Exhibit 10.1

US Three Tranche Option Agt – December 2009

VERIGY LTD. 2006 EQUITY INCENTIVE PLAN

NOTICE OF SHARE OPTION AWARD

(THREE TRANCHE)

You have been granted the following option to purchase Verigy Ltd. (the
“Company”) ordinary shares as follows:

 

Name of Optionee:    «Name» Total Number of Shares:    «TotalShares» Type of
Option:    Nonstatutory Stock Option Date of Award:    «AwardDate» Expiration
Date:    «ExpDate». This option may expire earlier if your Service terminates
earlier, as described in the Stock Option Agreement.

The Option shall be divided into three tranches of «1/3shares» each, with
exercise prices and vesting as follows:

 

Exercise Prices1    Exercise Price Per Share, 1st Tranche:   
$«PricePerShare1st» (The closing price of Verigy ordinary shares on the Date of
Award); Exercise Price Per Share, 2nd Tranche:    The closing price of Verigy
ordinary shares on the third business day following Verigy’s announcement of
financial results for the fiscal quarter ending «2pricingdate»; Exercise Price
Per Share, 3rd Tranche:    The closing price of Verigy ordinary shares on the
third business day following Verigy’s announcement of financial results for the
fiscal quarter ending «3pricingdate». Vesting Schedule2    1st Tranche
(«1/3shares»):    The first tranche of shares subject to this option vests and
becomes exercisable in 16 equal quarterly installments, with the first
installment vesting on «1vestingdate», provided that you continue to be an
Awardee Eligible to Vest as of the applicable vesting date. 2nd Tranche
(«1/3shares»):    The second tranche of shares subject to this option vests and
becomes exercisable in 15 equal quarterly installments, with the first
installment vesting on «2vestingdate», provided that you continue to be an
Awardee Eligible to Vest as of the applicable vesting date. 3rd Tranche
(1/3shares):    The third tranche of shares subject to this option vests and
becomes exercisable in 14 equal quarterly installments, with the first
installment vesting on «3vestingdate», provided that you continue to be an
Awardee Eligible to Vest as of the applicable vesting date.

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

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

 

 

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

  

 

    VERIGY LTD.

              BY:   

 

         

TITLE:

 

         

 

 

1

Except as set forth in the accompanying Option Agreement, the exercise price for
the 2nd and 3rd tranches shall be equal to the closing price of Verigy ordinary
shares on the pricing date indicated above. Such price shall be set
automatically and without any further action on the part of the Company or the
optionee.

2

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

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US Three Tranche Option Agt – December 2009

VERIGY LTD. 2006 EQUITY INCENTIVE PLAN

SHARE OPTION AGREEMENT

(Three 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 Share Option Award, as long as you remain an Awardee Eligible
to Vest (as defined in the Plan).

 

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

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

Notwithstanding the establishment of the pricing dates for the 2nd and 3rd
tranches of the award as set forth in the Notice of Share Option Award, the
exercise price of the 2nd tranche and 3rd tranches, if previously unpriced,
shall be established in accordance with the following in the 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 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.

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   No Affect On Vesting. The Vesting provisions applicable to each 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 Share Option Award may be adjusted in accordance with
the Company’s part-time work policy or the terms of an agreement between you and
the Company pertaining to your part-time schedule.

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

You may exercise this option from time to time for any number of shares for
which the option is then exercisable, by notice in writing, electronically or by
other means to, and as prescribed by, the Company’s equity incentive
administration service provider (the “administration service provider”). Your
exercise notice will be effective and irrevocable at such time as your notice,
method of payment (whether by cash, check, proceeds from the immediate sale of
the option shares, or as otherwise provided in the Plan) and such other
documentation as the administration service provider may require have been
received by the administration service provider. Your exercise notice must
specify 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 Section 5.7 of the Plan. Withholding
Taxes and Share Withholding    You will not be allowed to exercise this option
unless you make arrangements acceptable to the Company to pay any withholding
taxes that may be due as a result of the option exercise. Such arrangements
include an irrevocable direction to the Company’s securities broker service
provider to sell all or a part of the Shares being purchased under this option
and to deliver all or part of the sales proceeds to the Company, pursuant to
Section 5.7(b) of the plan.

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

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

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

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