Exhibit 10.3


Verigy
Ltd.


2006 Employee Shares Purchase Plan


(As Amended, December 20, 2006)















 


TABLE OF CONTENTS


	
  

  	
   

  	
  Page

  
	
  SECTION 1. PURPOSE OF THE PLAN

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 2. ADMINISTRATION OF THE PLAN

  	
   

  	
  1

  
	
  (a) Committee
  Composition

  	
   

  	
  1

  
	
  (b) Committee
  Responsibilities

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 3. STOCK OFFERED UNDER THE PLAN

  	
   

  	
  1

  
	
  (a) Authorized
  Shares

  	
   

  	
  1

  
	
  (b)
  Anti-Dilution Adjustments

  	
   

  	
  1

  
	
  (c)
  Reorganizations

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  SECTION 4. ENROLLMENT AND PARTICIPATION

  	
   

  	
  2

  
	
  (a) Offering
  Periods

  	
   

  	
  2

  
	
  (c) Enrollment
  at IPO

  	
   

  	
  2

  
	
  (c) Enrollment
  After IPO

  	
   

  	
  2

  
	
  (d) Duration of
  Participation

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  SECTION 5. EMPLOYEE CONTRIBUTIONS

  	
   

  	
  3

  
	
  (a) Commencement
  of Payroll Deductions

  	
   

  	
  3

  
	
  (b) Amount of
  Payroll Deductions

  	
   

  	
  3

  
	
  (c) Changing
  Withholding Rate

  	
   

  	
  3

  
	
  (d)
  Discontinuing Payroll Deductions

  	
   

  	
  3

  
	
  (e) Limit on
  Number of Elections

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  SECTION 6. WITHDRAWAL FROM THE PLAN

  	
   

  	
  4

  
	
  (a) Withdrawal

  	
   

  	
  4

  
	
  (b)
  Re-Enrollment After Withdrawal

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  SECTION 7. CHANGE IN EMPLOYMENT STATUS

  	
   

  	
  4

  
	
  (a) Termination
  of Employment

  	
   

  	
  4

  
	
  (b) Leave of
  Absence

  	
   

  	
  4

  
	
  (c) Death

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  SECTION 8. PLAN ACCOUNTS AND PURCHASE OF SHARES

  	
   

  	
  5

  
	
  (a) Plan
  Accounts

  	
   

  	
  5

  
	
  (b) Purchase
  Price

  	
   

  	
  5

  
	
  (c) Number of
  Shares Purchased

  	
   

  	
  5

  
	
  (d) Available
  Shares Insufficient

  	
   

  	
  5

  
	
  (e) Issuance of
  Stock

  	
   

  	
  5

  
	
  (f) Tax
  Withholding

  	
   

  	
  6

  
	
  (g) Unused Cash
  Balances

  	
   

  	
  6

  
	
  (h) Stockholder
  Approval

  	
   

  	
  6

  



 










 



 


	
  SECTION 9. LIMITATIONS ON STOCK OWNERSHIP

  	
   

  	
  6

  
	
  (a) Five Percent
  Limit

  	
   

  	
  6

  
	
  (b) Dollar Limit

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  SECTION 10. RIGHTS NOT TRANSFERABLE

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  SECTION 11. NO RIGHTS AS AN EMPLOYEE

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  SECTION 12. NO RIGHTS AS A STOCKHOLDER

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 13. AMENDMENT OR DISCONTINUANCE

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 14. COMMITTEE RULES FOR NON-U.S.
  JURISDICTIONS

  	
   

  	
  8

  
	
  (a) Rules and
  Procedures

  	
   

  	
  8

  
	
  (b) Sub-Plans

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 15. COMPLIANCE with LAW.

