Document:

Exhibit 10.70

 

 

TAX SHARING AGREEMENT

 

by and between

 

AGILENT TECHNOLOGIES, INC.

 

and

 

VERIGY LTD.

 

June 1, 2006

 

 

TAX SHARING AGREEMENT

 

THIS TAX
SHARING AGREEMENT (the “Agreement”)
is dated as of June 1, 2006, by and between Agilent
Technologies, Inc., a Delaware corporation (“Agilent”), and Verigy Ltd., a company organized under
the laws of Singapore (together with its successors and assigns, “Verigy”) (each, a “Party” and, collectively, the “Parties”).

 

W I T N E S S E T H:

 

WHEREAS,
Agilent has determined that it would be appropriate, desirable and in the best
interests of Agilent and Agilent’s stockholders to separate the Business from
Agilent (the “Separation”);

 

WHEREAS,
Agilent and its Subsidiaries will convey to Verigy and its Subsidiaries substantially
all of the business and assets of the Business owned by Agilent in accordance
with the Master Separation and Distribution Agreement, dated as of May 31,
2006, between the Parties (the “Master
Separation Agreement”), and Verigy will assume certain of the
liabilities related to the Business in accordance with the General Assignment
and Assumption Agreement, dated as of June 1, 2006, between the Parties
(the “General Assignment and Assumption
Agreement”);

 

WHEREAS,
Verigy intends to offer and sell for its own account a limited number of Verigy
Ordinary Shares pursuant to an initial public offering of such shares (the “IPO”);

 

WHEREAS,
Agilent intends, after the IPO, to distribute to holders of shares of Agilent
Common Stock the outstanding Verigy Ordinary Shares then owned by Agilent (the “Distribution”);

 

WHEREAS,
Agilent and Verigy intend that the Distribution qualify as a transaction
described in Section 355 of the Code;

 

WHEREAS,
Agilent and Verigy wish to provide for and agree upon the allocation between
the Agilent Tax Group and the Verigy Tax Group of all responsibilities,
liabilities and benefits relating to or affecting Taxes paid or payable by
either of them for all taxable periods; and

 

WHEREAS,
the Parties intend in this Agreement and the Transaction Documents to set forth
the principal arrangements between them regarding the Transfer, the IPO and the
Distribution;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements set forth below, and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Parties hereby agree
as follows:

 

ARTICLE I

DEFINITIONS AND RULES OF CONSTRUCTION

 

1.1           Definitions.

 

(a)           As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).

 

“Actually Realized” means, for purposes of
determining the timing of any Taxes (or related Tax Benefit or Tax Detriment)
relating to any payment, transaction, occurrence or event, the time at which
the amount of Taxes (including estimated Taxes) payable by any person is
increased above or reduced below, as the case may be, the amount of Taxes that
such person would be required to pay but for the payment, transaction,
occurrence or event.

 

“Agilent” has the meaning set forth in the
Recitals to this Agreement.

 

“Agilent Common Stock” means the common
stock of Agilent.

 

“Agilent Tax Group” means (i) Agilent,
(ii) any corporation or other legal entity which Agilent directly or
indirectly owns immediately following the Separation Date other than a Verigy
Tax Group

 

 

Member, and (iii) any other
corporation or other legal entity which Agilent directly or indirectly owned at
any time on or prior to the Separation Date other than a Verigy Tax Group
Member.

 

“Agilent Tax Representation Letter” means
the letter delivered by Agilent to Baker & McKenzie LLP on the
Distribution Date.

 

“Agilent/Verigy Tax Group” means any
corporation or other legal entity which is an Agilent Tax Group Member or
Verigy Tax Group Member but only with respect to Taxable Periods (or portions
thereof) ending on or before or including the Separation Date.

 

“Business” has the meaning set forth in the
Master Separation Agreement.

 

“Code” means the Internal Revenue Code of
1986, as amended, or any successor legislation.

 

“Controlling Company” has the meaning set
forth in Section 4.2.

 

“Distribution” has the meaning set forth in
the Recitals to this Agreement.

 

“Distribution Date” means the date on which
the Distribution occurs (or, if different, the date on which the Distribution
is deemed to occur for U.S. federal Income Tax purposes). For purposes of this
Agreement, the Distribution shall be deemed effective as of the end of the day
on the Distribution Date.

 

“Distribution Taxes” means any Tax
liability resulting from or arising in connection with any failure to qualify
the Distribution as a tax-free distribution to the Agilent Tax Group under the
Code or corresponding provisions of other Tax Laws. For the avoidance of doubt,
Distribution Taxes shall include any Tax resulting from or arising in
connection with any failure to qualify the Distribution under Section 355
of the Code or the application of Section 355(d) or Section 355(e) of
the Code to the Distribution; provided,
however, that Distribution Taxes
shall not include any Tax that results from or arises in connection with any
act, failure to act or omission by Agilent that occurs prior to the
Distribution Date, unless Verigy would otherwise be liable for Distribution
Taxes pursuant to Section 2.2(c)(ii)
of this Agreement.

 

“Entity” means a partnership (whether
general or limited), a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or any other entity, without regard to whether it is treated as a
disregarded entity for U.S. federal Tax purposes

 

“Foreign Income Tax” means any Income Tax
other than a U.S. federal, state or local Income Tax.

 

“Foreign Income Tax Return” means any
Income Tax Return which is not a U.S. federal, state or local Income Tax
Return.

 

“Group Member” means any Agilent Tax Group
Member or Verigy Tax Group Member, as the case may be.

 

“Income Tax” means (a) any Tax based
upon, measured by, or calculated with respect to (i) net income or profits
(including, but not limited to, any capital gains, minimum Tax and any Tax on
items of Tax preference, but not including sales, use, real or personal
property, gross or net receipts, transfer or similar Taxes) or
(ii) multiple bases (including, but not limited to, corporate franchise,
doing business or occupation Taxes) if one or more of the bases upon which such
Tax may be based, measured by, or calculated with respect to, is described in clause (i)
above, or (b) any U.S. state or local franchise Tax or similar foreign
Tax; including in the case of each of (a) and (b) any related
interest and any penalties, additions to such Tax or additional amounts imposed
with respect thereto by any Tax Authority.

 

“Income Tax Return” means any Tax Return
that relates to Income Taxes.

 

2

 

“Indemnification Expenses” has the meaning
set forth in Section 4.3.

 

“Indemnified Party” means (i) Agilent,
in cases where Verigy is obligated to indemnify Agilent for Losses under this
Agreement, and (ii) Verigy, in cases where Agilent is obligated to
indemnify Verigy for Losses under this Agreement.

