4.11 | Intellectual Property | 37 |
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Section | 4.12 | Services Support | 37 | ||
Section | 4.13 | Real Property | 37 | ||
ARTICLE V | SURVIVAL AND INDEMNIFICATION | 38 | |||
Section | 5.1 | Mutual Release | 38 | ||
Section | 5.2 | Indemnification by Vishay | 39 | ||
Section | 5.3 | Indemnification by VPG | 40 | ||
Section | 5.4 | Tax Indemnification | 41 | ||
Section | 5.5 | Indemnification Obligations Net of Insurance Proceeds and Other Amounts | 41 | ||
Section | 5.6 | Procedures for Indemnification of Third Party Claims | 41 | ||
Section | 5.7 | Procedures for Indemnification of Direct Claims | 43 | ||
Section | 5.8 | Payments | 43 | ||
Section | 5.9 | Contribution | 44 | ||
Section | 5.10 | Remedies Cumulative | 44 | ||
Section | 5.11 | Survival of Indemnities | 44 | ||
ARTICLE VI | CONTINGENT GAINS AND CONTINGENT LIABILITIES | 44 | |||
Section | 6.1 | Contingent Gains | 44 | ||
Section | 6.2 | Exclusive Contingent Liabilities | 45 | ||
Section | 6.3 | Shared Contingent Liabilities | 45 | ||
Section | 6.4 | Payments | 46 | ||
Section | 6.5 | Procedures to Determine Status of Contingent Liability or Contingent Gain | 46 | ||
Section | 6.6 | Certain Case Allocation Matters | 47 | ||
ARTICLE VII | INSURANCE | 47 | |||
Section | 7.1 | Insurance Matters Generally | 47 | ||
Section | 7.2 | Shared Insurance Policies | 47 | ||
Section | 7.3 | Insurance for VPG Officers & Directors | 49 | ||
Section | 7.4 | Director and Officer Indemnification | 49 | ||
Section | 7.5 | VPG Insurance | 49 | ||
ARTICLE VIII | DISPUTE RESOLUTION | 49 | |||
Section | 8.1 | Agreement to Resolve Disputes | 49 | ||
Section | 8.2 | Dispute Resolution; Mediation | 50 | ||
Section | 8.3 | Arbitration | 51 | ||
Section | 8.4 | Continuity of Service and Performance | 52 | ||
Section | 8.5 | Limitation of Liability | 52 | ||
ARTICLE IX | Termination | 52 | |||
ARTICLE X | MISCELLANEOUS | 52 | |||
Section | 10.1 | Counterparts | 52 | ||
Section | 10.2 | Entire Agreement | 52 | ||
Section | 10.3 | Construction | 53 | ||
Section | 10.4 | Assignability | 54 |
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Section | 10.5 | Third Party Beneficiaries | 54 | ||
Section | 10.6 | Governing Law | 54 | ||
Section | 10.7 | Notices | 54 | ||
Section | 10.8 | Severability | 55 | ||
Section | 10.9 | Nonrecurring Costs and Expenses | 55 | ||
Section | 10.10 | Press Releases; Public Announcements | 55 | ||
Section | 10.11 | Survival of Covenants | 56 | ||
Section | 10.12 | Waiver of Default | 56 | ||
Section | 10.13 | Amendments | 56 | ||
Section | 10.14 | Specific Performance | 56 | ||
Section | 10.15 | Consent to Jurisdiction | 57 | ||
Section | 10.16 | Waiver of jury trial | 57 | ||
Annex A | VPG Group Balance Sheet | ||||
SCHEDULES | |||||
Schedule 1.1 | Capital Allocation Transactions | ||||
Schedule 1.2 | Exclusive VPG Contingent Liabilities | ||||
Schedule 1.3 | Separation Transactions | ||||
Schedule 1.4 | Shared Contingent Liabilities | ||||
Schedule 2.4(a)(iii) | Subsidiaries of VPG | ||||
Schedule 2.4(b)(i) | Excluded Assets | ||||
Schedule 2.5(b)(ii) | Excluded Assumed Liabilities | ||||
Schedule 2.5(b)(v) | Excluded Assumed Environmental Liabilities | ||||
Schedule 2.16 | Assets Being Transferred to Members of Vishay Group | ||||
Schedule 3.3(b) | Director and Officer Resignations by Members of Vishay Group | ||||
Schedule 3.4(b) | Director and Officer Resignations by Members of VPG Group | ||||
EXHIBITS | |||||
Exhibit A | Employee Matters Agreement | ||||
Exhibit B | IP License Agreement | ||||
Exhibit C | Lease Agreements | ||||
Exhibit D | Option Agreement | ||||
Exhibit E | Patent License Agreement | ||||
Exhibit F | RCK IP License Agreement | ||||
Exhibit G | RCK Manufacturing Agreement | ||||
Exhibit H | RCK Supply Agreement | ||||
Exhibit I | Secondment Agreement | ||||
Exhibit J | Supply Agreement | ||||
Exhibit K | Tax Matters Agreement | ||||
Exhibit L | Trademark License Agreement | ||||
Exhibit M | Transition Services Agreements |
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FORM OF
This Master Separation and Distribution Agreement (this “Agreement”) is entered into as of
___________ ___, 2010, by and between Vishay Intertechnology, Inc., a
corporation organized under the laws of the State of Delaware (“Vishay”), and Vishay Precision Group,
Inc., a corporation organized under the laws of the State of Delaware (“VPG”).
RECITALS
WHEREAS, the Board of Directors of Vishay (the “Vishay Board”) has determined it is
appropriate and desirable to separate Vishay and VPG into two publicly-traded
companies by separating from Vishay and transferring to VPG Vishay’s MGF
Business (as defined below), and related assets and liabilities, in a series of
transactions on the terms and conditions set forth herein.
WHEREAS, the Vishay Board has determined that it would be advisable and
in the best interests of Vishay and its stockholders for Vishay to distribute,
on a pro rata basis, (i) to the holders as of the Record Date (as defined below)
of the issued and outstanding shares of Vishay’s common stock, par value $0.10
per share (the “Vishay common stock”), all of the issued and outstanding shares
of VPG’s common stock, par value $0.10 per share (the “VPG common stock”), owned by Vishay as of the Distribution
Date (as defined below) and (ii) to the holders as of the Record Date of the
issued and outstanding shares of Vishay’s Class B common stock, par value $0.10
per share (the “Vishay Class B common stock”, together with the Vishay common stock, the
“Vishay Stock”), all of the issued and outstanding shares
of VPG’s Class B common stock, par value $0.10 per share (the “VPG Class B common stock”, together with VPG common stock, the
“VPG Stock”), owned by Vishay as of the Distribution
Date, in each case, as further described herein (collectively, the “Distribution”);
WHEREAS, Vishay and VPG intend that the Separation (as defined below) and
the Distribution will qualify for United States federal income tax purposes as
transactions that are generally tax free under, among other provisions, Sections
355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the
“Code”) and hereby adopt this Agreement as a
“plan of reorganization”; and
WHEREAS, the parties intend in this Agreement to set forth the principal
arrangements between them regarding the Separation and the Distribution and
certain other agreements that will govern the relationship of Vishay and VPG
following the Distribution.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
agreements, representations and warranties contained herein, and for other good
and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree, intending to be legally bound, as
follows:
ARTICLE I
DEFINITIONS
Capitalized terms used but not defined herein shall have the meanings set
forth in this Article I.
“AAA” has the meaning set forth in Section 8.3(a) of this Agreement.
“Action” means any claim, demand, action, suit,
counter suit, arbitration, inquiry, proceeding or investigation by or before any
Governmental Authority and shall include any negotiations in settlement of or in
lieu of an Action.
“Actual VPG Net Cash” has the meaning set forth in Section 2.17(a) of this Agreement.
“Affiliate” means, as applied to any Person, any other
Person that, directly or indirectly, controls, is controlled by, or is under
common control with that Person as of the date on which or at any time during
the period for when such determination is being made. For purposes of this
definition, “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
other interests, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Agent” means the distribution agent to be appointed
by Vishay to distribute to the stockholders of Vishay pursuant to the
Distribution all of the shares of VPG Stock.
“Agreement” has the meaning set forth in the preamble of
this Agreement.
“Ancillary Agreements” means the (i) Tax Matters Agreement, (ii)
Transition Services Agreements, (iii) Employee Matters Agreement, (iv) License
Agreements, (v) Lease Agreements, (vi) RCK Agreements, (vii) Strain Gage
Agreements, (viii) Supply Agreements, and (ix) Secondment Agreements, and, in
the singular, means any one of them.
“Applicable Law” means any applicable law, statute, rule or
regulation of any Governmental
Authority, or any outstanding order, judgment, injunction, ruling or decree by
any Governmental Authority.
“Assets” means assets, properties and rights
(including goodwill), wherever located (including in the possession of vendors
or other third parties or elsewhere), whether real, personal or mixed, tangible,
intangible or contingent, in each case whether or not recorded or reflected or
required to be recorded or reflected on the books and records or financial
statements of any Person, including the following:
(i) all accounting and other books, records and files whether in paper,
microfilm, microfiche, computer tape or disc, magnetic tape or any other form;
(ii) all computers and other electronic data processing equipment,
fixtures, machinery, equipment, furniture, office equipment, motor vehicles and
other transportation equipment, special and general tools, prototypes and models
and other tangible personal property, wherever located that are owned or leased
by the Person, together with any express or implied warranty by the
manufacturers, sellers or lessors of any item or component part
thereof;
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(iii) all inventories, wherever located, including all finished goods,
(whether or not held at a location or facility or in transit), work in process,
raw materials, spare parts and all other materials and supplies to be used or
consumed in the production of finished goods;
(iv) all interests in real property of whatever nature, including any
Encumbrances thereto, whether as owner, mortgagee or holder of a Security
Interest in real property, lessor, sublessor, lessee, sublessee or otherwise;
(v) all interests in any capital stock or other equity interests of any
Subsidiary or any other Person; all bonds, notes, debentures or other securities
issued by any Subsidiary or any other Person; all loans, advances or other
extensions of credit or capital contributions to any Subsidiary or any other
Person; and all other investments in securities of any Person;
(vi) all license agreements, leases of personal property, open purchase
orders for raw materials, supplies, parts or services, unfilled orders for the
manufacture and sale of products and other contracts, agreements or commitments;
(vii) all deposits and prepaid expenses, letters of credit and
performance and surety bonds, claims for refunds and rights of set-off in
respect thereof;
(viii) all written technical Information, data, specifications, research
and development Information, engineering drawings, operating and maintenance
manuals, and materials and analyses whether prepared by Affiliates, by
consultants or other third parties;
(ix) all Intellectual Property and licenses from third Persons granting
the right to use any Intellectual Property;
(x) all computer applications, programs and other software (whether in
source code, object code or other form), including operating software, network
software, firmware, middleware, design software, design tools, compilations and
data, technology supporting the foregoing, systems documentation, and user and
training materials and instructions related to any of the foregoing;
(xi) all cost Information, sales and pricing data, customer prospect
lists, supplier records, customer and supplier lists, customer and vendor data,
correspondence and lists, product literature, artwork, design, development and
manufacturing files, vendor and customer drawings, formulations and
specifications, quality records and reports and other books, records, studies,
surveys, reports, plans and documents;
(xii) all trade accounts and notes receivable and other rights to payment
from customers and all security for such accounts or rights to payment,
including all trade accounts receivable representing amounts receivable in
respect of goods shipped or products sold or otherwise disposed of or services
rendered to customers, (b) all other accounts and notes receivable and all
security for such accounts or notes, and (c) any claim, remedy or other right
relating to any of the foregoing;
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(xiii) all rights under Contracts, all claims or rights against any
Person arising from the ownership of any Asset, all rights in connection with
any bids or offers and all claims, choses in action or similar rights, whether
accrued or contingent;
(xiv) all rights under insurance policies and all rights in the nature of
insurance, indemnification or contribution, including Insurance Proceeds;
(xv) all licenses, permits, approvals and authorizations which have been
issued by any Governmental Authority; and
(xvi) cash or cash equivalents, bank accounts, lock boxes and other
deposit arrangements.
“Assumed Liabilities” has the meaning set forth in Section 2.5(a) of this Agreement.
“Auditor” has the meaning set forth in Section 2.17(b) of this Agreement.
“Business” means the Vishay Business or the MGF
Business, as the context requires.
“Business Day” means any day other than a Saturday, Sunday
or a day on which commercial banks are authorized or required to close in New
York, New York or in Philadelphia, Pennsylvania.
“Capital Allocation
Transactions” means the
repayment of outstanding indebtedness owed by one or more members of the VPG
Group to one or more members of the Vishay Group or by one or more members of
the Vishay Group to one or more members of the VPG Group or any dividend or
other distributions by one or more members of the VPG Group to one or more
members of the Vishay Group or a capital contribution by one or more members of
the Vishay Group to one or more members of the VPG Group, as described in
Schedule 1.1, and in the singular means any one such
transaction. The Capital Allocation Transactions are intended to proceed in
accordance with and pursuant to the steps set forth in the request for a private
letter ruling submitted by Vishay to the IRS on December 23, 2009, as amended
from time to time.
“Class B Common Stock Distribution
Ratio” has the meaning set
forth in Section 3.5(c)(iii) of this Agreement.
“Code” has the meaning set forth in the recitals to
this Agreement.
“Commission” means the Securities and Exchange
Commission.
“Common Stock Distribution
Ratio” has the meaning set
forth in Section 3.5(c)(iii) of this Agreement.
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“Confidential Information” means all proprietary, design or operational
Information, data or material including, without limitation: (a) specifications,
ideas and concepts for goods and services; (b) manufacturing specifications and
procedures; (c) design drawings and models; (d) materials and material
specifications; (e) quality assurance policies, procedures and specifications;
(f) customer, client, manufacturer and supplier Information; (g) computer
software and derivatives thereof relating to design development or manufacture
of goods; (h) training materials and Information; (i) inventions, devices, new
developments, methods and processes, whether patentable or unpatentable and
whether or not reduced to practice; (j) all other know-how, methodology,
procedures, techniques and Trade Secrets; (k) proprietary earnings reports and
forecasts; (l) proprietary macro-economic reports and forecasts; (m) proprietary
marketing, advertising and business plans, objectives and strategies; (n)
proprietary general market evaluations and surveys; (o) proprietary financing
and credit-related Information; (p) other copyrightable or patented works; and
(q) all similar and related Information in whatever form; in each case, of one
party which, prior to or following the Distribution Date, has been disclosed by
Vishay or members of its Group on the one hand, or VPG or members of its Group,
on the other hand, in written, oral (including by recording), electronic, or
visual form to, or otherwise has come into the possession of, the other Group,
including pursuant to the access provisions of Section 4.3 hereof or any other provision of this
Agreement.
“Consents” means any consents, waivers or approvals, or
notification requirements.
“Contingent Claim Committee” means a committee composed of one
representative designated from time to time by each of Vishay and VPG that shall
be established in accordance with Section 6.5.
“Contingent Gain” means any claim or right of any member of
the Vishay Group or the VPG Group, whenever arising, against any Person, other
than a Person released or intended to be released from a claim or other right
under Article V; provided, that (i) such claim or right
has accrued as of the Distribution Date, and (ii) the existence or scope of the
claim or right against such other Person was not acknowledged, fixed or
determined in any material respect as of the Distribution Date as a result of a
dispute or as a result of any other uncertainty due to the failure of such claim
or right to have been discovered or asserted as of the Distribution Date. For
purposes of the foregoing, a claim or right shall be deemed to have accrued as
of the Distribution Date if all the elements of the claim necessary for its
assertion shall have occurred on or prior to the Distribution Date such that the
claim or right, were it to have been asserted in an Action on or prior to the
Distribution Date, would not be dismissed by a court on ripeness or similar
grounds, regardless of whether there was any Action pending, threatened or
contemplated as of the Distribution Date with respect thereto.
“Contingent Liability” means any Liability of a member of the
Vishay Group or the VPG Group, whenever arising, against any Person unless that
Person has been released or the Liability to that Person is intended to be
released under Article V; provided, that (i) such Liability has accrued as of
the Distribution Date and (ii) the existence or scope of such Liability was not
acknowledged, fixed or determined in any material respect as of the Distribution
Date as a result of a dispute or as a result of any other uncertainty due to the
failure of such Liability to have been discovered or asserted as of the
Distribution Date. For purposes of the foregoing, a Liability shall be deemed to
have accrued as of the Distribution Date if all the elements necessary for the
assertion of a claim with respect to such Liability shall have occurred on or
prior to the Distribution Date such that the claim, were it to have been
asserted in an Action on or prior to the Distribution Date, would not be
dismissed by a court on ripeness or similar grounds.
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“Contract” means any contract, agreement, lease,
purchase and/or commitment, license, consensual obligation, promise or
undertaking (whether written or oral and whether express or implied) that is
legally binding on any Person or any part of its property under Applicable Law,
including all claims or rights against any Person, choses in action and similar
rights, whether accrued or contingent with respect to any such contract,
agreement, lease, purchase and/or commitment, license, consensual obligation,
promise or undertaking, but excluding this Agreement and any Ancillary
Agreement, save as otherwise expressly provided in this Agreement or in any
Ancillary Agreement.
“Determination Date” has the meaning set forth in Section 2.17(b) of this Agreement.
“Determination Request” has the meaning set forth in Section 6.5(b) of this Agreement.
“Distribution” has the meaning set forth in the recitals to
this Agreement.
“Distribution Date” means the date determined by the Vishay
Board as the date on which the Distribution shall be effected.
“Dispute” has the meaning set forth in Section 8.2(a) of this Agreement.
“Dispute Notice” has the meaning set forth in Section 8.2(a) of this Agreement.
“Effective Time” has the meaning set forth in Section 3.5(b) of this Agreement.
“Employee Matters Agreement” means the Employee Matters Agreement
substantially in the form attached hereto as Exhibit A. From and after the Distribution Date, the
Employee Matters Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit A, as amended and/or modified from time to time
in accordance with its terms.
“Encumbrance” means, with respect to any Asset, mortgages,
liens, hypothecations, pledges, security interests, easements, encroachments,
rights to acquire, use restrictions, transfer restrictions or other encumbrances
of any kind in respect of such Asset, whether or not filed, recorded or
otherwise perfected under Applicable Law.
“Environmental Law” means any federal, state, local, or foreign
law, regulation, order, judgment, decree, permit, authorization, common law or
agency requirement whether now existing or hereafter enacted or promulgated
relating to: (A) the protection, investigation, or restoration of the
environment, health, safety or natural resources; (B) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance; or
(C) noise, odor, indoor air, employee exposure, wetlands, pollution,
contamination or any injury or threat of injury to persons or property relating
to any Hazardous Substance; including but not limited to the Comprehensive
Environmental, Compensation and Liability Act of 1980 as amended, the Resource
Conservation and Recovery Act, the Clean Air Act as amended, the Toxic
Substances Control Act as amended, the Occupational Safety and Health Act of
1970 and comparable local, state and foreign statutes. As used herein,
“Hazardous Substance” means any substance that is: (A) listed, classified or
regulated pursuant to any Environmental Law; (B) any petroleum product or
by-product, asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyl, radioactive material or radon; and (C) any other
substance which is subject to regulatory Action by any Governmental Authority in
connection with any Environmental Law.
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“Environmental Liabilities” means all Liabilities relating to, arising
out of or resulting from any Environmental Law or Contract relating to
environmental, health or safety matters (including all removal, remediation or
cleanup costs, investigatory costs, governmental response costs, natural
resources damages, property damages, personal injury damages, costs of
compliance with any product take back requirements or with any settlement,
judgment or other determination of Liability and indemnity, contribution or
similar obligations) and all costs and expenses, interest, fines, penalties or
other monetary sanctions in connection therewith.
“Exchange Act” means the Securities Exchange Act of 1934,
as amended, together with the rules and regulations promulgated thereunder.
“Excluded Assets” has the meaning set forth in Section 2.4(b) of this Agreement.
“Excluded Assumed
Liabilities” has the
meaning set forth in Section 2.5(b) of this Agreement.
“Exclusive Vishay Contingent
Gain” means any Contingent
Gain other than an Exclusive VPG Contingent Gain or a Shared Contingent
Gain.