  	
   

  	
  8

  
	
  (a) Securities
  Laws and Regulations

  	
   

  	
  8

  
	
  (b) Governmental
  Approvals

  	
   

  	
  9

  
	
  (c) Choice of
  Law

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  SECTION 16. DEFINITIONS

  	
   

  	
  9

  
	
  (a) Board

  	
   

  	
  9

  
	
  (b) Code

  	
   

  	
  9

  
	
  (c) Committee

  	
   

  	
  9

  
	
  (d) Company

  	
   

  	
  9

  
	
  (e) Compensation

  	
   

  	
  9

  
	
  (f) Corporate
  Reorganization

  	
   

  	
  9

  
	
  (g) Eligible
  Employee

  	
   

  	
  9

  
	
  (h) Exchange Act

  	
   

  	
  10

  
	
  (i) Fair Market
  Value

  	
   

  	
  10

  
	
  (j) IPO

  	
   

  	
  10

  
	
  (k) Offering
  Period

  	
   

  	
  10

  
	
  (l) Participant

  	
   

  	
  10

  
	
  (m)
  Participating Company

  	
   

  	
  10

  
	
  (n) Plan

  	
   

  	
  11

  
	
  (o) Plan Account

  	
   

  	
  11

  
	
  (p) Purchase
  Price

  	
   

  	
  11

  
	
  (q) Stock

  	
   

  	
  11

  
	
  (r) Subsidiary

  	
   

  	
  11

  



 



 ii














 


Verigy Ltd.


2006 Employee Shares Purchase Plan


SECTION
1.                                               PURPOSE
OF THE PLAN.


The Board adopted the Plan effective as of the date of
the IPO.  The purpose of the Plan is to
provide Eligible Employees with an opportunity to increase their proprietary
interest in the success of the Company by purchasing Shares from the Company on
favorable terms and to pay for such purchases through payroll deductions.  The Plan is intended to qualify for favorable
tax treatment under section 423 of the Code although the Company
undertakes no obligation to maintain such qualification.  In addition, this Plan document authorizes
the grant of options to Eligible Employees resident outside of the United
States of America pursuant to terms, rules, procedures or sub-plans adopted by
the Committee (or its designate) designed to achieve tax, securities law or
other Company objectives but which may not qualify under section 423 of
the Code, provided that such terms, rules, procedures or sub-plans shall apply
on a uniform basis to all Eligible Employees employed by a Participating
Company if the grants to the Eligible Employees employed by such Participating
Company are intended to qualify under section 423 of the Code.


SECTION
2.                                               ADMINISTRATION
OF THE PLAN.


(a)           Committee Composition.  The
Committee shall administer the Plan.  The
Committee shall consist exclusively of one or more directors of the Company,
who shall be appointed by the Board.


(b)           Committee Responsibilities.  The
Committee shall have the authority and discretion to interpret the Plan and
make all other policy decisions relating to the operation of the Plan.  The Committee may adopt such rules,
guidelines and forms as it deems appropriate to implement the Plan.  The Committee’s determinations under the Plan
shall be final and binding on all persons.


SECTION
3.                                               SHARES
OFFERED UNDER THE PLAN.


(a)           Authorized Shares.  The
number of Shares available for purchase under the Plan shall be 1,700,000
(subject to adjustment pursuant to Subsection (b) below).


(b)           Anti-Dilution Adjustments.  The
aggregate number of Shares offered under the Plan, the 2,500-share limitation
described in Section 8(c) and the price of shares that any Participant has
elected to purchase shall be adjusted proportionately for any increase or
decrease in the number of outstanding Shares resulting from a subdivision or
consolidation of Shares or the payment of a share dividend, any other increase
or decrease in the outstanding Shares effected without receipt or payment of
consideration by the Company, the distribution of the shares of a Subsidiary to
the Company’s stockholders, or a similar event. 
The determination










 



of the basis for, and the calculation of, any such adjustment shall be
made in the discretion of the Committee.


(c)           Reorganizations.  Any
other provision of the Plan notwithstanding, immediately prior to the effective
time of a Corporate Reorganization, the Offering Period then in progress shall
terminate and shares shall be purchased pursuant to Section 8, unless the
Plan is continued or assumed by the surviving corporation or its parent
corporation.  The Plan shall in no event
be construed to restrict in any way the Company’s right to undertake a
dissolution, liquidation, merger, consolidation or other reorganization.


SECTION
4.                                               ENROLLMENT
AND PARTICIPATION.


(a)           Offering Periods. 
While the Plan is in effect and unless otherwise determined by the
Committee, two Offering Periods shall commence in each calendar year.  The Offering Periods shall consist of the
six-month periods commencing on each June 1 and December 1, except that:


(i)            The first Offering Period under the Plan
shall commence on the date of the IPO and shall end on November 30, 2006;


(ii)           Prior to the commencement of any Offering
Period, the Committee may in its discretion alter the length of such Offering
Period, provided that an Offering Period shall in no event be longer than 27
months; and


(iii)          The Committee may determine that the first
Offering Period applicable to the Eligible Employees of a new Participating
Company shall commence on any date specified by the Committee, provided that an
Offering Period shall in no event be longer than 27 months.


