**Exhibit10.2**

**VerigyLtd.2006 Equity Incentive Plan(As Amended December 13, 2006)**

----

**TABLE OF CONTENTS**
|            | ** ** | ** **                                       | ** ** | **Page** |
|------------|------------|--------------------------------------------------|------------|----------|
| ARTICLE 1. |       | INTRODUCTION                                     |       | 1        |
|       |       |                                             |       |     |
| ARTICLE 2. |       | ADMINISTRATION                                   |       | 1        |
| 2.1        |       | Committee Composition                            |       | 1        |
| 2.2        |       | Committee Responsibilities                       |       | 1        |
| 2.3        |       | Committee for Non-Officer Grants                 |       | 2        |
| 2.4        |       | Administration with Respect to Substitute Awards |       | 2        |
|       |       |                                             |       |     |
| ARTICLE 3. |       | SHARES AVAILABLE FOR GRANTS                      |       | 2        |
| 3.1        |       | Basic Limitation                                 |       | 2        |
| 3.2        |       | Shares Returned to Reserve                       |       | 2        |
| 3.3        |       | Substitute Awards                                |       | 2        |
| 3.4        |       | Dividend Equivalents                             |       | 3        |
|       |       |                                             |       |     |
| ARTICLE 4. |       | ELIGIBILITY                                      |       | 3        |
| 4.1        |       | Incentive Stock Options                          |       | 3        |
| 4.2        |       | Other Grants                                     |       | 3        |
|       |       |                                             |       |     |
| ARTICLE 5. |       | OPTIONS                                          |       | 3        |
| 5.1        |       | Option Agreement                                 |       | 3        |
| 5.2        |       | Number of Shares                                 |       | 3        |
| 5.3        |       | Exercise Price                                   |       | 4        |
| 5.4        |       | Exercisability and Term                          |       | 4        |
| 5.5        |       | Effect of Change in Control                      |       | 5        |
| 5.6        |       | Buyout Provisions                                |       | 5        |
| 5.7        |       | Payment for Option Shares                        |       | 5        |
|       |       |                                             |       |     |
| ARTICLE 6. |       | SHARE APPRECIATION RIGHTS                        |       | 5        |
| 6.1        |       | SAR Agreement                                    |       | 5        |
| 6.2        |       | Number of Shares                                 |       | 6        |
| 6.3        |       | Exercise Price                                   |       | 6        |
| 6.4        |       | Exercisability and Term                          |       | 6        |
| 6.5        |       | Effect of Change in Control                      |       | 7        |
| 6.6        |       | Exercise of SARs                                 |       | 7        |
|       |       |                                             |       |     |
| ARTICLE 7. |       | RESTRICTED SHARES                                |       | 7        |
| 7.1        |       | Restricted Share Agreement                       |       | 7        |
| 7.2        |       | Number of Shares                                 |       | 7        |
| 7.3        |       | Payment for Awards                               |       | 8        |
| 7.4        |       | Vesting Conditions                               |       | 8        |
| 7.5        |       | Effect of Change in Control                      |       | 9        |
| 7.6        |       | Voting and Dividend Rights                       |       | 9        |
|       |       |                                             |       |     |
| ARTICLE 8. |       | SHARE UNITS                                      |       | 9        |
| 8.1        |       | Share Unit Agreement                             |       | 9        |
| 8.2        |       | Number of Shares                                 |       | 9        |

 

i

----

 
| 8.3         |   | Payment for Awards                                           |   | 9      |
|-------------|--------|--------------------------------------------------------------|--------|--------|
| 8.4         |   | Vesting Conditions                                           |   | 9      |
| 8.5         |   | Effect of Change in Control                                  |   | 10     |
| 8.6         |   | Voting and Dividend Rights                                   |   | 10     |
| 8.7         |   | Form and Time of Settlement of Share Units                   |   | 10     |
| 8.8         |   | Creditors’ Rights                                       |   | 11     |
|        |   |                                                         |   |   |
| ARTICLE 9.  |   | AUTOMATIC OPTION GRANTS TO OUTSIDE DIRECTORS                 |   | 11     |
| 9.1         |   | Initial Grants                                               |   | 11     |
| 9.2         |   | Annual Grants                                                |   | 11     |
| 9.3         |   | Cessation of Eligibility to Vest                             |   | 12     |
| 9.4         |   | Accelerated Exercisability                                   |   | 12     |
| 9.5         |   | Exercise Price                                               |   | 12     |
| 9.6         |   | Term                                                         |   | 12     |
| 9.7         |   | Affiliates of Outside Directors                              |   | 12     |
|        |   |                                                         |   |   |
| ARTICLE 10. |   | PROTECTION AGAINST DILUTION                                  |   | 12     |
| 10.1        |   | Adjustments                                                  |   | 12     |
| 10.2        |   | Dissolution or Liquidation                                   |   | 13     |
| 10.3        |   | Reorganizations                                              |   | 13     |
|        |   |                                                         |   |   |
| ARTICLE 11. |   | PAYMENT OF DIRECTOR’S FEES IN SECURITIES                |   | 14     |
| 11.1        |   | Effective Date                                               |   | 14     |
| 11.2        |   | Elections to Receive NSOs, Restricted Shares or  Share Units |   | 14     |
| 11.3        |   | Number and Terms of NSOs, Restricted Shares or Share  Units  |   | 14     |
|        |   |                                                         |   |   |
| ARTICLE 12. |   | LIMITATION ON RIGHTS                                         |   | 15     |
| 12.1        |   | Retention Rights                                             |   | 15     |
| 12.2        |   | Shareholders’ Rights                                    |   | 15     |
| 12.3        |   | Regulatory Requirements                                      |   | 15     |
|        |   |                                                         |   |   |
| ARTICLE 13. |   | WITHHOLDING TAXES                                            |   | 15     |
| 13.1        |   | General                                                      |   | 15     |
| 13.2        |   | Share Withholding                                            |   | 15     |
|        |   |                                                         |   |   |
| ARTICLE 14. |   | LIMITATION ON PAYMENTS                                       |   | 15     |
| 14.1        |   | Scope of Limitation                                          |   | 15     |
| 14.2        |   | Basic Rule                                                   |   | 16     |
| 14.3        |   | Reduction of Payments                                        |   | 16     |
| 14.4        |   | Overpayments and Underpayments                               |   | 16     |
| 14.5        |   | Related Corporations                                         |   | 17     |
|        |   |                                                         |   |   |
| ARTICLE 15. |   | FUTURE OF THE PLAN                                           |   | 17     |
| 15.1        |   | Term of the Plan                                             |   | 17     |
| 15.2        |   | Amendment or Termination                                     |   | 17     |
| 15.3        |   | Shareholder Approval                                         |   | 17     |
|        |   |                                                         |   |   |
| ARTICLE 16. |   | DEFINITIONS                                                  |   | 17     |

 

ii

----

**VerigyLtd.**

**2006Equity Incentive Plan**

# ARTICLE 1.            INTRODUCTION.

The purpose of the Plan is to promote the long-termsuccess of the Company and the creation of shareholder value by(a) encouraging Employees, Outside Directors and Consultants to focus oncritical long-range objectives, (b) encouraging the attraction andretention of Employees, Outside Directors and Consultants with exceptionalqualifications and (c) linking Employees, Outside Directors andConsultants directly to shareholder interests through increased shareownership.  The Plan seeks to achievethis purpose by providing for Awards in the form of Options (which mayconstitute ISOs or NSOs), SARs, Restricted Shares or Share Units.

The Plan shall be governed by, and construed inaccordance with, the laws of the Republic of Singapore (except itschoice-of-law provisions).