“Exclusive Vishay Contingent
Liability” means any
Contingent Liability other than an Exclusive VPG Contingent Liability or a
Shared Contingent Liability.
“Exclusive VPG Contingent
Gain” means any Contingent
Gain if such Contingent Gain relates exclusively to the MGF Business or if such
Contingent Gain is expressly assigned to any member of the VPG Group pursuant to
this Agreement or any Ancillary Agreement. As of the date of this Agreement, the
parties are not aware of the existence of any Exclusive VPG Contingent
Gains.
“Exclusive VPG Contingent
Liability” means any
Contingent Liability if such Contingent Liability relates exclusively to the MGF
Business, including the matters listed or described on Schedule 1.2 hereto, or if such Contingent Liability is
expressly assigned to any member of the VPG Group pursuant to this Agreement or
any Ancillary Agreement.
“final determination” has the meaning set forth in Section 5.8 of this Agreement.
“Form 10 Registration
Statement” means the
registration statement on Form 10 (including any and all exhibits filed thereto)
to be filed under the Exchange Act, pursuant to which the shares of VPG Stock to
be issued in VPG Distribution will be registered, together with all amendments
thereto.
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“GAAP” has the meaning set forth in Section 2.4(a)(v) of this Agreement.
“Governmental Approvals” means any notices, reports or other filings
to be made, or any Consents, registrations, approvals, permits or authorizations
to be obtained from, any Governmental Authority.
“Governmental Authority” means any U.S. or non-U.S. federal, state,
local, foreign or international court, arbitration or mediation tribunal,
government, department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority.
“Group” means the Vishay Group or the VPG Group, as
the context requires.
“Indemnified Party” has the meaning set forth in Section 5.5(a) of this Agreement.
“Indemnifying Party” has the meaning set forth in Section 5.5(a) of this Agreement.
“Indemnity Payment” has the meaning set forth in Section 5.5(a) of this Agreement.
“Information” means information, whether or not patentable
or copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data, but in any case excluding back-up
tapes.
“Information Statement” means the information statement forming a
part of the Form 10 Registration Statement.
“Insurance Policy” means any insurance policies and insurance
Contracts, including without limitation general liability, property and
casualty, workers’ compensation, automobile, marine, directors & officers
liability, errors and omissions, employee dishonesty and fiduciary liability
policies and contracts, but excluding life and other benefits policies or
Contracts, whether in the nature of primary, excess, umbrella or self-insurance
overage, together with all rights, benefits and privileges thereunder.
“Insurance Proceeds” means those monies (in each case net of any
costs or expenses incurred in the collection thereof and net of any applicable
premium adjustments (including reserves and retrospectively rated premium
adjustments)): (a) received by an insured from an insurance carrier; or (b) paid
by an insurance carrier on behalf of the insured, net of any applicable premium
deductible or self insured retention.
“Intellectual Property” means all domestic and foreign patents and
patent applications, together with any continuations, continuations-in-part or
divisional applications thereof, and all patents issuing thereon (including
reissues, renewals and re-examinations of the foregoing); design patents;
invention disclosures; mask works; all domestic and foreign copyrights, whether
or not registered, together with all copyright applications and registrations
therefor; all domain names, together with any registrations therefor and any
goodwill relating thereto; all domestic and foreign trademarks, service marks,
trade names, and trade dress, in each case together with any applications and
registrations therefor and all goodwill relating thereto; all Trade Secrets,
commercial and technical Information, know-how, proprietary or Confidential
Information, including engineering, production and other designs, notebooks,
processes, drawings, specifications, formulae, and technology; computer and
electronic data processing programs and software (object and source code), data
bases and documentation thereof; all inventions (whether or not patented); all
utility models; all registered designs, certificates of invention and all other
intellectual property under the laws of any country throughout the
world.
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“IP License Agreement” means the IP License Agreement, between VPG,
as licensor, and Vishay or a Subsidiary of Vishay, as licensee, for the license
of certain Intellectual Property relating to the manufacture of strain gages,
substantially in the form of Exhibit B. From and after the Distribution Date, the IP
License Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit B, as amended and/or modified from time to time
in accordance with its terms.
“IRS” means the Internal Revenue Service.
“Lease Agreements” means the real property lease agreements
between one or more members of the Vishay Group, on the one hand, and one or
more members of the VPG Group on the other hand, listed on Exhibit C, substantially in the forms attached to such
Exhibit. From and after the Distribution Date, the Lease Agreements shall refer
to the real property lease agreements substantially in the form attached to
Exhibit C, each as amended and/or modified from time to
time in accordance with its terms.
“Liability” means, with respect to any Person, any and
all losses, claims, charges, debts, demands, Actions, causes of action, suits,
damages, obligations, payments, costs and expenses, sums of money, accounts,
reckonings, bonds, specialties, indemnities and similar obligations, exoneration
covenants, obligations under Contracts, guarantees, make whole agreements and
similar obligations, and other liabilities and requirements, including all
contractual obligations, whether absolute or contingent, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued, known or unknown, joint or
several, whenever arising, and including those arising under any Applicable Law,
Action, threatened or contemplated Action (including the costs and expenses of
demands, assessments, judgments, settlements and compromises relating thereto
and attorneys’ fees and any and all costs and expenses, whatsoever reasonably
incurred in investigating, preparing or defending against any such Actions or
threatened or contemplated Actions) or order of any Governmental Authority or
any award of any arbitrator or mediator of any kind, and those arising under any
Contract, in each case, whether or not recorded or reflected or otherwise
disclosed or required to be recorded or reflected or otherwise disclosed, on the
books and records or financial statements of any Person, including any Liability
for Taxes.
“License Agreements” mean the Trademark License Agreement, the
Patent License Agreement, the IP License Agreement and the RCK IP License
Agreement.
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“MGF Business” means the measurements and foil resistor
business owned and operated, indirectly or directly, by Vishay prior to the
Distribution, to be owned and operated, directly or indirectly, by VPG after the
Distribution.
“NYSE” has the meaning set forth in Section 3.1(e) of this Agreement.
“Option Agreement” means the Option Agreement, between VPG, as
optionee, and Vishay or a Subsidiary of Vishay, as optionor relating to VPG’s
option to purchase assets relating to the strain gage business operated by a
Subsidiary of Vishay, substantially in the form of Exhibit D. From and after the Distribution Date, the
Option Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit D, as amended and/or modified from time to time
in accordance with its terms.
“Party,” whether or not capitalized, means Vishay or
VPG.
“Patent License Agreement” means the Patent License Agreement, between
Vishay or a Subsidiary of Vishay, as licensor, and VPG, as licensee,
substantially in the form of Exhibit E. From and after the Distribution Date, the
Patent License Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit E, as amended and/or modified from time to time
in accordance with its terms.
“Person” (whether or not initially capitalized) means
any corporation, limited liability company, partnership, firm, joint venture,
entity, natural person, trust, estate, unincorporated organization, association,
enterprise, government or political subdivision thereof, or Governmental
Authority.
“Privilege” has the meaning set forth in Section 4.6(a) of this Agreement.
“Privileged Information” has the meaning set forth in Section 4.6(a) of this Agreement.
“RCK Agreements” means the RCK IP License Agreement, RCK
Manufacturing Agreement and the RCK Supply Agreement.
“RCK IP License Agreement”
means the IP License Agreement, between VPG or a Subsidiary of VPG, as
licensor, and Vishay or a Subsidiary of Vishay, as licensee, for the license of
certain Intellectual Property relating to the manufacture of RCK HR foil
resistor products, substantially in the form of in the form of Exhibit F. From and after the
Distribution Date, the RCK IP License Agreement shall refer to the agreement
executed and delivered substantially in the form attached hereto as Exhibit F, as amended and/or modified
from time to time in accordance with its terms.
“RCK Manufacturing Agreement” means the Manufacturing Agreement, between
VPG or a Subsidiary of VPG, as buyer, and Vishay or a Subsidiary of Vishay, as
manufacturer, relating to the manufacture of specified RCK HR foil resistor
products, substantially in the form of Exhibit G. From and after the Distribution Date, the
RCK Manufacturing Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit G, as amended and/or modified from time to time
in accordance with its terms.
“RCK Supply Agreement” means the Supply Agreement, between VPG or a
Subsidiary of VPG, as supplier, and Vishay or a Subsidiary of Vishay, as buyer,
relating to the sale and manufacture of specified RCK foil resistor chips,
substantially in the form of Exhibit H. From and after the Distribution Date, the
RCK Supply Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit H, as amended and/or modified from time to time
in accordance with its terms.
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“Record Date” means the close of business on the date to
be determined by Vishay’s Board in its sole and absolute discretion as the
record date for determining the stockholders of Vishay entitled to receive
shares of VPG Stock in the Distribution.
“Record Holder” mean a holder of record of Vishay Stock as
of the close of business on the Record Date.
“Registrar and Transfer
Agent” has the meaning set
forth in Section 3.5(c)(i) of this Agreement.
“Response” has the meaning set forth in Section 8.2(a) of this Agreement.
“Secondment Agreement” means the secondment agreement between one
or more members of the Vishay Group, as the seconding party, on the one hand,
and one or more members of the VPG Group on the other hand, listed on
Exhibit I, in the substantially in the forms attached
to such Exhibit. From and after the Distribution Date, the Secondment Agreement
shall refer to the secondment agreement substantially in the form attached to
Exhibit I, as amended and/or modified from time to time
in accordance with its terms.
“Senior Party Representative” has the meaning set forth in Section 8.2(a) of this Agreement.
“Separated Assets” has the meaning set forth in Section 2.4(a) of this Agreement.
“Separation” means the multi-step process described in
Article II, including the Separation Transactions and
the Capital Allocation Transactions, by which the MGF Business shall be
transferred, directly or indirectly, from Vishay and members of the Vishay Group
to VPG and members of the VPG Group.
“Separation Transactions” means the transfers of assets, shares and
other equity interests to be performed by Vishay, VPG and members of each
respective Group prior to the Distribution, in the manner referred to
Schedule 1.3 hereto and, in the singular, means any one
such transaction. The Separation Transactions are intended to proceed in
accordance with and pursuant to the steps set forth in the request for a private
letter ruling submitted by Vishay to the IRS on December 23, 2009, as amended
from time to time.
“Shared Contingent Gain” means, without duplication, any Contingent
Gain that is not an Exclusive Vishay Contingent Gain or an Exclusive VPG
Contingent Gain and shared between the Groups.
“Shared Contracts” means Contracts with a third party providing
for rights and obligations of both one or more members of the Vishay Group and
one or more members of the VPG Group.
“Shared Contingent Liability” means, without duplication, any Contingent
Liability that is not an Exclusive Vishay Contingent Liability or an Exclusive
VPG Contingent Liability and shared between the Groups, which Shared
Contingent Liabilities shall be allocated as set forth in this Agreement and
described on Schedule
1.4.
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“Shared VPG Percentage” means the proportion of the Shared
Contingent Gain or the Shared Contingent Liability, as applicable, that relates
to the MGF Business, provided that, if such Shared Contingent Gain or Shared
Contingent Liability, as the case may be, cannot reasonably be allocated, then
the Shared VPG Percentage shall be 10%.
“Shared Percentage” means the Shared Vishay Percentage or the
Shared VPG Percentage, as the case may be.
“Shared Vishay Percentage” means the proportion of the Shared
Contingent Gain or the Shared Contingent Liability, as applicable, that relates
to the Vishay Business; provided that if such Shared Contingent Gain or Shared
Contingent Liability, as the case may be, cannot reasonably be allocated, then
the Shared VPG Percentage shall be 90%.
“Strain Gage Agreements” means the IP License Agreement and the
Option Agreement.
“Subsidiary” of any Person means a corporation or other
organization whether incorporated or unincorporated of which at least a majority
of the securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its Subsidiaries;
provided, however, that no Person that is not directly or
indirectly wholly-owned by any other Person shall be a Subsidiary of such other
Person unless such other Person controls, or has the right, power or ability to
control, that Person.
“Supply Agreements” means the Supply Agreements, between one or
more members of the Vishay Group, on the one hand, and one or more members of
the VPG Group, on the other hand, listed on Exhibit J, substantially in the form attached to such
Exhibit J. From and after the Distribution Date, the
Supply Agreement shall refer to the supply agreement substantially in the form
attached to Exhibit J, as amended and/or modified from time to time
in accordance with its terms.
“Taxes” has the meaning set forth in the Tax Matters
Agreement.
“Tax Matters Agreement” means the Tax Matters Agreement
substantially in the form attached hereto as Exhibit K. From and after the Distribution Date, the
Tax Matters Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit K, as amended and/or modified from time to time
in accordance with its terms.
“Third Party Claim” has the meaning set forth in Section 5.6(a) of this Agreement.
“Trade Secrets” means Information, including a formula,
program, device, method, technique, process or other Confidential Information
that derives independent economic value, actual or potential, from not being
generally known to the public or to other Persons who can obtain economic value
from its disclosure or use and is the subject of efforts that are reasonable,
under the circumstances, to maintain its secrecy.
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“Trademark License Agreement” means the Trademark License Agreement,
between Vishay, as licensor, and VPG, as licensee, substantially in the form of
Exhibit L. From and after the Distribution Date, the
Trademark License Agreement shall refer to the agreement executed and delivered
substantially in the form attached hereto as Exhibit L, as amended and/or modified from time to time
in accordance with its terms.
“Transition Services
Agreements” means the
transition services agreements between on or more members of the Vishay Group,
on the one hand, and one or more members of the VPG Group, on the other hand,
listed on Exhibit M, substantially in the forms attached to such
Exhibit. From and after the Distribution Date, the Transition Services
Agreements shall refer to the transition services agreements substantially in
the form attached as Exhibit M, each as amended and/or modified from time to
time in accordance with its terms.
“Vishay” has the meaning set forth in the preamble of
this Agreement.
“Vishay Board” has the meaning set forth in the recitals to
this Agreement.
“Vishay Business” means, collectively, any and all businesses
other than the MGF Business owned and operated, directly or indirectly, by
Vishay (including without limitation the strain gage business operated by Vishay
S.A.).
“Vishay Class B common stock” has the meaning set forth in the recitals to
this Agreement.
“Vishay common stock” has the meaning set forth in the recitals to
this Agreement.
“Vishay Group” means Vishay and each Subsidiary of Vishay
and each other Person that is controlled directly or indirectly by Vishay
immediately after the Distribution.
“Vishay Indemnified Parties” has the meaning set forth in Section 5.3 of this Agreement.
“Vishay Stock” has the meaning set forth in the recitals to
this Agreement.
“VPG” has the meaning set forth in the preamble of
this Agreement.
“VPG Class B common stock” has the meaning set forth in the recitals to
this Agreement.
“VPG common stock” has the meaning set forth in the recitals to
this Agreement.
“VPG Contracts” means the following Contracts to which
Vishay or any member of the Vishay Group is a party or by which it or any of its
Assets is bound, whether or not in writing, except for any such Contract that is
explicitly retained by Vishay or any member of the Vishay Group pursuant to any
provision of this Agreement or any Ancillary Agreement: (i) any Contract entered
into in the name of, or expressly on behalf of, the MGF Business; (ii) any
Contract that relates exclusively to the MGF Business; (iii) the portion of any
Shared Contract to the extent attributable to VPG or the MGF Business; (iv) any
Contract that is otherwise expressly contemplated pursuant to this Agreement or
any of the Ancillary Agreements to be assigned to VPG or any member of the VPG
Group; (v) any guarantee, indemnity, representation, warranty or other Liability
of any member of the Vishay Group or the VPG Group in respect of any VPG
Contract, any Assumed Liability or the MGF Business (including guarantees of
financing incurred by customers or other third parties in connection with
purchases of products or services from the MGF Business); and (vi) any other
Contract as agreed between the parties.
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“VPG Group” means VPG, each Subsidiary of VPG and each
other Person that is controlled directly or indirectly by VPG immediately after
the Distribution.
“VPG Group Balance Sheet” means the unaudited pro forma combined and
consolidated balance sheet of the VPG Group at [March 31, 2010],
substantially in the form attached as Annex A.
“VPG Indemnified Parties” has the meaning set forth in Section 5.2 of this Agreement.
“VPG Information” has the meaning set forth in Section 4.6(a) of this Agreement.
“VPG Net Cash” means the amount of (i) all cash and cash
equivalents less, without duplication, the sum of (ii) all notes payable to
banks, (iii) all other indebtedness owed to third parties and (iv) the principal
amount of the exchangeable notes due 2102 of Vishay allocated to VPG, in the
case of clauses (i), (ii) and (iii) of VPG and its Subsidiaries on a
consolidated basis, and in each case as recorded in accordance with GAAP.
“VPG Net Cash Statement” has the meaning set forth in Section 2.17(a) of this Agreement.
“VPG Stock” has the meaning set forth in the recitals to
this Agreement.
“Wholly-owned Subsidiary” of a Person means a Subsidiary of that
Person substantially all of whose voting securities and outstanding equity
interest are owned either directly or indirectly by such Person or one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries.
ARTICLE II
BUSINESS SEPARATION
Section 2.1 Separation. Prior to the Distribution, each of Vishay
and VPG shall, and shall cause the applicable members of its Group to, complete
the Separation Transactions and the Capital Allocation Transactions and
otherwise take all actions necessary to implement the Separation on the terms
and subject to the conditions set forth in this Agreement. The parties
acknowledge that the Separation is intended to result in VPG, directly or
indirectly, operating the MGF Business, owning the Separated Assets and assuming
the Assumed Liabilities as set forth in this Article II. As promptly as practicable after the
Separation is complete and subject to the conditions set forth in Section 3.2, the parties shall take, or cause to be
taken, all actions that are necessary or appropriate to effectuate the
Distribution.
Section 2.2 [Intentionally
omitted]
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Section 2.3 Transfer of Separated Assets; Assumption of
Assumed Liabilities. (a)
Without limiting the generality of Section 2.1, on the terms and subject to the conditions
set forth in this Agreement, and in furtherance of the Separation, on or prior
to the Distribution Date:
(i) Vishay shall, and shall cause its applicable Subsidiaries to, cause the
Separated Assets to be contributed, assigned, transferred, conveyed and
delivered, directly or indirectly, to VPG and its Subsidiaries, as applicable,
and VPG shall, and shall cause its applicable Subsidiaries to, accept from
Vishay and its Subsidiaries, all of Vishay’s and its Subsidiaries’ rights, title
and interest in and to all of the Separated Assets, which will result in VPG
owning, directly or indirectly, the MGF Business.
(ii) VPG shall, and shall cause its applicable Subsidiaries to, accept, assume
and agree to faithfully perform, discharge and fulfill all of the Assumed
Liabilities in accordance with their respective terms. VPG shall, directly or
indirectly, be responsible for all of the Assumed Liabilities, regardless of
when or where such Assumed Liabilities arose or arise, or whether the facts on
which they are based occurred prior to or subsequent to the Distribution Date,
regardless of where or against whom such Assumed Liabilities are asserted or
determined or whether asserted or determined prior to the Distribution Date.
(b) It is the intention of parties that the transfer of the Separated Assets
and the assumption of the Assumed Liabilities, as aforesaid, shall be
accomplished through the Separation Transactions, subject to the provisions of
Sections 2.7, 2.8, 2.9 and 2.10.
