EXHIBIT 10.3

CORRECTED SECOND AMENDED AND RESTATED SEVERANCE

AGREEMENT

This Corrected Second Amended and Restated Severance Agreement (the “Agreement”)
is entered into this     day of March, 2010 (the “Effective Date”), between
Verigy Ltd., a Singapore corporation (the “Company”), and Keith L. Barnes
(“Executive”), who currently serves as Chairman, President and Chief Executive
Officer of the Company.

RECITALS

WHEREAS, the Company and Executive entered into a severance agreement, dated on
or about December 20, 2006 (the “Original Severance Agreement”), which was
replaced in its entirety by an Amended and Restated Severance Agreement dated on
or about March 7, 2008 (the “First Restated Severance Agreement”);

WHEREAS, the First Restated Severance Agreement was replaced in its entirety by
a Second Amended and Restated Severance Agreement dated on or about December 17,
2008 (the “Second Restated Severance Agreement”) in light of the regulations and
guidance provided under, and to bring the severance terms into documentary
compliance with Section 409A of the Internal Revenue Code (the “Code”) and the
final regulations and other official guidance thereunder; and

WHEREAS, it was subsequently discovered that the Second Amended & Restated
Severance Agreement contained a typographical error which the parties desire to
correct by executing and delivering this Agreement.

NOW THEREFORE, in consideration of the following:

A. As is the case with most, if not all, publicly traded businesses, it is
expected that the Company from time to time may consider or may be presented
with the need to consider the possibility of an acquisition by another company
or other change in control of the ownership of the Company. The Board of
Directors of the Company (the “Board”) recognizes that such considerations can
be a distraction to Executive and can cause Executive to consider alternative
employment opportunities or to be influenced by the impact of a possible change
in control of the ownership of the Company on Executive’s personal circumstances
in evaluating such possibilities. The Board has determined that it is in the
best interests of the Company and its shareholders to ensure that the Company
will have the continued dedication and objectivity of Executive, notwithstanding
the possibility, threat or occurrence of a Change of Control of the Company.

B. The Board believes that it is in the best interests of the Company and its
shareholders to provide Executive with an incentive to continue his/her
employment and to motivate Executive to maximize the value of the Company for
the benefit of its shareholders.

C. The Board believes that it is important to provide Executive with certain
benefits upon Executive’s termination of employment in certain instances that
provide Executive with enhanced financial security and incentive and
encouragement to Executive to remain with the Company.

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D. At the same time, the Board expects the Company to receive certain benefits
in exchange for providing Executive with this measure of financial security and
incentive under the Agreement. Therefore, the Board believes that Executive
should provide various specific commitments, which are intended to assure the
Company that Executive will not direct Executive’s skills, experience and
knowledge to the detriment of the Company for a period not to exceed the period
during which payments are being made to Executive under this Agreement.

E. Certain capitalized terms used in this Agreement are defined in Article VIII.

The Company and Executive hereby agree as follows:

ARTICLE I

EMPLOYMENT BY THE COMPANY

1.1 This Agreement shall be in effect commencing on the Effective Date and
ending on the later of (i) the date when Executive ceases to be employed by the
Company for any reason or (ii) the date when all obligations of the parties
under this Agreement have been met.

1.2 The Company and Executive each agree and acknowledge that Executive is
employed by the Company as an “at-will” employee and that either Executive or
the Company has the right at any time to terminate Executive’s employment with
the Company, with or without cause or advance notice, for any reason or for no
reason. This Agreement does not constitute a contract of employment or impose on
Executive any obligation to remain as an employee or impose on the Company any
obligation (i) to retain Executive as an employee, (ii) to change the status of
Executive as an at-will employee or (iii) to change the Company’s policies
regarding termination of employment. In this Agreement, the Company and
Executive wish to set forth the compensation and benefits that Executive shall
be entitled to receive in the event that Executive’s employment with the Company
terminates under the circumstances described in Article II or III.

1.3 The duties and obligations of the Company to Executive under this Agreement
shall be in consideration for Executive’s past services to the Company,
Executive’s continued employment with the Company, Executive’s compliance with
the obligations described in Section 5.4, and Executive’s execution of the
general waiver and release described in Section 5.5. The Company and Executive
agree that Executive’s compliance with the obligations described in Section 5.4
and Executive’s execution of the general waiver and release described in
Section 5.5 are preconditions to Executive’s entitlement to the receipt of
benefits under this Agreement and that these benefits shall not be earned unless
all such conditions have been satisfied through the scheduled date of payment.
The Company hereby declares that it has relied upon Executive’s commitments
under this Agreement to comply with the requirements of Article V and would not
have been induced to enter into this Agreement or to execute this Agreement in
the absence of such commitments.

 

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ARTICLE II

TERMINATION BEFORE CHANGE IN CONTROL

2.1 Termination without Cause. In the event (i) Executive’s employment with the
Company and its subsidiaries is involuntarily terminated at any time by the
Company without Cause or (ii) Executive voluntarily terminates his/her
employment within three months of the occurrence of an event constituting Good
Reason and on account of an event constituting Good Reason and, in each case,
Article III does not apply, then such termination of employment will be a
Termination Event and the Company shall pay Executive the compensation and
benefits described in this Article II, subject to Executive complying with
his/her obligations described in Sections 5.4 and 5.5 of this Agreement.

2.2 Disability. In the event Executive’s employment with the Company and its
subsidiaries terminates as a result of his/her Disability, then Executive shall
be entitled to the pro rated final period bonus described in Section 2.5, the
stock award acceleration described in Section 2.6 and the Company-reimbursed
health insurance coverage described in Section 2.7 (but none of the other
compensation and benefits described in this Article II).

2.3 Death. In the event Executive’s employment with the Company and its
subsidiaries terminates as a result of his/her death, then Executive’s survivors
shall be entitled to the pro rated final period bonus described in Section 2.5
and the stock award acceleration described in Section 2.6 (but none of the other
compensation and benefits described in this Article II).

2.4 Lump Sum Payment upon Termination before Change in Control. If a Termination
Event described in Section 2.1 occurs, Executive shall receive a single lump sum
amount equal to the sum of Executive’s Base Salary and Target Bonus, less any
applicable withholding of federal, state, local or foreign taxes within five
business days after the later of: (i) the date of the Termination Event or
(ii) the effective date of the general waiver and release of claims entered unto
between Executive and the Company, subject to the terms provided in Section 5.5
below; provided, however, that the timing of such payments shall be subject to
any delay period required under Section 5.6 of this Agreement.

