Exhibit 10.2.16

VERIGY LTD. 2006 EQUITY INCENTIVE PLAN

NOTICE OF SHARE OPTION AWARD

(FOUR TRANCHE)

On <Date> (the "Award Date") you were awarded an option to purchase Verigy Ltd.
(the “Company”) ordinary shares.  The Option shall be divided into four
tranches, each representing 1/4 of the total shares covered by the Option.  Each
traunch will be summarized on the Award Summary page of your Smith Barney
account.  Each summary (including the number of shares and exercise price of
each traunche) will be posted to your Smith Barney account shortly after the
exercise price is determined as follows:

Exercise Prices (1)

 

 

 

 

 

Exercise Price Per Share, 1st Tranche:

 

The last sale price of Verigy ordinary shares on <Date>;

 

 

 

Exercise Price Per Share, 2nd Tranche:

 

The last sale price of Verigy ordinary shares on the third business day
following Verigy’s announcement of financial results for the fiscal quarter
ending <Date>;

 

 

 

Exercise Price Per Share, 3rd Tranche:

 

The last sale price of Verigy ordinary shares on the third business day
following Verigy’s announcement of financial results for the fiscal quarter
ending <Date> ; and

 

 

 

Exercise Price Per Share, 4th Tranche:

 

The last sale price of Verigy ordinary shares on the third business day
following Verigy’s announcement of financial results for the fiscal quarter
ending <Date>.

 

 

 

Vesting Schedule

 

 

 

 

 

1st Tranche (1/4shares):

 

The first tranche of shares subject to this option vests and becomes exercisable
in 16 equal quarterly installments, (2) with the first installment vesting on
<Date>, provided that you continue to be an Awardee Eligible to Vest as of the
applicable vesting date.

 

 

 

2nd Tranche (1/4shares):

 

The second tranche of shares subject to this option vests and becomes
exercisable in 15 equal quarterly installments,(2) with the first installment
vesting on <Date>, provided that you continue to be an Awardee Eligible to Vest
as of the applicable vesting date.

 

 

 

3rd Tranche (1/4shares):

 

The third tranche of shares subject to this option vests and becomes exercisable
in 14 equal quarterly installments,(2) with the first installment vesting on
<Date>, provided that you continue to be an Awardee Eligible to Vest as of the
applicable vesting date.

 

 

 

4th Tranche (1/4shares):

 

The fourth tranche of shares subject to this option vests and becomes
exercisable in 13 equal quarterly installments,(2) with the first installment
vesting on <Date>, 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 Stock Option Agreement, both of which are made a part of this document.

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You further agree that the Company shall cause the shares issued upon exercise
of this option to be deposited in your 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.

BY CLICKING ON THE “ACCEPT” BUTTON ON THE SCREEN TITLED “STEP 3: CONFIRM THE
REVIEW/ACCEPTANCE OF YOUR AWARD,” YOU AGREE TO BE BOUND BY THE STOCK OPTION
AGREEMENT, THIS NOTICE AND THE PLAN.

 

VERIGY LTD.

 

 

 

BY:

 

 

 

 

 

KEITH L. BARNES

 

 

 

PRESIDENT AND CHIEF EXECUTIVE OFFICER

 

 

 

 

 

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(1) Except as set forth in the accompanying Option Agreement, the exercise
prices for the 2nd through 4th tranches shall be equal to the closing price of
Verigy ordinary shares on the pricing dates indicated above.  Such prices shall
be set automatically and without any further action on the part of the Company
or the optionee.

(2) 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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VERIGY LTD. 2006 EQUITY INCENTIVE PLAN

SHARE OPTION AGREEMENT

(Four Tranche)

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 Stock 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 Stock 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, total and permanent disability,
or retirement due to age, in accordance with the Company’s or a Subsidiary’s or
Affiliate’s retirement policy, 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 total and permanent disability or in connection with your retirement due
to age, 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.

 

 

 

 

 

For all purposes under this Agreement, “total and permanent disability” means
that you are unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted, or can be expected to last for a
continuous period of not less than one year.