Section 2.4 Separated Assets. (a) For purposes of this Agreement,
“Separated Assets” means, without duplication, those Assets
used or contemplated to be used or held for use exclusively or primarily in the
ownership, operation or conduct of the MGF Business or relating exclusively or
primarily to the MGF Business, including the following:
(i) all Assets (including VPG Contracts) expressly identified in this
Agreement, in any Ancillary Agreement or in any Schedule hereto or thereto,
including those referred to on Schedule
1.3, as Assets to be transferred to, or retained by, VPG or any other
member of the VPG Group;
(ii) any Exclusive VPG Contingent Gain or any Shared VPG Percentage of a
Shared Contingent Gain;
(iii) the outstanding capital stock, units or other equity interests held by
VPG in its Subsidiaries and listed on Schedule 2.4(a)(iii) and the Assets
owned by such Subsidiaries;
(iv) all Assets properly reflected on the VPG Group Balance Sheet, excluding
Assets disposed of by Vishay or any other Subsidiary or entity controlled by
Vishay subsequent to the date of the VPG Group Balance Sheet;
(v) all Assets that have been written off, expensed or fully depreciated by
Vishay or any Subsidiary or entity controlled by Vishay that, had they not been
written off, expensed or fully depreciated, would have been reflected on the VPG
Group Balance Sheet in accordance with accounting principles generally accepted
in the United States (“GAAP”);
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(vi) all Assets acquired by Vishay or any Subsidiary or entity controlled by
Vishay after the date of the VPG Group Balance Sheet and that would be reflected
on the balance sheet of VPG as of the Distribution Date, if such balance sheet
were prepared in accordance with GAAP;
(vii) all Assets transferred to VPG or any member of the VPG Group pursuant to
Section 4.2; provided, however, that any such transfer shall take effect
under Section 4.2 and not under this Section 2.4; and
(viii) any and all Assets owned or held immediately prior to the Distribution
Date by Vishay or any other member of the Vishay Group that are used in the MGF
Business. The intention of this clause (viii) is only to rectify any inadvertent
omission of transfer or conveyance of any Assets that, had the parties given
specific consideration to such Asset as of the date hereof, would have otherwise
been classified as a Separated Asset. No Asset shall be deemed to be a Separated
Asset solely as a result of this clause (viii) if such Asset is within the
category or type of Asset expressly covered by the subject matter of an
Ancillary Agreement. In addition, no Asset shall be deemed a Separated Asset
solely as a result of this clause (viii) unless a claim with respect thereto is
made by VPG or a member of the VPG Group on or prior to the second anniversary
of the Distribution Date.
Notwithstanding anything to the contrary contained in this Section 2.4 or elsewhere in this Agreement, the Separated
Assets shall not in any event include the Excluded Assets referred to in
Section 2.4(b)(i) below.
(b) The following Assets shall not form part of the Separated Assets and
shall remain the exclusive property of Vishay or the relevant member of the
Vishay Group on and after the Separation (the “Excluded Assets”):
(i) any Asset expressly identified on Schedule 2.4(b)(i) or Schedule 2.16;
(ii) the rights of any member of the Vishay Group under any Shared Contract;
(iii) any Asset transferred to Vishay or to any other relevant member of the
Vishay Group pursuant to Section 4.2; provided, however, that any such transfers shall take effect
under Section 4.2 and not under this Section 2.4;
(iv) any Exclusive Vishay Contingent Gain or any Shared Vishay Percentage of a
Shared Contingent Gain; and
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(v) any and all Assets that are expressly contemplated by this Agreement or
any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be
retained by Vishay or any other member of the Vishay Group.
Section 2.5 Liabilities.
(a) For the purposes of this Agreement, “Assumed Liabilities” shall mean
(without duplication):
(i) any and all Liabilities that are expressly contemplated by this Agreement
or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities
to be assumed by VPG or any member of the VPG Group, and all agreements,
obligations and Liabilities of any member of the VPG Group under this Agreement
or any of the Ancillary Agreements;
(ii) subject to the terms of Article VI, all Exclusive VPG Contingent Liabilities and
the Shared VPG Percentage of any Shared Contingent Liabilities;
(iii) all Liabilities to the extent relating to, arising out of or resulting
from any terminated, divested or discontinued businesses and operations of the
MGF Business;
(iv) all Liabilities reflected as liabilities or obligations of VPG or its
Subsidiaries in the VPG Group Balance Sheet, subject to any discharge of such
Liabilities subsequent to the date of the VPG Group Balance Sheet;
(v) all Environmental Liabilities (other than the Environmental Liabilities
under Section 2.5(b)(v)),
whether arising prior to, on or after the Distribution Date, to the extent
arising out of or resulting from the use by the MGF Business of any property
owned, operated, used or leased in the course of operating the MGF Business at
any time or any other property where the MGF Business contracted or arranged for
disposal at any time; provided
that, notwithstanding such
general rule, Environmental Liabilities for the facilities set forth on Schedule 2.5(b)(v) shall be the
obligation and Liability of Vishay as specified in such Schedule 2.5(b)(v). With respect to
Environmental Liabilities arising from any facility that was jointly used by VPG
and Vishay, except as may otherwise agreed between the parties, if one party was
the primary user of that property, that party shall be responsible to administer
any Action related thereto, including providing any required defense, and the
other party shall cooperate in the administration and defense. Liabilities
associated with any such Action shall
be shared equally by Vishay and VPG unless there is another allocation methodology that more accurately and reasonably reflects the appropriate allocation of responsibility as between Vishay and VPG (including, for the avoidance of doubt, a reasonable estimation of relative fault or cause of the Liabilities);
be shared equally by Vishay and VPG unless there is another allocation methodology that more accurately and reasonably reflects the appropriate allocation of responsibility as between Vishay and VPG (including, for the avoidance of doubt, a reasonable estimation of relative fault or cause of the Liabilities);
(vi) all other Liabilities (other than Taxes, which are allocated as set forth
in the Tax Matters Agreement and employee-related Liabilities, which are
allocated as set forth in the Employee Matters Agreement), in each case to the
extent relating to, arising out of or resulting from:
(A) the
operation of the MGF Business, as conducted at any time prior to, on or after
the Distribution Date (including any Liability relating to, arising out of or
resulting from any act or failure to act by any director, officer, employee,
agent or representative (whether or not such act or failure to act is or was
within such Person’s authority)); or
(B) any
Separated Assets;
in any such case
whether arising prior to, on or after the Distribution Date; and
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(vii) any inadvertent omission of transfer or assumption of Liability that, had
the parties given specific consideration to such Liability as of the date
hereof, would have otherwise been classified as an Assumed Liability.
Notwithstanding the foregoing, the Assumed Liabilities shall not include
the Excluded Assumed Liabilities referred to in Section 2.5(b) below.
(b) For the purposes of this Agreement, “Excluded Assumed
Liabilities” shall mean:
(i) any and all Liabilities that are expressly contemplated by this Agreement
or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities
to be retained or assumed by Vishay or any other member of the Vishay Group, and
all agreements and obligations of any member of the Vishay Group under this
Agreement or any of the Ancillary Agreements;
(ii) any Liability which is expressly identified on Schedule 2.5(b)(ii);
(iii) any and all liabilities relating to, arising out of or resulting from any
Excluded Assets;
(iv) subject to the terms of Article VI, all Exclusive Vishay Contingent Liabilities
and the Shared Vishay Percentage of any Shared Contingent Liabilities;
(v) all Environmental Liabilities for the facilities set forth on Schedule 2.5(b)(v) and all
Environmental Liabilities that are not Assumed Liabilities under Section 2.5(a)(v); and
(vi) any inadvertent transfer, conveyance or assumption of any Liability that,
had the parties given specific consideration to such Liability as of the date
hereof, would have otherwise been classified as an Excluded Assumed Liability.
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Section 2.6 Excluded Assumed
Liabilities. Vishay shall,
or shall cause, as applicable, its Subsidiaries, to be responsible for the
Excluded Assumed Liabilities regardless of when or where such Liabilities arose
or arise, regardless of where such Liabilities are asserted or determined or
regardless of whether asserted or determined prior to the Distribution Date.
Section 2.7 Deferred Separation
Transactions.
(a) Misallocated Assets. In the event that at any time or from time
to time (whether prior to, on or after the Distribution Date), any member of the
Vishay Group or any member of the VPG Group shall receive or otherwise possess
any Asset that is allocated to a member of the other Group pursuant to this
Agreement, any Ancillary Agreement or the Separation (including any remittances
from account debtors), Vishay shall or shall cause such member of the Vishay
Group or VPG shall or shall cause such member of the VPG Group, as the case may
be, to promptly transfer, or cause to be transferred, such Asset to the Person
so entitled thereto. Prior to any such transfer, the Person receiving or
possessing such Asset shall hold such Asset in trust for any such other Person.
Each party shall cooperate with the other party and use its commercially
reasonable efforts to set up procedures and notifications as are reasonably
necessary or advisable to effectuate the transfers contemplated by this
Section 2.7.
(b) Mistaken Assignments and
Assumptions. If at anytime
there exists (i) Assets that either party discovers were, contrary to the
agreements between the parties, by mistake or unintentional omission,
transferred to VPG or retained by Vishay or (ii) Liabilities that either party
discovers were, contrary to the agreements between the parties, by mistake or
unintentional omission, assumed by VPG or not assumed by VPG or retained by the
Vishay Group, then the parties shall cooperate in good faith to effect the
transfer or retransfer of misallocated Assets, and/or the assumption or
reassumption of misallocated Liabilities, to or by the appropriate Person and
shall not use the determination that remedial actions need to be taken to alter
the original intent of the parties with respect to the Assets to be transferred
to or Liabilities to be assumed by VPG or retained by Vishay. Each party shall
reimburse the other or make other financial adjustments or other adjustments to
remedy any mistakes or omissions relating to any of the Assets transferred
hereby or any of the Liabilities assumed or retained hereby.
(c) No Additional Consideration. For the avoidance of doubt, the transfer or
assumption of any Assets or Liabilities under this Section 2.7 shall be effected without any additional
consideration by either party.
Section 2.8 Consents and Governmental
Approvals.
(a) Transfers not Consummated Prior to Separation
Date. If the transfer or
assignment of any Asset intended to be transferred or assigned hereunder is not
consummated prior to or on the Distribution Date, whether as a result of a
requisite Consent or Governmental Approval or for any other reason, then the
Person retaining such Asset shall thereafter hold such Asset for the use and
benefit, insofar as reasonably possible, of the Person entitled thereto until
the consummation of the transfer or assignment thereof (or as otherwise
determined by Vishay and VPG, as applicable). In addition, the Person retaining
such Asset shall take such other actions as may be reasonably requested by the
Person to whom such Asset is to be transferred in order to place such Person,
insofar as reasonably possible, in the same position as if such Asset had been
transferred as contemplated hereby and so that all the benefits and burdens
relating to such Asset, including possession, use, risk of loss, potential for
gain, and dominion, control and command over such Asset, are to inure from and
after the Distribution Date to the Person to whom such Asset is to be
transferred. Notwithstanding the foregoing, any such Asset shall still be
considered a Separated Asset or Excluded Asset, as applicable.
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(b) Expenses. The Person retaining an Asset due to the
deferral of the transfer and assignment of such Asset shall not be obligated, in
connection with the foregoing, to expend any money in connection with the
maintenance of the Asset or otherwise unless the necessary funds are advanced by
the Person to whom such Asset is to be transferred, other than reasonable
out-of-pocket expenses, attorneys’ fees and recording or similar fees, all of
which shall be promptly reimbursed by the Person to whom such Asset is to be
transferred; provided, however, that the Person retaining such Asset shall
provide prompt notice to the Person to whom such Asset is to be transferred of
the amount of all such expenses and fees.
(c) No Additional Consideration. For the avoidance of doubt, the transfer of
any Assets under this Section 2.8 shall be effected without any additional
consideration by either party.
Section 2.9 Novation of the Assumed
Liabilities.
(a) Reasonable Best Efforts. Each of Vishay and VPG, at the request of
the other and with the other’s reasonable best cooperation, shall use its
reasonable best efforts to obtain, or to cause to be obtained, any agreement,
instrument, Consent, substitution or amendment required to novate or assign all
rights and obligations under Contracts and other obligations or Liabilities of
any nature whatsoever that constitute Assumed Liabilities, or to obtain in
writing an unconditional release of all parties to such arrangements other than
any member of the VPG Group, so that, in any such case, VPG and the other
members of the VPG Group will be solely responsible for such Liabilities or, in
the case of Shared Contracts, to novate the rights and obligations under each
such Contract such that it is replaced with two separate Contracts, one of which
provides for the rights and obligations of a member or members of the Vishay
Group and the other of which provides for the rights and obligations of a member
or members of the VPG Group; provided, however, that neither the Vishay Group nor the VPG
Group shall be obligated to pay any consideration or assume any additional
obligation therefor to any third party from whom any such Consent, substitution
or amendment is requested. Each of Vishay and VPG, at the request of the other
and with the other’s reasonable best cooperation, shall use its reasonable best
efforts to obtain, or to cause to be obtained, any agreement, instrument,
Consent, substitution or amendment required to novate or assign all rights and
obligations under Contracts and other obligations or Liabilities of any nature
whatsoever that constitute Excluded Assumed Liabilities, or to obtain in writing
an unconditional release of all parties to such arrangements other than any
member of the Vishay Group, so that, in any such case, Vishay and the other
members of the Vishay Group will solely be responsible for such Liabilities or,
in the case of Shared Contracts, to novate the rights and obligations under each
such Contract such that it is replaced with two separate Contracts, one of which
provides for the rights and obligations of a member or members of the Vishay
Group and the other which provides for the rights and obligations of a member or
members of the VPG Group; provided, however, that neither the Vishay Group nor the VPG
Group shall be obligated to pay any consideration or assume any additional
obligation therefor to any third party from whom any such Consent, substitution
or amendment is requested.
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(b) Inability to Obtain
Novation. If Vishay or VPG
is unable to obtain, or to cause to be obtained, any such required agreement,
instrument, Consent, release, substitution or amendment with respect to any such
Assumed Liability or Excluded Assumed Liability, as applicable, the applicable
member of the Vishay Group or the VPG Group, as applicable, shall continue to be
bound by such Contracts and other obligations and Liabilities and, unless not
permitted by Applicable Law or the terms thereof (except to the extent expressly
set forth in this Agreement or any Ancillary Agreement), Vishay, with respect to
any Excluded Assumed Liability, and VPG, with respect to any Assumed Liability,
shall, as agent or subcontractor for the other or such other Person, as the case
may be, pay, perform and discharge fully, or cause to be paid, transferred or
discharged all the obligations or other Liabilities of any member of the other’s
Group thereunder from and after the Distribution Date or, in the case of a
Shared Contract, such obligations or other Liabilities as pertain to the member
or members of its own Group. Notwithstanding the foregoing, any such Liability
shall still be considered an Assumed Liability or Excluded Assumed Liability, as
applicable; provided, however, that neither Vishay nor VPG shall (nor shall
either permit any member of its respective Group to), amend, renew, change the
term of, modify the obligations under, or transfer to a third Person, any such
Contract or other obligation or other Liability without the written consent of
the other. Each of Vishay and VPG shall each use reasonable best efforts to
provide prompt notice to the other of any request they receive from the
counterparty to any Contract for any such amendment, renewal, change,
modification or transfer. Vishay, with respect to any Assumed Liability and VPG,
with respect to any Excluded Assumed Liability, shall, without further
consideration, pay and remit, or cause to be paid or remitted, to the other or
its appropriate Subsidiary promptly all money, rights and other consideration
received by it or any member of its Group in respect of such performance (unless
any such consideration is, with respect to consideration received by Vishay or
any member of the Vishay Group, an Excluded Asset, or, with respect to
consideration received by VPG or any member of the VPG Group, a Separated
Asset). If and when any such agreement, instrument, Consent, release,
substitution or amendment shall be obtained or such Contract or other
obligations and Liabilities shall otherwise become assignable or able to be
novated, Vishay, for any Assumed Liability, and VPG, for any Excluded Assumed
Liability, shall thereafter assign, or cause to be assigned, all of its rights,
obligations and other Liabilities thereunder or any rights or obligations of any
member of its respective Group to the other without payment of further
consideration and the other shall, without the payment of any further
consideration, assume such rights, obligations and Liabilities.
Section 2.10 Documents Relating to Transfers of the
Separated Assets and Assumption of the Assumed Liabilities. In furtherance of the Separation and the
Distribution, including as contemplated by the Separation Transactions, (i)
Vishay shall execute and deliver, and shall cause its Subsidiaries to execute
and deliver, such bills of sale, stock powers, certificates of title,
assignments of Contracts and other instruments of transfer, conveyance and
assignment as and to the extent necessary to evidence the transfer, conveyance
and assignment of all of Vishay’s and its Subsidiaries’ right, title and
interest in and to the Separated Assets to VPG or its Subsidiaries and (ii) VPG
shall execute and deliver, and shall cause its Subsidiaries to execute and
deliver, to Vishay and its Subsidiaries such assumptions of Contracts and other
instruments of assumption as and to the extent necessary to evidence the valid
and effective assumption of the Assumed Liabilities by VPG. All conveyance and
assumption documents and instruments used to effectuate the Separation and the
Distribution shall be in form mutually satisfactory to Vishay and
VPG.
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Section 2.11 Termination of Agreements.
(a) Except as set forth in Section 2.11(b), in
furtherance of the releases and other provisions of Section 5.1, VPG and
each member of the VPG Group, on the one hand, and Vishay and each member of the
Vishay Group, on the other hand, effective as of the Distribution Date, shall
terminate, any and all Contracts (including any intercompany accounts payable or
accounts receivable accrued as of the Distribution Date that are reflected in
the books and records of the parties or otherwise documented in writing in
accordance with past practices), whether or not in writing, between or among VPG
and/or any member of the VPG Group, on the one hand, and Vishay and/or any
member of the Vishay Group, on the other hand, effective as of the Distribution
Date. No such terminated Contracts (including any provision thereof which
purports to survive termination) shall be of any further force or effect after
the Distribution Date. Each party shall, at the reasonable request of any other
party, take, or cause to be taken, such other actions as may be necessary to
effect the foregoing.
(b) The provisions of Section 2.11(a) shall
not apply to any of the following Contracts (or to any of the provisions
thereof) in: (i) this Agreement or the Ancillary Agreements (and each other
agreement or instrument expressly contemplated by this Agreement or any
Ancillary Agreement to be entered into by any of the parties or any of the
members of their respective Groups); (ii) any Contracts to which any Person
other than the parties and their respective Affiliates is a party (it being
understood that to the extent that the rights and obligations of the parties and
the members of their respective Groups under any such Contracts constitute
Separated Assets or Assumed Liabilities, they shall be assigned or assumed, as
the case may be, pursuant to Section 2.3); (iii)
any Contracts to which any non-wholly owned Subsidiary of Vishay or VPG, as the
case may be, is a party (it being understood that directors’ qualifying shares
or similar interests will be disregarded for purposes of determining whether a
Subsidiary is wholly owned); (iv) intercompany Contracts or accounts receivable
entered into or generated in the ordinary course of business; or (v) any other
Contracts that this Agreement or any Ancillary Agreement expressly contemplates
will survive the Distribution Date.
Section 2.12 Release of Security
Interest. Upon VPG’s reasonable request, Vishay shall use its reasonable
best efforts to obtain from third parties the release of any Security Interest
granted by Vishay (or any member of its Group) on any Separated
Asset.
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Section 2.13 No Representation or
Warranty.
(a) No party to this Agreement, any Ancillary
Agreement, or any other agreement or document contemplated by this Agreement,
any Ancillary Agreement or otherwise, is making any representation as to,
warranty of or covenant, express or implied, with respect to: (a) any of the
Separated Assets, the MGF Business, the Excluded Assets or the Assumed
Liabilities, including any warranty of merchantability or fitness for a
particular purpose, or any representation or warranty regarding any Consents or
Governmental Approvals required in connection therewith or their transfer, (b)
the value or freedom from Encumbrances of, or any other matter concerning, any
Separated Asset or Excluded Asset, or regarding the absence of any defense or
right of setoff or freedom from counterclaim with respect to any claim or other
Separated Asset or Excluded Asset, including any account receivable of either
party, or (c) the legal sufficiency of any assignment, document or instrument
delivered hereunder to convey title to any Separated Asset or Excluded Asset
upon the execution, delivery and filing hereof or thereof.
(b) EXCEPT AS MAY EXPRESSLY BE SET FORTH
HEREIN OR IN ANY ANCILLARY AGREEMENT, ALL ASSETS TO BE TRANSFERRED AS SET FORTH
HEREIN OR IN ANY ANCILLARY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT
CONTEMPLATED HEREBY OR THEREBY SHALL BE TRANSFERRED “AS IS, WHERE IS” (AND, IN
THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM DEED OR
CONVEYANCE) AND THE TRANSFEREE SHALL BEAR THE ECONOMIC AND LEGAL RISK THAT ANY
CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD AND
MARKETABLE TITLE, AND CLEAR OF ANY SECURITY INTEREST OR ANY NECESSARY CONSENTS
OR GOVERNMENTAL APPROVALS ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS OR
JUDGMENTS ARE NOT COMPLIED WITH.