 

“Indemnifying Party” means
(i) Agilent, in cases where it is obligated to indemnify Verigy for Losses
under this Agreement, and (ii) Verigy, in cases where it is obligated to
indemnify Agilent for Losses under this Agreement.

 

“Independent Firm” means a nationally
recognized law or accounting firm; provided,
however, that such term shall not
include any law or accounting firm that performs or has performed legal or
audit services with respect to Agilent or Verigy.

 

“IRS” means the Internal Revenue Service.

 

“Loss” means any loss, cost, fine, penalty,
fee, damage, obligation, liability, payment in settlement, Tax or other expense
of any kind, including reasonable attorneys’ fees and costs, but excluding any
consequential, special, punitive or exemplary damages.

 

“Non-Income Tax” means any Tax other than
an Income Tax.

 

“Person” means any individual, partnership,
joint venture, corporation, limited liability entity, trust, unincorporated
organization or other entity (including a governmental entity).

 

“Post-Separation Date Taxable Period” means
a Taxable Period beginning after the Separation Date.

 

“Pre-Separation Date Taxable Period” means
a Taxable Period ending on or before the Separation Date.

 

“Reimbursement Statement” has the meaning
set forth in Section 4.3.

 

“Representative” means, with respect to any
Person, any of such Person’s directors, officers, employees, agents,
consultants, advisors, accountants, attorneys and representatives.

 

“Separation” has the meaning set forth in
the Recitals to this Agreement.

 

“Separation Date” has the meaning set forth
in the General Assignment and Assumption Agreement.

 

“Shareholder Costs” means any and all
Losses relating to or arising from claims or lawsuits by stockholders of
Agilent resulting from the failure of the Distribution to qualify under
Section 355 of the Code or corresponding provisions of other Tax Laws.

 

“Straddle Period” means a Taxable Period
that includes but does not end on the Separation Date.

 

“Tax” and “Taxes”
means all forms of taxation, whenever created or imposed, and whether of the
United States or elsewhere, and whether imposed by a federal, state, municipal,
governmental, territorial, local, foreign or other body, and without limiting
the generality of the foregoing, shall include net income, gross income, gross
receipts, sales, use, value added, ad valorem, transfer, recording, franchise,
profits, license, lease, service, service use, payroll, wage, withholding,
employment, unemployment insurance, workers compensation, social security,
excise, severance, stamp, business license, business organization, occupation,
premium, property, environmental, windfall profits, customs, duties,
alternative minimum, estimated or other taxes, fees, premiums, assessments or
charges of any kind whatever imposed or collected by any governmental entity or
political subdivision thereof, together with any related interest and any
penalties, additions to such tax or additional amounts imposed with respect
thereto by any Tax Authority.

 

“Tax Advisor” means Baker &
McKenzie LLP.

 

3

 

“Tax Asset” means any Tax item that has
accrued for Tax purposes, but has not been used during a Taxable Period, and
that could reduce a Tax in another Taxable Period, including a net operating
loss, net capital loss, investment tax credit, foreign tax credit, research and
experimentation credit, charitable deduction or credit related to alternative
minimum tax or any other Tax credit.

 

“Tax Authority” means, with respect to any
Tax, any governmental entity, quasi-governmental body or political
subdivision thereof that imposes such Tax and the agency (if any) charged with
the determination or collection of such Tax for such entity, body or
subdivision.

 

“Tax Benefit” means any refund, credit or
other reduction in otherwise required Tax payments (including any reduction in
estimated Tax payments).

 

“Tax Contest” means an audit, review,
examination or any other administrative or judicial proceeding with the purpose
or effect of redetermining Taxes of any member of any Group (including any
administrative or judicial review of any claim for refund) for any Tax Period.

 

“Tax Detriment” means an increase in the
Tax liability of any Group Member for any Taxable Period or a decrease in a Tax
Asset of any Group Member. Except as otherwise provided in this Agreement, a
Tax Detriment shall be deemed to have been realized from a Tax item in a
Taxable Period only if and to the extent that the Tax liability of the Group
Member for such Tax Period, after taking into account the effect of the Tax
item on the Tax liability of such Group Member in the current Tax Period and
all prior Tax Periods, is more than it would have been if such Tax liability
were determined without regard to such Tax item.

 

“Tax Group” means the Agilent Tax Group or
the Verigy Tax Group, as the case may be.

 

“Tax Indemnification Period” means any
Pre-Separation Date Taxable Period and that portion of any Straddle Period that
ends on the Separation Date.

 

“Tax Law” means the law of any governmental
entity or political subdivision thereof relating to any Tax, including the
Code.

 

“Taxable Period” means, with respect to any
Tax, the period for which the Tax is reported as provided under the Code or
other applicable Tax Law.

 

“Tax Return” means any return, filing,
questionnaire, information return, election or other document required or
permitted to be filed, including requests for extensions of time, filings made
with respect to estimated tax payments, claims for refund and amended returns
that may be filed, for any period with any Tax Authority (whether domestic or foreign)
in connection with any Tax (whether or not a payment is required to be made
with respect to such filing).

 

“Transaction Documents” has the meaning set
forth in the Master Separation Agreement.

 

“Transfer Taxes” has the meaning set forth
in Section 2.2(b)(iii).

 

“Verigy Ordinary Shares” means the ordinary
shares of Verigy.

 

“Verigy Tax Group” means (i) Verigy
and (ii) any corporation or other legal entity which Verigy directly or
indirectly owned or owns prior to, on or following the Separation Date.

 

“Verigy Tax Representation Letter” means
the letter delivered by Verigy to Baker & McKenzie LLP on the
Distribution Date.

 

1.2           Rules
of Construction.

 

(a)           This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the Party drafting or causing any instrument to be
drafted.

 

4

 

(b)           The words “hereof, “herein” and “hereunder”
and words of similar import when used in this Agreement will refer to this
Agreement as a whole (including any annexes, exhibits and schedules to this
Agreement) and not to any particular provision of this Agreement, and section
and subsection references are to this Agreement unless otherwise specified. The
words “include,” “including,” or “includes” when used herein shall be deemed in
each case to be followed by the words “without limitation” or words having
similar import. The headings and table of contents in this Agreement are
included for convenience of reference only and will not limit or otherwise
affect the meaning or interpretation of this Agreement. The meanings given to
terms defined herein will be equally applicable to both the singular and plural
forms of such terms.

 

(c)           References to a “Schedule” are, unless otherwise specified,
to a Schedule attached to this Agreement; references to “Section” or “Article” are, unless otherwise specified, to one of the
Sections or Articles of this Agreement; references to “sub-section” are, unless
the context otherwise requires, references to the section in which the
reference appears; and references to this Agreement include the Schedules.

