**Exhibit 10.3**

**VerigyLtd.**

**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**

# **SECTION1.****                                               PURPOSEOF THE PLAN.**

The Board adopted the Plan effective as of the date ofthe IPO.  The purpose of the Plan is toprovide Eligible Employees with an opportunity to increase their proprietaryinterest in the success of the Company by purchasing Shares from the Company onfavorable terms and to pay for such purchases through payroll deductions.  The Plan is intended to qualify for favorabletax treatment under section 423 of the Code although the Companyundertakes no obligation to maintain such qualification.  In addition, this Plan document authorizesthe grant of options to Eligible Employees resident outside of the UnitedStates of America pursuant to terms, rules, procedures or sub-plans adopted bythe Committee (or its designate) designed to achieve tax, securities law orother Company objectives but which may not qualify under section 423 ofthe Code, provided that such terms, rules, procedures or sub-plans shall applyon a uniform basis to all Eligible Employees employed by a ParticipatingCompany if the grants to the Eligible Employees employed by such ParticipatingCompany are intended to qualify under section 423 of the Code.

# **SECTION2.****                                               ADMINISTRATIONOF THE PLAN.**

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

## (b)           **Committee Responsibilities**.  TheCommittee shall have the authority and discretion to interpret the Plan andmake 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 Planshall be final and binding on all persons.

# **SECTION3.****                                               SHARESOFFERED UNDER THE PLAN.**

## (a)           **Authorized Shares**.  Thenumber 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**.  Theaggregate number of Shares offered under the Plan, the 2,500-share limitationdescribed in Section 8(c) and the price of shares that any Participant haselected to purchase shall be adjusted proportionately for any increase ordecrease in the number of outstanding Shares resulting from a subdivision orconsolidation of Shares or the payment of a share dividend, any other increaseor decrease in the outstanding Shares effected without receipt or payment ofconsideration by the Company, the distribution of the shares of a Subsidiary tothe Company’s stockholders, or a similar event. The determination

----

## of the basis for, and the calculation of, any such adjustment shall bemade in the discretion of the Committee.

## (c)           **Reorganizations**.  Anyother provision of the Plan notwithstanding, immediately prior to the effectivetime of a Corporate Reorganization, the Offering Period then in progress shallterminate and shares shall be purchased pursuant to Section 8, unless thePlan is continued or assumed by the surviving corporation or its parentcorporation.  The Plan shall in no eventbe construed to restrict in any way the Company’s right to undertake adissolution, liquidation, merger, consolidation or other reorganization.

# **SECTION4.****                                               ENROLLMENTAND PARTICIPATION.**

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

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

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

### (iii)          The Committee may determine that the firstOffering Period applicable to the Eligible Employees of a new ParticipatingCompany shall commence on any date specified by the Committee, provided that anOffering Period shall in no event be longer than 27 months.

## (b)           **Enrollment at IPO**.  Eachindividual who, on the day of the IPO, qualifies as an Eligible Employee shallautomatically become a Participant on such day, and shall initially be deemedto have elected a payroll deduction rate of zero.  Each Participant who was automaticallyenrolled on the day of the IPO shall confirm their enrollment and participationlevel in the manner and within the time prescribed by the Company.

## (c)           **Enrollment After IPO**.  Inthe case of any individual who qualifies as an Eligible Employee on the firstday of any Offering Period other than the first Offering Period, he or she mayelect to become a Participant on such day by submitting the prescribedenrollment form to the Company in the manner prescribed by the Company notlater than such day.  The Company mayprescribe electronic enrollment procedures.

2

----

## (d)           **Duration of Participation**.  Onceenrolled in the Plan, a Participant shall continue to participate in the Planuntil he or she:

### (i)            Reaches the end of the Offering Period inwhich his or her employee contributions were discontinued underSection 5(d) or 9(b);

### (ii)           Is deemed to withdraw from the Plan underSubsection (b) above;

### (iii)          Withdraws from the Plan underSection 6(a); or

### (iv)          Ceases to be an Eligible Employee.

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

# **SECTION5.****                                               EMPLOYEECONTRIBUTIONS.**

## (a)           **Commencement of PayrollDeductions**.  A Participant may purchase Shares under thePlan solely by means of payroll deductions. Payroll deductions shall commence as soon as reasonably practicableafter the Company has received the Participant’s enrollment instructions in theprescribed manner.

## (b)           **Amount of Payroll Deductions**.  AnEligible Employee shall designate in the enrollment instructions the portion ofhis or her Compensation that he or she elects to have withheld for the purchaseof Shares.  Such portion shall be a wholepercentage of the Eligible Employee’s Compensation, but not more than 10%.