 

 

 

Special Provisions

 

Notwithstanding the establishment of pricing dates for the 2nd, 3rd and
4th tranches of the award as set forth in the Notice of Stock Option Award, the
exercise price of any

 

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for Accelerated Pricing of

 

previusly unpriced tranche shall be established in accordance with the following
in the

Unpriced Tranches

 

following circumstances:

 

 

 

 

 

Change of Control.  In the event that prior to any pricing date the Company or
any third party publicly announces any transaction or event which, as announced
or if consummated, would constitute a Change of Control (as defind in the Plan)
of the Company, the per-share exercise price for each tranche of this option 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 any 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 each tranche of
this option 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 any tranche 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 Stock 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.

 

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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 which tranche(s) 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 Sections 5.7 (a), (c) and (d) of the Plan.

 

 

 

Withholding Taxes and Stock Withholding

 

Regardless of any action the Company or your employer (the “Employer”) takes
with respect to any or all income tax, social insurance, payroll tax, payment on
account or other tax-related withholding (“Tax-Related Items”), you acknowledge
that the ultimate liability for all Tax-Related Items legally due by you is and
remains your responsibility and that the Company and/or the Employer (1) make no
representations or undertakings regarding the treatment of any Tax-Related Items
in connection with any aspect of the option grant, including the grant, vesting
or exercise of the option, the subsequent sale of shares acquired pursuant to
such exercise and the receipt of any dividends; and (2) do not commit to
structure the terms of the grant or any aspect of the option to reduce or
eliminate your liability for Tax-Related Items.

 

 

 

 

 

Prior to exercise of the option, you will pay or make adequate arrangements
satisfactory to the Company and/or the Employer to satisfy all withholding and
payment on account obligations of the Company and/or the Employer.  In this
regard, you authorize the Company and/or the Employer to withhold all applicable
Tax-Related Items legally payable by you from your wages or other cash
compensation paid to you by the Company and/or the Employer or from proceeds of
the sale of shares.  Alternatively, or in addition, if permissible under local
law, the Company may (1) sell or arrange for the sale of shares that you acquire
to meet the withholding obligation for Tax-Related Items, and/or (2) withhold in
shares, provided that the Company only withholds the amount of shares necessary
to satisfy the minimum withholding amount.  Finally, you will pay to the Company
or the Employer any amount of Tax-Related Items that the Company or the Employer
may be required to withhold as a result of your participation in the Plan or
your purchase of shares that cannot be satisfied by the means previously
described.  The Company may refuse to honor the exercise and refuse to deliver
the shares if you

 

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fail to comply with your obligations in connection with the Tax-Related Items as
described in this section.

 

 

 

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.

 

 

 

Stockholder Rights

 

You, or your estate or heirs, have no rights as a stockholder 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.

 

 

 

 

In accepting the grant, you acknowledge that:

Nature of the Grant

 

(a)  the Plan is established voluntarily by the Company, it is discretionary in
nature and it may be modified, amended, suspended or terminated by the Company
at any time, unless otherwise provided in the Plan and this Share Option
Agreement;

 

 

 

 

 

(b)  the grant of the option is voluntary and occasional and does not create any
contractual or other right to receive future grants of options, or benefits in
lieu of options, even if options have been granted repeatedly in the past;

 

 

 

 

 

(c)  all decisions with respect to future option grants, if any, will be at the
sole discretion of the Company;

 

 

 

 

 

(d)  you are voluntarily participating in the Plan;

 

 

 

 

 

(e)  the option is an extraordinary item that does not constitute compensation
of any kind for services of any kind rendered to the Company or the Employer,
and which is outside the scope of your employment contract, if any;

 

 

 

 

 

(f)  the option is not part of normal or expected compensation or salary for any
purposes, including, but not limited to, calculating any severance, resignation,

 

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termination, redundancy, end of service payments, bonuses, long-service awards,
pension or retirement benefits or similar payments and in no event should be
considered as compensation for, or relating in any way to, past services for the
Company or the Employer;

 

 

 

 

 

(g)  in the event that you are not an employee of the Company, the option grant
will not be interpreted to form an employment contract or relationship with the
Company; and furthermore, the option grant will not be interpreted to form an
employment contract with the Employer or any subsidiary or affiliate of the
Company;

 

 

 

 

 

(h)  the future value of the underlying shares is unknown and cannot be
predicted with certainty;

 

 

 

 

 