 

ARTICLE II

FILING OF TAX RETURNS; PAYMENT OF TAXES;
REFUNDS

 

2.1           Preparation of Tax Returns.

 

(a)           Income
Tax Returns.

 

(i)            Agilent shall
prepare and file or cause to be prepared and filed all U.S. federal Income Tax
Returns, U.S. state Income Tax Returns, and Foreign Income Tax Returns
(including amendments thereto) which are required to be filed in respect of the
Agilent Tax Group for any Taxable Period.

 

(ii)           Verigy shall
prepare and file or cause to be prepared and filed all U.S. federal Income Tax
Returns, U.S. state Income Tax Returns, and Foreign Income Tax Returns
(including amendments thereto) which are required to be filed in respect of a
Verigy Tax Group Member for any Taxable Period.

 

(iii)          For the avoidance
of doubt, Verigy shall prepare all IRS Forms 5471 (and any similar state and
local forms) for the Verigy Tax Group that are required to be filed with the
Income Tax Returns of the Agilent Tax Group. Verigy shall provide Agilent with
a true, correct and complete IRS Form 5471 with respect to each Verigy Tax
Group Member (and such additional information regarding such form as may
reasonably be requested by Agilent) at least sixty (60) calendar days
prior to the due date for the Income Tax Returns of the Agilent Tax Group
(including extensions).

 

(b)           Non-Income
Tax Returns.

 

(i)            Agilent shall
prepare and file or cause to be prepared and filed all Non-Income Tax Returns
which are required to be filed in respect of (A) a member of the
Agilent/Verigy Tax Group for any Pre-Separation Date Taxable Period or Straddle
Period or (B) an Agilent Tax Group Member for any Post-Separation Date
Taxable Period. Verigy hereby irrevocably designates, and agrees to cause each
Verigy Tax Group Member to designate, Agilent as its agent to take any and all
actions necessary or incidental to the preparation and filing of such
Non-Income Tax Returns.

 

(ii)           Verigy
shall prepare and file or cause to be prepared and filed all Non-Income Tax
Returns with respect to the Verigy Tax Group which are required to be filed in
respect of a Verigy Tax Group Member for any Post-Separation Date Taxable
Period.

 

5

 

(c)           Manner
of Preparation.  Unless
Agilent and Verigy otherwise agree in writing:

 

(i)            In the absence of a
controlling change in law or circumstances, all Tax Returns filed after the
date of this Agreement for any Pre-Separation Date Taxable Period or Straddle
Period shall be prepared on a basis consistent with the elections, accounting
methods, conventions and principles of taxation used for the most recent
Taxable Periods for which Tax Returns involving similar matters have been
filed.

 

(ii)           In
the absence of a controlling change in law or circumstances, Verigy will not,
and will not permit any Verigy Tax Group Member to, change any accounting
method, change its taxable year, amend any Tax Return or take any position on a
Tax Return, take any other action, or enter into any transaction that may
reasonably be expected to result in any increased Tax liability or reduction of
any Tax Asset of any Agilent Tax Group Member.

 

(iii)          Agilent
will make the allocations to the Verigy Tax Group required under
Section 41(f)(3) of the Code. Verigy agrees that the Verigy Tax Group will
not deviate from the amount of any qualified research expenditures allocated to
it by Agilent.

 

(iv)          Whenever
permitted to do so by applicable law, Verigy shall elect to relinquish any
carryback period which would relate to any Pre-Separation Date Taxable Period.

 

(v)           Agilent
and Verigy agree to treat stock-based compensation as follows:

 

(1)                                  the Agilent Tax Group shall prepare and file Tax
Returns claiming (i) any deduction with respect to the exercise of a vested
option to purchase Agilent Common Stock that is exercised by an employee of the
Verigy Tax Group after the Separation Date and (ii) any other similar
compensated-related Tax deductions. Agilent shall pay the related Tax
liability under the Federal Insurance Contributions Act, the Federal
Unemployment Tax Act or any state, local or foreign employment Tax law;

 

(2)                                  the Verigy Tax Group shall prepare and file Tax
Returns claiming (i) any deduction with respect to the exercise of a
vested option to purchase Verigy Ordinary Shares that is exercised by an
employee of the Verigy Tax Group after the Separation Date (including any
option that is issued by Verigy on the Distribution Date to replace an unvested
option to acquire Agilent Common Stock), and (ii) any other similar
compensation-related Tax deductions. Verigy shall pay the related Tax
liability under the Federal Insurance Contributions Act, the Federal
Unemployment Tax Act or any state, local or foreign employment Tax law.

 

(d)           Responsibility
for Filing.  Notwithstanding
any other provision of this Agreement to the contrary, Agilent and Verigy have
agreed that the other Party will prepare and file the Tax Returns listed in Schedule 2.1(d). Agilent and Verigy
may agree in writing from time to time to additions to or deletions from Schedule 2.1(d).

 

2.2           Liability
for and Payment of Taxes.

 

(a)           Income
Taxes.  Except as otherwise
provided in this Agreement:

 

(i)            Agilent shall be
liable for and shall pay or cause to be paid on a timely basis, and pursuant to
Article III shall indemnify,
defend and hold harmless Verigy from and against, all Taxes due with respect to
the U.S. federal Income Tax, U.S. state and local Income Tax, and Foreign
Income Tax liability for all Agilent Tax Group Members for any Taxable Period; provided, however,
that Agilent shall not be liable for or pay, and shall not indemnify or hold
harmless Verigy from and against any Distribution Taxes described in Section 2.2(c)(ii) of this Agreement.

 

(ii)           Verigy
shall be liable for and shall pay or cause to be paid on a timely basis, and
pursuant to Article III
shall indemnify, defend and hold harmless Agilent from and against, all 

 

6

 

Taxes due with respect to the U.S. federal Income Tax, U.S. state and
local Income Tax, and Foreign Income Tax liability for any Verigy Tax Group
Member for any Taxable Period.