# ARTICLE 2.            ADMINISTRATION.

## **2.1****          Committee Composition**.  The Committee shall administer the Plan.  The Committee shall consist exclusively oftwo or more directors of the Company, who shall be appointed by the Board.  In addition, each member of the Committeeshall meet the following requirements:

#### (a)           Anylisting standards prescribed by the principal securities market on which theCompany’s equity securities are traded;

#### (b)           Suchrequirements as the Internal Revenue Service may establish for outsidedirectors acting under plans intended to qualify for exemption undersection 162(m)(4)(C) of the Code;

#### (c)           Suchrequirements as the Securities and Exchange Commission may establish for administratorsacting under plans intended to qualify for exemption under Rule 16b-3(or its successor) under the Exchange Act; and

#### (d)           Anyother requirements imposed by applicable law, regulations or rules.

## **2.2****          CommitteeResponsibilities**.  The Committee shall(a) select the Employees, Outside Directors and Consultants who are toreceive Awards under the Plan, (b) determine the type, number, vestingrequirements and other features and conditions of such Awards,(c) interpret the Plan, (d) make all other decisions relating to theoperation of the Plan and (e) carry out any other duties delegated to itby the Board.  The Committee may adoptsuch rules or guidelines as it deemsappropriate to implement the Plan, including rules and procedures relating tothe operation and administration of the Plan in order to accommodate thespecific

----

## requirements of local lawsand procedures.  Without limiting thegenerality of the foregoing, the Committee is specifically authorized to adopt(a) rules and procedures regarding the conversion of local currency,withholding procedures and handling of stock certificates that vary with localrequirements and (b) such sub-plans and Plan addenda as the Committeedeems desirable to accommodate foreign tax laws, regulations and practice.  The Committee’s determinations under the Planshall be final and binding on all persons.

## **2.3****          Committee forNon-Officer Grants**.  The Board mayalso appoint a secondary committee of the Board, which shall be composed of oneor more directors of the Company who need not satisfy the requirements ofSection 2.1.  Such secondarycommittee may administer the Plan with respect to Employees and Consultants whoare not Outside Directors and are not considered executive officers of theCompany under section 16 of the Exchange Act, may grant Awards under thePlan to such Employees and Consultants and may determine all features andconditions of such Awards.  Within thelimitations of this Section 2.3, any reference in the Plan to theCommittee shall include such secondary committee.

## **2.4****          Administration withRespect to Substitute Awards**.  Notwithstanding any other provision of this Plan, in connection withissuing Substitute Awards, the Committee may provide that the Substitute Awardsshall be subject to the terms and conditions of the plan and/or agreementsunder which the awards being assumed or substituted were originally issued,even where such terms are in conflict or inconsistent with the terms of thisPlan.

# ARTICLE 3.            SHARESAVAILABLE FOR GRANTS.

## **3.1****          Basic Limitation**.  Shares issued pursuant to the Plan may beauthorized but unissued shares or treasury shares.  The aggregate number of Shares issued underthe Plan shall not exceed (a) 10,300,000 plus (b) the additionalShares described in Section 3.3. The number of Shares that are subject to Awards outstanding at any timeunder the Plan shall not exceed the number of Shares that then remain availablefor issuance under the Plan. Notwithstanding any other provision of this Plan, the maximum number ofShares that may be issued upon the exercise of ISOs under this Plan is10,300,000.  The limitations of thisSection 3.1 shall be subject to adjustment pursuant to Article 10.

## **3.2****          Shares Returned toReserve**.  If Options, SARs or ShareUnits (including Replacement Awards) are forfeited or terminate for any otherreason before being exercised or settled, then the Shares subject to suchOptions, SARs or Share Units shall again become available for issuance underthe Plan.  If SARs are exercised, thenonly the number of Shares (if any) actually issued in settlement of such SARsshall reduce the number available under Section 3.1 and the balance shallagain become available for issuance under the Plan.  If Share Units are settled, then only thenumber of Shares (if any) actually issued in settlement of such Share Unitsshall reduce the number available under Section 3.1 and the balance shallagain become available for issuance under the Plan.  If Restricted Shares or Shares issued upon theexercise of Options are reacquired by the Company pursuant to a forfeitureprovision or for any other reason, then such Shares shall again becomeavailable for issuance under the Plan.

## **3.3****          Substitute Awards**.  Except with respect to Substitute Awardsissued with respect to awards previously issued by Agilent Technologies, Inc.,Substitute Awards shall not

2

----

## reduce theShares authorized for issuance under the Plan or authorized for grant to aParticipant in any calendar year. Additionally, in the event that a company acquired by the Company or anySubsidiary, or with which the Company or any Subsidiary combines, has sharesavailable under a pre-existing plan approved by shareholders and not adopted incontemplation of such acquisition or combination, the shares available forgrant pursuant to the terms of such pre-existing plan (as adjusted, to theextent appropriate, using the exchange ratio or other adjustment or valuationratio or formula used in such acquisition or combination to determine theconsideration payable to the holders of ordinary shares or common shares of theentities party to such acquisition or combination) may be used for Awards underthe Plan and shall not reduce the Shares authorized for issuance under thePlan; provided that Awards using such available Shares shall not be made afterthe date awards or grants could have been made under the terms of thepre-existing plan, absent the acquisition or combination, and shall only bemade to individuals who were employees, directors or consultants of suchacquired or combined company before such acquisition or combination.

## **3.4**          **DividendEquivalents**.  Any dividendequivalents paid or credited under the Plan shall be applied against the numberof Shares that may be issued under the Plan if such dividend equivalents areconverted into Share Units.

# ARTICLE 4.            ELIGIBILITY.

## **4.1**          **IncentiveStock Options**.  Only Employeeswho are common-law employees of the Company, a Parent or a Subsidiaryshall be eligible for the grant of ISOs. In addition, an Employee who owns more than 10% of the total combined votingpower of all classes of outstanding shares of the Company or any of its Parentsor Subsidiaries shall not be eligible for the grant of an ISO unless therequirements set forth in section 422(c)(5) of the Code aresatisfied.

## **4.2**          **OtherGrants**.  Only Employees,Outside Directors and Consultants shall be eligible for the grant of RestrictedShares, Share Units, NSOs or SARs.

# ARTICLE 5.            OPTIONS.

## **5.1**          **OptionAgreement**.  Each grant of anOption under the Plan shall be evidenced by an Option Agreement between theOptionee and the Company.  Such Optionshall be subject to all applicable terms of the Plan and may be subject to anyother terms that are not inconsistent with the Plan.  The Option Agreement shall specify whetherthe Option is an ISO or an NSO.  The provisionsof the various Option Agreements entered into under the Plan need not beidentical.  An Option Agreement mayprovide that a new Option will be granted automatically to the Optionee when heor she exercises a prior Option and pays the Exercise Price in the formdescribed in Section 5.7(b).

## **5.2**          **Number ofShares**.  Each Option Agreementshall specify the number of Shares subject to the Option and shall provide forthe adjustment of such number in accordance with Article 10.  Options granted to any Optionee in a singlefiscal year of the Company shall not cover more than 750,000 Shares, exceptthat Options granted to a new Employee in the fiscal year of the Company inwhich his or her Service as an Employee first commences shall not cover

3

----

## more than 1,500,000Shares.  The limitations set forth in thepreceding sentence shall be subject to adjustment in accordance withArticle 10.

## **5.3**          **ExercisePrice**.  Each Option Agreementshall specify the Exercise Price; provided that the Exercise Price shall in noevent be less than 100% of the Fair Market Value of a Share on the Date ofGrant.  Other than in connection with anevent or transaction described in Article 10, Options may not be repriced,replaced, regranted through cancellation or modified without shareholderapproval if the effect of such repricing, replacement, regrant or modificationwould be to reduce the exercise price of such Options.

## **5.4**          **Exercisabilityand Term.**

#### (a)           **General**. Each Option Agreement shall specify the date or event when all or anyinstallment of the Option is to become exercisable.  The Option Agreement shall also specify theterm of the Option; provided that the term of an ISO shall in no event exceed10 years from the Date of Grant.  Optionsmay be awarded in combination with SARs, and such an Award may provide that theOptions will not be exercisable unless the related SARs are forfeited.

#### (b)           **Cessation of Eligibility to Vest**.  Unless otherwise provided by the OptionAgreement, if an Optionee ceases to be an Awardee Eligible to Vest, other thanas a result of circumstances described in Subsection (c) or (d) below,such Optionee’s Option shall terminate immediately as to the unvested Sharesand such unvested Shares shall revert to the Plan, and such Optionee’s Optionshall be exercisable as to the vested Shares for three months after the datesuch individual ceases to be an Awardee Eligible to Vest or, if earlier, theexpiration of the term of such Option. If, for any reason, the Optionee does not exercise his or her vestedOption within the appropriate exercise period set forth above, the Option shallautomatically terminate, and the Shares covered by such Option shall revert tothe Plan.