Section 2.14 Use of Cash. From the
date hereof until the Distribution Date, Vishay shall be entitled to use, retain
or otherwise dispose of all cash generated by the MGF Business and the Separated
Assets in accordance with the ordinary course of operation of
Vishay.
Section 2.15 Plan of
Reorganization. This Agreement shall constitute a plan of reorganization
for purposes of Section 368 of the Code.
Section 2.16 Assets Transferred to
Vishay. In connection with the Separation, VPG shall, or shall cause the
applicable members of the VPG Group to, cause those assets identified on Schedule 2.16 (which
are intended to be Excluded Assets) to be contributed, assigned, transferred,
conveyed and delivered, directly or indirectly, to Vishay and one or more
members of the Vishay Group, as applicable, and Vishay shall, and shall cause
the applicable members of the Vishay Group to, accept from VPG and the
applicable members of the VPG Group all of their rights, title and interest in
and to all such assets identified on Schedule 2.16. The
terms and provisions of Sections 2.7, 2.8, 2.10, 2.12, 2.13 and 4.2 as such terms and
provisions relate to the contribution, assignment, transfer, conveyance or
delivery of assets from Vishay or a member of the Vishay Group to VPG or a
member of the VPG Group shall apply to any contribution, assignment, transfer,
conveyance or delivery of assets contemplated by this Section 2.16, mutatis mutandis.
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Section 2.17 Net Cash.
(a) No later than fifteen (15) Business Days
following the Distribution Date, VPG shall determine the VPG Net Cash as of the
opening of business on the Distribution Date (the “Actual VPG Net
Cash”). As soon as reasonably practicable, but in no event later than
five (5) Business Days after making such determination, VPG shall prepare and
deliver to Vishay a calculation of the VPG Net Cash, together with reasonably
detailed supporting information (the “VPG Net Cash
Statement”).
(b) Thereafter, VPG will provide Vishay and
its accountants with access to the records and employees of VPG, to the extent
reasonably related to Vishay’s evaluation of the VPG Net Cash Statement, the
calculation of the VPG Net Cash or the resolution of any dispute with respect
thereto. Within ten (10) Business Days after Vishay’s receipt of the VPG Net
Cash Statement, Vishay shall notify VPG in writing as to whether Vishay agrees
or disagrees with the VPG Net Cash Statement, which notice, in the case of a
disagreement, shall set forth in reasonable detail the particulars of such
disagreement. In the event that Vishay does not provide a notice of disagreement
within such ten (10) Business Day period, then Vishay shall be deemed to have
accepted the calculations and the amounts set forth in the VPG Net Cash
Statement delivered by VPG, which shall be final, binding and conclusive for all
purposes hereunder. If any notice of disagreement is timely provided in
accordance with this Section 2.17, VPG and
Vishay shall each use commercially reasonable efforts for a period of ten (10)
Business Days thereafter (or such longer period as they may mutually agree) to
resolve any disagreements with respect to the calculations in the VPG Net Cash
Statement. If, at the end of such period, VPG and Vishay are unable to resolve
any disagreements as to items in the VPG Net Cash Statement, then the Parties
shall engage KPMG LLP (the “Auditor”) to resolve
any remaining disagreements. The Auditor shall be charged with determining as
promptly as practicable, but in any event within thirty (30) days after the date
on which such dispute is referred to the Auditor, whether the Actual VPG Net
Cash as set forth in the VPG Net Cash Statement was prepared in accordance with
this Agreement whether and to what extent the Actual VPG Net Cash requires
adjustment. The fees and expenses of the Auditor shall be shared by VPG and
Vishay in inverse proportion to the relative amounts of the disputed amounts
determined in favor of VPG and Vishay, respectively. The determination of the
Auditor shall be final, binding and conclusive for all purposes hereunder. The
date on which the Actual VPG Net Cash is finally determined in accordance with
this Section
2.17 is referred to as the “Determination
Date.”
(c) If the Actual VPG Net Cash, as determined
in accordance with this Section 2.17, exceeds $71,500,000, VPG shall make a
payment to Vishay in the amount of the excess, which for all purposes shall be
deemed a dividend to Vishay from VPG made immediately prior to the Separation.
If the Actual VPG Net Cash is less than $58,500,000, Vishay shall make a payment
to VPG in the amount of the difference, which for all purposes shall be deemed a
capital contribution by Vishay to VPG made immediately prior to the Separation.
Such payment by VPG or Vishay, as the case may be, shall be made no later than
five (5) Business Days after the Determination Date by wire transfer of
immediately available funds.
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ARTICLE III
THE DISTRIBUTION AND ACTIONS PENDING THE
DISTRIBUTION
Section 3.1 Transactions Prior to the
Distribution. Subject to the conditions specified in Section 3.2, Vishay
and VPG shall use their reasonable best efforts to consummate the Distribution.
Such efforts shall include, without limitation, those specified in this Section
3.1.
(a) Separation Transactions and
Capital Allocation Transactions. Vishay and VPG shall cooperate, and
shall use their reasonable best efforts, to effect the Separation Transactions
and the Capital Allocation Transactions on or prior to the Distribution
Date.
(b) Form 10 Registration
Statement. Vishay and VPG shall cooperate to cause the Form 10
Registration Statement heretofore filed with the Commission to become and remain
effective under Applicable Law, including, without limitation, filing such
amendments or supplements to the Form 10 Registration Statement as may be
required by the Commission or federal, state or foreign securities
laws.
(c) Information Statement; Other
Materials. Vishay shall, as soon as practicable after the Form 10
Registration Statement is declared effective under the Exchange Act and the
Vishay Board has approved the Distribution, cause the Information Statement to
be mailed to the Record Holders. Vishay and VPG shall prepare and mail, on or
prior to the Distribution Date, to the holders of Vishay Stock, such other
Information concerning VPG, the MGF Business, operations and management, the
Separation, the Distribution and such other matters as Vishay in its sole and
absolute discretion determines is necessary or desirable or as may be required
by Applicable Law.
(d) Other Actions. Vishay
and VPG shall take all other actions as Vishay in its sole and absolute
discretion determines are necessary or appropriate under applicable federal or
state securities or blue sky laws of the United States (and any comparable laws
under any foreign jurisdiction) in connection with the
Distribution.
(e) NYSE Listing. VPG
shall prepare, file and use its reasonable best efforts to obtain approval of,
an application for listing of VPG common stock on The New York Stock Exchange
(“NYSE”),
subject to official notice of distribution.
(f) Accounting Matters.
All prepaid items and reserves that have been maintained by Vishay on a
consolidated basis but related in part to Separated Assets or Assumed
Liabilities shall be allocated between Vishay and VPG as determined by Vishay in
its reasonable discretion.
(g) Corporate Matters.
Vishay and VPG shall take all necessary action (i) to adopt the Amended and
Restated Certificate of Incorporation and Amended and Restated Bylaws of VPG in
the form filed as exhibits to the Form 10 Registration Statement and (ii) to
cause the Board of Directors of VPG to consist of the persons identified in the
Information Statement as the directors of VPG to be in office following the
Separation.
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Section 3.2 Conditions Precedent to
Consummation of the Distribution. The obligation of Vishay to effect the
Distribution is subject to the satisfaction or the waiver by Vishay, in its sole
and absolute discretion, of each of the following conditions:
(a) Approval by Vishay’s
Board. This Agreement and the transactions contemplated hereby, including
establishing the Record Date and the declaration of the Distribution, shall have
been duly taken and approved by the Vishay Board in accordance with Applicable
Law and the certificate of incorporation and bylaws of
Vishay.
(b) Form 10 Registration
Statement. The Form 10 Registration Statement shall have been declared
effective by the Commission, and there shall be no stop-order in effect with
respect thereto, and no proceeding for that purpose shall have been instituted
by the Commission.
(c) Other Actions. The
actions and filings necessary or appropriate under applicable federal and state
securities laws and state blue sky laws of the United States (and any comparable
laws under any foreign jurisdictions) in connection with the Distribution
(including, if applicable, any actions and filings relating to the Form 10
Registration Statement) and any other necessary and applicable Consents shall
have been taken, obtained and, where applicable, have become effective or been
accepted, each as the case may be.
(d) NYSE Listing. VPG
common stock to be distributed pursuant to the Distribution shall have been
approved for listing on NYSE, subject to official notice of the
Distribution.
(e) No Legal Restraints.
No Governmental Authority of competent jurisdiction shall have, after the date
of this Agreement, enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent), which is in effect and prohibits or
materially restricts or materially adversely affects the consummation of the
Separation or the Distribution or any of the other transactions contemplated by
this Agreement and the Ancillary Agreements.
(f) Separation. The
Separation shall have become effective in accordance with the terms of this
Agreement and the Separation Transactions and the Capital Allocation
Transactions.
(g) Private Letter Ruling and
Opinion of Tax Counsel. Vishay shall have obtained a favorable private
letter ruling from the IRS that the Distribution is part of a reorganization
within the meaning of Section 368(a)(1)(D) of the Code and that the Distribution
generally will not give rise to income or gain to Vishay or, pursuant to Section
355, its shareholders, and such ruling shall continue in effect, and Vishay
shall have received an opinion of the law firm of Xxxxxx Xxxxxxxx LLP to the
same effect.
(h) Approval from Israeli Tax
Authorities. Vishay shall have received a ruling from the Israeli taxing
authorities that the Separation as it relates to the transfer to the VPG Group
of Israeli Companies held by the Vishay Group will not give rise to current
Taxes under any Applicable Law in Israel.
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(i) Consents and
Approvals. Any and all Consents and Governmental Approvals necessary to
consummate the Separation and the Distribution shall have been obtained and be
in full force and effect, except where the failure to obtain such consents or
approvals would not have a material adverse effect on either (A) the ability of
the parties to complete the transactions contemplated by this Agreement or any
Ancillary Agreement or (B) the business, Assets, Liabilities, condition or
results of operations of VPG and its Subsidiaries, or Vishay and its
Subsidiaries, in each case, taken as a whole (such Consents and Governmental
Approvals, “Material
Consents and Approvals”). As of the date of this Agreement, other than
the private letter ruling from the IRS and the ruling from the Israeli taxing
authorities listed separately above under Sections 3.2(g) and
3.2(h)
respectively, the parties are not aware of any Material Consents and
Governmental Approvals.
(j) Ancillary Agreements;
Performance of Obligations. Vishay shall have received duly executed
counterparts of each Ancillary Agreement from the members of the VPG Group party
thereto, and VPG (and the applicable members of the VPG Group) shall have fully
performed its or their obligations hereunder and thereunder which are required
to be performed prior to or at the time of the Distribution.
(k) Other Transactions.
The parties shall have consummated any other transactions in connection with the
Distribution that are contemplated by the Information Statement to be
consummated prior to or at the time of the Distribution and are not specifically
referred to in this Agreement or the Ancillary Agreements.
(l) No Other Events. No
other events or developments shall have occurred that, in the judgment of the
Vishay Board, in its sole and absolute discretion, would result in the
Separation or the Distribution having a material adverse effect on Vishay, its
stockholders, the Vishay Business or the MGF Business.
The foregoing conditions are for the sole benefit of Vishay and shall not
give rise to or create any duty on the part of Vishay or the Vishay Board to
waive or not to waive any such conditions or in any way limit Vishay’s right to
terminate this Agreement as set forth in Article IX or alter the
consequences of any such termination from those specified in Article IX. Any
determination made by Vishay prior to the Distribution concerning the
satisfaction or waiver of any or all of the conditions set forth in this Section 3.2 shall be
conclusive.
Section 3.3 Documents to be Delivered by
Vishay. On or prior to the Distribution Date, Vishay will deliver, or
will cause its appropriate Subsidiaries to deliver, to VPG all of the
following:
(a) In each case where Vishay or any other
member of the Vishay Group is a party to any Ancillary Agreement, a duly
executed counterpart of such Ancillary Agreement;
(b) Resignations of each individual listed on
Schedule
3.3(b), who is a director and/or officer of any member of the VPG
Group;
(c) Any other agreements, documents and
instruments necessary to effectuate the Separation; and
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(d) Such other agreements, documents or
instruments as the parties may agree are necessary or desirable in order to
achieve the purposes hereof.
Section 3.4 Documents to be Delivered by
VPG. On or prior to the Distribution Date, VPG will deliver, or will
cause its appropriate Subsidiaries to deliver, to Vishay all of the
following:
(a) In each case where VPG or any other member
of the VPG Group is a party to any Ancillary Agreement, a duly executed
counterpart of such Ancillary Agreement;
(b) Resignations of each individual listed on
Schedule 3.4(b)
who is a director and/or officer of any member of the Vishay Group;
and
(c) Any other agreements, documents and
instruments necessary to effectuate the Separation; and
(d) Such other agreements, documents or
instruments as the parties may agree are necessary or desirable in order to
achieve the purposes hereof.
Section 3.5 Distribution.
(a) Sole Discretion.
Vishay shall, in its sole and absolute discretion, determine whether or not to
proceed with all or part of the Distribution, determine the Distribution Date
and determine whether to modify or change the terms of the Distribution,
including, without limitation, the form, structure and terms of any
transaction(s) to effect the Distribution (including the Separation
Transactions, the Capital Allocation Transactions and any other transactions
provided for in this Agreement) or the timing of and conditions to the
consummation of the Distribution. VPG shall cooperate with Vishay in all
respects to accomplish the Distribution and shall, at Vishay’s direction,
promptly take any and all actions reasonably necessary or desirable in Vishay’s
sole and absolute discretion to effect the Distribution.
(b) Effective Time. The
Distribution shall be effective at 12:01 a.m., Eastern Time, on the Distribution
Date (the “Effective
Time”).
(c) Actions in Connection with
Distribution. Unless Vishay has previously determined not to proceed with
the Separation, Vishay and VPG will cause to be taken the following actions in
connection with the Distribution:
(i) VPG shall appoint a registrar and transfer
agent (the “Registrar
and Transfer
Agent”) for the purpose of recording the ownership and transfer of record
of the holders of VPG common stock and VPG Class B common stock. Such record of
ownership and transfer shall be maintained in book entry form only, and no
physical certificates evidencing the ownership of the VPG common stock or VPG
Class B common stock shall be issued.
(ii) On or prior to the Distribution Date, VPG
shall issue to Vishay and Vishay shall deliver to Agent, in each case by
appropriate entry on the books and records of the Registrar and Transfer Agent,
a sufficient number of shares of VPG common stock and VPG Class B common stock
for distribution on the Distribution Date to the Record Holders of Vishay common
stock and Vishay Class B common stock, respectively.
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(iii) On the Distribution Date, (x) each
Record Holder of Vishay common stock will be entitled to receive in the
Distribution a number of shares of VPG common stock equal to the number of
shares of Vishay common stock held by such Record Holder on the Record Date
multiplied by the distribution ratio to be determined by the Vishay Board when
it declares the Distribution (the “Common Stock Distribution
Ratio”), and (y) each Record Holder of Vishay Class B Common Stock will
be entitled to receive in the Distribution a number of shares of VPG Class B
Common Stock equal to the number of shares of Vishay Class B Common Stock held
by such Record Holder on the Record Date multiplied by the distribution ratio to
be determined by the Vishay Board when it declares the Distribution (the “Class B Common Stock
Distribution Ratio”). The Vishay Board shall have the right to adjust the
Common Stock Distribution Ratio and/or the Class B Common Stock Distribution
Ratio at any time prior to the Distribution.
(iv) As promptly as practicable after the
Distribution Date, the Registrar and Transfer Agent will send to each Record
Holder, at the address of such Record Holder as it appears on the books and
records of the registrar and transfer agent for the Vishay common stock and the
Vishay Class B common stock, as the case may be, an account statement showing
the number of shares of VPG common stock and VPG Class B common stock held by
such Record Holder as of the Distribution Date.
(v) Vishay and VPG, as the case may be, will
provide to the Agent and the Registrar and Transfer Agent all authorizations and
other documentation and any Information required in order to complete the
Distribution on the basis set forth in this Section 3.5. No
action will be necessary for any Record Holder of Vishay to receive VPG common
stock and/or VPG Class B Common Stock, as applicable, or cash in lieu of
fractional shares in the Distribution.
(d) Fractional Shares. No
fractional shares of VPG common stock or VPG Class B common stock will be
issued. Instead, Record Holders will receive cash in lieu of any fractional
shares, in accordance with the following procedures.
(i) Vishay shall direct the Agent to determine
the number of fractional shares of VPG common stock and VPG Class B Common Stock
allocable to each Record Holder of Vishay common stock and Vishay Class B Common
Stock, as applicable.
(ii) The Agent shall aggregate all fraction
shares of VPG common stock and sell the whole shares obtained thereby in open
market transactions or otherwise as soon as practicable on or after the
Distribution Date at then prevailing trading prices and shall cause to be
distributed to each Record Holder of Vishay common stock, in lieu of any
fractional share of VPG common stock, such Record Holder’s ratable share of the
proceeds of such sale. Solely for purposes of computing fractional share
interests pursuant to this Section 3.5(d)(ii),
the beneficial owner of Vishay Stock held of record in the name of a nominee in
any nominee account, if and to the extent Vishay is advised in writing of such
nominee relationship prior to the Distribution Date, shall be treated as the
Record Holder with respect to such shares.
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(iii) Vishay shall cause to be delivered to
the Agent cash in an amount equal to the total of all fractional shares of VPG
Class B common stock multiplied by the amount of cash per share of VPG common
stock distributed to Record Holders of Vishay common stock in lieu of fractional
shares. The Agent shall cause to be distributed to each Record Holder of Vishay
Class B common stock, in lieu of any fractional share of VPG Class B common
stock, such holder’s ratable share of the cash provided by Vishay.
(iv) All cash in lieu of fractional shares
shall be delivered to the Record Holders by check delivered to the address of
such holder as it appears on the books and records of the registrar and transfer
agent for the Vishay common stock and the Vishay Class B common stock, as the
case may be, or by such other means as the Record Holder and the Agent shall
agree.
ARTICLE IV
ADDITIONAL COVENANTS, FURTHER ASSURANCES AND
OTHER MATTERS
Section 4.1 Provision of Corporate
Records. Prior to or as promptly as practicable after the Distribution
Date, each of Vishay and VPG shall deliver or make available to the other all
corporate books and records of the other Group in its possession, and complete
and accurate copies of all relevant portions of all corporate books and records
of the Vishay Group relating directly and primarily to the other’s Business
(and, in the case of VPG, relating to the Separated Assets or the Assumed
Liabilities), including, in each case, all active agreements, active litigation
files, government filings and returns or reports relating to Taxes for all open
periods. Subject to Section 4.5 and Section 4.6, each
party may retain complete and accurate copies of such books and records. From
and after the Distribution Date, all such books, records and copies shall be the
property of the other party. The costs and expenses incurred in the provision of
records or other Information to a party shall be paid for by the receiving
party, or as the parties shall otherwise agree.
Section 4.2 Further Assurance.
(a) In addition to the actions specifically
provided for elsewhere in this Agreement (such as Section 2.7 and Section 2.11(a)),
Vishay and VPG agree to execute or cause to be executed by the appropriate
parties and deliver, as appropriate, such other agreements, instruments and
other documents as may be necessary or desirable in order to effect the purposes
of this Agreement and the Ancillary Agreements.