(b)           Enrollment at IPO.  Each
individual who, on the day of the IPO, qualifies as an Eligible Employee shall
automatically become a Participant on such day, and shall initially be deemed
to have elected a payroll deduction rate of zero.  Each Participant who was automatically
enrolled on the day of the IPO shall confirm their enrollment and participation
level in the manner and within the time prescribed by the Company.


(c)           Enrollment After IPO.  In
the case of any individual who qualifies as an Eligible Employee on the first
day of any Offering Period other than the first Offering Period, he or she may
elect to become a Participant on such day by submitting the prescribed
enrollment form to the Company in the manner prescribed by the Company not
later than such day.  The Company may
prescribe electronic enrollment procedures.



 2
 






 



(d)           Duration of Participation.  Once
enrolled in the Plan, a Participant shall continue to participate in the Plan
until he or she:


(i)            Reaches the end of the Offering Period in
which his or her employee contributions were discontinued under
Section 5(d) or 9(b);


(ii)           Is deemed to withdraw from the Plan under
Subsection (b) above;


(iii)          Withdraws from the Plan under
Section 6(a); or


(iv)          Ceases to be an Eligible Employee.


A Participant whose
employee contributions were discontinued automatically under Section 9(b)
shall automatically resume participation at the beginning of the earliest
Offering Period ending in the next calendar year, if he or she then is an
Eligible Employee.  In all other cases, a
former Participant may again become a Participant, if he or she then is an
Eligible Employee, by following the procedure described in Subsection (c)
above.


SECTION
5.                                               EMPLOYEE
CONTRIBUTIONS.


(a)           Commencement of Payroll
Deductions.  A Participant may purchase Shares under the
Plan solely by means of payroll deductions. 
Payroll deductions shall commence as soon as reasonably practicable
after the Company has received the Participant’s enrollment instructions in the
prescribed manner.


(b)           Amount of Payroll Deductions.  An
Eligible Employee shall designate in the enrollment instructions the portion of
his or her Compensation that he or she elects to have withheld for the purchase
of Shares.  Such portion shall be a whole
percentage of the Eligible Employee’s Compensation, but not more than 10%.


(c)           Changing Withholding Rate.  If a
Participant wishes to change the rate of payroll withholding, he or she may do
so by submitting new instructions with the Company in the prescribed manner at
any time.  The new withholding rate shall
be effective as soon as reasonably practicable after the Company has received
such instructions.  The new withholding
rate shall be a whole percentage of the Eligible Employee’s Compensation, but
not less than 1% nor more than 10%.


(d)           Discontinuing Payroll
Deductions.  If a Participant wishes to discontinue
employee contributions entirely, he or she may do so by submitting new
enrollment instructions with the Company in the prescribed manner at any
time.  Payroll withholding shall cease as
soon as reasonably practicable after the Company has received such
instructions.  (In addition, employee
contributions may be discontinued automatically pursuant to
Section 9(b).)  A Participant who
has discontinued employee contributions may resume such contributions by
submitting new enrollment instructions with the Company in the prescribed
manner.  Payroll withholding shall resume
as soon as reasonably practicable after the Company has received such
instructions.



 3
 






 



(e)           Limit on Number of Elections.  No
Participant shall make more than three elections under Subsection (c) or
(d) above during any Offering Period.


SECTION
6.                                               WITHDRAWAL
FROM THE PLAN.


(a)           Withdrawal.  A
Participant may elect to withdraw from the Plan by submitting his or her
withdrawal instructions with the Company in the prescribed manner at any time
before the last day of an Offering Period. 
As soon as reasonably practicable thereafter, payroll deductions shall
cease and the entire amount credited to the Participant’s Plan Account shall be
refunded to him or her in cash, without interest.  No partial withdrawals shall be permitted.