#### (c)           **Death, Disability or Retirement of Optionee**.  Unless otherwise provided by the OptionAgreement, if an Optionee ceases to be an Awardee Eligible to Vest as a resultof the Optionee’s death, total and permanent disability or retirement due toage, in accordance with the Company’s or a Subsidiary’s or Affiliate’sretirement policy, then (i) the vested portion of such Optionee’s Optionshall be determined by adding 12 months to the length of his or her actualService, (ii) such Optionee’s Option shall terminate immediately as to theunvested Shares and such unvested Shares shall revert to the Plan, and (iii) suchOptionee’s Option shall be exercisable as to the vested Shares for one yearafter the date such individual ceases to be an Awardee Eligible to Vest or, ifearlier, the expiration of the term of such Option.  Where an individual ceases to be an AwardeeEligible to Vest as a result of death, the Option may be exercised by thebeneficiary designated by the Optionee, the executor or administrator of theOptionee’s estate or, if none, by the person(s) entitled to exercise the Optionunder the Optionee’s will or the laws of descent or distribution.  If, for any reason, the Option is not soexercised within the time specified herein, the Option shall automaticallyterminate, and the Shares covered by such Option shall revert to the Plan.

#### (d)           **Voluntary Severance Incentive Program**.  If an Optionee ceases to be an AwardeeEligible to Vest as a result of participation in a voluntary severanceincentive

4

----

#### program orworkforce management plan approved by the Board or a Committee, unvestedOptions shall vest and Options shall remain exercisable, to the extent providedby the Board or a Committee in such voluntary severance incentive program orworkforce management plan.  Absent aspecific provision for acceleration or extended exercise period, the provisionsof Subsection (b) above shall apply.

## **5.5**          **Effect ofChange in Control**.  TheCommittee may determine, at the time of granting an Option or thereafter, thatsuch Option shall become exercisable as to all or part of the Shares subject tosuch Option if a Change in Control occurs with respect to the Company or if theOptionee’s Service is terminated without Cause after a Change in Control.  In addition, acceleration of exercisabilitymay be required under Section 10.3.

## **5.6**          **BuyoutProvisions**.  The Committee mayat any time (a) offer to buy out for a payment in cash or cash equivalentsan Option previously granted or (b) authorize an Optionee to elect to cashout an Option previously granted, in either case at such time and based uponsuch terms and conditions as the Committee shall establish.

## **5.7**          **Payment forOption Shares.**

#### (a)           **General Rule**.  The entire Exercise Price of Shares issuedupon exercise of Options shall be payable in cash or cash equivalents at thetime when such Shares are purchased, except that the Committee at its solediscretion may accept payment of the Exercise Price in any other form(s)described in this Section 5.7. However, if the Optionee is an Outside Director or executive officer ofthe Company, he or she may pay the Exercise Price in a form other than cash orcash equivalents only to the extent permitted by section 13(k) of theExchange Act.

#### (b)           **Surrender of Shares**.  With the Committee’s consent, all or any partof the Exercise Price may be paid by surrendering, or attesting to theownership of, Shares that are already owned by the Optionee.  Such Shares shall be valued at their FairMarket Value on the date when the new Shares are purchased under the Plan.

#### (c)           **Exercise/Sale**.  With the Committee’s consent, all or any partof the Exercise Price and any withholding taxes may be paid by delivering (in amanner prescribed by the Company) an irrevocable direction to a securitiesbroker approved by the Company to sell all or part of the Shares beingpurchased under the Plan and to deliver all or part of the sales proceeds tothe Company.

#### (d)           **Other Forms of Payment**.  With the Committee’s consent, all or any partof the Exercise Price and any withholding taxes may be paid in any other formthat is consistent with applicable laws, regulations and rules.

# ARTICLE 6.            SHARE APPRECIATION RIGHTS.

## **6.1**          **SARAgreement**.  Each grant of aSAR under the Plan shall be evidenced by a SAR Agreement between the Optioneeand the Company.  Such SAR shall besubject to all applicable terms of the Plan and may be subject to any otherterms that are not inconsistent with

5

----

## the Plan.  The provisions of the various SAR Agreementsentered into under the Plan need not be identical.

## **6.2**          **Number ofShares**.  Each SAR Agreementshall specify the number of Shares to which the SAR pertains and shall providefor the adjustment of such number in accordance with Article 10.  SARs granted to any Optionee in a singlefiscal year shall in no event pertain to more than 750,000 Shares, except thatSARs granted to a new Employee in the fiscal year of the Company in which hisor her Service as an Employee first commences shall not pertain to more than1,500,000 Shares.  The limitations setforth in the preceding sentence shall be subject to adjustment in accordancewith Article 10.

## **6.3**          **ExercisePrice**.  Each SAR Agreementshall specify the Exercise Price; provided that the Exercise Price shall in noevent be less than 100% of the Fair Market Value of a Share on the Date ofGrant.  Other than in connection with anevent or transaction described in Article 10, SARs may not be repriced,replaced, regranted through cancellation or modified without shareholderapproval if the effect of such repricing, replacement, regrant or modificationwould be to reduce the exercise price of such SARs.

## **6.4**          **Exercisabilityand Term.**

#### (a)           **General**. Each SAR Agreement shall specify the date when all or any installment ofthe SAR is to become exercisable.  TheSAR Agreement shall also specify the term of the SAR.  SARs may be awarded in combination withOptions, and such an Award may provide that the SARs will not be exercisableunless the related Options are forfeited. An SAR may be included in an ISO only at the time of grant but may beincluded in an NSO at the time of grant or thereafter.  An SAR granted under the Plan may provide thatit will be exercisable only in the event of a Change in Control.

#### (b)           **Cessation of Eligibility to Vest**.  Unless otherwise provided by the SARAgreement, if an Optionee ceases to be an Awardee Eligible to Vest, other thanas a result of circumstances described in Subsection (c) or (d) below,such Optionee’s SAR shall terminate immediately as to the unvested Shares andsuch unvested Shares shall revert to the Plan, and the SAR shall be exercisableas to the vested Shares for three months after the date such individual ceasesto be an Awardee Eligible to Vest or, if earlier, the expiration of the term ofsuch SAR.  If, for any reason, theOptionee does not exercise his or her vested SARs within the appropriateexercise period set forth above, the SAR shall automatically terminate, and theShares covered by such SAR shall revert to the Plan.

#### (c)           **Death, Disability or Retirement of Optionee**.  Unless otherwise provided by the SARAgreement, if an Optionee ceases to be an Awardee Eligible to Vest as a resultof the Optionee’s total and permanent disability or retirement due to age, inaccordance with the Company’s or a Subsidiary’s or Affiliate’s retirementpolicy, then (i) the vested portion of such Optionee’s SAR shall bedetermined by adding 12 months to the length of his or her actual Service,(ii) such Optionee’s SAR shall terminate immediately as to the unvestedShares and such unvested Shares shall revert to the Plan, and (iii) suchOptionee’s SAR shall be exercisable as to the vested Shares for one year afterthe date such individual ceases to be an Awardee Eligible to Vest or, ifearlier, the expiration of the term of such SAR.  Where an

6

----

#### individualceases to be an Awardee Eligible to Vest as a result of death, the SAR may beexercised by the beneficiary designated by the Optionee, the executor oradministrator of the Optionee’s estate or, if none, by the person(s) entitledto exercise the SAR under the Optionee’s will or the laws of descent ordistribution.  If, for any reason, theSAR is not so exercised within the time specified herein, the SAR shallautomatically terminate, and the Shares covered by such SAR shall revert to thePlan.

#### (d)           **Voluntary Severance Incentive Program**.  If an Optionee ceases to be an AwardeeEligible to Vest as a result of participation in a voluntary severanceincentive program or workforce management plan approved by the Board or aCommittee, unvested SARs shall vest and SARs shall remain exercisable, to theextent provided by the Board or a Committee in such voluntary severance incentiveprogram or workforce management plan. Absent a specific provision for acceleration or extended exerciseperiod, the provisions of Subsection (b) above shall apply.

## **6.5**          **Effect ofChange in Control**.  TheCommittee may determine, at the time of granting a SAR or thereafter, that suchSAR shall become exercisable as to all or part of the Shares subject to suchSAR if a Change in Control occurs with respect to the Company or if theOptionee’s Service is terminated without Cause after a Change in Control.  In addition, acceleration of exercisabilitymay be required under Section 10.3.