 

(b)           Non-Income
Taxes.  Except as otherwise
provided in this Agreement:

 

(i)            Agilent
shall be liable for and shall pay or cause to be paid on a timely basis, and
pursuant to Article III
shall indemnify, defend and hold harmless Verigy from and against, (A) all
Non-Income Taxes due with respect to any members of the Agilent/Verigy Tax
Group for any Pre-Separation Date Taxable Period or Straddle Period and
(B) all Non-Income Taxes due with respect to any Agilent Tax Group Member
for any Post-Separation Date Taxable Period; provided,
however, that Agilent shall not
be liable for or pay, and shall not indemnify or hold harmless Verigy from and
against any Transfer Taxes; provided,
further, that Verigy, on behalf
of the Verigy Tax Group, hereby assumes and agrees to pay directly to or at the
direction of Agilent, at least five (5) calendar days prior to the date of
payment (including estimated payment) thereof is due, the Non-Income Taxes for
any Post-Separation Date Taxable Period (determined pursuant to Section 2.4) which relates to a
Verigy Tax Group Member or its business, assets or activities.

 

(ii)           Verigy
shall be liable for and shall pay or cause to be paid on a timely basis, and
pursuant to Article III
shall indemnify, defend and hold harmless Agilent from and against,
(A) all Taxes due with respect to the Non-Income Tax liability for any
Verigy Tax Group Member for any Post-Separation Date Taxable Period and
(B) all Transfer Taxes.

 

(iii)          Verigy
shall be liable for and shall pay on a timely basis, and pursuant to Article III shall indemnify, defend
and hold harmless Agilent from and against, all transfer, documentary, sales,
use, registration and such other Taxes (excluding any Taxes based on or
attributable to income or gains) and related fees (including any penalties,
interest, and addition to Tax) arising out of or incurred in connection with
the Separation (“Transfer Taxes”).

 

(c)           Distribution
Taxes.  Notwithstanding any
other provision of this Agreement to the contrary:

 

(i)            Agilent shall be
responsible for one hundred percent (100%) of any Distribution Taxes or
Shareholder Costs that are not the responsibility of Verigy pursuant to
Section 2.2(c)(ii).

 

(ii)           Verigy shall be
responsible for one hundred percent (100%) of any Distribution Taxes or
Shareholder Costs that result from one or more of the following:

 

(1)                                  any breach of its covenants under
Section 5.2(b) hereof;

 

(2)                                  any act, failure to act or omission of or by any
Verigy Tax Group Member after the Distribution Date, including a cessation,
transfer to Affiliates or disposition of the Business, or an issuance of stock,
stock buyback or payment of an extraordinary dividend by any Verigy Tax Group
Member following the Distribution Date;

 

(3)                                  any acquisition of any stock or assets of any
Verigy Tax Group Member by one or more Persons prior to or following the
Distribution Date; or

 

(4)                                  any issuance of stock by any Verigy Tax Group
Member, or change in ownership of stock of any Verigy Tax Group Member, that
causes Section 355(d) or Section 355(e) of the Code to apply to the
Distribution.

 

(iii)          Notwithstanding the
foregoing or anything to the contrary contained herein:

 

(1)                                  Agilent shall be solely responsible for any
Distribution Taxes arising pursuant to Treasury Regulation §§ 1.367(b)-5(b) or
1.367(e)-1(b); and

 

(2)                                  Verigy shall not be liable for any Distribution
Taxes or Shareholder Costs resulting from actions taken at the written
direction of Agilent.

 

7

 

(d)           Credit
for Prior Tax Payments.  To
the extent any member of a Tax Group has made a payment of Taxes (including
estimated Taxes) on or before the Separation Date for which a member of the other
Tax Group is liable under this Agreement, (i) the Party who made such
payment shall notify the Party who is liable, and (ii) the Party who is
liable shall reimburse the Party who made such payment within ten
(10) calendar days after receipt of such notice; provided, however,
that this Section 2.2(d)
shall not apply if the Party who made such payment receives a refund or credit
with respect to such payment of Taxes equal to the reimbursement obligation of
the Party who is liable..

 

(e)           Responsibility
for Payment; Notice of Payment Due. 
Although Agilent or Verigy may be responsible for paying a particular
Tax liability, Agilent and Verigy may agree in writing that the actual payment
to a Taxing Authority of certain Tax liabilities will be made by the non-responsible
Party. Agilent and Verigy may agree to prepare a schedule setting forth such
Tax liabilities and may agree from time to time to additions to or deletions
from such schedule, which additions or deletions shall be in writing. In each
case where Agilent or Verigy, as the case may be, is required to make payment
of Taxes to the other Party, Agilent or Verigy, as the case may be, shall
notify the other Party in writing as to the amount of Taxes due from the other
Party at least five (5) calendar days prior to the date of payment
(including estimated payment) is due.

 

2.3           Tax
Adjustments and Carrybacks.

 

(a)           Liability
for Taxes and Retention and Payment of Tax Refunds.  Except as otherwise provided in this
Agreement:

 

(i)            Agilent
shall be entitled to retain, and to receive within ten (10) calendar days
after Actually Realized by the Verigy Tax Group, the portion of all refunds or
credits of Taxes for which the Agilent Tax Group is liable pursuant to Section 2.2 or Section 3.1(a), excluding any refund
or credit for Taxes for which the Agilent Tax Group is liable pursuant to Section 2.2(d) but has not paid to
the Verigy Tax Group prior to the date that such refund or credit for Taxes is
received by Agilent or Actually Realized by the Verigy Tax Group.

 

(ii)           Verigy
shall be entitled to retain, and to receive within ten (10) calendar days
after Actually Realized by the Agilent Tax Group, the portion of all refunds or
credits of Taxes for which the Verigy Tax Group is liable pursuant to Section 2.2 or Section 3.1(b), excluding any refund
or credit for Taxes for which the Verigy Tax Group is liable pursuant to Section 2.2(d) but has not paid to
the Agilent Tax Group prior to the date that such refund or credit for Taxes is
received by Verigy or Actually Realized by the Agilent Tax Group.

 

(iii)          The
amount of any refund or credit of Taxes to which Agilent or Verigy is entitled
to retain and receive pursuant to this Section 2.3(a)
shall be reduced to take account of any Taxes incurred by the Verigy Tax Group,
in the case of a refund or credit to which Agilent is entitled, or the Agilent
Tax Group, in the case of a refund or credit to which Verigy is entitled, upon
the receipt of such refund or credit.

 

(b)           Refund
Claims.  Agilent shall be
permitted to file at Agilent’s sole expense, and Verigy shall reasonably
cooperate with Agilent in connection with, any claims for refund of Taxes to
which Agilent is entitled pursuant to this Section 2.3
or any other provision of this Agreement. Agilent shall reimburse Verigy for any
reasonable out-of-pocket costs and expenses incurred by any Verigy Tax Group
Member in connection with such cooperation. Verigy shall be permitted to file
at Verigy’s sole expense, and Agilent shall reasonably cooperate with Verigy in
connection with, any claims for refunds of Taxes to which Verigy is entitled
pursuant to this Section 2.3
or any other provision of this Agreement. Verigy shall reimburse Agilent for
any reasonable out-of-pocket costs and expenses incurred by any Agilent Tax
Group Member in connection with such cooperation.