## (c)           **Changing Withholding Rate**.  If aParticipant wishes to change the rate of payroll withholding, he or she may doso by submitting new instructions with the Company in the prescribed manner atany time.  The new withholding rate shallbe effective as soon as reasonably practicable after the Company has receivedsuch instructions.  The new withholdingrate shall be a whole percentage of the Eligible Employee’s Compensation, butnot less than 1% nor more than 10%.

## (d)           **Discontinuing PayrollDeductions**.  If a Participant wishes to discontinueemployee contributions entirely, he or she may do so by submitting newenrollment instructions with the Company in the prescribed manner at anytime.  Payroll withholding shall cease assoon as reasonably practicable after the Company has received suchinstructions.  (In addition, employeecontributions may be discontinued automatically pursuant toSection 9(b).)  A Participant whohas discontinued employee contributions may resume such contributions bysubmitting new enrollment instructions with the Company in the prescribedmanner.  Payroll withholding shall resumeas soon as reasonably practicable after the Company has received suchinstructions.

3

----

## (e)           **Limit on Number of Elections**.  NoParticipant shall make more than three elections under Subsection (c) or(d) above during any Offering Period.

# **SECTION6.****                                               WITHDRAWALFROM THE PLAN.**

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

## (b)           **Deemed Withdrawal**.  AParticipant shall be deemed to have withdrawn from the Plan where, during anoffering period the Participant has elected to reduce his or her withholdingrate to zero (including, with respect to the first Offering Period, aParticipant who does not reset his or her withholding level to a number abovezero) and such election remains in effect at the end of an OfferingPeriod.  A withdrawal pursuant to thisSection 6(b) will be deemed effective with respect to the Offering Period firstsucceeding the Offering Period which ended with a withholding election at thezero level, but will not be deemed a withdrawal from the Offering Period inwhich the withholding level was reduced to zero. A former Participant who isdeemed to have withdrawn from the Plan shall not be a Participant until he orshe re-enrolls in the Plan under Subsection (c) below.  Re-enrollment may be effective only at thecommencement of an Offering Period.

## (c)           **Re-Enrollment AfterWithdrawal**.  A former Participant who has withdrawn fromthe Plan pursuant to Sections 6(a) or 6(b) shall not be a Participant until heor she re-enrolls in the Plan under Section 4(c).  Re-enrollment may be effective only at thecommencement of an Offering Period.

# **SECTION7.****                                               CHANGEIN EMPLOYMENT STATUS.**

## (a)           **Termination of Employment**. Termination of status as an Eligible Employee for any reason, includingdeath, shall be treated as an automatic withdrawal from the Plan underSection 6(a).  (A transfer from oneParticipating Company to another shall not be treated as a termination ofemployment.)  Determination of EligibleEmployee status shall be made by the Committee in its sole discretion.

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

## (c)           **Death**.  Inthe event of the Participant’s death, the amount credited to his or her PlanAccount shall be paid to a beneficiary designated by him or her for thispurpose in

4

----

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

# **SECTION8.****                                               PLANACCOUNTS AND PURCHASE OF SHARES.**

## (a)           **Plan Accounts**.  TheCompany shall maintain a Plan Account on its books in the name of eachParticipant.  Whenever an amount isdeducted from a Participant’s Compensation under the Plan, such amount shall becredited to the Participant’s Plan Account. Amounts credited to Plan Accounts shall not be trust funds and may becommingled with the Company’s general assets and applied to general corporate purposesunless otherwise determined by the Committee in order to comply with locallaw.  No interest shall be credited toPlan Accounts.

## (b)           **Purchase Price**.  ThePurchase Price for each Share purchased at the close of an Offering Periodshall be the lower of:

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

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

## (c)           **Number of Shares Purchased**.  Asof the last day of each Offering Period, each Participant shall be deemed tohave elected to purchase the number of Shares calculated in accordance withthis Subsection (c), unless the Participant has previously elected towithdraw from the Plan in accordance with Section 6(a).  The amount then in the Participant’s PlanAccount shall be divided by the Purchase Price, and the number of shares thatresults shall be purchased from the Company with the funds in the Participant’sPlan Account.  The foregoingnotwithstanding, no Participant shall purchase more than 2,500 Shares withrespect to any Offering Period nor more than the amounts of Shares set forth inSections 3(a) and 9(b).

