Exhibit 10.1


 


	
   

  	
   

  	
  Agilent Technologies,
  Inc.

  395 Page Mill Road, MS A3-14

  Palo Alto, California 94306

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  Adrian Dillon

  Executive Vice President

  Finance and Administration

  Chief Financial Officer

  	
   

  	
   

  



 


April 4, 2006


 


Keith Barnes


[address]


 


Dear Keith,


 


We are pleased that you
are interested in joining our team at Verigy, the Agilent Technologies
Semiconductor Test Systems business that we plan to spin off by the end of the
fiscal year. This letter outlines our offer of employment for the position of
Chief Executive Officer and our intent to nominate you to serve as a member of
the board of directors of Verigy. This offer is subject to the approval of
Agilent’s Compensation Committee.


 


Your base salary will be
$500,000 per year, and you will be a participant in the Verigy variable pay program
at the beginning of the next fiscal quarter. If your start
date is on or before May 1, 2006, you will be a participant in the Verigy variable
pay program beginning May 1, 2006. Your annual variable pay target bonus opportunity
will be 100%, paid semiannually and broken out as follows: 1) 15% target bonus
opportunity tied to Verigy long-term financial goals; 2) 85% target bonus
opportunity based upon other short-term financial and operational goals to be
determined. For your first year of employment, we will guarantee you a payout
at 50% of your target annual bonus ($250,000), paid semiannually and contingent
on your continued service as provided under the program.


 


In addition, we are
pleased to offer you an initial Restricted Stock grant equivalent to $800,000
in value. This grant of Verigy restricted stock will be effective at the date
of the Initial Public Offering, and the number of shares will be determined using
the price at which the shares will be first offered to the public (as reflected
on the cover page of the final prospectus, the “Public Offering Price”). We
also offer you a non-qualified option to purchase 750,000 shares, effective at
the date of the Initial Public Offering, with an exercise price equal to the Public
Offering Price. Both components of this initial equity grant will vest 25% per
year, on an annual basis, with the first 25% vesting on the first anniversary
of the IPO date. The terms and conditions of your grant will be governed by the
Verigy stock plan and subject to the Verigy Board of Directors’ approval. In
addition to this “initial hire” equity grant, you can anticipate subsequent
annual Long Term Incentive awards based on performance and market practice.


 


Should you join Agilent
Technologies/Verigy, we will reimburse you for actual and reasonable living
expenses (lodging, car rental, meals, and travel to and from Portland for you
and on occasion your family) subject to a monthly cap of $6,500 for a period
not to exceed 3 years from the date of hire. You will provide documentation of
such expenses in order to receive these reimbursements. After 3 years from your
hire date, you agree to relocate to the Bay Area from Portland. Your relocation
will be covered under the Verigy Relocation program. Verigy will reimburse you
for documented actual and reasonable expenses incurred in relocating from Portland
to the Bay Area (e.g., shipment of household goods, final move to new location,
relevant fees and commissions, and reimbursement for the tax cost, if any,
related to the reimbursement of relocation expenses).


 

















 


Should you join Agilent
Technologies/Verigy, you will have the opportunity to receive a severance
benefit. Prior to the date of the IPO, in the event of your involuntary
termination without cause or your voluntary termination with good reason, or in
the unlikely event that the IPO does not take place by December 31, 2006, you
will be eligible to receive a severance benefit equal to 12 months of your
current annual base salary plus 100% of your annual target bonus and COBRA
coverage paid by the employer until the earlier to occur of the date (i) that
is twelve months after your termination, or (ii) you commence employment with
another employer that offers medical coverage. In the event of your involuntary
termination without cause or your voluntary termination with good reason within
twenty four months from the date of the IPO, the benefit opportunity will be
equal to 100% of your current annual base salary plus 100% of your annual target
bonus and COBRA coverage paid by the employer until the earlier to occur of the
date (i) that is twelve months after your termination, or (ii) you commence
employment with another employer that offers medical coverage. Additionally,
all unvested stock options and restricted stock will immediately vest. Additional
details will be provided in a separate severance agreement provided soon after acceptance
of the employment offer.


 


Should you join Agilent
Technologies/Verigy, you will have the opportunity to participate in Verigy’s Change
of Control program, which provides certain benefits in the event of a
termination under specified circumstances after a change of control. The
benefit will include a severance payment equal to 200% of your annual base
salary and target annual bonus as well as accelerated vesting of all
outstanding stock options and restricted stock. The Verigy Change of Control
agreement would go into effect after final distribution of Verigy stock by Agilent
Technologies, Inc.


 


You will also be eligible
for 20 days of Flexible Time Off (FTO), effective your first year of
employment, and other Agilent Technologies/Verigy benefits, according to their
terms. A few key Agilent Technologies/Verigy benefits are stock purchase plan,
401K plan; medical and dental plans.


 


Please note that this
offer is contingent upon:


 


1.               Completion and
return of Employment Acceptance form


 


2.               Completion and
return of Agreement Regarding Confidential Information and Proprietary
Developments


 


3.               Completion of a background check


(http://www.sterlingtesting.com/ad/agilent/bg)


Because we are committed
to providing a safe and productive work environment, if you accept my
employment offer you will be required to successfully complete a background check
which includes verification of such things as prior employment and educational
and criminal conviction history. An Agilent Technologies representative will
contact you to assist with the background check.


 


Your employment with
Agilent Technologies/Verigy shall be “at will” at all times.


 


Enclosed with this letter
is a current copy of our Standards of Business Conduct. Adherence to these
policies, including subsequent changes, is required of all employees. Also
enclosed for your signature are (1) Agilent Technologies’ Agreement Regarding Confidential
Information and Proprietary Developments and (2) the Employment Acceptance Form.
You may notify me by phone or email of your intention to accept this offer;
however for such acceptance to be valid, these forms must be signed and
returned to me.


 

















 


Keith, I am excited about
the prospect of your joining Verigy. If you have any questions, please call me.


 


Sincerely,


 


 


Adrian Dillon


Executive Vice President


Finance and
Administration


Chief Financial Officer


 


Enclosures