(i)  if the underlying shares do not increase in value, the option will have no
value;

 

 

 

 

 

(j)  if you exercise your option and obtain shares, the value of those shares
acquired upon exercise may increase or decrease in value, even below the
exercise price;

 

 

 

 

 

(k)  in consideration of the grant of the option, no claim or entitlement to
compensation or damages shall arise from termination of the option or diminution
in value of the option or shares purchased through exercise of the option
resulting from termination of your employment by the Company or the Employer
(for any reason whatsoever and whether or not in breach of local labor laws) and
you irrevocably release the Company and the Employer from any such claim that
may arise; if, notwithstanding the foregoing, any such claim is found by a court
of competent jurisdiction to have arisen, then, by signing this Share Option
Agreement, you shall be deemed irrevocably to have waived your entitlement to
pursue such claim; and

 

 

 

 

 

(l)  in the event of termination of your employment (whether or not in breach of
local labor laws), your right to receive the option and vest in the option under
the Plan, if any, will terminate effective as of the date that you are no longer
actively employed and will not be extended by any notice period mandated under
local law (e.g., active employment would not include a period of “garden leave”
or similar period pursuant to local law); furthermore, in the event of
termination of employment (whether or not in breach of local labor laws), your
right to exercise the option after termination of employment, if any, will be
measured by the date of termination of your active employment and will not be
extended by any notice period mandated under local law;  the Company shall have
the exclusive discretion to determine when you are no longer actively employed
for purposes of your option grant.

 

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Data Privacy Notice and Consent

 

You hereby explicitly and unambiguously consent to the collection, use and
transfer, in electronic or other form, of your personal data as described in
this Share Option Agreement by and among, as applicable, your employer, the
Company, its subsidiaries and its affiliates for the exclusive purpose of
implementing, administering and managing your participation in the Plan.

 

 

 

 

 

You understand that the Company and your employer may hold certain personal
information about you, including, but not limited to, your name, home address
and telephone number, date of birth, social insurance number or other
identification number, salary, nationality, job title, any shares of stock or
directorships held in the Company, details of all options or any other
entitlement to shares awarded, canceled, vested, unvested or outstanding in your
favor, for the purpose of implementing, administering and managing the Plan
(“Data”).  You understand that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that
these recipients may be located in your country, or elsewhere, and that the
recipient’s country may have different data privacy laws and protections than
your country.  You understand that you may request a list with the names and
addresses of any potential recipients of the Data by contacting your local human
resources representative.  You authorize the recipients to receive, possess,
use, retain and transfer the Data, in electronic or other form, for the purposes
of implementing, administering and managing your participation in the Plan,
including any requisite transfer of such Data as may be required to a broker,
escrow agent or other third party with whom the shares received upon exercise of
the option  may be deposited.  You understand that Data will be held only as
long as is necessary to implement, administer and manage your participation in
the Plan.  You understand that you may, upon request, view Data, request
additional information about the storage and processing of Data, correct Data or
refuse or withdraw the consents herein, in any case without cost, by contacting
in writing your local human resources representative.  You understand that
refusal or withdrawal of consent may affect your ability to participate in the
Plan.  For more information on the consequences of your refusal to consent or
withdrawal of consent, You understand that You may contact your local human
resources representative.

 

 

 

Language

 

If you have received this Share Option Agreement or any other document related
to the Plan translated into a language other than English and if the translated
version is different than the English version, the English version will control.

 

 

 

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).

 

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The Plan and Other Agreements

 

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

 

 

 

 

 

This Agreement and the Plan constitute the entire understanding between you and
the Company regarding this option.  Any prior agreements, commitments or
negotiations concerning this option are superseded.  This Agreement may be
amended only by another written agreement between the parties.

 

 

 

 

 

If one or more of the provisions of this Share Option Agreement shall be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and the invalid, illegal or unenforceable provisions shall be
deemed null and void; however, to the extent permissible by law, any provisions
which could be deemed null and void shall first be construed, interpreted or
revised retroactively to permit this Share Option Agreement to be construed so
as to foster the intent of this Share Option Agreement and the Plan

 

YOUR ELECTRONIC SIGNATURE TO THIS NOTICE AND AGREEMENT IS YOUR AGREEMENT TO ALL
OF THE TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

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