2.5 Bonus for Final Period. If a Termination Event described in Section 2.1
occurs, Executive shall receive a pro rated bonus for the performance period in
which the Termination Event occurs (in addition to the amount described in
Section 2.4). The amount of the bonus shall be equal to the Target Bonus for the
period in which the Termination Event occurred multiplied by a fraction in which
(i) the numerator is the number of days from and including the first day of the
performance period until and including the date of the Termination Event and
(ii) the denominator is the number of days in the performance period. Subject to
any delay period required under Section 5.6 of this Agreement. Such bonus shall
be paid at the time prescribed in Section 2.4. Executive’s rights to the payment
provided in this Section 2.5 shall not be subject to Section 5.4.

 

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2.6 Stock Award Acceleration upon Termination before Change in Control.

(a) Executive’s Stock Options that are outstanding as of the date of a
Termination Event described in this Article II shall become fully vested upon
the occurrence of such Termination Event and exercisable so long as Executive
complies with the restrictions and limitations set forth in Article V. The Stock
Options shall remain exercisable until the earlier of (i) the fifteen month
anniversary of the date of the Termination Event or (ii) the expiration of each
option in accordance with its original terms provided, in either case, that
Executive complies with his/her obligations under Article V of this Agreement.
The term “Stock Options” shall not include any rights of Executive under the
Company’s 2006 Employee Shares Purchase Plan or similar plans.

(b) Executive’s Restricted Stock awards that are outstanding as of the date of a
Termination Event described in this Article II shall become fully vested and
free from any contractual rights of the Company to repurchase or otherwise
reacquire the Restricted Stock as a result of Executive’s termination of
employment. All shares of Restricted Stock that have not yet been delivered to
Executive or his/her designee (whether because subject to joint escrow
instructions or otherwise) shall be promptly delivered to Executive or his/her
designee upon the occurrence of a Termination Event described in this
Article II.

Executive’s Stock Units that are outstanding as of the date of a Termination
Event described in this Article II shall become fully vested as a result of
Executive’s termination of employment. All Stock Units that have not yet been
settled shall be promptly settled, in the form specified in the relevant Stock
Unit agreements and relevant stock plans under which the Stock Units were
granted, upon the occurrence of a Termination Event described in this
Article II.

2.7 Health & Welfare Benefits Coverage.

(a) Following the occurrence of a Termination Event described in Section 2.1, to
the extent permitted by the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended and codified in Section 4980B of the Code and the regulations
thereunder (“COBRA”) and by the Company’s group health insurance policies,
Executive and/or Executive’s covered dependents will be eligible to continue
their health insurance benefits at their own expense. However, if Executive
and/or Executive’s covered dependents timely elect COBRA continuation for
Executive and/or Executive’s covered dependents, the Company shall reimburse
Executive and/or Executive’s covered dependents’ COBRA continuation premiums for
group health coverage for 12 months, provided that the Company’s obligation to
make such reimbursements shall cease immediately to the extent that Executive
and/or Executive’s covered dependents are no longer entitled by law to receive
COBRA continuation coverage. Executive agrees to notify a duly authorized
officer of the Company in writing immediately upon Executive’s and/or a covered
dependent’s beginning to receive health benefits from another source, or as
otherwise required by COBRA. This Section 2.7(a) provides only for the Company’s
reimbursement of COBRA continuation premiums for the periods specified above,
and does not affect the rights of Executive and/or Executive’s covered
dependents under any applicable law with respect to health insurance
continuation coverage. Such reimbursements shall be made as soon as
administratively feasible following the Company’s receipt of appropriate
documentation.

 

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ARTICLE III

TERMINATION AFTER CHANGE IN CONTROL

3.1 Involuntary Termination upon or Following Change of Control. In the event
Executive’s employment with the Company and its subsidiaries is involuntarily
terminated at any time by the Company without Cause either (i) at the time of or
within 24 months following the occurrence of a Change of Control, (ii) within
three months prior to a Change of Control, whether or not such termination is at
the request of an Acquiror, or (iii) at any time more than three months prior to
a Change of Control that constitutes a “change in control” within the meaning of
Section 409A if such termination is at the request of an Acquiror, then such
termination of employment will be a Termination Event and the Company shall pay
Executive the compensation and benefits described in this Article III in the
manner and at the time described in Section 3.3, subject to Executive complying
with his/her obligations described in Sections 5.4 and 5.5 of this Agreement. If
the Company reasonably believes that a Change of Control will not occur within
three months following the termination of Executive, but in fact a Change of
Control does occur within three months following such termination, Executive
will be provided with the compensation and benefits described in this
Article III in the manner and at the time described in Section 3.3. An
“Acquiror” is either a person or a member of a group of related persons
representing such group that in either case obtains effective control of the
Company in the transaction or a group of related transactions constituting the
Change of Control. For the elimination of doubt, in the event Executive’s
employment with the Company and its subsidiaries is involuntarily terminated by
the Company without Cause and the circumstances described in this Section 3.1
are not applicable, then Article II will apply to such event.

3.2 Voluntary Termination For Good Reason Upon or Following Change of Control.

(a) In the event Executive voluntarily terminates his/her employment within
three months of the occurrence of an event constituting Good Reason and on
account of an event constituting Good Reason, which event occurs either (i) at
the time of or within 24 months following the occurrence of a Change of Control,
(ii) within three months prior to a Change of Control, whether or not such
termination is at the request of an Acquiror, or (iii) at any time more than
three months prior to a Change of Control that constitutes a “change in control”
within the meaning of Section 409A if such triggering event or Executive’s
termination is at the request of an Acquiror, then such termination of
employment will be a Termination Event and the Company shall pay Executive the
compensation and benefits described in this Article III in the manner and at the
time described in Section 3.3, subject to Executive complying with his/her
obligations described in Sections 5.4 and 5.5 of this Agreement. If the Company
reasonably believes that a Change of Control will not occur within three months
following the voluntary termination for Good Reason by Executive, but a Change
of Control does in fact occur within three months following such termination,
Executive will be provided with the compensation and benefits described in this
Article III in the manner and at the time described in Section 3.3.

 

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(b) In the event Executive voluntarily terminates his/her employment for any
reason other than on account of an event constituting Good Reason under the
circumstances described in Section 3.2(a), then such termination of employment
will not be a Termination Event, Executive will not be entitled to receive any
payments or benefits under the provisions of this Agreement, and the Company
will cease paying compensation or providing benefits to Executive as of
Executive’s termination date.

3.3 Lump Sum Payment upon Termination after Change in Control.

(a) If a Termination Event described in this Article III occurs, Executive shall
receive an amount equal to two times the sum of Executive’s Base Salary and
Target Bonus, less any applicable withholding of federal, state, local or
foreign taxes; provided, however, that the Company may deduct from amounts
payable to Executive pursuant to this Article III any amounts paid to Executive
pursuant to Article II.