(b)           Deemed Withdrawal.  A
Participant shall be deemed to have withdrawn from the Plan where, during an
offering period the Participant has elected to reduce his or her withholding
rate to zero (including, with respect to the first Offering Period, a
Participant who does not reset his or her withholding level to a number above
zero) and such election remains in effect at the end of an Offering
Period.  A withdrawal pursuant to this
Section 6(b) will be deemed effective with respect to the Offering Period first
succeeding the Offering Period which ended with a withholding election at the
zero level, but will not be deemed a withdrawal from the Offering Period in
which the withholding level was reduced to zero. A former Participant who is
deemed to have withdrawn from the Plan shall not be a Participant until he or
she re-enrolls in the Plan under Subsection (c) below.  Re-enrollment may be effective only at the
commencement of an Offering Period.


(c)           Re-Enrollment After
Withdrawal.  A former Participant who has withdrawn from
the Plan pursuant to Sections 6(a) or 6(b) shall not be a Participant until he
or she re-enrolls in the Plan under Section 4(c).  Re-enrollment may be effective only at the
commencement of an Offering Period.


SECTION
7.                                               CHANGE
IN EMPLOYMENT STATUS.


(a)           Termination of Employment. 
Termination of status as an Eligible Employee for any reason, including
death, shall be treated as an automatic withdrawal from the Plan under
Section 6(a).  (A transfer from one
Participating Company to another shall not be treated as a termination of
employment.)  Determination of Eligible
Employee status shall be made by the Committee in its sole discretion.


(b)           Leave of Absence.  For
purposes of the Plan, employment shall not be deemed to terminate when the
Participant goes on a military leave, a sick leave or another bona fide leave of absence, if the leave
was approved by the Company in writing. 
Employment, however, shall be deemed to terminate 90 days after the
Participant goes on a leave, unless a contract or statute guarantees his or her
right to return to work.  Employment
shall be deemed to terminate in any event when the approved leave ends, unless
the Participant immediately returns to work.


(c)           Death.  In
the event of the Participant’s death, the amount credited to his or her Plan
Account shall be paid to a beneficiary designated by him or her for this
purpose in



 4
 






 



the prescribed manner or, if none, to the Participant’s estate.  Such designation shall be valid only if it
was submitted to the Company in the prescribed manner before the Participant’s
death and is otherwise valid under applicable law.


SECTION
8.                                               PLAN
ACCOUNTS AND PURCHASE OF SHARES.


(a)           Plan Accounts.  The
Company shall maintain a Plan Account on its books in the name of each
Participant.  Whenever an amount is
deducted from a Participant’s Compensation under the Plan, such amount shall be
credited to the Participant’s Plan Account. 
Amounts credited to Plan Accounts shall not be trust funds and may be
commingled with the Company’s general assets and applied to general corporate purposes
unless otherwise determined by the Committee in order to comply with local
law.  No interest shall be credited to
Plan Accounts.


(b)           Purchase Price.  The
Purchase Price for each Share purchased at the close of an Offering Period
shall be the lower of:


(i)            85% of the Fair Market Value of one Share on
the last trading day before the commencement of such Offering Period or, in the
case of the first Offering Period under the Plan, 85% of the IPO Price; or


(ii)           85% of the Fair Market Value of one Share on
the last trading day in such Offering Period.


(c)           Number of Shares Purchased.  As
of the last day of each Offering Period, each Participant shall be deemed to
have elected to purchase the number of Shares calculated in accordance with
this Subsection (c), unless the Participant has previously elected to
withdraw from the Plan in accordance with Section 6(a).  The amount then in the Participant’s Plan
Account shall be divided by the Purchase Price, and the number of shares that
results shall be purchased from the Company with the funds in the Participant’s
Plan Account.  The foregoing
notwithstanding, no Participant shall purchase more than 2,500 Shares with
respect to any Offering Period nor more than the amounts of Shares set forth in
Sections 3(a) and 9(b).


(d)           Available Shares
Insufficient.  In the event that the aggregate number of
shares that all Participants elect to purchase during an Offering Period
exceeds the maximum number of shares remaining available for issuance under
Section 3, then the number of shares to which each Participant is entitled
shall be determined by multiplying the number of shares available for issuance
by a fraction.  The numerator of such
fraction is the number of shares that such Participant has elected to purchase,
and the denominator of such fraction is the number of shares that all
Participants have elected to purchase.