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(b) Without limiting the generality of the
foregoing, at the request of VPG, and without further consideration, Vishay will
execute and deliver, and will cause the applicable members of the Vishay Group
to execute and deliver, to VPG and the applicable members of the VPG Group such
other instruments of transfer, conveyance, assignment, substitution,
confirmation or other documents and take such action as VPG may reasonably deem
necessary or desirable in order to more effectively transfer, convey and assign
to VPG and the applicable members of the VPG Group and confirm VPG’s and the
applicable members’ of the VPG Group title to all of the assets, rights and
other things of value contemplated to be transferred to VPG and the applicable
members of the VPG Group pursuant to this Agreement, the Ancillary Agreements,
and any documents referred to herein or therein, to put VPG and the applicable
members of the VPG Group in actual possession and operating control thereof and
to permit VPG and the applicable members of the VPG Group to exercise all rights
with respect thereto (including, without limitation, rights under Contracts and
other arrangements as to which the consent of any third party to the transfer
thereof shall not have previously been obtained). Without limiting the
generality of the foregoing, at the request of Vishay and without further
consideration, VPG will execute and deliver, and will cause the applicable
members of the VPG Group to execute and deliver, to Vishay and the applicable
members of the Vishay Group all instruments, assumptions, novations,
undertakings, substitutions or other documents and take such other action as
Vishay may reasonably deem necessary or desirable in order to have VPG and the
applicable members of the VPG Group fully and unconditionally assume and
discharge the liabilities contemplated to be assumed by VPG and the applicable
members of the VPG Group under this Agreement, any Ancillary Agreement or any
document in connection herewith or therewith and to relieve the Vishay and the
applicable members of the Vishay Group of any liability or obligation with
respect thereto and evidence the same to third parties.
(c) Neither Vishay nor VPG shall be
obligated, in connection with this Section 4.2, to
expend money other than reasonable out-of-pocket expenses, attorneys’ fees and
recording or similar fees, unless reimbursed by the other party.
(d) Furthermore, each party, at the request of
the other party, shall execute and deliver such other instruments and do and
perform such other acts and things as may be necessary or desirable for
effecting completely the consummation of the transactions contemplated
hereby.
Section 4.3 Agreement For Exchange Of
Information.
(a) Generally. Each of
Vishay and VPG, on behalf of its respective Group, agrees to provide, or cause
to be provided, to the other party’s Group and its authorized accountants,
counsel and other designated representatives, at any time after the Distribution
Date, reasonable access during normal business hours and as soon as reasonably
practicable after written request therefor, (i) all Information regularly
provided by such respective Group to the other Group prior to the Distribution
Date, and (ii) any Information in the possession or under the control of such
respective Group that the requesting party reasonably needs (A) to comply with
reporting, disclosure, filing or other requirements imposed on the requesting
party (including under applicable securities and tax laws) by a Governmental
Authority having jurisdiction over the requesting party, (B) for use in any
other judicial, regulatory, administrative or other proceeding or in order to
satisfy audit, accounting, claims, regulatory, litigation or other similar
requirements, in each case, other than claims or allegations that one party to
this Agreement has against the other, (C) to comply with its obligations under
this Agreement or any Ancillary Agreement, (D) to comply with reporting, filing
and disclosure obligations, (E) for the preparation of financial statements or
completing an audit, (F) for use in compensation, benefit or welfare plan
administration or other bona fide business purposes or (G) for the conduct of
the ongoing businesses of Vishay or VPG, as the case may be; provided, however, that in the
event that either Vishay or VPG determines that any such provision of or access
to Information would be commercially detrimental in any material respect,
violate any Applicable Law or agreement or waive any Privilege, the parties
shall take all reasonable measures to permit the compliance with such
obligations in a manner that avoids any such harm or consequence and shall
comply with the applicable provisions of this Agreement. Each of Vishay and VPG
agree to make their respective personnel available during normal business hours
to discuss the Information exchanged pursuant to this Section 4.3 provided, that such
access does not interfere with the day-to-day operations of the applicable
party.
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(b) Financial
Information. Without limiting the generality of Section 4.3(a), until
the end of the first full VPG fiscal year occurring after the Distribution Date
(and for a reasonable period of time afterwards as required for each party to
prepare consolidated financial statements or complete a financial statement
audit for the fiscal year during which the Distribution Date occurs), each party
shall use its commercially reasonable efforts, to cooperate with the other
party’s Information requests to enable the other party to meet its timetable for
dissemination (in accordance with applicable securities laws) of its earnings
releases and financial statements and to enable such other party’s auditors to
timely complete their audit of the annual financial statements and review of the
quarterly financial statements of such party.
(c) Ownership of
Information. Any Information owned by a party that is provided to the
other party pursuant to this Section 4.3 shall be
deemed to remain the property of the party that owned and provided such
Information. Unless specifically set forth herein, nothing contained in this
Agreement shall be construed as granting or conferring rights of license or
ownership in any Information owned by one party hereunder to the other party
hereunder.
(d) Record Retention.
Except with respect to Information for which a different retention policy is
specified in an Ancillary Agreement, to facilitate the exchange of Information
contemplated by this Section 4.3 and other
provisions of this Agreement after the Distribution Date, each party agrees to,
and to use its reasonable best efforts to cause the members of its Group to,
retain all Information related to the MGF Business in their respective
possession or control on the Distribution Date in accordance with the record
retention and destruction policies of the applicable Business, as in effect
immediately prior to the Distribution Date or such other policies and procedures
as may reasonably be adopted by the applicable party after the Distribution Date
as provided herein. No party will destroy, or permit any member of its Group to
destroy, any Information which the other party may have the right to obtain
pursuant to this Agreement without first notifying the other party of the
proposed destruction and giving the other party the opportunity to take
possession of such Information prior to such destruction; provided, however, that no
party will destroy, or permit any member of its Group to destroy, any
Information required to be retained by Applicable Law.
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(e) Limitation of
Liability. Each party will use its reasonable best efforts to ensure that
Information provided to the other party is accurate and complete; provided, however, that, except
as otherwise provided in any Ancillary Agreement, in the absence of gross
negligence or willful misconduct by the party providing such Information, no
party shall have any liability to any other party in the event that any
Information exchanged or provided pursuant to this Section 4.3 is found
to be inaccurate. No party shall have any liability to the other party if any
Information is destroyed after commercially reasonable efforts by such party to
comply with the provision of this Section
4.3.
(f) Other Agreements Providing
for Exchange of Information. The rights and obligations granted under
this Section
4.3 are subject to any specific limitations, qualifications or additional
provisions on the sharing, exchange or confidential treatment of Information set
forth in this Agreement and any Ancillary Agreement.
(g) Compensation for Providing
Information. The party requesting Information agrees to reimburse the
other party for the reasonable out-of-pocket costs and expenses, if any, of
creating, gathering and copying such Information, to the extent that such costs
and expenses are incurred for the benefit of the requesting party.
Section 4.4 Production of Witnesses; Records;
Cooperation.
(a) Subject to Section 4.6, after
the Distribution Date, except in the case of any Action by one or more members
of one Group against one or more members of the other Group, each party shall
use its reasonable best efforts to make available to the other party, upon
written request, the former, current and future directors, officers, employees,
other personnel and agents of the members of its respective Group as witnesses
and any books, records or other documents within its control or which it
otherwise has the ability to make available, to the extent that any such Person
(giving consideration to business demands of such directors, officers,
employees, other personnel and agents) or books, records or other documents may
reasonably be required in connection with any Action in which the requesting
party may from time to time be involved, regardless of whether such Action is a
matter with respect to which indemnification may be sought hereunder. The
requesting party shall reimburse the other party for its reasonable
out-of-pocket cost and expenses in connection with requests made under this
Section
4.4.
(b) Without limiting the forgoing but subject
to Section 4.6,
the parties shall cooperate and consult to the extent reasonably necessary with
respect to any Action, except in the case of an adversarial Action by one or
more members of one Group against one or more members of the other
Group.
Section 4.5 Confidentiality.
(a) Subject to Section 4.6, which
shall govern Privileged Information, from and after the Distribution Date,
Vishay and VPG shall hold and shall cause each member of their respective Groups
to hold, and shall each cause their respective directors, officers, employees,
agents, consultants, advisors and other representatives to hold, in strict
confidence and not to disclose or release without the prior written consent of
the other party, any and all Confidential Information of the other party’s
Group; provided, that each
party may disclose, or may permit disclosure of, Confidential Information (i) to
its respective auditors, attorneys, financial advisors, bankers and other
appropriate consultants and advisors who have a need to know such Confidential
Information and are informed of such party’s obligation to hold such Information
confidential to the same extent as is applicable to the parties and in respect
of whose failure to comply with such obligations, VPG or Vishay, as the case may
be, will be responsible, (ii) if such party or any of the members of such
party’s respective Group is compelled to disclose any such Information by
judicial or administrative process or, in the opinion of independent legal
counsel, by other requirements of Applicable Law, (iii) if any such Information
is or becomes generally available to the public other than as a result of a
disclosure in violation of this Agreement or (iv) if such Information was or
becomes available to either VPG or Vishay or any member of their respective
Group on a non-confidential basis and from a source (other than a party to this
Agreement or any Affiliate, director, officer, employee, agent, consultant,
advisor and other representative of such party) that is not known after actual
inquiry to be bound by a confidentiality obligation. Notwithstanding the
foregoing, in the event that any demand or request for disclosure of
Confidential Information is made pursuant to clause (ii) above, Vishay or VPG,
as the case may be, shall promptly notify the other of the existence of such
request or demand and shall provide the other a reasonable opportunity to seek
an appropriate confidentiality agreement, protective order or other remedy at
the reasonable cost and expense of the disclosing party and which both parties
will cooperate in obtaining. In the event that such appropriate protective order
or other remedy is not obtained, the party whose Confidential Information is
required to be disclosed shall, or shall cause to be, furnished, only that
portion of the Confidential Information that is legally required to be
disclosed.
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(b) Notwithstanding anything herein to the
contrary, Vishay and the members of its Group, on the one hand, and VPG and the
members of its Group, on the other hand, shall be deemed to have satisfied their
obligations hereunder with respect to Confidential Information if they exercise
the same degree of care (but no less than a reasonable degree of care) as they
take to preserve confidentiality for their own similar Information.
(c) Nothing in this Agreement shall be
construed to limit or prohibit either party from independently creating or
developing (or having created or developed for it), or from acquiring from third
parties, any Information similar to or competitive with the Information
contemplated by or embodied in the other party’s Confidential Information, provided that in
connection with such creation, development or acquisition such party does not
violate any of its obligations under this Agreement, any Ancillary Agreement or
any other agreement with the other party. Notwithstanding the foregoing, neither
party shall, nor shall it assist others to, disassemble, decompile, reverse
engineer, or otherwise attempt to recreate, the other party’s Confidential
Information.
Section 4.6 Privileged Matters.
(a) Vishay and VPG agree that their respective
rights and obligations to maintain, preserve, assert or waive any or all
privileges belonging to either party or the respective members of their
respective Group with respect to the Vishay Business or the MGF Business,
including but not limited to the attorney-client, work product privileges or any
other applicable privileges (individually, a “Privilege”), shall be
governed by the provisions of this Section 4.6. With
respect to Privileged Information of Vishay, Vishay shall have sole authority in
perpetuity to determine whether to assert or waive any or all Privileges, and
VPG shall take no action (nor permit any member of its Group to take action)
without the prior written consent of Vishay that could result in any waiver of
any Privilege that could be asserted by Vishay or any member of its Group under
Applicable Law and this Agreement. With respect to Privileged Information of
VPG, VPG shall have sole authority in perpetuity to determine whether to assert
or waive any or all Privileges, and Vishay shall take no action (nor permit any
member of its Group to take action) without the prior written consent of VPG
that could result in any waiver of any Privilege that could be asserted by VPG
or any member of its Group under Applicable Law and this Agreement. The rights
and obligations created by this Section 4.6 shall
apply to all Information (“Privileged
Information”) as to which Vishay or VPG or their respective Groups would
be entitled to assert or have asserted a Privilege without regard to the effect,
if any, of the Separation and the Distribution. Privileged Information of Vishay
and its Group includes but is not limited to (w) any and all Information
satisfying the criteria of the preceding sentence regarding the Vishay Business
and its Group (other than Information satisfying the criteria of the preceding
sentence relating to the MGF Business (“VPG Information”)),
whether or not such Information (other than VPG Information) is in the
possession of VPG or any member of its Group; and (x) all communications subject
to a Privilege between counsel for Vishay (including any Person who, at the time
of the communication, was an employee of Vishay or its Group in the capacity of
in-house counsel, regardless of whether such employee is or becomes an employee
of VPG or any member of its Group) and any Person who, at the time of the
communication, was an employee of Vishay, regardless of whether such employee is
or becomes an employee of VPG or any member of its Group. Privileged Information
of VPG and its Group includes but is not limited to (x) any and all VPG
Information, whether or not it is in the possession of Vishay or any member of
its Group; and (y) all communications subject to a Privilege occurring after the
Distribution between counsel for the MGF Business (including in-house counsel
and former in-house counsel who are employees of Vishay) and any Person who, at
the time of the communication, was an employee of VPG, any member of its Group
or the MGF Business regardless of whether such employee was, is or becomes an
employee of Vishay or any member of its Group.
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(b) Upon receipt by Vishay or VPG, or any of
the members of the respective Groups, as the case may be, of any subpoena,
discovery or other request from any third party that actually or arguably calls
for the production or disclosure of Privileged Information of the other or if
Vishay or VPG, or any of members of their respective Groups, as the case may be,
obtains knowledge that any current or former employee of Vishay or VPG, as the
case may be, receives any subpoena, discovery or other request from any third
party that actually or arguably calls for the production or disclosure of
Privileged Information of the other, Vishay or VPG, as the case may be, shall
promptly notify the other of the existence of the request and shall provide the
other a reasonable opportunity to review the Information and to assert any
rights it may have under this Section 4.6 or
otherwise to prevent the production or disclosure of Privileged Information.
Vishay or VPG, as the case may be, will not, and will cause the members of their
respective Groups to not, produce or disclose to any third party any of the
other’s Privileged Information under this Section 4.6 unless
(i) the non-disclosing party has provided its express written consent to such
production or disclosure or (ii) a court of competent jurisdiction has entered
an order not subject to interlocutory appeal or review (or for which the period
for appeal or review has lapsed) finding that the Information is not entitled to
protection from disclosure under any applicable privilege, doctrine or rule, in
which case, such Information shall be subject to Section 4.5.
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(c) Vishay’s transfer of books and records
pertaining to the MGF Business and other Information to VPG, Vishay’s agreement
to permit VPG to obtain Information existing prior to the Distribution, VPG’s
transfer of books and records pertaining to the Vishay Business, if any, and
other Information to Vishay and VPG’s agreement to permit Vishay to obtain
Information existing prior to the Distribution are made in reliance on Vishay’s
and VPG’s respective agreements, as set forth in Section 4.5 and this
Section 4.6, to
maintain the confidentiality of such Information and to take the steps provided
herein for the preservation of all Privileges that may belong to or be asserted
by Vishay or VPG, as the case may be. The access to Information, witnesses and
individuals being granted pursuant to Sections 4.3 and
4.4 and the
disclosure to VPG and Vishay of Privileged Information relating to the MGF
Business or the Vishay Business pursuant to this Agreement in connection with
the Separation and Distribution shall not be asserted by Vishay or VPG to
constitute, or otherwise deemed, a waiver of any Privilege that has been or may
be asserted under this Section 4.6 or
otherwise. Nothing in this Agreement shall operate to reduce, minimize or
condition the rights granted to Vishay and VPG in, or the obligations imposed
upon Vishay and VPG by, this Section
4.6.
Section 4.7 Cooperation with Respect to
Know-how. Neither party shall knowingly utilize or incorporate into its
products or services the confidential know-how or other proprietary technical
information of the other party without the express, prior written consent of the
other party. The parties agree that if a party reasonably believes that the
other party has or may have an interest or expectation of ownership in know-how
or other technical information that has come to the attention of the personnel
of the first party and that the first party proposes to utilize in its products,
services or other aspects of its business, the first party shall bring this to
the attention of the other party. Thereafter, the parties shall discuss in good
faith the use of such know-how or other technical information to determine
whether such information is the exclusive property of one of the parties or if
it is information in which both parties have an interest or expectation of
ownership. If it is determined that the know-how or other technical information
is the exclusive property of one of the parties, the other party may request a
license to utilize such information for development of or incorporation into its
products and services or in other aspects of its business. In such case, the
other party shall in good faith consider the request for a license, including
the financial arrangements and other terms that the first party proposes for
such a license. Nothing, however, shall require a party to enter into such a
license or to act against its commercial interests as determined by such party.
For the purpose of the discussions contemplated by this Section 4.7, each
party shall at all times designate by notice to the other party one or more
individuals at a level equal to or above divisional P&L leader who shall be
available to engage in such discussions at the request of the other
party.
Section 4.8 VPG Exchangeable Notes and VPG Warrants;
Registration. VPG agrees
to take the following actions:
(a) Issue notes exchangeable for shares of VPG
common stock (the “VPG
Exchangeable
Notes”) to such Persons, in such amounts, upon such terms and at such
time as required by that certain Put and Call Agreement dated as of December 13,
2002, by and between Vishay and each of the holders of the Notes due December
31, 2102 issued by Vishay.
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(b) Issue warrants to acquire VPG common stock
(the “VPG
Warrants”) to such Persons, in such amounts, upon such terms and at such
time as required by that certain Warrant Agreement dated as of December 13,
2002, by and between Vishay and American Stock Transfer and Trust
Company.
(c) Register the shares of VPG common stock
issuable upon (i) exchange of the VPG Exchangeable Notes or (ii) exercise of the
VPG Warrants, on a resale registration statement on such terms and within such
time periods as required by that certain Securities Investment and Registration
Rights Agreement dated as of December 13, 2002, by and among Vishay, Phoenix
Acquisition Company S.a.r.l., Phoenix Bermuda, LP and certain other persons as
set forth therein.
Section 4.9 Tax
Matters. All matters relating to Taxes shall be governed exclusively by
the Tax Matters Agreement, except as may be expressly stated herein or therein.
In the event of any inconsistency with respect to such matters between the Tax
Matters Agreement and this Agreement or any other Ancillary Agreement, the Tax
Matters Agreement shall govern to the extent of the
inconsistency.
Section 4.10 Employee Matters. All
matters relating to or arising out of any employee benefit, compensation or
welfare arrangement in respect of any present and former employee of the Vishay
Group or the VPG Group shall be governed by the Employee Matters Agreement. In
the event of any inconsistency with respect to such matters between the Employee
Matters Agreement and this Agreement or any Ancillary Agreement, the Employee
Matters Agreement shall govern to the extent of the inconsistency; provided,
however, that notwithstanding anything to the contrary herein or in the Employee
Matters Agreement, for the period from and after the Distribution Date, Vishay
shall have no responsibility for the compensation or benefits of any of the
executives or other employees of VPG, including those who were employed by
Vishay prior to the Separation.
Section 4.11 Intellectual
Property. All matters relating to the ownership and right to use
Intellectual Property shall be governed exclusively by the License Agreements,
as applicable, except as may be expressly stated herein or therein. In the event
of any inconsistency with respect to such matters between a particular License
Agreement and this Agreement or any Ancillary Agreement, such particular License
Agreement shall govern to the extent of the inconsistency.
Section 4.12 Services Support. All
matters relating to the provision of support and other services by one Group to
the other Group after the Effective Time, covered by the Transition Services
Agreements, shall be governed exclusively by the respective Transition Services
Agreements, except as may be expressly stated herein or therein. In the event of
any inconsistency with respect to such matters between a particular Transition
Services Agreement and this Agreement or any other Ancillary Agreement, such
particular Transition Services Agreement shall govern to the extent of the
inconsistency.
Section 4.13 Real Property. All
matters relating to real property to be leased, subleased, occupied, or shared
either Group after the Effective Time shall be governed by the Lease Agreements,
except as may be expressly stated herein or therein. In the event of any
inconsistency with respect to such matters between a particular Lease Agreements
and this Agreement or any Ancillary Agreement, such particular Lease Agreement
shall govern to the extent of the inconsistency.
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ARTICLE V
SURVIVAL AND INDEMNIFICATION
Section 5.1 Mutual Release.