(b) The salary and bonus amounts payable pursuant to this Article III shall be
paid in a single lump sum. Such payments, (i) up to the amounts that would have
payable under Article II had the Termination Event occurred under Article II,
will be paid at the time(s) and in the form provided under Section 2.4, and
(ii) any remaining salary and bonus amounts shall be paid in a lump sum (x) on
the 3-month anniversary of the Termination Event, or (y) if the triggering event
is Section 3.1(iii) or Section 3.2(a)(iii), on the Change of Control, in each
case subject to the terms provided in Section 5.5 below, and provided further
that the timing of such payments shall be subject to any delay period required
under Section 5.6 of this Agreement.

3.4 Bonus for Final Period. If a Termination Event described in this Article III
occurs, Executive shall receive a pro rated bonus for the performance period in
which the Termination Event occurs (in addition to the amount described in
Section 3.3). The amount of the bonus shall be equal to Target Bonus for the
period in which the Termination Event occurred multiplied by a fraction in which
(i) the numerator is the number of days from and including the first day of the
performance period until and including the date of the Termination Event and
(ii) the denominator is the number of days in the performance period. Such bonus
shall be paid at the time prescribed in Section 2.4.

3.5 Stock Award Acceleration upon Termination after Change in Control.

(a) Executive’s Stock Options that are outstanding as of the date of a
Termination Event described in this Article III shall become fully vested upon
the occurrence of such Termination Event and exercisable so long as Executive
complies with the restrictions and limitations set forth in Article V. The Stock
Options shall remain exercisable until the earlier of (i) the second anniversary
of the date of the Termination Event or (ii) the expiration of each option in
accordance with its original terms provided, in either case, that Executive
complies with his/her obligations under Article V of this Agreement. The term
“Stock Options” shall not include any rights of Executive under the Company’s
2006 Employee Shares Purchase Plan or similar plans.

 

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(b) Executive’s Restricted Stock awards that are outstanding as of the date of a
Termination Event described in this Article III shall become fully vested and
free from any contractual rights of the Company to repurchase or otherwise
reacquire the Restricted Stock as a result of Executive’s termination of
employment. All shares of Restricted Stock that have not yet been delivered to
Executive or his/her designee (whether because subject to joint escrow
instructions or otherwise) shall be promptly delivered to Executive or his/her
designee upon the occurrence of a Termination Event described in this
Article III.

(c) Executive’s Stock Units that are outstanding as of the date of a Termination
Event described in this Article III shall become fully vested as a result of
Executive’s termination of employment. All Stock Units that have not yet been
settled shall be promptly settled, in the form specified in the relevant Stock
Unit agreements and relevant stock plans under which the Stock Units were
granted, upon the occurrence of a Termination Event described in this
Article III, but in no event later than sixty (60) days after which such vesting
occurs. Notwithstanding the foregoing, such settlement shall be subject to any
delay period required under Section 5.6 of this Agreement.

3.6 Health & Welfare Benefits Coverage.

(a) Following the occurrence of a Termination Event described in this
Article III, to the extent permitted by COBRA and by the Company’s group health
insurance policies, Executive and/or Executive’s covered dependents will be
eligible to continue their health insurance benefits at their own expense.
However, if Executive and/or Executive’s covered dependents timely elects COBRA
continuation for Executive and/or Executive’s covered dependents, the Company
shall reimburse Executive’s and/or Executive’s covered dependents’ COBRA
continuation premiums for group health coverage for 24 months, provided that the
Company’s obligation to make such reimbursements shall cease immediately to the
extent that Executive and/or Executive’s covered dependents are no longer
entitled to receive COBRA continuation coverage. Executive agrees to notify a
duly authorized officer of the Company, in writing, immediately upon Executive’s
and/or a covered dependent’s beginning to receive health benefits from another
source, or as otherwise required by COBRA. This Section 3.6(a) provides only for
the Company’s reimbursement of COBRA continuation premiums for the periods
specified above. This Section 3.6(a) does not affect the rights of Executive or
Executive’s covered dependents under any applicable law with respect to health
insurance continuation coverage. Such reimbursement shall be made as soon as
administratively feasible following the Company’s receipt of appropriate
documentation.

ARTICLE IV

TERMINATION FOR CAUSE

4.1 General Effect of Termination for Cause. In the event Executive’s employment
with the Company and its subsidiaries is involuntarily terminated by the Company
with Cause at any time, whether before or after a Change of Control, then such
termination of employment will not be a Termination Event, Executive will not be
entitled to receive any payments or benefits under the provisions of this
Agreement, and the Company will cease paying compensation or providing benefits
to Executive as of Executive’s termination date.

 

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4.2 Procedure for “Cause” Finding.

(a) Prior to a Change in Control, Executive may only be terminated for Cause if
a majority of the Board then in office determines that grounds for Cause exist.
In the event of such determination, the Company will give Executive notice of
the finding of Cause with reasonable specificity, and will provide Executive
with a reasonable opportunity to meet with the Board to refute the finding.

(1) If Executive elects to appear before the Board to dispute the finding, the
Board will meet with the Executive. Following such meeting, the Board shall
reconsider its initial finding and the decision of a majority of the Board then
in office will be required to confirm the determination that grounds for Cause
exist.

(2) If Executive declines to appear before the Board to dispute the finding,
then the initial action by the Board shall constitute the determination to
terminate Executive for Cause.

(b) Subsequent to a Change in Control, the procedural requirements of
Section 4.2(a) shall apply, except that the findings of the Board must be
approved by not less than 2/3rds of the directors then in office.

ARTICLE V

LIMITATIONS AND CONDITIONS ON BENEFITS

5.1 Right to Benefits. If a Termination Event does not occur, Executive shall
not be entitled to receive any benefits described in this Agreement, except as
otherwise specifically set forth herein. If a Termination Event occurs,
Executive shall be entitled to receive the benefits described in this Agreement
only if Executive complies with the restrictions and limitations set forth in
this Article V.

5.2 No Mitigation. Except as otherwise specifically provided herein, Executive
shall not be required to mitigate damages or the amount of any payment provided
under this Agreement by seeking other employment or otherwise, nor shall the
amount of any payment provided for under this Agreement be reduced by any
compensation earned by Executive as a result of employment by another employer
or by retirement benefits after the date of the Termination Event, or otherwise.

5.3 Withholding Taxes. The Company shall withhold appropriate federal, state,
local or foreign income, employment and other applicable taxes from any payments
hereunder.

5.4 Obligations of Executive.

(a) For two years following a Termination Event, Executive agrees not to
personally solicit any of the employees either of the Company or of any entity
in which the Company directly or indirectly possesses the ability to determine
the voting of 50% or more of the voting securities of such entity (including
two-party joint ventures in which each party possesses 50% of the total voting
power of the entity) to become employed elsewhere or provide the names of such
employees to any other company that Executive has reason to believe will solicit
such employees.