(e)           Issuance of Shares. 
Shares purchased by a Participant under the Plan shall be credited to an
account with the transfer agent in the name of the Participant as soon as
reasonably practicable after the close of the applicable Offering Period.  The Committee may provide that such shares
shall initially be held for each Participant’s benefit by a broker designated
by the Committee.



 5
 






 



(f)            Tax Withholding.  To the
extent required by applicable federal, state, local or foreign law, as
determined by the Committee, a Participant shall make arrangements satisfactory
to the Company for the satisfaction of any withholding tax obligations that
arise in connection with the Plan.  The
Company shall not be required to issue any Shares under the Plan until such
obligations are satisfied.


(g)           Unused Cash Balances.  An
amount remaining in the Participant’s Plan Account that represents the Purchase
Price for any fractional share shall be carried over in the Participant’s Plan
Account to the next Offering Period.  Any
amount remaining in the Participant’s Plan Account that represents the Purchase
Price for whole shares that could not be purchased by reason of
Subsection (c) above, Section 3 or Section 9(b) shall be
refunded to the Participant in cash, without interest.


(h)           Shareholder Approval.  Any
other provision of the Plan notwithstanding, no Shares shall be purchased under
the Plan unless and until the Company’s stockholders have approved the adoption
of, and the issuance of Shares under, the Plan.


SECTION
9.                                               LIMITATIONS
ON STOCK OWNERSHIP.


(a)           Five Percent Limit.  Any
other provision of the Plan notwithstanding, no Participant shall be granted a
right to purchase Shares under the Plan if such Participant, immediately after
his or her election to purchase such Shares, would own stock possessing more
than 5% of the total combined voting power or value of all classes of stock of
the Company or any parent or Subsidiary of the Company.  For purposes of this Subsection (a), the
following rules shall apply:


(i)            Ownership of stock shall be determined after
applying the attribution rules of section 424(d) of the Code;


(ii)           Each Participant shall be deemed to own any
stock that he or she has a right or option to purchase under this or any other
plan; and


(iii)          Each Participant shall be deemed to have the
right to purchase 2,500 Shares under this Plan with respect to each Offering
Period.


(b)           Dollar Limit.  Any
other provision of the Plan notwithstanding, no Participant shall purchase
Shares with a Fair Market Value in excess of the following limit:


(i)            In the case of Shares purchased during an
Offering Period that commenced in the current calendar year, the limit shall be
equal to (A) $25,000 minus (B) the Fair Market Value of the Shares
that the Participant previously purchased in the current calendar year (under
this Plan and all other employee stock purchase plans of the Company or any
parent or Subsidiary of the Company);



 6
 






 



(ii)           In the case of Shares purchased during an
Offering Period that commenced in the immediately preceding calendar year, the
limit shall be equal to (A) $50,000 minus (B) the Fair Market Value
of the Shares that the Participant previously purchased (under this Plan and
all other employee stock purchase plans of the Company or any parent or
Subsidiary of the Company) in the current calendar year and in the immediately
preceding calendar year; or


(iii)          In the case of Stock purchased during an
Offering Period that commenced in the second preceding calendar year, the limit
shall be equal to (A) $75,000 minus (B) the Fair Market Value of the
Stock that the Participant previously purchased (under this Plan and all other
employee stock purchase plans of the Company or any parent or Subsidiary of the
Company) in the current calendar year and in the two preceding calendar years.


For purposes of this
Subsection (b), the Fair Market Value of Shares shall be determined in
each case as of the beginning of the Offering Period in which such Shares is
purchased.  Shares purchased under stock
purchase plans not intended to qualify under section 423 of the Code shall
be disregarded.  If a Participant is precluded
by this Subsection (b) from purchasing additional Shares under the Plan,
then his or her employee contributions shall automatically be discontinued and
shall automatically resume at the beginning of the earliest Offering Period
ending in the next calendar year (if he or she then is an Eligible Employee).


SECTION
10.                                        RIGHTS
NOT TRANSFERABLE.


The rights of any Participant under the Plan, or any
Participant’s interest in any Shares or monies to which he or she may be
entitled under the Plan, shall not be transferable by voluntary or involuntary
assignment or by operation of law, or in any other manner other than by
beneficiary designation or the laws of descent and distribution.  If a Participant in any manner attempts to
transfer, assign or otherwise encumber his or her rights or interest under the
Plan, other than by beneficiary designation or the laws of descent and
distribution, then such act shall be treated as an election by the Participant
to withdraw from the Plan under Section 6(a).