(a) Effective as of the Distribution Date and
except as otherwise specifically set forth in the Ancillary Agreements, each of
Vishay, on behalf of itself and each member of the Vishay Group, on the one
hand, and VPG, on behalf of itself and each member of the VPG Group, on the
other hand, hereby unequivocally, unconditionally and irrevocably releases and
forever discharges the other party and the members of such party’s Group, and
its and their respective current and former directors, officers, managers or
other Persons acting in a similar capacity, agents, record and beneficial
security holders (including trustees and beneficiaries of trusts holding such
securities), advisors, accountants, attorneys and other representatives (in each
case, in their respective capacities as such) and their respective heirs,
executors, administrators, successors and assigns, of and from, all Liabilities
whatsoever of every name and nature, whether at law or in equity (including any
right of contribution), whether arising under any Contract, by operation of law
or otherwise, existing or arising from any acts or events occurring or failing
to occur or alleged to have occurred or to have failed to occur or any
conditions existing or alleged to have existed on or before the Distribution
Date, whether or not known on the Distribution Date, whether fixed or
contingent, and whether or not concealed or hidden, including in connection with
the transactions and all other activities to implement the Separation and the
Distributions.
(b) Nothing contained in Section 5.1(a) shall
impair any right of any party (or any of the respective members of such party’s
Group) to enforce this Agreement, any Ancillary Agreement or any other Contracts
that are contemplated by Section
2.11(b) or the applicable Schedules thereto, nor shall anything contained
in those sections be interpreted as terminating as of the Distribution Date any
rights under any such Contracts. For purposes of clarification, nothing
contained in Section
5.1(a) shall release any Person from:
(i) any Liability provided in or resulting
from any agreement among any member of the Vishay Group or the VPG Group that is
specified in Section
2.11(b)
or the applicable Schedules thereto as not to terminate as of the Distribution
Date, or any other Liability specified in such Section 2.11(b) as
not to terminate as of the Distribution Date;
(ii) any Liability, contingent or otherwise,
assumed, transferred, assigned or allocated to the Group of which such Person is
a member in accordance with, or any other Liability of any member of any Group
under, this Agreement or any Ancillary Agreement;
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(iii) any Liability for the sale, lease,
construction or receipt of goods, property or services purchased, obtained or
used in the ordinary course of business by a member of one Group from a member
of any other Group prior to the Distribution Date;
(iv) any Liability for unpaid amounts for
products or services or refunds owing on products or services due on a
value-received basis for work done by a member of one Group at the request or on
behalf of a member of another Group;
(v) any Liability that the parties may have
with respect to indemnification or contribution pursuant to this Agreement for
claims brought against the parties by third Persons, which Liability shall be
governed by the provisions of this Article V and Article VI and, if
applicable, the appropriate provisions of the Ancillary Agreements;
or
(vi) any Liability the release of which would
result in the release of any Person other than a Person released pursuant to
this Section
5.1.
In addition, nothing contained in Section 5.1(a) shall
release any party from honoring its existing obligations to indemnify any
director, officer or employee of either Group who was a director, officer or
employee of such party on or prior to the Distribution Date, to the extent that
such director, officer or employee becomes a named defendant in any litigation
involving such party and was entitled to such indemnification pursuant to then
existing obligations.
(c) Neither Vishay nor VPG shall make, nor
shall either permit any other member of its Group to make, any claim or demand,
or commence any Action asserting any claim or demand, including any claim of
contribution or any indemnification, against the other or any member of the
other Group or any other Person released pursuant to Section 5.1(a), with
respect to any Liabilities released pursuant to Section
5.1(a).
(d) It is the intent of Vishay and VPG by
virtue of the provisions of this Section 5.1 to
provide for a full and complete release and discharge of all Liabilities
existing or arising from all acts and events occurring or failing to occur or
alleged to have occurred or to have failed to occur and all conditions existing
or alleged to have existed on or before the Distribution Date, between or among
Vishay or any member of the Vishay Group, on the one hand, and VPG or any member
of the VPG Group, on the other hand (including any contractual agreements or
arrangements existing or alleged to exist between or among any such members on
or before the Distribution Date), except as expressly set forth in Section 5.1(b). At any time, at the
request of any other party, each party shall cause each member of its respective
Group to execute and deliver releases reflecting the provisions
hereof.
Section 5.2 Indemnification by
Vishay. Vishay shall indemnify, defend and hold harmless VPG, each member
of the VPG Group and each of their respective current and former directors,
officers and employees, and each of the heirs, executors, successors and assigns
of any of the foregoing (collectively, the “VPG Indemnified
Parties”), from and against any and all Liabilities of VPG Indemnified
Parties relating to, arising out of or resulting from any of the following items
(without duplication):
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(a) the failure of Vishay or any other member
of the Vishay Group or any other Person to pay, perform or otherwise promptly
discharge any Liabilities of the Vishay Group other than the Assumed Liabilities
whether prior to or after the date hereof;
(b) the conduct of the Vishay
Business;
(c) any Liability of the Vishay Group
(including the Excluded Assumed Liabilities) other than the Assumed
Liabilities;
(d) any Environmental Liabilities under Section 2.5(b)(v);
(e) any breach of, or failure to perform or
comply with, any covenant, undertaking or obligation of, this Agreement or any
Ancillary Agreements, by Vishay or any member of the Vishay Group;
and
(f) any untrue statement or alleged untrue
statement of material fact or omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent relating to Vishay Group contained in
the Form 10 Registration Statement, the Information Statement or any other
registration statements filed by VPG or Vishay in connection with the
Distribution.
Section 5.3 Indemnification by
VPG. VPG shall indemnify defend and hold harmless Vishay, each member of
the Vishay Group and each of their respective current and former directors,
officers and employees, and each of the heirs, executors, successors and assigns
of any of the foregoing (collectively, the “Vishay Indemnified
Parties”) from and against any and all Liabilities of the Vishay
Indemnified Parties relating to, arising out of or resulting from any of the
following items (without duplication):
(a) the failure of VPG or any other member of
the VPG Group or any other Person to pay, perform or otherwise promptly
discharge any Assumed Liabilities in accordance with their respective terms,
whether prior to or after the date hereof;
(b) the conduct of the MGF
Business;
(c) any Assumed Liability;
(d) any Environmental Liabilities under Section 2.5(a)(v);
(e) any breach of, or failure to perform or
comply with, any covenant, undertaking or obligation of, this Agreement or any
Ancillary Agreements, by VPG or any member of the VPG Group; and
(f) any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent relating to the VPG Group contained
in the Form 10 Registration Statement, the Information Statement or any other
registration statements filed by VPG in connection with the
Distribution.
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Section 5.4 Tax
Indemnification. Notwithstanding anything herein to the contrary,
indemnification for matters subject to the Tax Matters Agreement shall be
governed by the terms, provisions and procedures of the Tax Matters Agreement
and not by this Article
V.
Section 5.5 Indemnification Obligations Net of Insurance
Proceeds and Other Amounts.
(a) The parties intend that any Liability
subject to indemnification or reimbursement pursuant to this Article V or Article VI will be
net of Insurance Proceeds that actually reduce the amount of the Liability.
Accordingly, the amount which any party (an “Indemnifying Party”)
is required to pay to any Person entitled to indemnification hereunder (an
“Indemnified
Party”) will be reduced by any Insurance Proceeds theretofore actually
received, realized or recovered by or on behalf of the Indemnified Party in
reduction of the related Liability. If an Indemnified Party receives a payment
(an “Indemnity
Payment”) required by this Agreement from an Indemnifying Party in
respect of any Liability and subsequently receives Insurance Proceeds that
actually reduce the amount of the Liability, then the Indemnified Party will pay
to the Indemnifying Party an amount equal to the excess of the Indemnity Payment
received over the amount of the Indemnity Payment that would have been due if
the Insurance Proceeds had been received, realized or recovered before the
Indemnity Payment was made.
(b) In the case of any Shared Contingent
Liability, any Insurance Proceeds actually received, realized or recovered by
any party in respect of the Shared Contingent Liability will be shared among the
parties in such manner as may be necessary so that the obligations of the
parties for such Shared Contingent Liability, net of such Insurance Proceeds,
will remain in proportion to their respective Shared Percentages, regardless of
which party or parties may actually receive, realize or recover such Insurance
Proceeds.
(c) An insurer who would otherwise be
obligated to pay any claim shall not be relieved of the responsibility with
respect thereto or, solely by virtue of the indemnification provisions hereof,
have any subrogation rights with respect thereto, it being expressly understood
and agreed that no insurer or any other third party shall be entitled to a
“wind-fall” ( i.e., a benefit they
would not be entitled to receive in the absence of the indemnification
provisions) by virtue of the indemnification provisions hereof. Nothing
contained in this Agreement or in any Ancillary Agreement shall obligate any
member of any Group to seek to collect or recover any Insurance Proceeds; provided, that such
member is capable of fulfilling and meeting any of its obligations as an
Indemnifying Party under this Agreement (including, but not limited to the
ability to make a full payment on any indemnification obligation).
Section 5.6 Procedures for Indemnification of Third Party
Claims.
(a) If an Indemnified Party shall receive
notice or otherwise learn of the assertion by a Person (including any
Governmental Authority) who is not a member of the Vishay Group or the VPG Group
of any claim or of the commencement by any such Person of any Action
(collectively, a “Third Party Claim”)
with respect to which an Indemnifying Party may be obligated to provide
indemnification to such Indemnified Party pursuant to Section 5.2 or Section 5.3 or any
other section of this Agreement or any Ancillary Agreement, such Indemnified
Party shall give such Indemnifying Party written notice thereof within twenty
(20) days after becoming aware of such Third Party Claim. Any such notice shall
describe the Third Party Claim in reasonable detail. If any Person shall receive
notice or otherwise learn of the assertion of a Third Party Claim which may
reasonably be determined to be a Shared Contingent Liability, such Person shall
give the other party to this Agreement written notice thereof within twenty (20)
days after becoming aware of such Third Party Claim. Any such notice shall
describe the Third Party Claim in reasonable detail. Notwithstanding the
foregoing, the failure of any Indemnified Party or other Person to give notice
as provided in this Section 5.6(a) shall
not relieve the related Indemnifying Party of its obligations under this Article V, except to
the extent that such Indemnifying Party is actually prejudiced by such failure
to give notice.
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(b) If the Indemnifying Party receiving any
notice pursuant to Section 5.6(a) or the
Indemnified Party believes that the Third Party Claim is or may be a Shared
Contingent Liability, such party may make a Determination Request with respect
thereto. Vishay shall be entitled (but not obligated) to assume the defense of
such Third Party Claim as if it were the Indemnifying Party hereunder until a
determination on whether such Third Party Claim is a Shared Contingent
Liability. In any such event, Vishay shall be entitled to reimbursement of all
the costs and expenses of such defense once a final determination or
acknowledgment is made as to the status of the Third Party Claim; provided, that, if
such Third Party Claim is determined to be a Shared Contingent Liability, such
costs and expenses shall be shared as provided in Section 5.6(c). If it is
determined by the parties or the Contingent Claim Committee that the Third Party
Claim is a Shared Contingent Liability, the Indemnifying Party determined to
have a majority of the Shared Percentage of such Shared Contingent Liability
shall assume the defense of such Third Party Claim; provided, that such
Indemnifying Party is solvent. If the Indemnifying Party with a majority of the
Shared Contingent Liability is insolvent, the Indemnifying Party with less than
a majority of the Shared Contingent Liability shall be entitled (but not
obligated) to assume the defense of such Third Party Claim.
(c) The costs and expenses of assuming the
defense of any Third Party Claim that is a Shared Contingent Liability (subject
to Section
5.6(b)), and/or seeking to settle or compromise (subject to Section 5.6(g)) shall
be included in the calculation of the amount of the applicable Shared Contingent
Liability in determining the reimbursement obligations of the other parties with
respect thereto pursuant to Section 6.3. Any
Indemnified Party in respect of a Shared Contingent Liability shall have the
right to employ separate counsel and to participate in (but not control) the
defense, compromise, or settlement thereof, but all fees and expenses of such
counsel shall be the expense of such Indemnified Party.
(d) Other than in the case of a Shared
Contingent Liability, an Indemnifying Party may elect to defend (and, unless the
Indemnifying Party has specified any reservations or exceptions, to seek to
settle or compromise), at such Indemnifying Party’s own expense and by such
Indemnifying Party’s own counsel, any Third Party Claim. Within thirty (30) days
after the receipt of notice from an Indemnified Party in accordance with Section 5.6(a) (or
sooner, if the nature of such Third Party Claim so requires), the Indemnifying
Party shall notify the Indemnified Party of its election whether the
Indemnifying Party will assume responsibility for defending such Third Party
Claim, which election shall specify any reservations or exceptions. After notice
from an Indemnifying Party to an Indemnified Party of its election to assume the
defense of a Third Party Claim, such Indemnified Party shall have the right to
employ separate counsel and to participate in (but not control) the defense,
compromise, or settlement thereof, but the fees and expenses of such counsel
shall be the expense of such Indemnified Party.
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(e) Other than in the case of a Shared
Contingent Liability, if an Indemnifying Party elects not to assume
responsibility for defending a Third Party Claim, or fails to notify an
Indemnified Party of its election as provided in Section 5.6(d), such
Indemnified Party may defend such Third Party Claim at the cost and expense of
the Indemnifying Party.
(f) Unless the Indemnifying Party has failed
to assume the defense of the Third Party Claim in accordance with the terms of
this Agreement, no Indemnified Party may settle or compromise any Third Party
Claim that is not a Shared Contingent Liability without the consent of the
Indemnifying Party. No Indemnified Party may settle or compromise any Third
Party Claim that is a Shared Contingent Liability without the consent of the
Indemnifying Party that is entitled to or has assumed the defense of such Third
Party Claim.
(g) In the case of a Third Party Claim that is
not a Shared Contingent Liability, no Indemnifying Party shall consent to entry
of any judgment or enter into any settlement of the Third Party Claim without
the consent of the Indemnified Party if the effect thereof is to permit any
injunction, declaratory judgment, other order or other nonmonetary relief to be
entered, directly or indirectly against any Indemnified Party. In the case of a
Third Party Claim that is a Shared Contingent Liability, the Indemnifying Party
that has assumed the defense of such Third Party Claim shall not consent to
entry of any judgment or enter into any settlement of the Third Party Claim
without the consent of the Indemnified Party if the effect thereof is to permit
any injunction, declaratory judgment, other order or other nonmonetary relief to
be entered, directly or indirectly, against any Indemnified Party; provided, however, the
Indemnifying Party shall not need to obtain the consent of the Indemnified Party
if the Indemnified Party is insolvent.
Section 5.7 Procedures for
Indemnification of Direct Claims. Any claim for indemnification made
directly by the Indemnified Party against the Indemnifying Party that does not
result from a Third Party Claim shall be asserted by written notice from the
Indemnified Party to the Indemnifying Party specifically claiming
indemnification hereunder. Such Indemnifying Party shall have a period of
forty-five (45) days after the receipt of such notice within which to respond
thereto. If such Indemnifying Party does not respond within such forty-five (45)
day period, such Indemnifying Party shall be deemed to have accepted
responsibility to make payment and shall have no further right to contest the
validity of such claim. If such Indemnifying Party does respond within such
forty-five (45) day period and rejects such claim in whole or in part, such
Indemnified Party shall be free to pursue resolution as provided in Article VIII.
Section 5.8 Payments. The
Indemnifying Party shall pay all amounts payable pursuant to this Article V by wire
transfer of immediately available funds, promptly following receipt from an
Indemnified Party of a statement therefor, together with all accompanying
reasonably detailed backup documentation, for a Liability that is the subject of
indemnification hereunder, unless the Indemnifying Party in good faith disputes
the Liability, in which event it shall so notify the Indemnified Party. In any
event, the Indemnifying Party shall pay to the Indemnified Party, by wire
transfer of immediately available funds, the amount of any Liability for which
it is liable hereunder no later than ten (10) Business Days following any final
determination of such Liability and the Indemnifying Party’s liability therefor.
A “final determination” shall
exist when (a) the parties to the dispute have reached an agreement in writing,
(b) a court of competent jurisdiction shall have entered a final and
non-appealable order or judgment or (c) an arbitration or like panel shall have
rendered a final non-appealable determination with respect to disputes the
parties have agreed to submit thereto.
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Section 5.9 Contribution. If the
indemnification provided for in this Article V shall, for
any reason, be unavailable or insufficient to hold harmless an Indemnified Party
hereunder in respect of any Liability, then the Indemnifying Party shall, in
lieu of indemnifying such Indemnified Party, contribute to the amount paid or
payable by such Indemnified Party as a result of such Liability, in such
proportion as shall be sufficient to place the Indemnified Party in the same
position as if such Indemnified Party were indemnified hereunder, the parties
intending that their respective contributions hereunder be as close as possible
to the indemnification under Section 5.2 and Section 5.3. If the
contribution provided for in the previous sentence shall, for any reason, be
unavailable or insufficient to put the Indemnified Party in the same position as
if it were indemnified under Section 5.2 or Section 5.3, as the
case may be, then the Indemnifying Party shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Liability, in such
proportion as shall be appropriate to reflect the relative benefits received by
and the relative fault of the Indemnifying Party on the one hand and the
Indemnified Party on the other hand with respect to the matter giving rise to
the Liability.
Section 5.10 Remedies Cumulative.
The rights and remedies provided in this Article V shall be
cumulative and, subject to the provisions of Article VIII, shall
not preclude assertion by any Indemnified Party of any other rights or the
seeking of any and all other remedies against any Indemnifying
Party.
Section 5.11 Survival of
Indemnities. The rights and obligations of each of Vishay and VPG and
their respective Indemnified Parties under this Article V shall
survive the distribution, sale or other transfer by any party of any Assets or
the delegation or assignment by it of any Liabilities.
ARTICLE VI
CONTINGENT GAINS AND CONTINGENT LIABILITIES
Section 6.1 Contingent Gains.
(a) Each of Vishay and VPG shall have the sole
and exclusive right to any benefit received with respect to any Exclusive Vishay
Contingent Gain and any Exclusive VPG Contingent Gain, respectively. Each of
Vishay and VPG shall have the sole and exclusive authority to commence,
prosecute, settle, manage, control, conduct, waive, forego, release, discharge,
forgive and otherwise determine all matters whatsoever with respect to any such
Exclusive Vishay Contingent Gain or Exclusive VPG Contingent Gain, as the case
may be.
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(b) Any benefit that may be received from any
Shared Contingent Gain shall be shared between Vishay and VPG in proportion to
the Shared Vishay Percentage and the Shared VPG Percentage, respectively, and
shall be paid in accordance with Section 6.4. If it is
determined by the parties or the Contingent Claim Committee that a Contingent
Gain is a Shared Contingent Gain, the party determined to have a majority of the
Shared Percentage of such Shared Contingent Gain shall have the sole and
exclusive authority to commence, prosecute, settle, manage, control, conduct,
waive, forgo, release, discharge, forgive and otherwise determine all matters
whatsoever with respect to such Shared Contingent Gain. The party with a
minority interest in such Shared Contingent Gain shall not take, or permit any
member of its Group to take, any action (including commencing any Action) that
would interfere with such rights and powers of the other party. The party with a
majority of the Shared Percentage of such Shared Contingent Gain shall use its
reasonable best efforts to notify the other party in the event that it commences
an Action with respect to a Shared Contingent Gain; provided, that the
failure to provide such notice shall not give rise to any rights on the part of
the other party against such party or affect any other provision of this Section 6.1. The
party with a majority of the Shared Percentage of such Shared Contingent Gain
may elect not to pursue any Shared Contingent Gain for any reason whatsoever
(including a different assessment of the merits of any Action, claim or right
than the other party or any business reasons that are in the best interests of
such party or a member of such party’s Group, without regard to the best
interests of any member of the other Group) and no member of the Group with a
majority interest in such Shared Contingent Gain shall have any liability to any
Person (including any member of the other Group) as a result of any such
determination.
(c) In the event of any dispute as to whether
any claim or right is a Contingent Gain or whether any Contingent Gain is a
Shared Contingent Gain, an Exclusive Vishay Contingent Gain or an Exclusive VPG
Contingent Gain, Vishay may, but shall not be obligated to, commence prosecution
or other assertion of such claim or right pending resolution of such dispute. In
the event that Vishay commences any such prosecution or assertion and, upon
resolution of the dispute, it is determined hereunder that VPG has the exclusive
right to such claim or right, Vishay shall, promptly upon the request of VPG,
discontinue the prosecution or assertion of such right or claim and transfer the
control thereof to VPG. In such event, VPG will reimburse Vishay for all costs
and expenses, reasonably incurred prior to resolution of such dispute in the
prosecution or assertion of such claim or right.