 

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(b) Following the occurrence of a Termination Event, Executive agrees to
continue to satisfy his/her obligations under the terms of the Company’s
standard form of Agreement Regarding Confidential Information and Proprietary
Development previously executed by Executive (or any comparable agreement
subsequently executed by Executive in substitution or supplement thereto).

(c) Executive acknowledges and agrees that the Company’s remedies at law for a
breach or threatened breach of any of the provisions of Section 5.4(a) or
(b) would be inadequate and, in recognition of this fact, Executive agrees that,
in the event of such a breach or threatened breach, in addition to any remedies
at law, the Company, without posting any bond, shall be entitled to cease making
any payments or providing any benefit otherwise required by this Agreement and,
with respect to a breach or threatened breach of Section 5.4(a) or (b) only,
obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction, or any other equitable
remedy that may then be available.

5.5 Employee Release Prior to Receipt of Benefits. Upon the occurrence of a
Termination Event, and prior to the receipt of any benefits under this Agreement
on account of the occurrence of the Termination Event, Executive shall execute
and not revoke an employee release substantially in the form attached hereto as
Exhibit A and such employee release must be irrevocably effective within sixty
(60) days following the occurrence of the Termination Event (the “Release
Deadline”). Such employee release shall specifically relate to all of
Executive’s rights and claims in existence at the time of such execution
relating to Executive’s employment with the Company, but shall not include
(i) Executive’s rights under this Agreement, (ii) Executive’s rights under any
employee benefit plan sponsored by the Company, (iii) Executive’s rights to
indemnification or advancement of expenses under applicable law, the Company’s
bylaws or other governing instruments or any agreement addressing such subject
matter between Executive and the Company or (iv) any claims that cannot be
released as a matter of law. It is understood that Executive has 21 days (or
such longer period as may be required by applicable law) to consider whether to
execute such employee release and Executive may revoke such employee release
within seven days after execution of such employee release. In the event
Executive does not execute such employee release within the 21-day period (or
such longer period as may be required by applicable law), or if Executive
revokes such employee release within the seven-day period, or the employee
release is not irrevocably effective by the Release Deadline, no benefits shall
be payable under this Agreement and this Agreement shall be null and void.
Nothing in this Agreement shall limit the scope or time of applicability of such
employee release once it is executed and not timely revoked. Notwithstanding
anything to the contrary in this Agreement, in the event the Termination Event
occurs at a time during the calendar year where the Release Deadline is in the
calendar year following the calendar year in which the Executive’s termination
occurs, any severance pay and/or severance benefits that would constitute
deferred compensation subject to Section 409A of the Code (as described in
Section 5.6) will be paid on the first payroll date following the Release
Deadline, or such later time as required by the payment schedule applicable to
each payment or benefit, or Section 5.6.

 

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5.6 Compliance with Section 409A. In the event that (i) one or more payments of
compensation or benefits (and any other severance payments or benefits which may
be considered deferred compensation under Section 409A) received or to be
received by Executive pursuant to this Agreement (“Agreement Payment”) would
constitute deferred compensation subject to Section 409A of the Code and the
regulations or other authority promulgated thereunder, as amended from time to
time (“Section 409A”), and (ii) Executive is deemed at the time of such
termination of employment to be a “specified employee” under
Section 409A(a)(2)(B)(i), then such Agreement Payment shall not be made or
commence until the earlier of (i) the expiration of the six-month period
measured from the date of Executive’s “separation from service” (as such term is
at the time defined in Treasury Regulations under Section 409A) with the Company
(the “delay period”) or (ii) such earlier time permitted under Section 409A of
the Code; provided, however, that such deferral shall only be effected to the
extent required to avoid adverse tax treatment to Executive under Section 409A,
including (without limitation) the additional 20% tax for which Executive would
otherwise be liable under Section 409A(a)(1)(B) or any state law equivalent of
Section 409A in the absence of such deferral. During any period in which an
Agreement Payment to Executive is deferred pursuant to the foregoing, Executive
shall be entitled to interest on the deferred Agreement Payment at a per annum
rate equal to the highest rate of interest applicable to six-month non-callable
certificates of deposit with daily compounding offered by Citibank N.A., Wells
Fargo Bank, N.A. or Bank of America on the date of such separation from service.
Upon the expiration of the applicable delay period, any Agreement Payment that
would have otherwise been made during that period (whether in a single sum or in
installments) in the absence of this Section 5.6 shall be paid to Executive or
Executive’s beneficiary in one lump sum, including all accrued interest, and all
remaining Agreement Payments, if any, will be payable in accordance with the
payment schedule applicable to each payment or benefit.

Each payment and benefit payable under the Agreement is intended to constitute a
separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury
Regulations. The foregoing provisions are intended to comply with the
requirements of Section 409A so that none of the severance payments and benefits
to be provided hereunder will be subject to the additional tax imposed under
Section 409A, and any ambiguities herein will be interpreted to so comply. The
Company and Executive agree to work together in good faith to consider
amendments to this Agreement and to take such reasonable actions which are
necessary, appropriate or desirable to avoid imposition of any additional tax or
income recognition prior to actual payment to Executive under Section 409A.

5.7 Golden Parachute Payments.

(a) In the event that any payment received or to be received by Executive
pursuant to this Agreement or otherwise (“Payment”) would be subject to the
excise tax imposed by Section 4999 of the Code, or any comparable federal,
state, local or foreign excise tax (such excise tax, together with any interest
and penalties, is hereinafter collectively referred to as the “Excise Tax”),
then Executive shall be entitled to receive an additional payment from the
Company (“Gross-Up Payment”) in such an amount that after the payment of all
taxes (including, without limitation, any interest and penalties on such taxes
and the Excise Tax) on the Payment and on the Gross-Up Payment, Executive shall
retain an amount equal to (a) the Payment minus (b) all applicable taxes on the
Payment other than the Excise Tax. The intent of

 

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the parties is that the Company shall be solely responsible for, and shall pay,
any Excise Tax on the Payment and Gross-Up Payment and any income, employment
and other taxes (including, without limitation, penalties and interest) imposed
on the Gross-Up Payment (as well as any loss of tax deduction caused by the
Payment or the Gross-Up Payment). Notwithstanding the foregoing, in the event
that Excise Taxes could be avoided by a reduction in payments to Executive
pursuant to this Agreement, the Company may reduce such payments to bring the
total payments to that amount that falls immediately below the threshold
triggering the Excise Tax, up to a total reduction not to exceed $25,000. Any
reduction in payments and/or benefits required by this Section 5.7 shall occur
in the following order: (1) reduction of cash payments; (2) cancellation of
accelerated vesting of equity awards other than stock options; (3) cancellation
of accelerated vesting of stock options; and (4) reduction of other benefits
paid to the Executive. In the event that acceleration of vesting of equity award
compensation is to be reduced, such acceleration of vesting shall be cancelled
in the reverse order of the date of grant for the Executive’s equity awards. If
two or more equity awards are granted on the same date, each award will be
reduced on a pro-rata basis. Executive in no event will have any discretion
regarding the ordering of any reduction in payments or benefits. Any Gross-Up
Payment under this Agreement shall be made with thirty (30) days following the
date in which the related taxes are remitted to the taxing authorities by
Executive.