## **6.6**          **Exercise ofSARs**.  Upon exercise of a SAR,the Optionee (or any person having the right to exercise the SAR after his orher death) shall receive from the Company consideration in the form of(a) Shares, (b) cash or (c) a combination of Shares and cash, asthe Committee shall determine.  Each SARAgreement shall specify the amount and/or Fair Market Value of the considerationthat the Optionee will receive upon exercising the SAR; provided that theaggregate consideration shall not exceed the amount by which the Fair MarketValue (on the date of exercise) of the Shares subject to the SAR exceeds theExercise Price of the SAR.  If, on thedate when a SAR expires, the Exercise Price of the SAR is less than the FairMarket Value of the Shares subject to the SAR on such date but any portion ofthe SAR has not been exercised, then the SAR shall automatically be deemed tobe exercised as of such date with respect to such portion.  An SAR Agreement may also provide for anautomatic exercise of the SAR on an earlier date.

# ARTICLE 7.            RESTRICTED SHARES.

## **7.1**          **RestrictedShare Agreement**.  Each grantof Restricted Shares under the Plan shall be evidenced by a Restricted ShareAgreement between the recipient and the Company.  Such Restricted Shares shall be subject toall applicable terms of the Plan and may be subject to any other terms that arenot inconsistent with the Plan.  Theprovisions of the various Restricted Share Agreements entered into under thePlan need not be identical.

## **7.2**          **Number ofShares**.  Each Restricted ShareAgreement shall specify the number of Shares to which the Agreementpertains.  Such number shall be subjectto the limitation of Section 7.4(a), if applicable.

7

----

## **7.3**          **Payment forAwards**.  Restricted Shares maybe sold or awarded under the Plan for such consideration as the Committee maydetermine, including (without limitation) cash, cash equivalents, property,past services and future services. Within the limitations of the Plan, the Committee may accept thecancellation of outstanding options in return for the grant of RestrictedShares.

## **7.4****          Vesting Conditions.**

#### (a)           **General**. Each Award of Restricted Shares may or may not be subject tovesting.  Vesting shall occur, in full orin installments, upon satisfaction of the conditions specified in theRestricted Share Agreement.  TheCommittee may include among such conditions continued performance of Serviceand/or the requirement that the performance of the Company (or a Subsidiary,Affiliate or business unit of the Company) for a specified period of not lessthan one fiscal year equal or exceed a target determined by the Committee.  Such target shall be based on one or more ofthe criteria set forth in Appendix A, and shall be determined not laterthan the 90 days following commencement of the specified performanceperiod.  As to Awards with respect towhich the Company desires to secure an exemption from section 162(m) ofthe Code, no Participant shall receive more than 400,000 Restricted Sharessubject to performance-based vesting conditions in a single fiscal year, exceptthat a new Employee may receive up to 800,000 Restricted Shares subject toperformance-based vesting conditions in the fiscal year of the Company in whichhis or her Service as an Employee first commences.  The limitations set forth in the precedingsentence shall be subject to adjustment in accordance with Article 10.

#### (b)           **Cessation of Eligibility to Vest**.  Unless otherwise provided by the RestrictedShare Agreement, if a Participant ceases to be an Awardee Eligible to Vest,other than as a result of circumstances described in Subsection (c)or (d) below, then:

##### (i)            To the extent that theParticipant did not purchase the Restricted Shares, all unvested Shares subjectto a Restricted Share Agreement shall immediately be forfeited and shall revertto the Plan; and

##### (ii)           To the extent that theParticipant purchased the Restricted Shares, the Company shall have a right torepurchase the unvested Restricted Shares at the original price paid by theParticipant upon the Participant’s ceasing to be an Awardee Eligible to Vest.

#### (c)           **Death, Disability or Retirement of Participant**.  Unless otherwise provided by the RestrictedShare Agreement, if a Participant ceases to be an Awardee Eligible to Vest as aresult of the Participant’s death, total and permanent disability or retirementdue to age, in accordance with the Company’s or a Subsidiary’s or Affiliate’sretirement policy, the provisions of Subsection (b) above will apply exceptthat the vested portion of such Participant’s Restricted Shares shall bedetermined by adding 12 months to the length of his or her actual Service.

#### (d)           **Voluntary Severance Incentive Program**.  If a Participant ceases to be an AwardeeEligible to Vest as a result of participation in a voluntary severanceincentive

8

----

#### program orworkforce management plan approved by the Board or a Committee, unvestedRestricted Shares shall vest to the extent provided by the Board or a Committeein such voluntary severance incentive program or workforce managementplan.  Absent a specific provision foracceleration, the provisions of Subsection (b) above shall apply.

## **7.5**          **Effect ofChange in Control**.  TheCommittee may determine, at the time of granting Restricted Shares orthereafter, that all or part of such Restricted Shares shall become vested if aChange in Control occurs with respect to the Company or if the Participant’sService is terminated without Cause after a Change in Control.

## **7.6**          **Voting andDividend Rights**.  The holdersof Restricted Shares awarded under the Plan shall have the same voting,dividend and other rights as the Company’s other shareholders.  A Restricted Share Agreement, however, mayrequire that the holders of Restricted Shares invest any cash dividendsreceived in additional Restricted Shares. Such additional Restricted Shares shall be subject to the sameconditions and restrictions as the Award with respect to which the dividendswere paid.

# ARTICLE 8.            SHARE UNITS.

## **8.1**          **Share UnitAgreement**.  Each grant ofShare Units under the Plan shall be evidenced by a Share Unit Agreement betweenthe recipient and the Company.  SuchShare Units shall be subject to all applicable terms of the Plan and may besubject to any other terms that are not inconsistent with the Plan.  The provisions of the various Share UnitAgreements entered into under the Plan need not be identical.

## **8.2**          **Number ofShares**.  Each Share UnitAgreement shall specify the number of Shares to which the Share Unit pertainsand shall provide for the adjustment of such number in accordance withArticle 10.  Such number shall besubject to the limitation of Section 8.4(a), if applicable.

## **8.3**          **Payment forAwards**.  To the extent that anAward is granted in the form of Share Units, no cash consideration shall berequired of the Award recipients.

## **8.4**          **VestingConditions.**

#### (a)           **General**. Each Award of Share Units may or may not be subject to vesting.  Vesting shall occur, in full or ininstallments, upon satisfaction of the conditions specified in the Share UnitAward.  The Committee may include amongsuch conditions continued performance of Service and/or the requirement thatthe performance of the Company (or a Subsidiary, Affiliate or business unit ofthe Company) for a specified period of not less than one fiscal year equal orexceed performance targets determined by the Committee.  Such targets shall be based on one or more ofthe criteria set forth in Appendix A, and shall be determined not laterthan the 90 days following commencement of the specified performanceperiod.  As to Awards with respect towhich the Company desires to secure an exemption from section 162(m) ofthe Code, no Participant shall receive more than 400,000 Share Units subject toperformance-based vesting conditions in a single fiscal year, except that a newEmployee may receive up to 800,000 Share Units subject to performance-basedvesting conditions in the fiscal year of the

9

----

#### Company inwhich his or her Service as an Employee first commences.  The limitations set forth in the precedingsentence shall be subject to adjustment in accordance with Article 10.

#### (b)           **Cessation of Eligibility to Vest**.  Unless otherwise provided by the Share UnitAward, if a Participant ceases to be an Awardee Eligible to Vest, other than asa result of circumstances described in Subsection (c) or (d) below, thenall unvested Share Units subject to a Share Unit Agreement shall immediately beforfeited and shall revert to the Plan.

#### (c)           **Death, Disability or Retirement of Participant**.  Unless otherwise provided by the Share UnitAward, if a Participant ceases to be an Awardee Eligible to Vest as a result ofthe Participant’s death, total and permanent disability or retirement due toage, in accordance with the Company’s or a Subsidiary’s or Affiliate’sretirement policy, the provisions of Subsection (b) above will apply exceptthat the vested portion of such Participant’s Share Unit Award shall bedetermined by adding 12 months to the length of his or her actual Service.

#### (d)           **Voluntary Severance Incentive Program**.  If a Participant ceases to be an AwardeeEligible to Vest as a result of participation in a voluntary severanceincentive program or workforce management plan approved by the Board or aCommittee, unvested Share Units shall vest to the extent provided by the Boardor a Committee in such voluntary severance incentive program or workforcemanagement plan.  Absent a specificprovision for acceleration, the provisions of Subsection (b) above shallapply.