Section 6.2 Exclusive Contingent
Liabilities. Each Exclusive Contingent Liability shall constitute a
Liability for which indemnification is provided by Vishay or VPG, as the case
may be, pursuant to Article V and shall
be subject to the procedures set forth in Article V with
respect thereto.
Section 6.3 Shared Contingent
Liabilities.
(a) As set forth in Section 5.6(c) and
subject to Section
5.6(g), any Third Party Claim that is a Shared Contingent Liability, and
the costs and expenses thereof, shall be included in the calculation of the
amount of the applicable Shared Contingent Liability in determining the
reimbursement obligations of the other parties with respect thereto pursuant to
this Section
6.3.
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(b) Each of Vishay and VPG shall be
responsible for its Shared Percentage of any Shared Contingent Liability. It
shall not be a defense to any obligation by any party to pay any amount in
respect of any Shared Contingent Liability that such party was not consulted in
the defense thereof, that such party’s views or opinions as to the conduct of
such defense were not accepted or adopted, that such party does not approve of
the quality or manner of the defense thereof or that such Shared Contingent
Liability was incurred by reason of a settlement rather than by a judgment or
other determination of liability (even if, subject to Section 5.6(g), such
settlement was effected without the consent or over the objection of such
party).
Section 6.4 Payments. Any amount
owed in respect of (i) any Shared Contingent Liabilities (including
reimbursement for the cost or expense of defense of any Third Party Claim that
is a Shared Contingent Liability), or (ii) any Shared Contingent Gains
(including reimbursement for the costs or expenses to commence, prosecute or
settle matters with respect to a Shared Contingent Gain), pursuant to this Article VI shall be
remitted promptly after the party entitled to such amount provides an invoice
(including reasonable supporting Information with respect thereto) to the party
owing such amount.
Section 6.5 Procedures to Determine Status of Contingent
Liability or Contingent Gain.
(a) With respect to any other matters not set
forth on Schedules to this Agreement (regardless of whether such matters are
currently pending but not set forth on such Schedules or are asserted or filed
hereafter), Vishay and VPG will form the Contingent Claim Committee for (x) the
purpose of resolving whether:
(i) any claim or right is a Contingent
Gain;
(ii) any Contingent Gain is a Shared
Contingent Gain, an Exclusive Vishay Contingent Gain or an Exclusive VPG
Contingent Gain;
(iii) any Liability is a Contingent Liability;
or
(iv) any Contingent Liability is a Shared
Contingent Liability, an Exclusive Vishay Contingent Liability or an Exclusive
VPG Contingent Liability.
and (y) for the purpose
of determining the Shared VPG Percentage and the Shared Vishay Percentage in
connection with Shared Contingent Gains and Shared Contingent
Liabilities.
(b) (i) The parties shall refer any Shared
Contingent Gain or Shared Contingent Liability to the Contingent Claim Committee
to determine the Shared VPG Percentage and the Shared Vishay Percentage in
connection with such Shared Contingent Gain or Shared Contingent Liability and
(ii) any of the parties may refer any potential Contingent Gains or Contingent
Liabilities to the Contingent Claim Committee for resolution as described in
Section 6.5(a)
(any such request described in clause (i) or clause (ii), a “Determination Request”). If the
Contingent Claim Committee reaches a determination (which shall be made within
thirty (30) days of such referral on a matter submitted to the Contingent Claim
Committee by any of the parties), then that determination shall be binding on
all of the parties and their respective successors and assigns. In the event
that the Contingent Claim Committee cannot reach a determination as to (i) the
appropriate allocation of Contingent Gains or Contingent Liabilities between the
parties in connection with Shared Contingent Gains or Shared Contingent
Liabilities, respectively, or (ii) as to the nature or status of any such
Contingent Liabilities or Contingent Gains, within thirty (30) days after such
referral, then the issue will be submitted to the respective Senior Party
Representative of Vishay and VPG for determination. If the Senior Party
Representatives cannot reach a determination, then the procedures set forth in
Article VIII of
this Agreement shall govern.
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Section 6.6 Certain Case Allocation
Matters. The parties agree that if any Action not set forth on Schedules
to this Agreement involves separate and distinct claims that, if not joined in a
single Action, would constitute separate Exclusive Contingent Liabilities of two
or more parties, they will use their reasonable best efforts to segregate such
separate and distinct claims so that the Liabilities associated with each such
claim (including all costs and expenses) shall be treated as Exclusive
Contingent Liabilities of the appropriate party and so that each party shall
have the rights and obligations with respect to each such claim (including
pursuant to Article
V) as would have been applicable had such claims been commenced as
separate Actions. Notwithstanding the foregoing provisions,
this Section
6.6 shall not apply to any separate and distinct claim that is de minimis
or frivolous in nature.
ARTICLE VII
INSURANCE
Section 7.1 Insurance Matters
Generally.
(a) VPG does hereby, for itself and each other
member of the VPG Group, agree that no member of the Vishay Group or any Vishay
Indemnified Party shall have any liability whatsoever as a result of the
insurance policies and practices of Vishay and its Affiliates as in effect at
any time prior to the Effective Time, including as a result of the level or
scope of any such insurance, the creditworthiness of any insurance carrier, the
terms and conditions of any policy, the adequacy or timeliness of any notice to
any insurance carrier with respect to any claim or potential claim, the
bankruptcy or insolvency of any insurance carrier or otherwise.
(b) The Separated Assets shall include any and
all Insurance Policies which are owned or maintained by or on behalf of VPG or
any member of the VPG Group or which are owned or maintained by or on behalf of
Vishay or any member of the Vishay Group and which relate exclusively to the MGF
Business and which are by their terms assignable to VPG or any member of the VPG
Group. All other Insurance Policies shall be subject to the provisions of Section
7.2.
Section 7.2 Shared Insurance
Policies.
(a) Vishay agrees to use its reasonable best
efforts to cause the interest and rights of VPG and the other members of the VPG
Group as of the Effective Time as insureds, additional named insureds or
beneficiaries or in any other capacity under occurrence-based Insurance Policies
of Vishay or any other member of the Vishay Group in respect of periods prior to
the Effective Time (and under claims-made policies and programs to the extent a
claim has been submitted prior to the Effective Time) to survive the Effective
Time for the period for which such interests and rights would have survived
without regard to the transactions contemplated hereby to the extent permitted
by such Insurance Policies; provided however that Vishay shall be required to
maintain tail or extended coverage for the benefit of the VPG Group with respect
to certain Insurance Policies in effect prior to the Effective Time as described
in Schedule 1.4
and Schedule
2.5(b)(v). For the avoidance of doubt, except as otherwise provided in
Schedule 1.4 or
Schedule
2.5(b)(v), Vishay shall not be required to maintain any tail or extended
coverage for the benefit of the VPG Group with respect to Insurance Policies in
effect prior to the Effective Time.
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(b) Following the Effective Time, Vishay, at
its sole option, cost and expense, shall continue to administer the Insurance
Policies, including on behalf of VPG and the other members of the VPG Group.
Vishay’s retention of the administrative responsibilities for the Insurance
Policies shall not relieve VPG or any member of the VPG Group submitting any
insurance claim of the responsibility to report such claim accurately,
completely and in a timely manner or limit the authority of VPG or such other
member of the VPG Group to settle any such insurance claim within the limits of
the relevant Insurance Policy. Vishay may discharge its administrative
responsibilities under this Section 7.2(b) by
contracting for the provision of services by one or more independent
parties.
(c) If any insurer does not promptly
acknowledge insurance coverage in connection with any insured Assumed
Liabilities, then, with respect to such insured Assumed Liabilities, VPG, on an
as-incurred basis (i) shall advance all amounts expended by Vishay for or with
respect to such insured Assumed Liabilities, including all costs and expenses in
connection with the defense and settlement and in satisfaction of any judgment
incurred, and amounts sufficient to cover any Liabilities required to be paid by
Vishay or any member of the Vishay Group, and (ii) shall pay all costs incurred
in connection with pursuing and recovering Insurance Proceeds with respect to
the insured Assumed Liabilities, but, in the case of each of clauses (i) and
(ii) above, only to the extent Vishay is taking action in respect therewith at
the request of VPG, which shall be entitled to direct all such defense,
settlement and recovery efforts, subject, however to the provisions of Article
V. Any Insurance Proceeds received by Vishay or any other member of the Vishay
Group after the Effective Time under such policies and programs in respect of
VPG and the other members of the VPG Group shall be for the benefit of and shall
promptly be paid over to VPG and the other members of the VPG Group.
Notwithstanding anything herein to the contrary, neither Vishay nor any member
of the Vishay Group shall be liable for the satisfaction of any claim by VPG or
any member of the VPG Group out of any self-insurance program maintained by a
member of the Vishay Group to the extent relating to an Assumed
Liability.
(d) Except as otherwise provided in Schedule 1.4 or Schedule 2.5(b)(v), Vishay and VPG
agree that the aggregate amount of any deductible paid shall be borne by the
parties in the same proportion as the Insurance Proceeds received by each such
party bears to the total Insurance Proceeds received under the applicable
Insurance Policy, and any party that has paid more than its allocable share of
the deductible shall be entitled to receive from the other party an amount such
that each party will only bear its allocable share.
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(e) This Agreement is not intended as an
attempted assignment of any policy of insurance or as a contract of insurance
and shall not be construed to waive any right or remedy of any member of the
Vishay Group in respect of any insurance policy or any other contract or policy
of insurance.
(f) The parties agree to use their reasonable
best efforts to cooperate with respect to the insurance matters contemplated by
this Agreement. In the event that both parties have insurance claims relating to
the same occurrence, the parties shall jointly defend and waive any conflict
necessary to the conduct of a joint defense.
(g) Nothing in this Agreement shall be deemed
to restrict any member of the VPG Group from acquiring at its own expense any
other insurance policy in respect of any Liabilities or covering any
period.
Section 7.3 Insurance for VPG Officers
& Directors. Vishay shall use its reasonable best efforts to provide
insurance to those individuals who at and immediately following the Effective
Time are officers, directors, employees, fiduciaries or agents of VPG and who
immediately prior to the Effective Time were insured persons under the current
Vishay Directors & Officers Liability Insurance Policy (such individuals,
the “VPG Officers
& Directors”) with material terms and conditions no less favorable to
the VPG Officers & Directors than is available to the officers, directors,
employees, fiduciaries or agents of Vishay under the Vishay Directors &
Officers Liability Insurance Policy in effect at such time, except that such
insurance shall exclude coverage for wrongful acts, errors or omissions
occurring after the Distribution Date.
Section 7.4 Director and Officer
Indemnification. For a period of six (6) years from the Effective Time,
the provisions of the Amended and Restated Certificate of Incorporation and
Amended and Restated By-laws of Vishay to the extent providing for
indemnification of persons who were officers, directors, employees, fiduciaries
or agents immediately prior to the Effective Time shall not be amended in any
manner that would adversely affect the rights of persons who at the Effective
Time were directors, officers, employees, fiduciaries or agents of any member of
the VPG Group, unless such modification shall be required by, and then only to
the minimum extent required by, Applicable Law.
Section 7.5 VPG
Insurance. Effective as of the Distribution Date, except as expressly
provided herein, Vishay shall not be obligated to maintain insurance coverage
with respect to the business, affairs, operations, assets or liabilities of the
VPG Group, and VPG shall indemnify and hold the Vishay Group harmless from any
Liabilities arising by reason of the failure of the VPG Group to maintain such
insurance.
ARTICLE VIII
DISPUTE RESOLUTION
Section 8.1 Agreement to Resolve
Disputes. Except as otherwise specifically provided in any Ancillary
Agreement, the procedures for discussion, negotiation and dispute resolution set
forth in this Article
VIII shall apply to all disputes, controversies or claims (whether
sounding in contract, tort or otherwise) that may arise out of or relate to or
arise under or in connection with this Agreement or any Ancillary Agreement, or
the transactions contemplated hereby or thereby (including all actions taken in
furtherance of the transactions contemplated hereby or thereby on or prior to
the date hereof), or the commercial or economic relationship of the parties
relating hereto or thereto, between or among any member of the Vishay Group on
the one hand and the VPG Group on the other hand. Each party agrees on behalf of
itself and each member of its respective Group that the procedures set forth in
this Article
VIII shall be the sole and exclusive remedy in connection with any
dispute, controversy or claim relating to any of the foregoing matters and
irrevocably waives any right to commence any Action in or before any
Governmental Authority, except as otherwise required by Applicable
Law.
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Section 8.2 Dispute Resolution;
Mediation.
(a) Either party may commence the dispute
resolution process of this Section 8.2 by giving the
other party written notice (a “Dispute Notice”) of
any controversy, claim or dispute of whatever nature arising out of or relating
to or in connection with this Agreement, any Ancillary Agreement or the breach,
termination, enforceability or validity thereof (a “Dispute”) which has
not been resolved in the normal course of business or as provided in the
relevant Ancillary Agreement. The parties shall attempt in good faith to resolve
any Dispute by negotiation between executives of each party (“Senior Party
Representatives”) who have authority to settle the Dispute and, unless
discussions between the parties are already at a senior management level, who
are at a higher level of management than the Persons who have direct
responsibility for the administration of this Agreement or the relevant
Ancillary Agreement. Within fifteen (15) days after delivery of the Dispute
Notice, the receiving party shall submit to the other a written response (the
“Response”).
The Dispute Notice and the Response shall include (i) a statement setting forth
the position of the party giving such notice and a summary of arguments
supporting such position and (ii) the name and title of such party’s Senior
Party Representative and any other Persons who will accompany the Senior Party
Representative at the meeting at which the parties will attempt to settle the
Dispute. Within thirty (30) days after the delivery of the Dispute Notice, the
Senior Party Representatives of both parties shall meet at a mutually acceptable
time and place, and thereafter as often as they reasonably deem necessary, to
attempt to resolve the Dispute. The parties shall cooperate in good faith with
respect to any reasonable requests for exchanges of Information regarding the
Dispute or a Response thereto.
(b) If the Dispute has not been resolved
within sixty (60) days after delivery of the Dispute Notice, or if the parties
fail to meet within thirty (30) days after delivery of the Dispute Notice as
hereinabove provided, the parties shall make a good faith attempt to settle the
Dispute by mediation pursuant to the provisions of this Section 8.2 before
resorting to arbitration contemplated by Section 8.3 or any
other dispute resolution procedure that may be agreed by the
parties.
(c) All negotiations, conferences and
discussions pursuant to this Section 8.2 shall be
confidential and shall be treated as compromise and settlement negotiations.
Nothing said or disclosed, nor any document produced, in the course of such
negotiations, conferences and discussions that is not otherwise independently
discoverable shall be offered or received as evidence or used for impeachment or
for any other purpose in any current or future arbitration.
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(d) Unless the parties agree otherwise, the
mediation shall be conducted in accordance with the CPR Institute for Dispute
Resolution Model Procedure for Mediation of Business Disputes in effect on the
date of this Agreement by a mediator mutually selected by the
parties.
(e) Within thirty (30) days after the mediator
has been selected as provided above, both parties and their respective attorneys
shall meet with the mediator for one (1) mediation session, it being agreed that
each party representative attending such mediation session shall be a Senior
Party Representative with authority to settle the Dispute. If the Dispute cannot
be settled at such mediation session or at any mutually agreed continuation
thereof, either party may give the other and the mediator a written notice
declaring the mediation process at an end.
(f) Costs of the mediation shall be borne
equally by the parties involved in the matter, except that each party shall be
responsible for its own expenses.
(g) Any Dispute regarding the following
matters is not required to be negotiated or mediated prior to seeking relief
from an arbitrator or, if applicable, from a court pursuant to Section 10.14: (i)
breach of any obligation of confidentiality or waiver of Privilege; and (ii) any
other claim where interim relief is sought to prevent serious and irreparable
injury to one of the parties. However, the parties to the Dispute shall make a
good faith effort to negotiate and mediate such Dispute, according to the above
procedures, while such arbitration is pending.
Section 8.3 Arbitration.
(a) Subject to Section 8.3(b), if
for any reason a Dispute is not resolved within one hundred eighty (180) days
from delivery of the Dispute Notice in accordance with the dispute resolution
process described in Section 8.2, the
parties agree that such Dispute shall be settled by binding arbitration before a
single arbitrator under the auspices of the American Arbitration Association
(“AAA”) in
Philadelphia, Pennsylvania pursuant to the Commercial Rules of the AAA. The
arbitrator selected to resolve the Dispute shall be bound exclusively by the
laws of the State of New York without regard to its choice of law rules. Any
decisions of award of the arbitrator will be final and binding upon the parties
and may be entered as a judgment by the parties. Any rights to appeal or review
such award by any court or tribunal are hereby waived to the extent permitted by
Applicable Law.
(b) Costs of the arbitration shall be borne
equally by the parties involved in the matter, except that each party shall be
responsible for its own expenses, except as otherwise determined by the
arbitrator.
(c) The parties agree to comply and cause the
members of their applicable Group to comply with any award made in any
arbitration proceeding pursuant to this Section 8.3, and
agree to enforcement of or entry of judgment upon such award in any court of
competent jurisdiction, including any federal or state court located in
Philadelphia, Pennsylvania or the City of New York, Borough of Manhattan. The
arbitrator shall be entitled to award any remedy in such proceedings, including
monetary damages, specific performance and all other forms of legal and
equitable relief; provided, however, that the
arbitrator shall not be entitled to award punitive, exemplary, treble or any
other form of non-compensatory monetary damages unless in connection with
indemnification for a Third Party Claim, to the extent of such
claim.
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Section 8.4 Continuity of Service and
Performance. Unless otherwise agreed in writing, the parties will
continue to provide service and honor all other commitments under this Agreement
and each Ancillary Agreement during the course of dispute resolution pursuant to
the provisions of this Article VIII with
respect to all matters not subject to such Dispute.
Section 8.5 Limitation of
Liability. In no event shall any member of the Vishay Group or the VPG
Group be liable to any member of the other Group for any special, consequential,
indirect, collateral, incidental or punitive damages or lost profits or failure
to realize expected savings or other commercial or economic loss of any kind,
however caused and on any theory of liability (including negligence) arising in
any way out of this Agreement, whether or not such Person has been advised of
the possibility of any such damages; provided, however, that the
foregoing limitations shall not limit either party’s indemnification obligations
for Liabilities with respect to Third Party Claims as set forth in Article V. The
provisions of Article
V, Article
VIII and Section 10.14 shall
be the parties’ sole recourse for any breach hereof or any breach of the
Ancillary Agreements, except as may be explicitly provided in any Ancillary
Agreement.
ARTICLE IX
TERMINATION
Without limiting the generality of Section 3.5(a), (i)
this Agreement and the Ancillary Agreements may be terminated, (ii) the
Separation may be abandoned and (iii) the Distribution may be abandoned, in each
case at any time prior to the Effective Time by and in the sole and absolute
discretion of Vishay without the approval of VPG. In the event of such
termination, neither party shall have any Liability of any kind to the other
party.
ARTICLE X
MISCELLANEOUS
Section 10.1 Counterparts. This
Agreement may be executed in one or more counterparts, each of which when so
executed and delivered or transmitted by facsimile, e-mail or other electronic
means, shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument. A facsimile or electronic signature
is deemed an original signature for all purposes under this
Agreement.
Section 10.2 Entire Agreement.
This Agreement, the Ancillary Agreements, and any Annexes, Schedules and
Exhibits hereto and thereto, as well as any other agreements and documents
referred to herein and therein, constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof and supersede all
previous agreements, negotiations, discussions, understandings, writings,
commitments and conversations between the parties with respect to such subject
matter. No agreements or understandings exist between the parties other than
those set forth or referred to herein or therein.
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Section 10.3 Construction.
(a) Any uncertainty or ambiguity with respect
to any provision of this Agreement shall not be construed for or against any
party based on attribution of drafting by either party.