(b) Unless the Company and Executive otherwise agree in writing, all
determinations required to be made under this Section 5.7 and the assumptions to
be utilized in arriving at such determinations shall be made in writing in good
faith by an independent tax professional designated by the Company and
reasonably acceptable to Executive (the “Independent Tax Professional”). For
purposes of making the calculations required by this Section 5.7, the
Independent Tax Professional may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good-faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and Executive shall furnish to the Independent Tax
Professional such information and documents as the Independent Tax Professional
may reasonably request in order to make a determination under this Section 5.7.
The Company shall bear all costs that the Independent Tax Professional may
reasonably incur in connection with any calculations contemplated by this
Section 5.7.

ARTICLE VI

OTHER RIGHTS AND BENEFITS NOT AFFECTED

Nothing in the Agreement shall prevent or limit Executive’s continuing or future
participation in any benefit, bonus, incentive or other plans, programs,
policies or practices provided by the Company and for which Executive may
otherwise qualify, nor shall anything herein limit such greater rights as
Executive may have under any agreements with the Company applicable to his/her
Stock Options, Restricted Stock, Stock Units or other equity awards; provided,
however, that any benefits provided hereunder shall be in lieu of any other
severance benefits to which Executive may otherwise be entitled, including
(without limitation) under any employment contract or severance plan, program or
arrangement. Except as otherwise expressly provided herein, amounts that are
vested benefits or that Executive is otherwise entitled to receive under any
plan, policy, practice or program of the Company at or subsequent to the date of
a Termination Event shall be payable in accordance with such plan, policy,
practice or program.

 

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ARTICLE VII

NON-ALIENATION OF BENEFITS

No benefit hereunder shall be subject to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any attempt to do so
shall be void.

ARTICLE VIII

DEFINITIONS

For purposes of the Agreement, the following terms shall have the meanings set
forth below:

8.1 “Base Salary” means Executive’s annual salary (excluding bonus, any other
incentive or other payments and stock option exercises) from the Company at the
time of the occurrence of the Change of Control (if applicable) or the
Termination Event, whichever is greater.

8.2 “Cause” means (i) an unauthorized use or disclosure by Executive of the
Company’s confidential information or trade secrets, which use or disclosure
causes material harm to the Company, (ii) a material breach by Executive of a
material agreement between Executive and the Company, (iii) a material failure
by Executive to comply with the Company’s written policies or rules resulting in
material harm to the Company, (iv) Executive’s conviction of, or plea of
“guilty” or “no contest” to, a felony under the laws of the United States or any
State thereof or the equivalent under the applicable laws outside of the United
States, (v) Executive’s gross negligence or willful misconduct resulting in
material harm to the Company, (vi) a continuing failure by Executive to perform
assigned duties after receiving written notification of such failure or (vii) a
failure by Executive to cooperate in good faith with a governmental or internal
investigation of the Company or its directors, officers or employees, if the
Company has requested Executive’s cooperation.

8.3 “Change of Control” means:

(a) The consummation of a merger or consolidation of the Company with or into
another entity or any other corporate reorganization, if persons who were not
shareholders of the Company immediately prior to such merger, consolidation or
other reorganization own immediately after such merger, consolidation or other
reorganization 50% or more of the voting power of the outstanding securities of
each of (i) the continuing or surviving entity and (ii) any direct or indirect
parent corporation of such continuing or surviving entity;

(b) The sale, transfer or other disposition of all or substantially all of the
Company’s assets;

 

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(c) A change in the composition of the Board, as a result of which fewer than
50% of the incumbent directors are directors who either:

(i) Had been directors of the Company on the date 24 months prior to the date of
such change in the composition of the Board (the “Original Directors”); or

(ii) Were appointed to the Board, or nominated for election to the Board, with
the affirmative votes of at least a majority of the aggregate of (A) the
Original Directors who were in office at the time of their appointment or
nomination and (B) the directors whose appointment or nomination was previously
approved in a manner consistent with this Paragraph (ii); or

(d) Any transaction as a result of which any person is the “beneficial owner”
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)), directly or indirectly, of securities of the Company
representing at least 30% of the total voting power represented by the Company’s
then outstanding voting securities. For purposes of this Subsection (d), the
term “person” shall have the same meaning as when used in Sections 13(d)
and 14(d) of the Exchange Act but shall exclude (i) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or of a Parent
or Subsidiary and (ii) a corporation owned directly or indirectly by the
shareholders of the Company in substantially the same proportions as their
ownership of Shares.

A transaction shall not constitute a Change in Control if its sole purpose is to
change the jurisdiction of the Company’s incorporation or to create a holding
company that will be owned in substantially the same proportions by the persons
who held the Company’s securities immediately before such transaction.

8.4 “Company” means Verigy Ltd., a Singapore corporation, and any successor
thereto and its subsidiaries; provided, however, that with respect to
determining whether a Change in Control has occurred, the term “Company” shall
mean Verigy Ltd. exclusively.

8.5 “Disability” means that Executive is unable to perform the duties of his/her
office with the Company or any subsidiary, and is unable to perform
substantially equivalent duties, by reason of any medically determinable
physical or mental impairment, and such condition has lasted or can be expected
to last for a continuous period of not less than 12 months.

8.6 “Good Reason” means: (i) a reduction of Executive’s rate of compensation as
in effect on the Effective Date of this Agreement or, if a Change of Control has
occurred, as in effect immediately prior to the occurrence of a Change of
Control, other than reductions in Base Salary that apply broadly to employees of
the Company or reductions due to varying metrics and achievement of performance
goals for different periods under variable-pay programs; (ii) either (A) failure
to provide a package of benefits that, taken as a whole, provides substantially
similar benefits to those in which Executive is entitled to participate as of
the Effective Date (except that employee contributions may be raised to the
extent of any cost increases related to such benefits where such increases in
employee contributions are broadly applicable to employees of the Company) or
(B) any action by the Company that would significantly and adversely affect
Executive’s participation or reduce Executive’s benefits under any of the
Company’s benefit

 