## **8.5**          Effect of Change in Control.  The Committee may determine, at the time ofgranting Share Units or thereafter, that all or part of such Share Units shallbecome vested if a Change in Control occurs with respect to the Company or ifthe Participant’s Service is terminated without Cause after a Change in Control.  In addition, acceleration of vesting may berequired under Section 10.3.

## **8.6**          **Voting andDividend Rights**.  The holdersof Share Units shall have no voting rights. Prior to settlement or forfeiture, any Share Unit awarded under the Planmay, at the Committee’s discretion, carry with it a right to dividendequivalents.  Such right entitles theholder to be credited with an amount equal to all cash dividends paid on oneShare while the Share Unit is outstanding. Dividend equivalents may be converted into additional Share Units.  Settlement of dividend equivalents may bemade in the form of cash, in the form of Shares, or in a combination ofboth.  Prior to distribution, any dividendequivalents that are not paid shall be subject to the same conditions andrestrictions as the Share Units to which they attach.

## **8.7**          **Form andTime of Settlement of Share Units**. Settlement of vested Share Units may be made in the form of(a) cash, (b) Shares or (c) any combination of both, asdetermined by the Committee.  The actualnumber of Share Units eligible for settlement may be larger or smaller than thenumber included in the original Award, based on predetermined performancefactors.  Methods of converting ShareUnits into cash may include (without limitation) a method based on the averageFair Market Value of Shares over a series of trading days.  Vested Share Units may be settled in a lumpsum or in installments.  The distributionmay occur or commence when all vesting conditions applicable to the Share Unitshave been satisfied or have lapsed, or it may be deferred to any laterdate.  The amount of a deferreddistribution

10

----

## may beincreased by an interest factor or by dividend equivalents.  Until an Award of Share Units is settled, thenumber of such Share Units shall be subject to adjustment pursuant toArticle 10.

## **8.8**          **Creditors’Rights**.  A holder of ShareUnits shall have no rights other than those of a general creditor of theCompany.  Share Units represent anunfunded and unsecured obligation of the Company, subject to the terms andconditions of the applicable Share Unit Agreement.

# ARTICLE 9.            AUTOMATIC OPTION GRANTS TO OUTSIDEDIRECTORS.

## **9.1**          **InitialGrants**.  In connection withjoining the Board, each Outside Director shall receive:

#### (a)           A one-time grant of an NSO covering Shares with an Accounting Value of$110,000.  Such NSO shall be granted onthe date when such Outside Director first joins the Board, and shall vest andbecome exercisable on the first anniversary of the Date of Grant; and

#### (b)           Aone-time grant of Share Units with an Accounting Value of $110,000.  Such Share Units shall be granted on the datewhen such Outside Director first joins the Board and shall vest on the firstanniversary of the Date of Grant. Settlement of vested Share Units shall be made in a lump sum on thethird anniversary of the Date of Grant. Such lump sum shall consist of a number of Shares equal to the number ofvested Share Units.

#### (c)           Withrespect to an Outside Director who first becomes a member of the Board prior tocompletion of the Company’s initial public offering, the initial grantsreferred to in subparagraphs (a) and (b) above shall be granted on the date ofthe Company’s initial public offering and the prices shall be calculated byreference to the initial public offering price reflected in the finalprospectus related to the offering.

An Outside Director whowas previously an Employee shall not receive grants under thisSection 9.1.

## **9.2**          **AnnualGrants**.  Upon the conclusionof each regular annual meeting of the Company’s shareholders held in the year2007 or thereafter, each Outside Director who will continue serving as a memberof the Board thereafter shall receive:

#### (a)           Agrant of an NSO covering Shares with an Accounting Value of $55,000.  Such NSO shall vest and become exercisable onthe first anniversary of the Date of Grant; and

#### (b)           Agrant of Share Units with an Accounting Value of $55,000.  Such Share Units shall vest on the firstanniversary of the Date of Grant. Settlement of vested Share Units shall be made in a lump sum on thethird anniversary of the Date of Grant, unless deferred to a later date.  Such lump sum shall consist of a number ofShares equal to the number of vested Share Units.

11

----

Notwithstanding theforegoing, no grants shall be made pursuant to this Section 9.2 in the calendaryear in which the same Outside Director received grants described inSection 9.1.  An Outside Directorwho previously was an Employee shall be eligible to receive grants under thisSection 9.2.

## **9.3**          **Cessationof Eligibility to Vest**.  Unlessotherwise provided by the Award Agreement, if an Outside Director’s Serviceterminates prior to the vesting date specified in such agreement other than asa result of circumstances described in Section 9.4 below, then such Director’sunvested Award shall immediately be forfeited and such unvested Shares shallrevert to the Plan.

## **9.4**          **AcceleratedExercisability**.  All Awardsgranted to an Outside Director under this Article 9 shall also becomeexercisable in full, and Restricted Shares and Share Units shall bedistributed, in the event that:

#### (a)           SuchOutside Director’s Service terminates because of death, total and permanentdisability, or retirement at or after age 65;

#### (b)           TheCompany is subject to a Change in Control before such Outside Director’s Serviceterminates; or

#### (c)           Asotherwise required by Section 10.3.

## **9.5**          **ExercisePrice**.  The Exercise Priceunder all NSOs granted to an Outside Director under this Article 9 shallbe equal to 100% of the Fair Market Value of a Share on the Date of Grant,payable in one of the forms described in Section 5.7(a), (b) or (c).

## **9.6**          **Term**.  The Option Agreement shall specify the termof the option, which shall not exceed 10 years form the Date of Grant.  Each NSO granted to an Outside Director underthis Article 9 shall terminate on the earlier of (a) the expirationof the term of such option or (b) the date 12 months after the terminationof such Outside Director’s Service for any reason.

## **9.7**          **Affiliatesof Outside Directors**.  TheCommittee may provide that the NSOs that otherwise would be granted to anOutside Director under this Article 9 shall instead be granted to anaffiliate of such Outside Director.  Suchaffiliate shall then be deemed to be an Outside Director for purposes of thePlan, provided that the Service-related vesting and termination provisionspertaining to the NSOs shall be applied with regard to the Service of theOutside Director.

# ARTICLE 10.          PROTECTION AGAINST DILUTION.

## **10.1**        **Adjustments**.  In the event of a subdivision of theoutstanding Shares, a declaration of a dividend payable in Shares or acombination or consolidation of the outstanding Shares (by reclassification orotherwise) into a lesser number of Shares, corresponding adjustments shallautomatically be made in each of the following:

#### (a)           Thenumber of Options, SARs, Restricted Shares and Share Units available for futureAwards under Article 3;

12

----

#### (b)           Thelimitations set forth in Sections 5.2, 7.2, 8.4(a) and 9.4(a);

#### (c)           Thenumber of Shares covered by each outstanding Option and SAR;

#### (d)           TheExercise Price under each outstanding Option and SAR; or

#### (e)           Thenumber of Share Units included in any prior Award that has not yet beensettled.

Inthe event of a declaration of an extraordinary dividend payable in a form otherthan Shares in an amount that has a material effect on the price of Shares, arecapitalization, a spin-off or a similar occurrence, the Committee shall makesuch adjustments as it, in its sole discretion, deems appropriate in one ormore of the foregoing.  Except asprovided in this Article 10, a Participant shall have no rights by reasonof any issuance by the Company of shares of any class or securities convertibleinto shares of any class, any subdivision or consolidation of shares of anyclass, the payment of any share dividend or any other increase or decrease inthe number of shares of any class.

## **10.2**        **Dissolutionor Liquidation**.  To the extentnot previously exercised or settled, Options, SARs and Share Units shallterminate immediately prior to the dissolution or liquidation of the Company.

## **10.3**        **Reorganizations**.  In the event that the Company is a party to amerger or consolidation, all outstanding Awards shall be subject to theagreement of merger or consolidation. Such agreement shall provide for one or more of the following:

#### (a)           Thecontinuation of such outstanding Awards by the Company (if the Company is thesurviving corporation).

#### (b)           Theassumption of such outstanding Awards by the surviving corporation or itsparent, provided that the assumption of Options or SARs shall comply withsections 409A and 424(a) of the Code (whether or not the Options areISOs).