## (d)           **Available SharesInsufficient**.  In the event that the aggregate number ofshares that all Participants elect to purchase during an Offering Periodexceeds the maximum number of shares remaining available for issuance underSection 3, then the number of shares to which each Participant is entitledshall be determined by multiplying the number of shares available for issuanceby a fraction.  The numerator of suchfraction is the number of shares that such Participant has elected to purchase,and the denominator of such fraction is the number of shares that allParticipants have elected to purchase.

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

5

----

## (f)            **Tax Withholding**.  To theextent required by applicable federal, state, local or foreign law, asdetermined by the Committee, a Participant shall make arrangements satisfactoryto the Company for the satisfaction of any withholding tax obligations thatarise in connection with the Plan.  TheCompany shall not be required to issue any Shares under the Plan until suchobligations are satisfied.

## (g)           **Unused Cash Balances**.  Anamount remaining in the Participant’s Plan Account that represents the PurchasePrice for any fractional share shall be carried over in the Participant’s PlanAccount to the next Offering Period.  Anyamount remaining in the Participant’s Plan Account that represents the PurchasePrice for whole shares that could not be purchased by reason ofSubsection (c) above, Section 3 or Section 9(b) shall berefunded to the Participant in cash, without interest.

## (h)           **Shareholder Approval**.  Anyother provision of the Plan notwithstanding, no Shares shall be purchased underthe Plan unless and until the Company’s stockholders have approved the adoptionof, and the issuance of Shares under, the Plan.

# **SECTION9.****                                               LIMITATIONSON STOCK OWNERSHIP.**

## (a)           **Five Percent Limit**.  Anyother provision of the Plan notwithstanding, no Participant shall be granted aright to purchase Shares under the Plan if such Participant, immediately afterhis or her election to purchase such Shares, would own stock possessing morethan 5% of the total combined voting power or value of all classes of stock ofthe Company or any parent or Subsidiary of the Company.  For purposes of this Subsection (a), thefollowing rules shall apply:

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

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

### (iii)          Each Participant shall be deemed to have theright to purchase 2,500 Shares under this Plan with respect to each OfferingPeriod.

## (b)           **Dollar Limit**.  Anyother provision of the Plan notwithstanding, no Participant shall purchaseShares with a Fair Market Value in excess of the following limit:

### (i)            In the case of Shares purchased during anOffering Period that commenced in the current calendar year, the limit shall beequal to (A) $25,000 minus (B) the Fair Market Value of the Sharesthat the Participant previously purchased in the current calendar year (underthis Plan and all other employee stock purchase plans of the Company or anyparent or Subsidiary of the Company);

6

----

### (ii)           In the case of Shares purchased during anOffering Period that commenced in the immediately preceding calendar year, thelimit shall be equal to (A) $50,000 minus (B) the Fair Market Valueof the Shares that the Participant previously purchased (under this Plan andall other employee stock purchase plans of the Company or any parent orSubsidiary of the Company) in the current calendar year and in the immediatelypreceding calendar year; or

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

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

# **SECTION10.****                                        RIGHTSNOT TRANSFERABLE.**

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

# **SECTION11.****                                        NORIGHTS AS AN EMPLOYEE.**

Nothing in the Plan or in any right granted under thePlan shall confer upon the Participant any right to continue in the employ of aParticipating Company for any period of specific duration or interfere with orotherwise restrict in any way the rights of the Participating Companies or ofthe Participant, which rights are hereby expressly reserved by each, toterminate his or her employment at any time and for any reason, with or withoutcause.

7

----

# **SECTION12.****                                        NORIGHTS AS A SHAREHOLDER.**

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

# **SECTION13.****                                        AMENDMENTOR DISCONTINUANCE.**

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

# **SECTION14.****                                        COMMITTEERULES FOR NON-U.S. JURISDICTIONS.**

## (a)           **Rules and Procedures**.  TheCommittee may adopt rules or procedures relating to the operation andadministration of the Plan to accommodate the specific requirements of locallaws and procedures.  Without limitingthe generality of the foregoing, the Committee is specifically authorized toadopt 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 varywith local requirements.  In addition,the Committee may adopt rules regarding the payment of interest on amounts heldin Plan Accounts, provided that such rules shall apply on a uniform basis to allEligible Employees employed by a Participating Company if the grants to theEligible Employees employed by such Participating Company are intended toqualify under section 423 of the Code.

## (b)           **Sub-Plans**.  TheCommittee may also adopt sub-plans applicable to particular Subsidiaries, whichsub-plans may be designed to be outside the scope of Codesection 423.  The rules of suchsub-plans may take precedence over other provisions of this Plan, with theexception of Section 3(a), but unless otherwise superseded by the terms ofsuch sub-plan, the provisions of this Plan shall govern the operation of suchsub-plan.