(b) The headings contained herein are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. In this Agreement, unless a clear contrary
intention appears:
(i) the singular number includes the plural
number and vice versa;
(ii) reference to any Person includes such
Person’s successors and assigns but, if applicable, only if such successors and
assigns are not prohibited by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually;
(iii) reference to any gender includes each
other gender;
(iv) reference to any agreement, document or
instrument means such agreement, document or instrument as amended, modified,
supplemented or restated, and in effect from time to time in accordance with the
terms thereof subject to compliance with the requirements set forth
herein;
(v) reference to any Applicable Law means such
Applicable Law as amended, modified, codified, replaced or reenacted, in whole
or in part, and in effect from time to time, including rules and regulations
promulgated thereunder, and reference to any section or other provision of any
Applicable Law means that provision of such Applicable Law from time to time in
effect and constituting the substantive amendment, modification, codification,
replacement or reenactment of such section or other provision;
(vi) “herein,” “hereby,” “hereunder,”
“hereof,” “hereto” and words of similar import shall be deemed references to
this Agreement as a whole and not to any particular article, section or other
provision hereof or thereof;
(vii) “including” (and with correlative
meaning “include”) means including without limiting the generality of any
description preceding such term;
(viii) the Table of Contents and headings are
for convenience of reference only and shall not affect the construction or
interpretation hereof or thereof;
(ix) with respect to the determination of any
period of time, “from” means “from and including” and “to” means “to but
excluding;” and
(x) references to documents, instruments or
agreements shall be deemed to refer as well to all addenda, exhibits, schedules
or amendments thereto.
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Section 10.4 Assignability. This
Agreement shall be binding upon and inure to the benefit of the parties, and
their respective successors and permitted assigns; provided, however, that no
party may assign, delegate or transfer (by merger, operation of law or
otherwise) its respective rights or delegate its respective obligations under
this Agreement without the express prior written consent of the other party.
Notwithstanding the foregoing, either party may assign its rights and
obligations under this Agreement to any Wholly-owned Subsidiary; provided, however, that each
party shall at all times remain liable for the performance of its obligations
under this Agreement by any such Wholly-owned Subsidiary. Any attempted
assignment or delegation in violation of this Section 10.4 shall be
void.
Section 10.5 Third Party
Beneficiaries. Except for (x) the indemnification rights under this
Agreement of any Vishay Indemnified Party or any VPG Indemnified Party in their
respective capacities as such under Article V and for the
release under Section
5.1 of any Person provided therein and (y) the rights to insurance of VPG
Officers and Directors under Section 7.3: (i) the
provisions of this Agreement are solely for the benefit of the parties and their
respective successors and permitted assigns, and are not intended to confer upon
any Person, except the parties and their respective successors and permitted
assigns, any rights or remedies hereunder; (ii) there are no third party
beneficiaries of this Agreement; and (iii) this Agreement shall not provide any
third party with any remedy, claim, liability, reimbursement, claim of action or
other right in excess of those existing without reference to this
Agreement.
Section 10.6 Governing Law. This
Agreement and the legal relations between the parties shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the conflict of laws rules thereof to the extent such rules would require the
application of the law of another jurisdiction.
Section 10.7 Notices. All notices,
demands and other communications required to be given to a Party hereunder shall
be in writing and shall be deemed to have been duly given if personally
delivered, sent by a nationally recognized overnight courier, transmitted by
facsimile, or mailed by registered or certified mail (postage prepaid, return
receipt requested) to such Party at the relevant street address or facsimile
number set forth below (or at such other street address or facsimile number as
such Party may designate from time to time by written notice in accordance with
this provision):
If to Vishay, to:
Vishay Intertechnology, Inc.
00 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xx. Xxxx X. Xxxxxxxx, Chief Financial Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
00 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xx. Xxxx X. Xxxxxxxx, Chief Financial Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
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If to VPG, to:
Vishay Precision Group, Inc.
0 Xxxxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Chief Financial Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
0 Xxxxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Chief Financial Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
Eighteenth and Arch Streets
Philadelphia, Pennsylvania 19103-2799
Attention: Xxxxx Xxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
3000 Two Xxxxx Square
Eighteenth and Arch Streets
Philadelphia, Pennsylvania 19103-2799
Attention: Xxxxx Xxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
Any notice, demand or
other communication hereunder shall be deemed given upon the first to occur of:
(i) the fifth (5th) day after deposit
thereof, postage prepaid and addressed correctly, in a receptacle under the
control of the United States Postal Service; (ii) transmittal by facsimile
transmission to a receiver or other device under the control of the party to
whom notice is being given; or (iii) actual delivery to or receipt by the party
to whom notice is being given or an employee or agent thereof.
Section 10.8 Severability. If any
provision of this Agreement or the application thereof to any Person or
circumstance is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof, or the application of
such provision to Persons or circumstances or in jurisdictions other than those
as to which it has been held invalid or unenforceable, shall remain in full
force and effect and shall in no way be affected, impaired or invalidated
thereby, so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination, the parties shall negotiate in good faith in an effort to
agree upon such a suitable and equitable provision to effect the original intent
of the parties.
Section 10.9 Nonrecurring Costs and
Expenses. Vishay shall pay for all reasonable documented out-of-pocket
fees, costs and expenses incurred by the VPG Group prior to the Effective Time
in connection with the Separation and the Distribution.
Section 10.10 Press Releases; Public
Announcements. Prior to the Distribution Date, Vishay shall be
responsible for issuing any press releases or otherwise making public statements
with respect to this Agreement, the Ancillary Agreements, the Separation, the
Distribution or any of the other transactions contemplated hereby and thereby,
and VPG shall not make such statements without the prior written consent of
Vishay. Prior to the Distribution Date, Vishay and VPG shall each consult with
the other prior to making any filings with any Governmental Authority with
respect to any of the foregoing, but no such filing shall be made without the
approval of Vishay, and Vishay shall be permitted to make any filings as it
deems necessary or appropriate. Following the Effective Time, neither party
shall issue any release or make any other public announcement concerning this
Agreement or the transactions contemplated hereby without the prior written
approval of the other party, which approval shall not be unreasonably withheld,
delayed or conditioned; provided, however, that either
party shall be permitted to make any release or public announcement that in the
opinion of its counsel it is required to make by law or the rules of any
national securities exchange of which its securities are listed; provided further that it has
made efforts that are reasonable in the circumstances to obtain the prior
approval of the other party.
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Section 10.11 Survival of
Covenants. Except as expressly set forth in this Agreement or any
Ancillary Agreement, any covenants, representations or warranties contained in
this Agreement or any Ancillary Agreement shall survive the Separation and
Distribution and shall remain in full force and effect.
Section 10.12 Waiver of
Default.
(a) Any term or provision of this Agreement
may be waived, or the time for its performance may be extended, by the party or
the parties entitled to the benefit thereof. Any such waiver shall be validly
and sufficiently given for the purposes of this Agreement if, as to any party,
it is in writing signed by an authorized representative of such
party.
(b) Waiver by any party of any default by the
other party of any provision of this Agreement shall not be construed to be a
waiver by the waiving party of any subsequent or other default, nor shall it in
any way affect the validity of this Agreement or any party hereof or prejudice
the rights of the other party thereafter to enforce each and ever such
provision. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
Section 10.13 Amendments. This
Agreement may be amended, supplemented, modified or abandoned at any time prior
to the Distribution Date by and in the sole and absolute discretion of Vishay
without the approval of VPG or of the stockholders of Vishay. After the
Effective Time, no provisions of this Agreement shall be deemed amended,
modified or supplemented by any party, unless such amendment, supplement or
modification is in writing and signed by the authorized representative of the
party against whom it is sought to enforce such amendment, supplement or
modification.
Section 10.14 Specific Performance.
The parties agree that the remedy at law for any breach of this Agreement or any
Ancillary Agreement may be inadequate, and that, as between Vishay and VPG, any
party by whom this Agreement or any Ancillary Agreement is enforceable shall be
entitled to seek temporary, preliminary or permanent injunctive or other
equitable relief with respect to the specific enforcement or performance of this
Agreement or any Ancillary Agreement. Such party may, in its sole discretion,
apply to a court of competent jurisdiction for such injunctive or other
equitable relief as such court may deem just and proper in order to enforce this
Agreement or any Ancillary Agreement as between Vishay and VPG, or the members
of their respective Groups, or prevent any violation hereof, and, to the extent
permitted by Applicable Law, as between Vishay and VPG, each party waives any
objection to the imposition of such relief.
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Section 10.15 Consent to
Jurisdiction. Subject to the provisions of Article VIII, each of
the parties irrevocably submits to the jurisdiction of the federal and state
courts located in Philadelphia, Pennsylvania and the City of New York, Borough
of Manhattan for the purposes of any suit, Action or other proceeding to compel
arbitration, for the enforcement of any arbitration award or for specific
performance or other equitable relief pursuant to Section 10.14. Each
of the parties further agrees that service of process, summons or other document
by U.S. registered mail to such parties address as provided in Section 10.7 shall be
effective service of process for any Action, suit or other proceeding with
respect to any matters for which it has submitted to jurisdiction pursuant to
this Section
10.15. Each of the parties irrevocably waives any objection to venue in
the federal and state courts located in Philadelphia, Pennsylvania and the City
of New York, Borough of Manhattan of any Action, suit or proceeding arising out
of this Agreement or any Ancillary Agreement, or the transactions contemplated
hereby or thereby for which it has submitted to jurisdiction pursuant to this
Section 10.15,
and waives any claim that any such Action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
Section 10.16 Waiver of jury trial.
Subject to Article
VIII, each of the parties hereby waives to the fullest extent permitted
by Applicable Law any right it may have to a trial by jury with respect to any
court proceeding directly or indirectly arising out of and permitted under or in
connection with this agreement or the transactions contemplated by this
agreement. Each of the parties hereby (a) certifies that no representative,
agent or attorney of any other party has represented, expressly or otherwise,
that such other party would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it has been induced to enter into
this agreement and the transactions contemplated by this agreement, as
applicable, by, among other things, the mutual waivers and certifications in
this Section
10.16.
[SIGNATURE PAGE FOLLOWS]
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WHEREFORE, the parties have signed this
Separation Agreement effective as of the date first set forth
above.
between
VISHAY
INTERTECHNOLOGY, INC.
and
DATED
_______, 2010
SCHEDULES
Terms used but not defined in these Schedules
shall have the meanings assigned to them in the Master Separation and
Distribution Agreement (the “Master Separation Agreement”).
1
Schedule 1.1
Capital Allocation Transactions
Capital Allocation Transactions
Prior to the Separation, the parties will
cause the following transactions to occur:
1. | All intercompany accounts for money borrowed and non-trade invoicing between Vishay or any other member of the Vishay Group, on the one hand, and VPG or any other member of the VPG Group, on the other, will be settled and eliminated. | ||
2. | The extinguishment of notes payable obligations running from members of the VPG Group to members of the Vishay Group will be effected through distribution and contribution transactions of cash and the notes. | ||
3. | Vishay will cause the VPG to have Actual VPG Net Cash as of the Distribution Date equal between $58,500,000 and $71,500,000. To the extent Actual VPG Net Cash is less than or exceeds these values, the parties will make an adjustment in accordance with the terms of Section 2.17 of the Master Separation Agreement. | ||
4. | VPG will enter into a credit facility. |
The foregoing
transaction list is qualified by reference to the description of the separation
transactions in the Private Letter Ruling Request, dated ______, 2010, as amended
from time to time prior to the Separation, submitted by Vishay Intertechnology,
Inc. to the Internal Revenue Service (the “Private Letter Ruling
Request”). In the case of any inconsistency between this Schedule
and the Private Letter Ruling Request, this Schedule shall be deemed amended to
conform to the description of the separation transactions as set forth in the
Private Letter Ruling Request.
2
Schedule 1.2
Exclusive VPG Contingent Liabilities
Exclusive VPG Contingent Liabilities
For the avoidance of doubt, this schedule is
not necessarily exhaustive of all litigation relating to the MGF
Business.
Lawsuits
XXXXXX X.
VISHAY INTERTECHNOLOGY, INC.
ARTICLE
XIMCMAHON V. VISHAY INTERTECHNOLOGY, INC.
Environmental
Matters
See Schedule 2.5(b)(v).
3
Schedule 1.3
Separation Transactions
Separation Transactions
The separation transactions shall be as
specified in the Private Letter Ruling Request. In the case of any inconsistency
between this Schedule and the Private Letter Ruling Request, this Schedule shall
be deemed amended to conform to the description of the separation transactions
as set forth in the Private letter Ruling Request.
The parties will cause the following
miscellaneous asset transfers to occur:
1. | Acquisition of intellectual property owned by Vishay S.A. and necessary for manufacturing strain gage products to Vishay Measurements Group, Inc. | ||
2. | Acquisition of intellectual property owned by Vishay S.A. and necessary for manufacturing foil resistor chips for Vishay Precision Foil GmbH. |
4
Schedule 1.4
Shared Contingent Liabilities
Shared Contingent Liabilities
Product
Liability
Product liability refers to third party
liability from bodily injury and/or property damage caused by faulty products.
With respect to products manufactured in all jurisdictions other than the United
States and sold prior to the Separation, it also includes other third party
financial loss and the cost of dismantling and refitting any other products
manufactured with the faulty product, but does not include the cost of product
recall. With respect to products sold in the United States, it includes other
third party financial loss only to extent covered by the Errors and Omission
(E&O) Insurance Policy of the Vishay Group.
The Vishay Group will be responsible for
product liability in respect of any product manufactured by the VPG Group
outside the United States and sold prior to the Separation, whether a claim is
made with respect thereto before or after the Separation, to the extent of
available insurance coverage of the Vishay Group.
The Vishay Group will be responsible for
product liability in respect of any product sold by the VPG Group prior to the
Separation inside the United States, but only for which a claim has been made
with respect thereto before the Separation, to the extent of available insurance
coverage of the Vishay Group; provided that to the extent the liability is
covered under the Errors & Omission (E&O) Insurance Policy of the Vishay
Group, Vishay will be responsible for the liability whether a claim is made with
respect thereto before or after the Separation.
The following shall govern deductible amounts
under any insurance policies of the Vishay Group for which coverage is sought
under the circumstances recited in the two preceding paragraphs. Any deductible
for which a liability has been accrued on the books and records of the VPG Group
prior to the Separation will be the sole responsibility of the VPG Group. Any
policy deductible for which a liability has not been accrued on the books and
records of the VPG Group prior to the Separation will be shared equally by the
Vishay Group and the VPG Group.
Vishay agrees to (i) obtain tail coverage for
a period of five years under the E&O Policy of Vishay (as in effect on the
date the Agreement), to the extent it affords coverage for third party loss on
account of products manufactured and sold by the VPG Group prior to the
Separation; and (ii) purchase or self-insure extended reporting coverage for a
period of five years for product liability relating to products of the VPG Group
manufactured and sold prior to the Separation, which coverage shall be
substantially the same (including deductible amounts and policy limits) as the
coverage afforded under the existing policy of Vishay with HDI-Xxxxxxx (as in
effect on the date the Agreement), but only in respect of products manufactured
outside the United States.
5
Product
Recall Liability
Product Recall Liability refers to third party
expenses arising in connection with the recall of a faulty product to prevent
bodily injury or property damage.
The Vishay Group will be responsible for
product recall liability in respect of any product manufactured by the VPG Group
outside the United States and sold prior to the Separation, whether a claim is
made with respect thereto before or after the Separation, to the extent of
available insurance coverage of the Vishay Group.
The following shall govern deductible amounts
under any insurance policies of the Vishay Group for which coverage is sought
under the circumstances recited in the preceding paragraph. Any deductible for
which a liability has been accrued on the books and records of the VPG Group
prior to the Separation will be the sole responsibility of the VPG Group. Any
policy deductible for which a liability has not been accrued on the books and
records of the VPG Group prior to the Separation will be shared equally by the
Vishay Group and the VPG Group.
Vishay agrees to purchase or self-insure
extended reporting coverage for a period of five years for product recall
liability relating to products of the VPG Group manufactured and sold prior to
the Separation, which coverage shall be substantially the same (including
deductible amounts and policy limits) as the coverage afforded under the
existing policy of Vishay with Xxxxxxx Insurance (as in effect on the date the
Agreement), but only in respect of products manufactured outside the United
States.
Liabilities
Relating to the Separation
Liabilities relating to the Separation based
upon a claim or other assertion that the Separation violated the rights of any
Person or constituted a breach of a duty owed by any Person to the stockholders
of Vishay or VPG shall be borne by the Vishay Group and the VPG Group as
follows:
(i) | if covered by an insurance policy of the Vishay Group or an insurance policy of the VPG Group, by the Vishay Group or the VPG Group, as the case may be, but only to the extent of the insurance proceeds; | ||
(ii) | each party shall be responsible for the policy deductible under its insurance policy referred to in clause (i); and | ||
(iii) | otherwise in the proportion of the Vishay Group 90% and the VPG Group 10%. |
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Schedule 2.4(a)(iii)
Subsidiaries of VPG
Subsidiaries of VPG
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Schedule 2.4(b)(i)
Excluded Assets
Excluded Assets
1. | All assets used exclusively by Vishay S.A. in its strain gage business other than intellectual property. | ||
2. | All assets used exclusively by Vishay S.A. in finishing RCK foil resistor products, other than the intellectual property and equipment transferred to Vishay Advanced Technologies Ltd. (see Schedule 1.3). |
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Schedule
2.5(b)(ii)
Excluded Assumed Liabilities
Excluded Assumed Liabilities
Excluded Assumed Liabilities other than
Excluded Assumed Environmental Liabilities set forth on Schedule
2.5(b)(v).
1. | Any Liabilities arising from or related to Nippon Vishay, K.K. to the extent arising from occurrences prior to the Distribution. |
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Schedule 2.5(b)(v)
Excluded Assumed Environmental Liabilities
Excluded Assumed Environmental Liabilities
The Vishay Group will be responsible for
Environmental Liabilities in respect of the manufacturing locations of the VPG
Group in existence at or prior to the Separation in the United States, Germany,
India and Israel attributable to, and to the extent of, conditions in existence
at or prior to the Separation, whether a claim is made with respect thereto
before or after the Separation, to the extent of available insurance coverage of
the Vishay Group.
The Vishay Group will be responsible for
Environmental Liabilities in respect of the manufacturing locations of the VPG
Group in existence at or prior to the Separation in all other jurisdictions
attributable to, and to the extent of, conditions in existence at or prior to
the Separation, whether a claim is made with respect thereto before or after the
Separation, to the extent of available insurance coverage of the Vishay Group,
but only if the environmental conditions giving rise to the Environmental
Liabilities were openly manifest and apparent prior to the
Separation.
The following shall govern deductible amounts
under any insurance policies of the Vishay Group for which coverage is sought
under the circumstances recited in the two preceding paragraphs. Any deductible
for which a liability has been accrued on the books and records of the VPG Group
prior to the Separation will be the sole responsibility of the VPG Group. Any
policy deductible for which a liability has not been accrued on the books and
records of the VPG Group prior to the Separation will be shared equally by the
Vishay Group and the VPG Group.
Vishay agrees to list as “discontinued
locations” (i) for a period of five years for VPG manufacturing locations in the
United States, India and Israel in existence at or prior to the Separation and
(ii) for a period of three years for VPG manufacturing locations located in
Germany in existence at or prior to the Separation, in the insurance policies of
Vishay providing coverage for Environmental Liabilities in those jurisdictions,
but only in respect of Liabilities attributable to, and to the extent of,
environmental conditions in existence at or prior to the
Separation.
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Schedule 2.16
VPG Assets to be Transferred to Vishay
VPG Assets to be Transferred to Vishay
1. | Research & development facility and warehouse historically owned by Vishay Advanced Technologies, Ltd. (to be transferred to Vishay Israel Limited). | ||
2. | Certain WSL Assets |
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Schedule
3.3(b)
Vishay Group Resignations
Vishay Group Resignations
Effective as of the time of Separation, Xx.
Xxx Xxxxxxxx will resign as an executive officer of Vishay Intertechnology,
Inc., but will remain a director on Vishay Intertechnology Inc.’s board of
directors.
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Schedule
3.4(b)
VPG Group Resignations
VPG Group Resignations
Effective as of the time of the Separation (i)
Xx. Xxxx Xxxxxxxx and Xx. Xxxxxxx Xxxxxx will resign as directors of VPG and
(ii) Xx. Xxxxxxxx will resign as an officer of VPG.
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