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plans, other than changes that apply broadly to employees of the Company;
(iii) a change in Executive’s duties, responsibilities, authority, job title or
reporting relationships resulting in a significant diminution of position,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith that is remedied by the Company promptly after notice thereof
is given by Executive; (iv) a request that Executive relocate to a worksite that
is more than 25 miles from his/her prior worksite, unless Executive accepts such
relocation opportunity; (v) a failure or refusal of a successor to the Company
to assume the Company’s obligations under this Agreement, as provided in
Section 9.9 or (vi) a material breach by the Company or any successor to the
Company of any of the material provisions of this Agreement. For purposes of
clause (iii) of the immediately preceding sentence, Executive’s duties,
responsibilities, authority, job title or reporting relationships shall be
considered to be significantly diminished (and therefore shall constitute “Good
Reason”) if Executive no longer to performs substantially the same functional
role for the Company as Executive performed immediately prior to the occurrence
of the Change of Control of an entity whose equity securities are publicly
traded; provided, however, that prior to terminating his/her employment for Good
Reason under clause (iii) of the immediately preceding sentence solely as a
result of the entity for which Executive is providing services not being an
entity whose securities are publicly traded, Executive shall notify the
successor entity of his/her intention to so terminate his/her employment and
shall provide the successor entity with a reasonable period of time, not to
exceed 90 days, to negotiate terms of employment which meet Executive’s
requirements. If, at the end of the notice and negotiation period, the parties
are unable to arrive at mutually satisfactory terms and conditions of
employment, then Executive may exercise his/her right to termination for good
reason as a result of no longer serving in a comparable role with a company
whose securities are publicly traded.

8.7 “Target Bonus” means an amount equal to an average of the annualized bonus
compensation paid to Employee with respect to the two fiscal years of the
Company most recently preceding the date of the Termination Event; provided,
however, that if the Executive’s target bonus in the year in which the
Termination Event occurs, expressed as a percent of Executive’s Base Salary, is
higher than the percentage target bonus levels in the years used for purposes of
the average, then an equitable adjustment will be made to the prior year amounts
so as to treat Executive as if s/he were at the higher target bonus percentage
for the years used to determine the average.

8.8 “Termination Event” means an involuntary termination of employment described
in Section 2.1 or 3.1(a) or a voluntary termination of employment described in
Section 3.2(a). No other event shall be a Termination Event for purposes of this
Agreement.

ARTICLE IX

GENERAL PROVISIONS

9.1 Interpretation. The parties acknowledge that Executive may serve as an
officer and/director of the Company as well as an officer and/or director of one
or more of the Company’s subsidiaries. It is the parties’ intention that, when
determining whether a Termination Event or Change of Control has occurred, the
parties will look at the facts and circumstances affecting the highest level
entity in the Company’s corporate family in which Executive plays a role. For
example, an executive officer of the Company who also served on

 

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the Board or as an officer of one or more of the Company’s subsidiaries will not
be deemed to have experienced a change in Executive’s duties, responsibilities,
authority, job title or reporting relationships resulting in a significant
diminution of position solely as a result of the change at the subsidiary level,
i.e., changes implemented solely at the subsidiary level but not at the higher
level would not constitute Good Cause unless the overall effect of the
subsidiary-level changes resulted in a significant diminution of overall
position with the Company and its subsidiaries taken as a whole.

9.2 Subsidiaries Bound. To the extent that Executive is employed by a subsidiary
of Verigy Ltd. and not by Verigy Ltd. itself, (i) Executive’s Base Salary and
Target Bonus shall be the amounts as so defined as payable by Executive’s direct
employer; and (ii) to the extent that Verigy Ltd. itself is not the direct
employer or otherwise paying the benefits due to Executive under this Agreement,
Verigy Ltd. shall cause the subsidiary directly employing Executive to make
provide the benefits due to Executive under this Agreement.

9.3 Notices. Any notices provided hereunder must be in writing, and such notices
or any other written communication shall be deemed effective upon the earlier of
personal delivery (including personal delivery by facsimile) or the third day
after mailing by first-class mail, to the Company at its primary U.S. office
location and to Executive at Executive’s address as listed in the Company’s
payroll records. Any payments made by the Company to Executive under the terms
of this Agreement shall be delivered to Executive either in person or at such
address as listed in the Company’s payroll records.

9.4 Severability. It is the intent of the parties to this Agreement that,
whenever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provision or any other
jurisdiction, but this Agreement shall be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provisions had
never been contained herein.

9.5 Waiver. If either party should waive any breach of any provisions of this
Agreement, that party shall not thereby be deemed to have waived any preceding
or succeeding breach of the same or any other provision of this Agreement.

9.6 Complete Agreement. This Agreement, including Exhibit A, constitutes the
entire agreement between Executive and the Company and is the complete, final
and exclusive embodiment of their agreement with regard to this subject matter;
provided that (subject to any delay period required under Section 5.6) nothing
herein shall limit such greater rights as Executive may have under any
agreements with the Company applicable to his/her Stock Options, Restricted
Stock, Stock Units or other equity awards. This Agreement shall be deemed to be
an amendment of any agreements between Executive and the Company applicable to
his/her Stock Options, Restricted Stock, Stock Units or other equity awards to
the extent that this Agreement provides greater rights. This Agreement is
entered into without reliance on any promise or representation other than those
expressly contained herein. Without limiting the foregoing, this Agreement
supersedes and replaces all prior agreements and understandings, whether written
or oral, on the matters set forth herein that may exist between Executive and
the

 

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Company or its predecessor, Agilent Technologies, Inc. or any of their
respective subsidiaries, including the Original Severance Agreement and the
First Restated Severance Agreement. With respect to Stock Options, Restricted
Stock, Stock Units or other equity awards granted on or after the date hereof,
the acceleration of vesting provided herein will apply to such awards except to
the extent otherwise explicitly provided (which must include reference to this
Agreement) in the applicable equity award agreement.

9.7 Counterparts. This Agreement may be executed in separate counterparts, any
one of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same Agreement.

9.8 Headings. The headings of the Articles and Sections hereof are inserted for
convenience only and shall neither be deemed to constitute a part hereof nor to
affect the meaning thereof.

9.9 Successors and Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by Executive and the Company, and their respective
successors, assigns, heirs, executors and administrators, except that Executive
may not delegate any of Executive’s duties hereunder and may not assign any of
Executive’s rights hereunder without the written consent of the Company, which
consent shall not be withheld unreasonably. Any successor to the Company
(whether direct or indirect and whether by purchase, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company’s business
and/or assets shall assume the Company’s obligations under this Agreement in the
same manner and to the same extent as the Company would be required to perform
such obligations in the absence of a succession. For all purposes under this
Agreement, the term “Company” shall include any successor to the Company’s
business and/or assets, whether or not such successor executes and delivers an
assumption agreement referred to in the preceding sentence or becomes bound by
the terms of this Agreement by operation of law or otherwise.

9.10 Amendment or Termination of this Agreement. This Agreement may be changed
or terminated only upon the mutual written consent of the Company and Executive.