# **SECTION15.****                                        COMPLIANCEWITH LAW.**

## (a)           **Securities Laws andRegulations**.  Shares shall not be issued under the Planunless the issuance and delivery of such shares comply with (or are exemptfrom) all applicable requirements of law, including (without limitation) theU.S. Securities Act of 1933, as amended, the rules and regulations promulgatedthereunder, state and non-U.S. securities laws and regulations, and theregulations of any stock exchange or other securities market on which theCompany’s securities may then be traded.

8

----

## (b)           **Governmental Approvals**.  ThisPlan and the Company’s obligation to sell and deliver shares of its stock underthe Plan shall be subject to the approval of any governmental authorityrequired in connection with the Plan or the authorization, issuance, sale, ordelivery of stock hereunder.

## (c)           **Choice of Law**.  ThisPlan shall be governed by the laws of the Republic of Singapore, without regardto choice of law rules.

# **SECTION16.****                                        DEFINITIONS.**

## (a)           “**Board**” means the Board ofDirectors 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 acommittee of the Board, as described in Section 2.

## (d)           “**Company**” means VerigyLtd., a Singapore corporation.

## (e)           “**Compensation**” means(i) the following to the extent paid in cash to a Participant by aParticipating Company:  salaries; basewages; commissions and other sales achievement-based compensation; shiftpremiums; salaries and wages paid during flexible time off, paid holidays, juryduty, bereavement periods and other approved time off; plus (ii) any pre-taxcontributions made by the Participant under section 401(k) or 125 of theCode.  The Committee shall determinewhether a particular item is included in Compensation.”

## (f)            “**CorporateReorganization**” means:

### (i)            The consummation of a merger or consolidationof the Company with or into another entity or any other corporatereorganization; or

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

## (g)           “**Eligible Employee**” meansany employee of a Participating Company who meets both of the followingrequirements:

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

### (ii)           He or she has been an employee of aParticipating Company for not less than three consecutive months, or such otherperiod as the Committee may determine before the beginning of the applicableOffering Period.

9

----

The foregoing notwithstanding, (A) for the firstOffering Period, the requirements of subparagraph (ii) above shall not be applicable;(B) an individual shall be considered an Eligible Employee regardless ofwhether the individual satisfies the requirements of Paragraphs (i)and (ii) above where so provided by the law of any country that hasjurisdiction over him or her or if he or she is subject to a collectivebargaining agreement that so provides; and (C) an individual shall not beconsidered an Eligible Employee if his or her participation in the Plan isprohibited by the law of any country that has jurisdiction over him or her orif he or she is subject to a collective bargaining agreement that does notprovide for participation in the Plan, provided that the eligibilityrequirements of the Plan shall apply on a uniform basis to all employees of aParticipating Company if the grants to the Eligible Employees employed by suchParticipating Company are intended to qualify under section 423 of theCode.

## (h)           “**Exchange Act**” means theU.S. Securities Exchange Act of 1934, as amended.

## (i)            “**FairMarket Value**” means the market price of Shares, determined by theCommittee as follows:

### (i)            If the Shares are traded on Nasdaq or on astock exchange, then the Fair Market Value shall be equal to the last saleprice 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 FairMarket Value will be equal to the last sale price on the last trading dayimmediately preceding the day in question. If the Shares are traded on morethan one market or exchange, then the Fair Market Value shall be determined byreference to the primary market or exchange where the Shares trade.

### (ii)           If the foregoing provisions are notapplicable, then the Committee shall determine the Fair Market Value in goodfaith 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 Companywith the U.S. Securities and Exchange Commission for its initial offering ofShares to the public.

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

## (l)            “**OfferingPeriod**” means a period with respect to which the right to purchaseShares may be granted under the Plan, as determined pursuant toSection 4(a).

## (m)          “**Participant**” means anEligible 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 Subsidiarydesignated by the Committee as a Participating Company.

## (o)           “**Plan**” means this VerigyLtd. 2006 Employee Shares Purchase Plan, as it may be amended from time totime.

## (p)           “**Plan Account**” means theaccount established for each Participant pursuant to Section 8(a).

## (q)           “**Purchase Price**” means theprice at which Participants may purchase Shares under the Plan, as determinedpursuant to Section 8(b).

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

## (s)           “**Subsidiary**” means anycorporation (other than the Company) in an unbroken chain of corporationsbeginning with the Company, if each of the corporations other than the lastcorporation in the unbroken chain owns stock possessing 50% or more of thetotal combined voting power of all classes of stock in one of the othercorporations 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

----