#### (c)           Thesubstitution by the surviving corporation or its parent of new awards for suchoutstanding Awards, provided that the substitution of Options or SARs shallcomply with sections 409A and 424(a) of the Code (whether or not theOptions are ISOs).

#### (d)           Fullexercisability of outstanding Options and SARs and full vesting of the Sharessubject to such Options and SARs, followed by the cancellation of such Optionsand SARs.  The full exercisability ofsuch Options and SARs and full vesting of such Shares may be contingent on theclosing of such merger or consolidation. The Optionees shall be able to exercise such Options and SARs during aperiod of not less than five full business days preceding the closing date ofsuch merger or consolidation, unless (i) a shorter period is required topermit a timely closing of such merger or consolidation and (ii) suchshorter period still offers the Optionees a reasonable opportunity to exercisesuch Options and SARs.  Any exercise ofsuch Options and SARs during such period may be contingent on the closing ofsuch merger or consolidation.

13

----

#### (e)           Thecancellation of outstanding Options and SARs and a payment to the Optioneesequal to the excess of (i) the Fair Market Value of the Shares subject tosuch Options and SARs (whether or not such Options and SARs are thenexercisable or such Shares are then vested) as of the closing date of suchmerger or consolidation over (ii) their Exercise Price.  Such payment shall be made in the form ofcash, cash equivalents, or securities of the surviving corporation or itsparent with a Fair Market Value equal to the required amount.  Such payment may be made in installments andmay be deferred until the date or dates when such Options and SARs would havebecome exercisable or such Shares would have vested.  Such payment may be subject to vesting basedon the Optionee’s continuing Service, provided that the vesting schedule shallnot be less favorable to the Optionee than the schedule under which suchOptions and SARs would have become exercisable or such Shares would havevested.  If the Exercise Price of theShares subject to such Options and SARs exceeds the Fair Market Value of suchShares, then such Options and SARs may be cancelled without making a payment tothe Optionees.  For purposes of thisSubsection (e), the Fair Market Value of any security shall be determinedwithout regard to any vesting conditions that may apply to such security.

#### (f)            Thecancellation of outstanding Share Units and a payment to the Participants equalto the Fair Market Value of the Shares subject to such Share Units (whether ornot such Share Units are then vested) as of the closing date of such merger orconsolidation.  Such payment shall bemade in the form of cash, cash equivalents, or securities of the survivingcorporation or its parent with a Fair Market Value equal to the requiredamount.  Such payment may be made ininstallments and may be deferred until the date or dates when such Share Unitswould have vested.  Such payment may besubject to vesting based on the Participant’s continuing Service, provided thatthe vesting schedule shall not be less favorable to the Participant than theschedule under which such Share Units would have vested.  For purposes of this Subsection (f), theFair Market Value of any security shall be determined without regard to anyvesting conditions that may apply to such security.

# ARTICLE 11.          PAYMENT OF DIRECTOR’S FEES IN SECURITIES.

## **11.1**        **Effective Date**.  No provision of this Article 11 shall beeffective unless and until the Board has determined to implement suchprovision.

## **11.2**        **Elections toReceive NSOs, Restricted Shares or Share Units**.  An Outside Director may elect to receive hisor her annual retainer payments and/or meeting fees from the Company in theform of cash, NSOs, Restricted Shares or Share Units, or a combination thereof,as determined by the Board.  Such NSOs,Restricted Shares and Share Units shall be issued under the Plan.  An election under this Article 11 shallbe filed with the Company on the prescribed form.

## **11.3**        **Number andTerms of NSOs, Restricted Shares or Share Units**.  The number of NSOs, Restricted Shares orShare Units to be granted to Outside Directors in lieu of annual retainers andmeeting fees that would otherwise be paid in cash shall be calculated in amanner determined by the Board.  TheBoard shall also determine the terms of such NSOs, Restricted Shares or ShareUnits.

14

----

# ARTICLE 12.          LIMITATION ON RIGHTS.

## **12.1**        **RetentionRights**.  Neither the Plan norany Award granted under the Plan shall be deemed to give any individual a rightto remain an Employee, Outside Director or Consultant.  The Company and its Parents, Subsidiaries andAffiliates reserve the right to terminate the Service of any Employee, OutsideDirector or Consultant at any time, with or without cause, subject toapplicable laws, the Company’s Articles of Association and a written employmentagreement (if any).

## **12.2**        **Shareholders’Rights**.  A Participant shall haveno dividend rights, voting rights or other rights as a shareholder with respectto any Shares covered by his or her Award prior to the time when such Sharesare issued or, if applicable, the time when he or she becomes entitled toreceive such Shares by filing any required notice of exercise and paying anyrequired Exercise Price.  No adjustmentshall be made for cash dividends or other rights for which the record date isprior to such time, except as expressly provided in the Plan.

## **12.3**        **RegulatoryRequirements**.  Any otherprovision of the Plan notwithstanding, the obligation of the Company to issueShares under the Plan shall be subject to all applicable laws, rules andregulations and such approval by any regulatory body as may be required.  The Company reserves the right to restrict,in whole or in part, the delivery of Shares pursuant to any Award prior to thesatisfaction of all legal requirements relating to the issuance of such Shares,to their registration, qualification or listing or to an exemption fromregistration, qualification or listing.

# ARTICLE 13.          WITHHOLDING TAXES.

## **13.1**        **General**.  To the extent required by applicable federal,state, local or foreign law, a Participant or his or her successor shall makearrangements satisfactory to the Company for the satisfaction of anywithholding tax obligations that arise in connection with the Plan.  The Company shall not be required to issueany Shares or make any cash payment under the Plan until such obligations aresatisfied.

## **13.2**        **ShareWithholding**.  To the extentthat applicable law subjects a Participant to tax withholding obligations, theCommittee may permit such Participant to satisfy all or part of suchobligations by having the Company withhold all or a portion of any Shares thatotherwise would be issued to him or her or by surrendering all or a portion ofany Shares that he or she previously acquired. Such Shares shall be valued at their Fair Market Value on the date whenthey are withheld or surrendered.

# ARTICLE 14.          LIMITATION ON PAYMENTS.

## **14.1**        **Scope ofLimitation**.  ThisArticle 14 shall apply to an Award only if:

#### (a)           Theindependent auditors selected for this purpose by the Committee (the “Auditors”)determine that the after-tax value of such Award to the Participant, takinginto account the effect of all federal, state and local income taxes,employment taxes and excise taxes applicable to the Participant (including theexcise tax under section 4999 of the

15

----

#### Code), will begreater after the application of this Article 14 than it was before theapplication of this Article 14; or

#### (b)           TheCommittee, at the time of making an Award under the Plan or at any timethereafter, specifies in writing that such Award shall be subject to thisArticle 14 (regardless of the after-tax value of such Award to theParticipant).

Ifthis Article 14 applies to an Award, it shall supersede any contraryprovision of the Plan or of any Award granted under the Plan.

## **14.2**        **Basic Rule**.  In the event that the Auditors determine thatany payment or transfer by the Company under the Plan to or for the benefit ofa Participant (a “Payment”) would be nondeductible by the Company for federalincome tax purposes because of the provisions concerning “excess parachutepayments” in section 280G of the Code, then the aggregate present value ofall Payments shall be reduced (but not below zero) to the Reduced Amount.  For purposes of this Article 14, the “ReducedAmount” shall be the amount, expressed as a present value, which maximizes theaggregate present value of the Payments without causing any Payment to benondeductible by the Company because of section 280G of the Code.

## **14.3**        **Reduction ofPayments**.  If the Auditorsdetermine that any Payment would be nondeductible by the Company because ofsection 280G of the Code, then the Company shall promptly give theParticipant notice to that effect and a copy of the detailed calculationthereof and of the Reduced Amount, and the Participant may then elect, in hisor her sole discretion, which and how much of the Payments shall be eliminatedor reduced (as long as after such election the aggregate present value of thePayments equals the Reduced Amount) and shall advise the Company in writing ofhis or her election within 10 days of receipt of notice.  If no such election is made by the Participantwithin such 10-day period, then the Company may elect which and how muchof the Payments shall be eliminated or reduced (as long as after such electionthe aggregate present value of the Payments equals the Reduced Amount) andshall notify the Participant promptly of such election.  For purposes of this Article 14, presentvalue shall be determined in accordance with section 280G(d)(4) of theCode.  All determinations made by theAuditors under this Article 14 shall be binding upon the Company and theParticipant and shall be made within 60 days of the date when a Paymentbecomes payable or transferable.  Aspromptly as practicable following such determination and the electionshereunder, the Company shall pay or transfer to or for the benefit of the Participantsuch amounts as are then due to him or her under the Plan and shall promptlypay or transfer to or for the benefit of the Participant in the future suchamounts as become due to him or her under the Plan.