 

8

 

2.4           Determination of Straddle Period Taxes.

 

(a)           Periodic
Taxes.

 

(i)            The
periodic Taxes of an Agilent Tax Group Member or Verigy Tax Group Member or its
business, assets or activities that are not based on income or receipts (e.g., property Taxes) for the portion of
any Straddle Period which ends on the Separation Date shall be computed based
on the ratio of the number of days in such portion of the Straddle Period and the
number of days in the entire Straddle Period.

 

(ii)           The
periodic Taxes of an Agilent Tax Group Member or Verigy Tax Group Member or its
business, assets or activities that are not based on income or receipts for the
portion of any Straddle Period beginning on the day after the Separation Date
shall be computed based on the ratio of the number of days in such portion of
the Straddle Period and the number of days in the entire Straddle Period.

 

(b)           Non-Periodic
Taxes.

 

(i)            The Taxes of an
Agilent Tax Group Member or Verigy Tax Group Member or its business, assets or
activities for that portion of any Straddle Period ending on the Separation
Date (other than Taxes described in Section 2.4(a)
above), shall be computed on a “closing-of-the-books” basis as if such Taxable
Period ended as of the close of business on the Separation Date, and, in the
case of any Taxes of an Agilent Tax Group Member or Verigy Tax Group Member or
its business, assets or activities with respect to any equity interest in any
partnership or other “flow-through” entity, as if the Taxable Period of such
partnership or other “flow-through” entity ended as of the close of business on
the Separation Date; and

 

(ii)           The Taxes of an
Agilent Tax Group Member or Verigy Tax Group Member or its business, assets or
activities for that portion of any Straddle Period beginning on the day after
the Separation Date (other than Taxes described in Section 2.4(a) above), shall be computed on a “closing-of-the-books”
basis as if such Taxable Period began as of the beginning of business on the
day after the Separation Date, and, in the case of any Taxes of an Agilent Tax
Group Member or Verigy Tax Group Member or its business, assets or activities
with respect to any equity interest in any partnership or other “flow-through”
entity, as if the Taxable Period of such partnership or other “flow-through”
entity began as of the beginning of business on the day after the Separation
Date.

 

ARTICLE III

 

TAX INDEMNIFICATION

 

3.1           Indemnification.

 

(a)           Agilent
Indemnification.  Subject to Section 3.1(b) and Section 3.2, Agilent shall be liable
for and shall indemnify, defend and hold harmless each Verigy Tax Group Member
and each of their respective Representatives and each of the heirs, executors,
successors and assigns of any of the foregoing from and against:

 

(i)            all
Taxes of the Agilent Tax Group other than any Distribution Taxes described in Section 2.2(c)(ii) of this Agreement;

 

(ii)           all
Taxes of the Verigy Tax Group for all Straddle Periods for which Agilent is
liable pursuant to Section 2.2
or Section 3.2;

 

(iii)          all
liability as a result of Treasury Regulation § 1.1502-6 or of any comparable
U.S. state or local provision for Income Taxes of any Person which is or has
ever been affiliated with any Agilent Tax Group Member or with which any
Agilent Tax Group Member joins or has ever joined

 

9

 

(or is or has ever been required to join) in filing any consolidated,
combined or unitary Income Tax Return for any Taxable Period ending on or
before or including the Separation Date except to the extent the Verigy Tax
Group is liable for such Taxes pursuant to Section 2.2
or Section 3.2;

 

(iv)          all
Taxes for any Tax period (whether beginning before, on or after the Separation
Date) attributable to the breach by any Agilent Tax Group Member of any
representation, warranty, covenant or obligation under this Agreement;

 

(v)           all
Losses arising from a breach by any Agilent Tax Group Member of any
representation, warranty, covenant or obligation under this Agreement;

 

(vi)          all
Taxes imposed with respect to the transactions contemplated by the Master
Separation Agreement that are undertaken to carry out the Separation;

 

(vii)         Distribution
Taxes and Shareholder Costs for which Agilent is responsible under Section 2.2(c)(i) and Section 2.2(c)(iii); and

 

(viii)        all
liability of the Verigy Tax Group Member for any reasonable legal, accounting,
appraisal, consulting or similar fees and expenses relating to the foregoing.

 

(b)           Verigy
Indemnification.  Subject to Section 3.1(a) and Section 3.2, Verigy shall be liable
for, and shall indemnify, defend and hold harmless each Agilent Tax Group
Member and each of their respective Representatives and each of the heirs,
executors, successors and assigns of any of the foregoing from and against:

 

(i)            except
as set forth in Section 2.2(b)(i)(A),
all Taxes of any Verigy Tax Group Member;

 

(ii)           all
Taxes for any Tax Period (whether beginning before, on or after the Separation
Date) attributable to the breach by any Verigy Tax Group Member of any
representation, warranty, covenant or obligation under this Agreement;

 

(iii)          all
Losses arising from a breach by any Verigy Tax Group Member of any
representation, warranty, covenant or obligation under this Agreement;

 

(iv)          Distribution
Taxes and Shareholder Costs for which Verigy is responsible under Section 2.2(c)(ii);

 

(v)           Transfer
Taxes; and

 

(vi)          all
liability of the Agilent Tax Group Member for any reasonable legal, accounting,
appraisal, consulting or similar fees and expenses relating to the foregoing.

 

3.2           Payments.

 

(a)           Time
for Payment.  Except as
otherwise provided in this Section 3.2(a),
any indemnity payment required to be made pursuant to this Agreement shall be
paid within thirty (30) calendar days after the Indemnified Party makes
written demand upon the Indemnifying Party, provided that in no event shall
such payment be required to be made earlier than five (5) business days
prior to the date on which the relevant Taxes (including estimated Taxes) are
required to be paid (or would be required to be paid if no such Taxes are due)
to the relevant Tax Authority. Unless otherwise specified by the Indemnified
Party for items exceeding $500,000, any such payment may be made on a net Tax
basis (i.e., reduced to take
account of any net Tax Benefit to be realized by the Indemnified Party
(computed at the effective Tax rate set forth in Section 3.2(b)) to the extent such Indemnified Party is
entitled to a corresponding deduction.