9.11 Attorney Fees. If either party hereto brings any action to enforce such
party’s rights hereunder, the prevailing party in any such action shall be
entitled to recover such party’s reasonable attorneys’ fees and costs incurred
in connection with such action.

9.12 Arbitration. In order to ensure rapid and economical resolution of any
dispute that may arise under this Agreement, Executive and the Company agree
that any and all disputes or controversies arising from or regarding the
interpretation, performance, enforcement or termination of this Agreement which
cannot be resolved by good faith negotiation between the parties shall first be
submitted for non-binding mediation. If complete agreement cannot be reached
within 60 days after the date of submission to mediation, any remaining issues
will be submitted to the Judicial Arbitration & Mediation Services, Inc.
(“JAMS”) to be resolved by final and binding arbitration under the its
Employment Arbitration Rules & Procedures (the “JAMS Rules”) and California Law.
Accordingly, the parties hereby agree to waive their right to have any dispute
between them under this Agreement resolved in a court of law by a judge or jury.

 

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9.13 Choice of Law. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by the laws of the State of
California.

9.14 Construction of Agreement. In the event of a conflict between the text of
the Agreement and any summary, description or other information regarding the
Agreement, the text of the Agreement shall control.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
written above.

 

Verigy Ltd.,     EXECUTIVE a Singapore corporation    

 

   

 

(Signature of Authorized Signatory)     Keith L. Barnes

 

    (Print Name & Title of Signatory)    

Exhibit A: General Release and Agreement

Signature Page to Restated Severance Agreement

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Exhibit A

GENERAL RELEASE AND AGREEMENT

This General Release and Agreement (the “Agreement”) is entered into this
    day of             , 200     (the “Effective Date”), between Verigy Ltd., a
Singapore corporation (the “Company”), and Keith L. Barnes (“Executive”). The
Agreement is part of an agreement between Executive and Verigy Ltd. (“Verigy”)
to terminate Executive’s employment with Verigy on the terms set forth in the
Second Amended & Restated Severance Agreement dated December     , 2008, between
Verigy and Executive (the “Severance Agreement”).

Verigy and Executive hereby agree as follows:

 

1. Executive agrees to attend a Functional Exit Interview on                  ,
20    , at which time all company property and identification will be turned in
and the appropriate personnel documents will be executed. Thereafter, Executive
agrees to do such other acts as may be reasonably requested by Verigy in order
to effectuate the terms of this Agreement. Executive agrees to remove all
personal effects from his/her current office within seven days of signing this
Agreement and in any event not later than                  , 20    .

 

2. Executive agrees not to make any public statement or statements to the press
concerning Verigy, its business objectives, its management practices, or other
sensitive information without first receiving Verigy’s written approval.
Executive further agrees to take no action that would cause Verigy or its
employees or agents any embarrassment or humiliation or otherwise cause or
contribute to Verigy’s or any such person’s being held in disrepute by the
general public or Verigy’s employees, clients, or customers. Verigy agrees to
take no action that would cause Executive any embarrassment or humiliation or
otherwise cause or contribute to Executive’s being held in disrepute by the
general public or by Verigy’s employees, clients or customers.

 

3. Executive, on behalf of Executive and his/her heirs, estate, executors,
administrators, successors and assigns, does fully release, discharge, and agree
to hold harmless Verigy, its officers, agents, employees, attorneys,
subsidiaries, affiliated companies, predecessors, successors and assigns
(collectively, the “Releasees”) from all actions, causes of action, claims,
judgments, obligations, damages, liabilities, costs, or expense of whatsoever
kind and character that he may have, including but not limited to:

 

  a. any claims relating to employment discrimination on account of race, sex,
age, national origin, creed, disability, or other basis, whether or not arising
under the Federal Civil Rights Acts, the Age Discrimination in Employment Act
(“ADEA”), California Fair Employment and Housing Act, the Rehabilitation Act of
1973, the Americans With Disabilities Act, any amendments to the foregoing laws,
or any other federal, state, county, municipal, foreign or other law, statute,
regulation or order relating to employment discrimination;

--------------------------------------------------------------------------------

  b. any claims relating to pay or leave of absence arising under the Fair Labor
Standards Act, the Family Medical Leave Act, and any similar laws enacted in
California or any other jurisdiction, except as prohibited by law;

 

  c. any claims for reemployment, salary, wages, bonuses, vacation pay, stock
options, acquired rights, appreciation from stock options, stock appreciation
rights, benefits or other compensation of any kind;

 

  d. any claims relating to, arising out of, or connected with Executive’s
employment with Verigy, its predecessor Agilent Technologies, Inc. (“Agilent”),
or their respective subsidiaries, whether or not the same be based upon any
alleged violation of public policy; compliance (or lack thereof) with any
internal policy, procedure, practice or guideline; or any oral, written,
express, and/or implied employment contract or agreement, or the breach of any
terms thereof, including but not limited to, any implied covenant of good faith
and fair dealing; or any federal, state, county, municipal or foreign law,
statute, regulation or order, whether or not relating to labor or employment;
and

 

  e. any claims relating to, arising out of, or connected with any other matter
or event occurring prior to the execution of this Agreement, whether or not
brought before any judicial, administrative, or other tribunal.

The foregoing notwithstanding, Executive does not release any actions, causes of
action, claims, judgments, obligations, damages, liabilities, costs or expense
of whatsoever kind and character that he may have with respect to
(i) Executive’s rights under this Agreement or the Severance Agreement,
(ii) Executive’s rights under any employee benefit plan sponsored by Agilent or
Verigy or (iii) Executive’s rights to indemnification or advancement of expenses
under applicable law, the bylaws of Agilent or Verigy, or other governing
instruments or any agreement addressing such subject matter between Executive
and Agilent or Verigy. Moreover, this release does not release claims that
cannot be released as a matter of law, including, but not limited to:
(1) Executive’s right to file a charge with or participate in a charge by the
Equal Employment Opportunity Commission, or any other local, state, or federal
administrative body or government agency that is authorized to enforce or
administer laws related to employment, against the Company (with the
understanding that any such filing or participation does not give Executive the
right to recover any monetary damages against the Company; Executive’s release
of claims herein bars Executive from recovering such monetary relief from the
Company); (2) claims under Division 3, Article 2 of the California Labor Code
(which includes California Labor Code section 2802 regarding indemnity for
necessary expenditures or losses by employee); and (3) claims prohibited from
release as set forth in California Labor Code section 206.5 (specifically “any
claim or right on account of wages due, or to become due, or made as an advance
on wages to be earned, unless payment of such wages has been made”).

 

4. Executive represents and warrants that Executive has not assigned any such
claim or authorized any other person or entity to assert such claim on
Executive’s behalf. Further, Executive agrees that under this Agreement
Executive waives any claim for damages incurred at any time in the future
because of alleged continuing effects of past wrongful conduct involving any
such claims and any right to sue for injunctive relief against the alleged
continuing effects of past wrongful conduct involving such claims.