## **14.4**        **Overpaymentsand Underpayments**.  As aresult of uncertainty in the application of section 280G of the Code atthe time of an initial determination by the Auditors hereunder, it is possiblethat Payments will have been made by the Company which should not have beenmade (an “Overpayment”) or that additional Payments which will not have beenmade by the Company could have been made (an “Underpayment”), consistent ineach case with the calculation of the Reduced Amount hereunder.  In the event that the Auditors, based uponthe assertion of a deficiency by the Internal Revenue Service against theCompany or the Participant that the Auditors believe has a high probability ofsuccess, determine that an Overpayment has been made, such Overpayment shall betreated for all purposes as a loan to the Participant that he

16

----

## or she shallrepay to the Company, together with interest at the applicable federal rateprovided in section 7872(f)(2) of the Code; provided, however, that noamount shall be payable by the Participant to the Company if and to the extentthat such payment would not reduce the amount that is subject to taxation undersection 4999 of the Code.  In theevent that the Auditors determine that an Underpayment has occurred, suchUnderpayment shall promptly be paid or transferred by the Company to or for thebenefit of the Participant, together with interest at the applicable federalrate provided in section 7872(f)(2) of the Code.

## **14.5**        **RelatedCorporations**.  For purposes ofthis Article 14, the term “Company” shall include affiliated corporationsto the extent determined by the Auditors in accordance withsection 280G(d)(5) of the Code.

# ARTICLE 15.          FUTURE OF THE PLAN.

## **15.1**        **Term of thePlan**.  The Plan, as set forthherein, shall become effective on the date of the Company’s initial publicoffering.  The Plan shall remain ineffect until the earlier of (a) the date when the Plan is terminated underSection 15.2 or (b) the 10th anniversaryof the date when the Board adopted the Plan.

## **15.2**        **Amendment orTermination**.  The Board may,at any time and for any reason, amend or terminate the Plan.  No Awards shall be granted under the Planafter the termination thereof.  Thetermination of the Plan, or any amendment thereof, shall not affect any Awardpreviously granted under the Plan.

## **15.3**        **ShareholderApproval**.  An amendment of thePlan shall be subject to the approval of the Company’s shareholders only to theextent required by applicable laws, regulations or rules.  However, section 162(m) of the Code mayrequire that the Company’s shareholders approve:

#### (a)           ThePlan not later than the first regular meeting of shareholders that occurs inthe fourth calendar year following the calendar year in which the Company’sinitial public offering occurred; and

#### (b)           Theperformance criteria set forth in Appendix A not later than the firstmeeting of shareholders that occurs in the fifth year following the year inwhich the Company’s shareholders previously approved such criteria.

# ARTICLE 16.          DEFINITIONS.

### 16.1         “**AwardeeEligible to Vest**” means a Participant who is in activeservice with the Company or a Subsidiary or Affiliate (or who is on an approvedleave of absence or taking vacation or otherwise approved flexible time off (“FTO”)in accordance with the Company’s FTO policy) on the vesting date fixed in theAward Agreement, subject to the exceptions provided in Articles 5, 7, 8and 9.  With the exception of anindividual who is on an approved leave of absence or taking FTO, in no eventshall an individual be considered an Awardee Eligible to Vest if and at thetime the individual ceases or has ceased to perform job duties for which he orshe is compensated directly by the Company or a Subsidiary or Affiliate. Theforegoing shall be true in the event that the individual, prior to ceasing toperform job duties

17

----

### for which he orshe is compensated directly by the Company or a Subsidiary or Affiliate,received or provided notice of termination (irrespective of any notice periodor similar period prescribed under the laws of a jurisdiction outside theUnited States) whether such notice of termination or transfer is lawful orunlawful under applicable employment law or is in breach of an employmentcontract.  Continued affiliation orrelationship with the Company or a Subsidiary or Affiliate pursuant to astatutory or contractual notice period shall not constitute continuation of anindividual’s status as an Awardee Eligible to Vest.  In accordance with the definition above,status as an Awardee Eligible to Vest will always cease upon termination ofemployment with the Company or a Subsidiary or Affiliate except as provided inArticles 5, 7, 8 and 9.

### 16.2         “**Accounting Value**” means, with respect to anAward, a value calculated using the same methodology as was applied by theCompany for purposes of determining the accounting charge associated withsimilar Awards for the fiscal period immediately preceding the date on whichthe subject Award is granted.

### 16.3         “**Affiliate**” means any entity other than aSubsidiary, if the Company and/or one or more Subsidiaries own not less than50% of such entity.

### 16.4         “**Award**” means any award of an Option, a SAR,a Restricted Share or a Share Unit under the Plan.

### 16.5         “**Board**” means the Company’s Board ofDirectors, as constituted from time to time.

### 16.6         “**Cause**” means:

#### (a)           Anunauthorized use or disclosure by the Participant of the Company’s confidentialinformation or trade secrets, which use or disclosure causes material harm tothe Company;

#### (b)           Amaterial breach by the Participant of any agreement between the Participant andthe Company;

#### (c)           Amaterial failure by the Participant to comply with the Company’s writtenpolicies or rules;

#### (d)           TheParticipant’s conviction of, or plea of “guilty” or “no contest” to, a felonyunder the laws of the United States or any State thereof or the equivalentunder the applicable laws outside of the United States;

#### (e)           TheParticipant’s gross negligence or willful misconduct;

#### (f)            Acontinuing failure by the Participant to perform assigned duties afterreceiving written notification of such failure; or

#### (g)           Afailure by the Participant to cooperate in good faith with a governmental orinternal investigation of the Company or its directors, officers or employees,if the Company has requested the Participant’s cooperation.

18

----

### 16.7         “**Change in Control**” means:

#### (a)           Theconsummation of a merger or consolidation of the Company with or into anotherentity or any other corporate reorganization, if persons who were notshareholders of the Company immediately prior to such merger, consolidation orother reorganization own immediately after such merger, consolidation or otherreorganization 50% or more of the voting power of the outstanding securities ofeach of (i) the continuing or surviving entity and (ii) any direct orindirect parent corporation of such continuing or surviving entity;

#### (b)           Thesale, transfer or other disposition of all or substantially all of the Company’sassets;

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

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

##### (ii)           Were appointed to theBoard, or nominated for election to the Board, with the affirmative votes of atleast a majority of the aggregate of (A) the Original Directors who werein office at the time of their appointment or nomination and (B) thedirectors whose appointment or nomination was previously approved in a mannerconsistent with this Paragraph (ii); or

#### (d)           Anytransaction as a result of which any person is the “beneficial owner” (asdefined in Rule 13d-3 under the Exchange Act), directly or indirectly, ofsecurities of the Company representing at least 30% of the total voting powerrepresented by the Company’s then outstanding voting securities.  For purposes of this Subsection (d), theterm “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 orother fiduciary holding securities under an employee benefit plan of theCompany or of a Parent or Subsidiary and (ii) a corporation owned directlyor indirectly by the shareholders of the Company in substantially the sameproportions as their ownership of Shares.

A transaction shall not constitute a Change in Controlif its sole purpose is to change the jurisdiction of the Company’sincorporation or to create a holding company that will be owned insubstantially the same proportions by the persons who held the Company’ssecurities immediately before such transaction.

### 16.8         “**Code**” means the U.S. Internal Revenue Codeof 1986, as amended.

### 16.9         “**Committee**” means a committee of the Board,as described in Article 2.

### 16.10       “**Company**” means Verigy Ltd., a Singapore corporation.

### 16.11       “**Consultant**” means a consultant or adviser who provides bonafide services to the Company, a Parent, a Subsidiary or an Affiliate as anindependent contractor.

19

----

### 16.12       “**Date of Grant**” means thelatest of: (a) the date on which the Committee determines that the Option orSAR shall be granted; (b) the date on which the Optionee’s Service commences;or (c) the date on which all material terms of the Option or SAR, including(without limitation) the Exercise Price, are ascertainable; provided, however,that with respect to automatic awards to Outside Directors, “Date of Grant”means the date of such automatic award as provided in the applicable provisionof this Plan.