 

(b)           Payments
Net of Taxes and Tax Benefits. 
The amount of any payment under this Agreement shall be (i) reduced
to take into account any net Tax Benefit realized by the Indemnified Party’s
Tax Group arising from the incurrence or payment by such Party’s Tax Group of
any amount in respect of

 

10

 

which such payment is made and
(ii) increased to take into account any net Tax Detriment incurred by the
Indemnified Party’s Tax Group as a result of the receipt or accrual of payments
hereunder (grossed-up for such increase). The amount of any payment under
clause (i) or (ii) of the preceding sentence shall be determined by
treating the Indemnified Party as recognizing all other items of income, gain,
loss, deduction or credit before recognizing any item arising from the
incurrence, payment, receipt or accrual of any payment hereunder. In
determining the amount of any such Tax Benefit or Tax Detriment, the
Indemnified Party’s Tax Group shall be deemed to be subject to Tax as follows:
(A) U.S. federal Income Taxes and foreign Income Taxes at the maximum
statutory rate then in effect and (B) U.S. state and local Income Taxes at
an assumed rate of 5.75 percent net of U.S. federal Income Tax benefits.
Except as otherwise provided in this Agreement or unless the Parties otherwise
agree to an alternative method for determining the present value of any such
anticipated Tax Benefit or Tax Detriment, any payment hereunder shall initially
be made without regard to this section and shall be increased or reduced to reflect
any such net Tax Detriment (including gross-up) or net Tax Benefit only after
the recipient’s Tax Group has Actually Realized such Tax Detriment or Tax
Benefit; provided, however, that a Tax Detriment resulting
from the use of net operating loss carryovers (or similar Tax Assets) shall be
deemed Actually Realized if an indemnity payment under this Article III results in the absorption
of such loss carryovers (or similar Tax Assets) during any taxable year of the
Agilent Tax Group or the Verigy Tax Group.

 

(c)           Example.  To illustrate the application of Section 3.2(b), assume that
(i) Agilent is subject to a 35 percent Tax rate, (ii) Agilent
has a $100 million consolidated net operating loss carryover,
(iii) Verigy is required to indemnify Agilent for Distribution Taxes in
the amount of $10,000,000 pursuant to Section 2.2(c)(ii)
and Section 3.1(b)(iv), and
(iv) the indemnity payment is includible in Agilent’s income during the
year paid. On those assumptions, the indemnity payment from Verigy to Agilent would
reduce Agilent’s $100 million consolidated net operating loss carryover by
$10,000,000, resulting in a net Tax Detriment of $3,500,000 (before gross-up).
Under Section 3.2(b), Verigy
would be required to pay Agilent $5,384,615 (after gross-up) to compensate
Agilent for the net Tax Detriment ($3,500,000 divided
by (1.0 minus .35)).

 

(d)           Characterization
of Payments.  It is the
intention of the Parties to this Agreement that payments made pursuant to this
Agreement are to be treated as relating back to the Separation or the
Distribution as an adjustment to capital (i.e.,
capital contribution or distribution), and the Parties shall not take any
position inconsistent with such intention before any Tax Authority, except to
the extent that a “determination” (as defined in Section 1313 of the Code)
with respect to the Indemnified Party causes any such payment not to be so
treated.

 

ARTICLE IV

 

TAX CONTESTS

 

4.1           Notice.  Agilent and Verigy shall each provide prompt
notice to the other Party of any pending or threatened Tax audit, assessment or
proceeding or other Tax Contest of which it becomes aware that could affect any
Tax liability for which the other Party may be responsible under this
Agreement; provided, however, that failure to give prompt
notice shall not affect the indemnification obligations hereunder except to the
extent the Indemnifying Party is actually prejudiced thereby. Such notice shall
contain factual information (to the extent known) describing such matters in
reasonable detail and shall be accompanied by copies of any notice and other
documents received from any Tax Authority in respect of any such matters.

 

4.2           Control
of Tax Contests.

 

(a)           Tax
Contests Relating to Tax Returns. 
Except as otherwise provided in this Agreement, the Party responsible
for preparing and filing a Tax Return pursuant to Section 2.1 of this Agreement (the “Controlling Company”) shall have the
exclusive right, in its sole discretion, to control, contest and

 

11

 

represent the interests of its
respective Tax Group (and in the case of Straddle Period Taxes, the other Tax
Group) in any Tax Contest relating to such Tax Return and to resolve, settle or
agree to any deficiency, claim or adjustment proposed, asserted or assessed in
connection with or as a result of any such Tax Contest. The Controlling Company’s
rights shall extend to any matter pertaining to the management and control of
the Tax Contest, including execution of waivers, choice of forum, scheduling of
conferences and the resolution of any Tax item.

 

(b)           Distribution
Taxes.  Notwithstanding any
other provision of this Agreement to the contrary, Agilent shall have the
exclusive right, in its sole discretion, to control, contest and represent the
interests of each Tax Group in any Tax Contest relating, in whole or in part,
to Distribution Taxes and to resolve, settle or agree to any deficiency, claim
or adjustment proposed, asserted or assessed in connection with or as a result
of any such Tax Contest. Agilent’s rights shall extend to any matter pertaining
to the management and control of the Tax Contest, including execution of
waivers, choice of forum, scheduling of conferences and the resolution of any
Tax item.

 

(c)           Participation
Rights.  Verigy shall be
entitled to participate at its expense in any Tax audit or administrative or
court proceeding relating (in whole or in part) to Taxes described in Section 2.2(b)(ii), Section 2.2(c)(ii), Section 3.1(b) or Section 4.2(b). Verigy shall, with
respect to any such proceeding that is reasonably likely to result in Verigy
being liable for an indemnity obligation under Section 3.1(b)(iv), have
the right to consent (such consent not to be unreasonably withheld) to any
settlement of such proceeding.

 

4.3           Reimbursement
of Expenses.  If the
Indemnifying Party is not the Controlling Company, the Indemnifying Party shall
reimburse the Controlling Company for its costs (including accountant’s fees,
investigatory fees and fees and disbursements of tax counsel) (“Indemnification Expenses”) incurred in any
Tax Contest that are reasonably allocable to the portion of the contested Taxes
that would be the responsibility of the Indemnifying Party hereunder upon a
final determination that such contested Taxes are due. The Controlling Company
shall provide the Indemnifying Party with a written statement (a “Reimbursement Statement”) periodically
(but not more often than monthly) that sets forth the amount of the Controlling
Company’s Indemnification Expenses since the most recent Reimbursement Statement
and due hereunder. Within fifteen (15) calendar days of the Indemnifying
Party’s receipt of each Reimbursement Statement, the Indemnifying Party shall
pay to the Controlling Company the total amount of the Indemnification Expenses
shown on such Reimbursement Statement.