 

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5. Executive agrees not to act in any manner that might damage the business of
the Company. Executive further agrees that he/she will not knowingly encourage,
counsel, or assist any attorneys or their clients in the presentation or
prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against any of the Releasees, unless under a
subpoena or other court order to do so or as related directly to the ADEA waiver
in this Agreement. Executive agrees both to immediately notify the Company upon
receipt of any such subpoena or court order, and to furnish, within three
(3) business days of its receipt, a copy of such subpoena or other court order.
If approached by anyone for counsel or assistance in the presentation or
prosecution of any disputes, differences, grievances, claims, charges, or
complaints against any of the Releasees, Executive shall state no more than that
he/she cannot provide counsel or assistance.

 

6. In entering into this Agreement, the parties have intended that this
Agreement be a full and final settlement of all matters, whether or not
presently disputed, that could have arisen between them.

 

7. Executive understands and expressly agrees that this Agreement extends to all
claims of every nature and kind whatsoever, known or unknown, suspected or
unsuspected, past or present, and all rights under Section 1542 of the
California Civil Code and/or any similar statute or law or any other
jurisdiction are hereby expressly waived. Such Section reads as follows:

“Section 1542. A general release does not extend to claims which the creditor
does not know or suspect to exist in his or her favor at the time of executing
the release, which if known by him or her must have materially affected his or
her settlement with the debtor.”

 

8. It is expressly agreed that the claims released pursuant to this Agreement
include all claims against individual employees of Verigy, whether or not such
employees were acting within the course and scope of their employment.

 

9. Executive understands and agrees that, as a condition of this Agreement,
Executive shall not be entitled to any employment (including employment as an
independent contractor or otherwise) with Verigy, its subsidiaries or related
companies, or any successor, and Executive hereby waives any right, or alleged
right, of employment or re-employment with Verigy. Executive further agrees not
to apply for employment with Verigy in the future and not to institute or join
any action, lawsuit or proceeding against Verigy, its subsidiaries, related
companies or successors for any failure to employ Executive. In the event
Executive should secure such employment, it is agreed that such employment is
voidable without cause in the sole discretion of Verigy. After terminating
Executive’s employment, should Executive become employed by another company that
Verigy merges with or acquires after the date of this Agreement, Executive may
continue such employment only if Verigy makes offers of employment to all
employees of the acquired or merged company.

 

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10. Executive agrees that the terms, amount and fact of settlement shall be
confidential until Verigy needs to make any required disclosure of any
agreements between Verigy and Executive. Therefore, except as may be necessary
to enforce the rights contained herein in an appropriate legal proceeding or as
may be necessary to receive professional services from an attorney, accountant,
or other professional adviser in order for such adviser to render professional
services, Executive agrees not to disclose any information concerning these
arrangements to anyone, including, but not limited to, past, present and future
employees of Verigy, until such time of the public filings.

 

11. The terms of this Agreement are intended by the parties as a final
expression of their agreement with respect to such terms as are included in this
Agreement and may not be contradicted by evidence of any prior or
contemporaneous agreement. The parties further intend that this Agreement
constitutes the complete and exclusive statement of its terms and that no
extrinsic evidence whatsoever may be introduced in any judicial or other
proceeding, if any, involving this Agreement. No modification of this Agreement
shall be effective unless in writing and signed by both parties hereto.

 

12. It is further expressly agreed and understood that Executive has not relied
upon any advice from Verigy and/or its attorneys whatsoever as to the
taxability, whether pursuant to federal, state, local or foreign income tax
statutes or regulations or otherwise, of the payments made hereunder and that
Executive will be solely liable for all tax obligations, if any, arising from
payment of the sums specified herein and shall hold Verigy harmless from any tax
obligations arising from said payment.

 

13. In order to ensure rapid and economical resolution of any dispute that may
arise under this Agreement, Executive and the Company agree that any and all
disputes or controversies arising from or regarding the interpretation,
performance, enforcement or termination of this Agreement which cannot be
resolved by good faith negotiation between the parties shall first be submitted
for non-binding mediation. If complete agreement cannot be reached within 60
days after the date of submission to mediation, any remaining issues will be
submitted to the American Arbitration Association to be resolved by final and
binding arbitration under the its National Rules for the Resolution of
Employment Disputes and California Law. BY ENTERING INTO THIS AGREEMENT,
EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE IS WAIVING EXECUTIVE’S RIGHT TO JURY TRIAL
OF ANY DISPUTE COVERED BY THIS AGREEMENT.

 

14. The following notice is provided in accordance with the provisions of
Federal Law:

You have up to [21 days] [45 days] [NOTE USE “45” IF TERMINATION IS IN
CONNECTION WITH A “REDUCTION IN FORCE” FOR ADEA PURPOSES.] from the date this
General Release and Agreement is given to you in which to accept its terms,
although you may accept it any time within that [21-day period] [45-day period]
[NOTE USE “45-day period” IF TERMINATION IS IN CONNECTION WITH A

 

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“REDUCTION IN FORCE” FOR ADEA PURPOSES.]. You are advised to consult with an
attorney regarding this Agreement. You have the right to revoke your acceptance
of this Agreement at any time within seven days from the date you sign it, and
this Agreement will not become effective and enforceable until this seven-day
revocation period has expired. To revoke your acceptance, you must send a
written notice of revocation to Verigy Ltd., Attention: Vice President and
General Counsel, by 5:00 p.m. on or before the seventh day after you sign this
Agreement.

EXECUTIVE FURTHER STATES THAT EXECUTIVE HAS HAD THE OPPORTUNITY TO CONSULT WITH
THE ATTORNEY OF EXECUTIVE’S CHOICE, THAT EXECUTIVE HAS CAREFULLY READ THIS
AGREEMENT, THAT EXECUTIVE HAS HAD AMPLE TIME TO REFLECT UPON AND CONSIDER ITS
CONSEQUENCES, THAT EXECUTIVE FULLY UNDERSTANDS ITS FINAL AND BINDING EFFECT,
THAT THE ONLY PROMISES MADE TO EXECUTIVE TO SIGN THIS AGREEMENT ARE THOSE STATED
ABOVE OR IN THE SEVERANCE AGREEMENT, AND THAT EXECUTIVE IS SIGNING THIS
AGREEMENT VOLUNTARILY.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, this Agreement has been executed in duplicate originals on
the dates indicated below, and shall become effective as indicated above.

 

Verigy Ltd.,     EXECUTIVE a Singapore corporation      

 

   

 

(Signature of Authorized Signatory)     Keith L. Barnes

 

   

Date:

 

 

(Print Name & Title of Signatory)       Date:  

 

     

 

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