Exhibit 10.4

US Contingent Option Agt – December 2009

VERIGY LTD. 2006 EQUITY INCENTIVE PLAN

NOTICE OF CONTINGENT SHARE OPTION AWARD

On «AwardDate» (the “Award Date”) you were awarded, on a contingent basis, an
option to purchase Verigy Ltd. (the “Company”) ordinary shares under the
Company’s 2006 Equity Incentive Plan (the “Plan”). This award is contingent as
described in the section titled “Contingency” in the accompanying Share Option
Award Agreement.

 

Name of Optionee:    «Name» Total Number of Shares:    «TotalShares» Type of
Option:    Nonstatutory Stock Option Expiration Date:    «ExpDate». This option
may expire earlier if your Service terminates earlier, as described in the Stock
Option Agreement. Exercise Price:1    The closing price of Verigy ordinary
shares on the third business day following Verigy’s announcement of financial
results for the fiscal quarter ending «pricingdate». Vesting Schedule:2    The
shares subject to this option vest and become exercisable in 13 equal quarterly
installments, with the first installment vesting on «vestingdate», provided that
you continue to be an Awardee Eligible to Vest as of the applicable vesting
date.

You and the Company agree that this option is granted under and governed by the
terms and conditions of the Verigy Ltd. 2006 Equity Incentive Plan (the “Plan”)
and the Share Option Agreement, both of which are made a part of this document.

You further agree that the Company shall cause the shares issued upon exercise
of this option to be deposited in your Morgan Stanley Smith Barney Account and,
further, that the Company may deliver electronically all documents relating to
the Plan or this option (including, without limitation, prospectuses required by
the Securities and Exchange Commission) and all other documents that the Company
is required to deliver to its security holders (including, without limitation,
annual reports and proxy statements). You also agree that the Company may
deliver these documents by posting them on a web site maintained by the Company
or by a third party under contract with the Company. If the Company posts these
documents on a web site, it will notify you regarding such posting. This consent
will remain in effect until you give the Company written notice that it should
deliver paper documents.

 

 

BY CLICKING ON THE “ACCEPT” BUTTON ON THE ONLINE AWARD ACCEPTANCE SCREEN, YOU
AGREE TO BE BOUND BY THE SHARE OPTION AGREEMENT, THIS NOTICE AND THE PLAN.

  

 

    VERIGY LTD.

         BY:   

 

           

TITLE:

 

           

 

 

1

Except as set forth in the accompanying Option Agreement, the exercise price for
this option shall be equal to the closing price of Verigy ordinary shares on the
pricing date indicated above; provided, however, that if the date on which the
shareholders approve an increase in the number of shares available for issuance
under the Plan falls after the third business day following Verigy’s
announcement of financial results for the fiscal quarter ending July 31, 2010,
then the exercise price of this option will be the closing price of Verigy’s
ordinary shares on the date of such shareholder approval. In either event, the
exercise price shall be set automatically and without any further action on the
part of the Company or the optionee.

2

The vesting dates for the award will be each March 13, June 13, September 13 and
December 13, commencing with the first vesting date noted. No fractional shares
shall be issuable. The number of shares exercisable at each vesting event other
than the last shall be rounded down to the nearest whole share and the last
vesting event shall cover all shares not previously vested.

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US Contingent Option Agt – December 2009

 

VERIGY LTD. 2006 EQUITY INCENTIVE PLAN

CONTINGENT SHARE OPTION AGREEMENT

 

Contingency    This award is contingent upon the shareholders of the Company
approving an increase in the number of shares available for issuance under the
Plan during calendar 2010. If the shareholders vote one but do not approve an
increase in the number of shares available for issuance under the Plan during
calendar 2010, then this award shall become null and void on the date of the
meeting of shareholders at which the proposal was not approved, and no benefit
shall accrue as a result of this award. Notwithstanding the foregoing, in the
event that the pricing of this option is accelerated as described below in the
section titled “Special Provisions for Accelerated Pricing—Change of Control”
prior to the date on which a vote of shareholders is held with respect to a
proposal to approve an increase in the number of shares available for issuance
under the Plan, then the contingency will be deemed satisfied and this option
shall no longer be contingent. Tax Treatment    This option is intended to be a
nonstatutory stock option. Vesting   

This option becomes exercisable in installments, during the Option term as shown
in the Notice of Share Option Award, as long as you remain an Awardee Eligible
to Vest (as defined in the Plan).

 

This option will in no event become exercisable for additional shares after your
Service has terminated for any reason, except as otherwise provided in the Plan
and this agreement.

Term    This option expires in any event at the close of business at Company
headquarters on the day before the 7th anniversary of the Date of Award, as
shown in the Notice of Share Option Award. (It may expire earlier if your
Service terminates, as described below.) Regular Termination    Unless otherwise
provided in an agreement between you and the Company, if your Service terminates
for any reason except death, disability (as defined in the Plan), or retirement,
as provided in the Plan, then this option will expire at the close of business
at Company headquarters on the date three months after your termination date,
or, if earlier, the expiration of the term of this option. The Company
determines when your Service terminates for this purpose. Termination as a
result of Death, Disability or Retirement    If you die before your Service
terminates, or if your Service terminates because of your disability (as defined
in the Plan) or in connection with your retirement, as provided in the Plan,
then (i) the vested portion of each tranche of this option will be determined by
adding 12 months to your length of service and (ii) you will be entitled to
exercise this option until the close of business at Company headquarters on the
one year anniversary of the date of death, disability or retirement, or, if
earlier, until the expiration of the term of this option, as provided in the
Plan. Special Provisions for Accelerated Pricing   