 

12

 

ARTICLE V

 

POST DISTRIBUTION COVENANTS

 

5.1           Consistent
Actions.  Each Party to this
Agreement agrees, in the absence of a change in controlling law, (i) to
report the Distribution, and to cause each of the relevant members of its Tax
Group to report the Distribution, as a transaction described in
Section 355 of the Code on all Tax Returns and other filings, (ii) to
use its best efforts to ensure that the Distribution receives such treatment
for U.S. federal Income Tax purposes and (iii) that, unless it has
obtained the prior written consent from the other Party, neither such Party nor
any member of its Tax Group shall take any action inconsistent with, or fail to
take any action required by, the Master Separation Agreement.

 

5.2           Covenants
Regarding Tax Representation Letters.

 

(a)           Each Party hereto represents that
neither such Party nor any member of its Tax Group will take any action, or
fail or omit to take any action, which would cause any of the information or
representations made in the Agilent Tax Representation Letter or the Verigy Tax
Representation Letter to be untrue.

 

(b)           Verigy further covenants as follows:

 

(i)            Verigy
will be a corporation within the meaning of section 7701(a)(3) of the Code
at all times immediately after the Distribution.

 

(ii)           Verigy
will only have one class of equity outstanding immediately after the
Distribution.

 

(iii)          Verigy
will pay its own expenses, if any, incurred in connection with the Distribution.

 

(iv)          Following
the Distribution, Verigy will continue the active conduct of the Business
independently and with its separate employees.

 

(v)           Verigy
will comply with all reporting and record-keeping obligations with
respect to the Distribution as set forth in the Code and the Treasury
regulations.

 

5.3           Certain
Agilent Actions Following the Distribution.  Agilent agrees that during the two
(2) year period following the Distribution, without first obtaining a tax
opinion from an Independent Firm that the following actions or combination of
such actions will not result in Distribution Taxes:

 

(a)           Agilent shall not merge with,
transfer substantially all its assets to, or acquire substantially all the
assets of another Entity, without regard to which Entity survives or acquires
such assets, except in a reorganization within the meaning of
Section 368(a)(1)(A), (C) or (D), or an exchange under
Section 351 of the Code, in each case, where the stockholders of Agilent
own more than 50 percent of the stock of Agilent or the other Entity (for
this purpose any shares of Agilent acquired by any Person after the
Distribution shall not be considered to be owned by a stockholder of Agilent);
and

 

(b)           Agilent shall not issue stock of
Agilent (or any instrument that is convertible or exchangeable into any such
stock) in an acquisition or public or private offering (excluding any issuance
pursuant to the exercise of employee stock options or other employment related
arrangements having customary terms and conditions and that satisfy the
requirements of Treasury Regulation § 1.355-7(e)(4)(ii)), unless following such
issuance of stock, the stockholders of Agilent continue to own more than
50 percent of the stock of Agilent (excluding, for purposes of such
determination, any shares of Agilent acquired by any Person after the
Distribution).

 

13

 

5.4           Certain
Verigy Actions Following the Distribution.  During the two (2) year period following
the Distribution (the “Restriction Period”), without first obtaining the prior
written consent of Agilent, which consent shall not be unreasonably withheld:

 

(a)           Verigy shall not, and shall not
permit any Verigy Tax Group Member, to sell or transfer any asset (excluding
sales or transfers in the ordinary course of business) for consideration in
excess of $50 million (including assumption of liabilities related to such
asset);

 

(b)           Verigy shall not undertake any
transaction that is treated as a liquidation or merger under the Code;

 

(c)           Verigy shall not permit any Verigy
Tax Group Member which conducts the Business to liquidate or merge with or into
any other Entity (other than in a liquidation or merger with or into another
Verigy Tax Group Member that would not cause the Distribution to fail to qualify
as a tax-free distribution to the Agilent Tax Group under Section 355 of
the Code). For purposes of this Section 5.4(c), the phrase “Verigy Tax
Group Member which conducts the Business” shall not include an Entity which is
formed by Verigy solely for the purpose of completing an acquisition; and

 

(d)           Neither Verigy nor any Verigy Tax
Group Member will, directly or indirectly, in a single transaction or in a
series of transactions: (1) issue stock of Verigy (or any instrument that
is convertible or exchangeable into any such stock) in a merger, acquisition or
public or private offering (excluding any issuance pursuant to the exercise of
employee stock options or other employment related arrangements having
customary terms and conditions and that satisfy the requirements of Treasury
Regulation § 1.355-7(e)(4)(ii)); or (2) redeem, purchase or otherwise
reacquire any of its capital stock (other than through stock purchases meeting
the requirements of section 4.05(1)(b) of Rev. Proc. 96-30, 1996-1 C.B.
696); which, when aggregated with all other such transactions undertaken during
the Restriction Period, would involve the acquisition (determined under the
principles of Section 355 of the Code) by one or more Persons of more than
thirty-five (35%) of the stock of Verigy (including stock issued by Verigy in
the IPO).

 

(e)           Nothing in this Section 5.4
shall limit the liability of either Party to this Agreement for any
Distribution Taxes and Shareholder Costs that are the responsibility of such
party under this Agreement.

 

5.5           Notice
of Specified Transactions. 
Not later than twenty (20) calendar days prior to entering into any
oral or written contract or agreement, and not later than five
(5) calendar days after it first becomes aware of any negotiations, plan
or intention (regardless of whether it is a Party to such negotiations, plan or
intention), regarding any of the transactions described in Section 5.3 or Section 5.4, Agilent or Verigy, as
the case may be, shall provide written notice of its intent to consummate such
transaction or the negotiations, plan or intention of which it becomes aware,
to the other Party; provided, however, that Agilent shall not be
required to provide written notice to Verigy of any such contract or agreement
if the fair market value of the consideration to be issued by Agilent pursuant
to such agreement does not exceed $500,000,000. Each Party will, and each Party
will cause its Representatives to, hold in strict confidence all confidential
information concerning the other Party that is furnished by the other Party
pursuant to this Section 5.5.

 

14

 

ARTICLE VI

 

TAX ATTRIBUTES; INTEREST CHARGE FOR LATE
PAYMENTS; CURRENCY CALCULATIONS; EFFECTIVE TIMES; REPRESENTATION LETTERS

 

6.1           Allocation
of Tax Assets and Earnings and Profits.

 

(a)           Allocation
of Tax Assets. In connection with the Distribution, Agilent shall
determine in accordance with applicable Tax Laws the allocation of any
applicable Tax Assets among Agilent, each other Agilent Tax Group Member,
Verigy and each other Verigy Tax Group Member.