SECTION
11.                                        NO
RIGHTS AS AN EMPLOYEE.


Nothing in the Plan or in any right granted under the
Plan shall confer upon the Participant any right to continue in the employ of a
Participating Company for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Participating Companies or of
the Participant, which rights are hereby expressly reserved by each, to
terminate his or her employment at any time and for any reason, with or without
cause.



 7
 






 



SECTION
12.                                        NO
RIGHTS AS A SHAREHOLDER.


A Participant shall have no rights as a stockholder
with respect to any Shares that he or she may have a right to purchase under
the Plan until such shares have been purchased on the last day of the
applicable Offering Period and issued to the Participant.


SECTION
13.                                        AMENDMENT
OR DISCONTINUANCE.


The Board shall have the right to amend, suspend or
terminate the Plan at any time and without notice.  Except as provided in Section 3, any
increase in the aggregate number of Shares that may be issued under the Plan
shall be subject to the approval of the Company’s stockholders.  In addition, any other amendment of the Plan
shall be subject to the approval of the Company’s stockholders to the extent
required by any applicable laws and regulations, and the regulations of any
stock exchange or other securities market on which the Company’s securities may
then be traded.  The Plan shall terminate
automatically 20 years after its adoption by the Board, unless (a) the
Plan is extended by the Board and (b) the extension is approved within 12
months by a vote of the stockholders of the Company.


SECTION
14.                                        COMMITTEE
RULES FOR NON-U.S. JURISDICTIONS.


(a)           Rules and Procedures.  The
Committee may adopt rules or procedures relating to the operation and
administration of the Plan to accommodate the specific requirements of local
laws and procedures.  Without limiting
the generality of the foregoing, the Committee is specifically authorized to
adopt rules and procedures regarding handling of payroll deductions,
enrollment/withdrawal procedures, conversion of local currency, payroll tax,
withholding procedures and handling of evidence of stock ownership which vary
with local requirements.  In addition,
the Committee may adopt rules regarding the payment of interest on amounts held
in Plan Accounts, provided that such rules shall apply on a uniform basis to all
Eligible Employees employed by a Participating Company if the grants to the
Eligible Employees employed by such Participating Company are intended to
qualify under section 423 of the Code.


(b)           Sub-Plans.  The
Committee may also adopt sub-plans applicable to particular Subsidiaries, which
sub-plans may be designed to be outside the scope of Code
section 423.  The rules of such
sub-plans may take precedence over other provisions of this Plan, with the
exception of Section 3(a), but unless otherwise superseded by the terms of
such sub-plan, the provisions of this Plan shall govern the operation of such
sub-plan.


SECTION
15.                                        COMPLIANCE
WITH LAW.


(a)           Securities Laws and
Regulations.  Shares shall not be issued under the Plan
unless the issuance and delivery of such shares comply with (or are exempt
from) all applicable requirements of law, including (without limitation) the
U.S. Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder, state and non-U.S. securities laws and regulations, and the
regulations of any stock exchange or other securities market on which the
Company’s securities may then be traded.



 8
 






 



(b)           Governmental Approvals.  This
Plan and the Company’s obligation to sell and deliver shares of its stock under
the Plan shall be subject to the approval of any governmental authority
required in connection with the Plan or the authorization, issuance, sale, or
delivery of stock hereunder.


(c)           Choice of Law.  This
Plan shall be governed by the laws of the Republic of Singapore, without regard
to choice of law rules.


SECTION
16.                                        DEFINITIONS.


(a)           “Board” means the Board of
Directors of the Company, as constituted from time to time.


(b)           “Code” means the U.S.
Internal Revenue Code of 1986, as amended.


(c)           “Committee” means a
committee of the Board, as described in Section 2.


(d)           “Company” means Verigy
Ltd., a Singapore corporation.


(e)           “Compensation” means
(i) the following to the extent paid in cash to a Participant by a
Participating Company:  salaries; base
wages; commissions and other sales achievement-based compensation; shift
premiums; salaries and wages paid during flexible time off, paid holidays, jury
duty, bereavement periods and other approved time off; plus (ii) any pre-tax
contributions made by the Participant under section 401(k) or 125 of the
Code.  The Committee shall determine
whether a particular item is included in Compensation.”