Notwithstanding the establishment of the pricing date for this option as set
forth in the Notice of Share Option Award, the exercise price of this option
shall be established in accordance with the following in the following
circumstances:

 

Change of Control. In the event that, prior to the date on which a vote of
shareholders is scheduled to be held with respect to a proposal to approve an
increase in the number of shares available for issuance under the Plan, the
Company or any third party publicly announces any transaction or event which, as

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announced or if consummated, would constitute a Change of Control (as defind in
the Plan) of the Company, the per-share exercise price for this option (if not
already priced as of the date of such announcement), shall become fixed at an
amount equal to the closing price of Verigy ordinary shares on the last trading
day immediately preceding such announcement.

 

Termination of Employment. In the event that prior to the pricing date your
Service (as defined in the Plan) with the Company and its affiliates shall
terminate for any reason, then the per-share exercise price for this option, if
not already priced as of the date of such termination of Service, shall become
fixed at an amount equal to the closing price of Verigy ordinary shares on the
last trading day immediately preceding your last day of Service.

 

No Affect On Vesting. The Vesting provisions applicable to this option shall not
be affected by a change in the timing of establishing the exercise price in
accordance with the preceding paragraphs.

Leaves of Absence and Part-Time Work   

For purposes of this option, your Service does not terminate when you go on a
military leave, a sick leave or another Company approved leave of absence, and
if continued crediting of Service is required by the terms of the leave or by
applicable law. But your Service terminates when the approved leave ends, unless
you immediately return to active work.

 

Your status as an Awardee Eligible to Vest (as defined in the Plan) will always
cease upon termination of employment with the Company or a Subsidiary or
Affiliate except as provided in Article 5 of the Plan.

 

If you commence working on a part-time basis, then the vesting schedule
specified in the Notice of Share Option Award may be adjusted in accordance with
the Company’s part-time work policy or the terms of an agreement between you and
the Company pertaining to your part-time schedule.

Restrictions on Exercise    The Company will not permit you to exercise this
option if the issuance of shares at that time would violate any law or
regulation. Notice of Exercise   

You may exercise this option from time to time for any number of shares for
which the option is then exercisable, by notice in writing, electronically or by
other means to, and as prescribed by, the Company’s equity incentive
administration service provider (the “administration service provider”). Your
exercise notice will be effective and irrevocable at such time as your notice,
method of payment (whether by cash, check, proceeds from the immediate sale of
the option shares, or as otherwise provided in the Plan) and such other
documentation as the administration service provider may require have been
received by the administration service provider. Your exercise notice must
specify the number of shares of this option you are exercising.

 

If someone else wants to exercise this option after your death, that person must
prove to the Company’s satisfaction that he or she is entitled to do so.

Form of Payment    When you exercise this option, you must provide for payment
of the option exercise price for the shares that you are purchasing. To the
extent permitted by applicable law, payment may be made in one (or a combination
of two or more) of the forms set forth in Section 5.7 of the Plan.

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Withholding Taxes and Share Withholding    You will not be allowed to exercise
this option unless you make arrangements acceptable to the Company to pay any
withholding taxes that may be due as a result of the option exercise. Such
arrangements include an irrevocable direction to the Company’s securities broker
service provider to sell all or a part of the Shares being purchased under this
option and to deliver all or part of the sales proceeds to the Company, pursuant
to Section 5.7(b) of the plan. Restrictions on Resale    You agree not to sell
any option shares at a time when applicable laws, Company policies or an
agreement between the Company and its underwriters prohibit a sale. This
restriction will apply as long as your Service continues and for such period of
time after the termination of your Service as the Company may specify. Transfer
of Option    Unless determined otherwise by the Committee, this option may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by the beneficiary designation, will or by the laws of descent
or distribution and may be exercised, during your lifetime, only by you. If the
Committee makes this option transferable, it shall contain such additional terms
and conditions as the Committee deems appropriate. Retention Rights    Your
option or this Agreement does not give you the right to be retained by the
Company or a subsidiary of the Company in any capacity. The Company and its
subsidiaries reserve the right to terminate your Service at any time, with or
without cause. Shareholder Rights    You, or your estate or heirs, have no
rights as a Shareholder of the Company until you have exercised this option by
submitting the required notice in accordance with the provisions under “Notice
of Exercise” set forth above and paying the exercise price and any applicable
withholding taxes. No adjustments are made for dividends or other rights if the
applicable record date occurs before you exercise this option, except as
described in the Plan. Adjustments    In the event of a stock split, a stock
dividend or a similar change in Company stock, the number of shares covered by
this option and the exercise price per share may be adjusted pursuant to the
Plan. Applicable Law    This Agreement shall be governed by, and construed in
accordance with, the laws of the Republic of Singapore (except its choice-of-law
provisions). The Plan and Other Agreements   

The text of the Plan is incorporated in this Agreement by reference.

 

This Agreement and the Plan, together with the Severance Agreement by and
between you and the Company, if applicable, (the “Severance Agreement”)
constitute the entire understanding between you and the Company regarding this
option. Any prior agreements, commitments or negotiations concerning this
option, except for the Severance Agreement, are superseded. This Agreement may
be amended only by another written agreement between the parties.

YOUR ELECTRONIC SIGNATURE TO THIS NOTICE AND AGREEMENT IS YOUR AGREEMENT

TO ALL OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.