### 16.13       “**Employee**” means a full time or part time employee of theCompany or any Subsidiary or Affiliate, including Officers and Directors, whois treated as an employee in the personnel records of the Company or aSubsidiary or Affiliate for the relevant period, but shall exclude individualswho are classified by the Company or a Subsidiary or Affiliate as(a) leased from or otherwise employed by a third party,(b) independent contractors or (c) intermittent or temporary, even ifany such classification is changed retroactively as a result of an audit,litigation or otherwise.  A Participantshall not cease to be an Employee in the case of (i) any vacation or sicktime or otherwise approved FTO in accordance with the Company’s (or aSubsidiary’s or Affiliate’s) FTO policy or (ii) transfers betweenlocations of the Company or between the Company and/or any Subsidiary orAffiliate.  Neither service as a Directornor payment of a director’s fee by the Company shall be sufficient toconstitute “employment” by the Company.

### 16.14       “**Exchange Act**” means the U.S. Securities Exchange Act of 1934,as amended.

### 16.15       “**Exercise Price**,” in the case of an Option, means the amountfor which one Share may be purchased upon exercise of such Option, as specifiedin the applicable Option Agreement.  “**Exercise Price**,” in the case of a SAR,means an amount, as specified in the applicable SAR Agreement, which is subtractedfrom the Fair Market Value of one Share in determining the amount payable uponexercise of such SAR.

### 16.16       “**Fair Market Value**” means the market price of Shares,determined by the Committee as follows:

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

#### (b)           If foregoing provisionsare not applicable, then the Committee shall determine the Fair Market Value ingood faith on such basis as it deems appropriate.  Such determination shall be conclusive andbinding on all persons.

### 16.17       “**ISO**” means an incentive stock option described insection 422(b) of the Code.

20

----

### 16.18       “**NSO**” means a share option not described in sections 422or 423 of the Code.

### 16.19       “**Option**” means an ISO or NSO granted under the Plan andentitling the holder to purchase Shares.

### 16.20       “**Option Agreement**” means the agreement between the Company andan Optionee that contains the terms, conditions and restrictions pertaining tohis or her Option.

### 16.21       “**Optionee**” means an individual or estate that holds an Optionor SAR.

### 16.22       “**Outside Director**” means a member of the Board who is not anEmployee.

### 16.23       “**Parent**” means any corporation (other than the Company) in anunbroken chain of corporations ending with the Company, if each of thecorporations other than the Company owns shares possessing 50% or more of thetotal combined voting power of all classes of shares in one of the othercorporations in such chain.  Acorporation that attains the status of a Parent on a date after the adoption ofthe Plan shall be considered a Parent commencing as of such date.

### 16.24       “**Participant**” means an individual or estate that holds anAward.

### 16.25       “**Plan**” means this Verigy Ltd. 2006 Equity Incentive Plan, asamended from time to time.

### 16.26       “**Replacement Awards**” means Awards granted or Shares issued by theCompany in the conversion, assumption, substitution, or exchange of awardspreviously granted under the Agilent Technologies, Inc. 1999 Stock Plan or theAgilent Technologies, Inc. 1999 Non-employee Director Stock Plan.

### 16.27       “**Restricted Share**” means a Share awarded under the Plan.

### 16.28       “**Restricted Share Agreement**” means the agreement between theCompany and the recipient of a Restricted Share that contains the terms,conditions and restrictions pertaining to such Restricted Share.

### 16.29       “**SAR**” means a share appreciation right granted under the Plan.

### 16.30       “**SAR Agreement**” means the agreement between the Company and anOptionee that contains the terms, conditions and restrictions pertaining to hisor her SAR.

### 16.31       “**Service**” means service as an Employee, Outside Director orConsultant.

### 16.32       “**Shares**” means the Ordinary Shares of the Company.

### 16.33       “**Share Unit**” means a bookkeeping entry representing theequivalent of one Share, as awarded under the Plan.

21

----

### 16.34       “**Share Unit Agreement**” means the agreement between the Companyand the recipient of a Share Unit that contains the terms, conditions andrestrictions pertaining to such Share Unit.

### 16.35       “**Subsidiary**” means any corporation (other than the Company) inan unbroken chain of corporations beginning with the Company, if each of thecorporations other than the last corporation in the unbroken chain owns sharespossessing 50% or more of the total combined voting power of all classes ofshares in one of the other corporations in such chain.  A corporation that attains the status of aSubsidiary on a date after the adoption of the Plan shall be considered aSubsidiary commencing as of such date.

### 16.36       “**Substitute Awards**” means:

#### (a)           Awards granted orShares issued by the Company in assumption of, or in substitution or exchangefor, awards previously granted by: (i) a company acquired by the Company; (ii)a company acquired by any Subsidiary; or (iii) a company with which the Companyor any Subsidiary combines; and

#### (b)           Awards granted orShares issued by the Company in assumption of, or in substitution or exchangefor, awards previously granted by Agilent Technologies, Inc.

### **Adoption and Amendment History:**

| **Action**                                                                                                    | ** ** | **Date**          | ** ** |
|---------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|
|                                                                                                          |       |              |       |
| 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  definition of “Fair Market Value” (Section 16.16) |       | August 29, 2006   |       |
|                                                                                                          |       |              |       |
| Amended by the Board  of Directors to add definition of Date of Grant (Section 16.12)                         |       | December 13, 2006 |       |

22

----

# **ADDENDUM TO THE VERIGY LTD. 2006 EQUITY INCENTIVE PLAN**

Pursuantto Section 2.2 of the Verigy Ltd. 2006 Equity Incentive Plan thefollowing modifications to the Plan will apply in the countries as set forthbelow:

***CHINA***

All stock options granted in China will only beexercisable using the full cashless exercise method (*i.e.*,cashless exercise for cash).  Only fullcashless exercise (proceeds remitted in cash) will be permitted.  Cash exercises are prohibited.

***FRANCE***

Alloptions and restricted stock units (“RSUs”) granted in France shall be subjectto the additional terms and conditions of the Verigy Ltd. 2006Equity Incentive Plan****Option****Sub-Plan for French Employees and the Verigy Ltd. 2006Equity Incentive Plan****RSU****Sub-Plan for French Employees, asapplicable.

***ITALY***

All stock options granted in Italy will only beexercisable using the full cashless exercise method (*i.e.*,cashless exercise for cash).  Only fullcashless exercise (proceeds remitted in cash) will be permitted.  Cash exercises are prohibited.

23

----

**Appendix A**

**PerformanceCriteria for Restricted Shares and Share Units**

##### The Committee may apply any one or more ofthe following performance criteria, individually, alternatively or in anycombination, either to the Company as a whole or to a business unit, Subsidiaryor Affiliate, measured annually, quarterly or cumulatively over a period ofyears, either on an absolute basis or relative to a pre-established target,with respect to previous years’ results or a designated comparison group, ineach case as specified by the Committee: (i) cash flow (before or afterdividends), (ii) earnings per share (including earnings before interest,taxes, depreciation and amortization), (iii) share price, (iv) returnon equity, (v) total shareholder return, (vi) return on capital(including return on total capital or return on invested capital),(vii) return on assets or net assets, (viii) market capitalization,(ix) economic value added, (x) debt leverage (debt to capital),(xi) revenue or net revenue, (xii) income or net income,(xiii) operating income, (xiv) operating profit or net operatingprofit, (xv) operating margin or profit margin, (xvi) return onoperating revenue, (xvii) cash from operations, (xviii) operatingratio, (xix) operating revenue, (xx) customer satisfaction measures,(xxi) net order dollars, (xxii) guaranteed efficiency measures; (xxiii)service agreement renewal rates; (xxiv) service revenues as a percentage ofproduct revenues, either with respect to one or more particular transactions orwith respect to revenues as a whole; or (xxv) individual performance.  To the extent consistent withsection 162(m) of the Code, the Committee may appropriately adjust anyevaluation of performance under a performance criterion to exclude any of thefollowing events that occurs during a performance period: (i) assetwrite-downs, (ii) litigation, claims, judgments or settlements,(iii) the effect of changes in tax law, accounting principles or othersuch laws or provisions affecting reported results, (iv) accruals forreorganization and restructuring programs and (v) any extraordinary,unusual or non-recurring items.

24

----