(f)            “Corporate
Reorganization” means:


(i)            The consummation of a merger or consolidation
of the Company with or into another entity or any other corporate
reorganization; or


(ii)           The sale, transfer or other disposition of
all or substantially all of the Company’s assets or the complete liquidation or
dissolution of the Company.


(g)           “Eligible Employee” means
any employee of a Participating Company who meets both of the following
requirements:


(i)            His or her customary employment is for more
than five months per calendar year and for more than 20 hours per week;
and


(ii)           He or she has been an employee of a
Participating Company for not less than three consecutive months, or such other
period as the Committee may determine before the beginning of the applicable
Offering Period.



 9
 






 



The foregoing notwithstanding, (A) for the first
Offering Period, the requirements of subparagraph (ii) above shall not be applicable;
(B) an individual shall be considered an Eligible Employee regardless of
whether the individual satisfies the requirements of Paragraphs (i)
and (ii) above where so provided by the law of any country that has
jurisdiction over him or her or if he or she is subject to a collective
bargaining agreement that so provides; and (C) an individual shall not be
considered an Eligible Employee if his or her participation in the Plan is
prohibited by the law of any country that has jurisdiction over him or her or
if he or she is subject to a collective bargaining agreement that does not
provide for participation in the Plan, provided that the eligibility
requirements of the Plan shall apply on a uniform basis to all employees of a
Participating Company if the grants to the Eligible Employees employed by such
Participating Company are intended to qualify under section 423 of the
Code.


(h)           “Exchange Act” means the
U.S. Securities Exchange Act of 1934, as amended.


(i)            “Fair
Market Value” means the market price of Shares, determined by the
Committee as follows:


(i)            If the Shares are traded on Nasdaq or on a
stock exchange, then the Fair Market Value shall be equal to the last sale
price of the Shares on such market or exchange as of the date in question or,
if the market or exchange was closed on the date in question, then the Fair
Market Value will be equal to the last sale price on the last trading day
immediately preceding the day in question. If the Shares are traded on more
than one market or exchange, then the Fair Market Value shall be determined by
reference to the primary market or exchange where the Shares trade.


(ii)           If the foregoing provisions are not
applicable, then the Committee shall determine the Fair Market Value in good
faith on such basis as it deems appropriate. 
Such determination shall be conclusive and binding on all persons.


(j)            “IPO”
means the effective date of the registration statement filed by the Company
with the U.S. Securities and Exchange Commission for its initial offering of
Shares to the public.


(k)           “IPO Price” means the
price at which the shares will be first offered to the public (as reflected on
the cover page of the final prospectus prepared in connection with the IPO).


(l)            “Offering
Period” means a period with respect to which the right to purchase
Shares may be granted under the Plan, as determined pursuant to
Section 4(a).


(m)          “Participant” means an
Eligible Employee who participates in the Plan, as provided in Section 4.



 10
 






 



(n)           “Participating Company”
means (i) the Company and (ii) each present or future Subsidiary
designated by the Committee as a Participating Company.


(o)           “Plan” means this Verigy
Ltd. 2006 Employee Shares Purchase Plan, as it may be amended from time to
time.


(p)           “Plan Account” means the
account established for each Participant pursuant to Section 8(a).


(q)           “Purchase Price” means the
price at which Participants may purchase Shares under the Plan, as determined
pursuant to Section 8(b).


(r)            “Shares”
means the Ordinary Shares of the Company.


(s)           “Subsidiary” means any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.


ADOPTION & AMENDMENT HISTORY


	
  Adopted by the Board of
  Directors:

  	
  June 7, 2006

  	
   

  
	
   

  	
   

  	
   

  
	
  Approved by the
  sole shareholder:

  	
  June 7, 2006

  	
   

  
	
   

  	
   

  	
   

  
	
  Amended by the
  Board of Directors to revise the definition of “Compensation”
  (Section 16(e)):

  	
  August 29, 2006

  	
   

  
	
   

  	
   

  	
   

  
	
  Amended by the
  Board of Directors to revise definition of “Fair Market Value”
  (Section 16(i)):

  	
  December 20, 2006

  	
   

  



 



 11