 

(b)           Earnings
and Profits. Agilent shall advise Verigy in writing of the decrease
in Agilent’s earnings and profits attributable to the Distribution under
Section 312(h) of the Code on or before the first anniversary of the
Distribution; provided, however, that Agilent shall provide Verigy
with estimates of such amounts (determined in accordance with past practice)
prior to such date as reasonably requested by Verigy.

 

6.2           Interest
Charge for Late Payments.  Any
amount due and owing by one party to the other Party pursuant to this Agreement
that is not paid when due shall bear interest from the due date thereof until
paid at a rate equal to the prime rate of Citibank, N.A. in effect on the date
such payment was required to be made.

 

6.3           Currency
Calculations.  All currency
calculations shall be made in accordance with the exchange rate in effect on
the date of payment.

 

6.4           Effective
Time of Transaction.  Agilent
and Verigy agree that any transaction that, pursuant to the Master Separation
Agreement, is effective immediately after the Separation or the Distribution,
as the case may be, shall be treated for federal Income Tax purposes as
occurring at the beginning of the day following the Separation Date or the
Distribution Date, as the case may be.

 

6.5           No
Double Recovery.  No provision
of this Agreement shall be construed to provide an indemnity or other recovery
for any costs, damages or other amounts for which the damaged Party or other
Party has been fully compensated under any other provision of this Agreement or
under any other agreement or action at law or equity, or to provide an
indemnity or other recovery with respect to any breach of representation or
covenant as to which any costs, damages or other amounts have otherwise been
fully compensated. Unless expressly required in this Agreement, a Party shall
not be required to exhaust all remedies available under other agreements or at
law or equity before recovering under the remedies provided in this Agreement.

 

6.6           Effectiveness.  This Agreement shall be effective as of the
Separation Date. Except as otherwise contemplated by this Agreement, all
covenants and agreements of the Parties contained in this Agreement will remain
in full force and effect and survive the Separation Date and shall remain in
effect without limitation as to time.

 

6.7           Tax
Representation Letters.  On or
prior to the Distribution Date, Agilent shall execute and deliver to the Tax
Advisor the Agilent Tax Representation Letter and Verigy shall execute and
deliver to the Tax Advisor the Verigy Tax Representation Letter, in both cases
as reasonably requested by the Tax Advisor.

 

ARTICLE VII

 

COOPERATION AND EXCHANGE OF INFORMATION

 

7.1           Cooperation
and Exchange of Information.

 

(a)           Each Party hereto agrees to provide,
and to cause each member of its Tax Group to provide, such cooperation and
information as such other Party shall request, on a timely basis, in connection

 

15

 

with the preparation or filing
of any Tax Return or claim for Tax refund not inconsistent with this Agreement
or in conducting any Tax audit, Tax dispute, or otherwise in respect of Taxes
or to carry out the provisions of this Agreement (including any cooperation
required to carry out the intentions of the Parties as set forth in the
preamble), which cooperation and information shall include in particular,
making its employees involved in the research and development process available
to the other Party and having such employees provide such assistance as the
other Party may require for such purposes; provided,
however, that neither Party shall
be obligated to provide the other Party with Tax Returns, documentation or
other information of a proprietary or confidential nature for purposes of
verifying any calculation; provided,
further, that in any such case
where one Party does not provide the other Party with Tax Returns,
documentation or information because it is proprietary or confidential, both
parties shall cooperate in developing mutually acceptable procedures including
retaining a mutually agreeable accounting firm to review such Tax Returns,
documentation or information for purposes of verifying such calculation.

 

(b)           To the extent necessary to carry out
the purposes of this Agreement and subject to the other provisions of this
Agreement, the cooperation and information required pursuant to Section 7.1(a) shall include, without
limitation, the non-exclusive designation of an officer of Agilent as an
officer of Verigy and each Verigy Tax Group Member for the purpose of signing
Tax Returns, cashing refund checks, pursuing refund claims, corresponding with
Tax Authorities and defending audits as well as promptly forwarding copies of
appropriate notices and forms or other communications received from or sent to
any Tax Authority which relate to the Verigy Tax Group for the Tax
Indemnification Period and providing copies of all relevant Tax Returns for the
Tax Indemnification Period, together with accompanying schedules and related
workpapers, documents relating to rulings or other determinations by Tax
Authorities, including without limitation, foreign Tax Authorities, and records
concerning the ownership and Tax basis of property, which either Party may
possess. Subject to the rights of the Verigy Tax Group under the other
provisions of this Agreement, such officer shall have the authority to execute
powers of attorney (including IRS Form 2848) on behalf of each Verigy Tax
Group Member with respect to Tax Returns for the Tax Indemnification Period.

 

(c)           Each Party to this Agreement shall
make, or shall cause its affiliates to make, its employees and facilities
available on a mutually convenient basis to provide an explanation of any
documents or information provided under this Section 7.1.

 

7.2           Tax
Records.

 

(a)           Agilent and Verigy agree to (and to
cause each member of their respective Tax Group to) (i) retain all Tax
Returns, related schedules and workpapers, and all material records and other
documents as required under Section 6001 of the Code and the regulations
promulgated thereunder relating thereto existing on the date hereof or created
through the Separation Date, for a period of at least ten (10) years
following the Separation Date and (ii) allow the other Party to this Agreement,
at times and dates reasonably acceptable to the retaining party, to inspect,
review and make copies of such records, as Agilent and Verigy may reasonably
deem necessary or appropriate from time to time. In addition, after the
expiration of such ten-year period, such Tax Returns, related schedules and
workpapers, and material records shall not be destroyed or otherwise disposed
of at any time, unless, prior to such destruction or disposal, (A) the
Party proposing to destroy or otherwise dispose of such records shall provide
no less than thirty (30) calendar days prior written notice to the other
Party, specifying in reasonable detail the records proposed to be destroyed or
disposed of and (B) if a recipient of such notice shall request in writing
prior to the scheduled date for such destruction or disposal that any of the
records proposed to be destroyed or disposed of be delivered to such requesting
party, the Party proposing the destruction or disposal shall promptly arrange
for the delivery of such requested records at the expense of the Party
requesting such records.

 

16

 

(b)           Notwithstanding anything in this
Agreement to the contrary, if any Party fails to comply with the requirements
of Section 7.2(a) hereof,
the Party failing so to comply shall be liable for, and shall hold the other
Party, harmless from, any Taxes (including without limitation, penalties for
failure to comply with the record retention requirements of the Code) and other
costs resulting from such Party’s failure to comply.

 

ARTICLE VIII

 

MISCELLANEOUS

 

8.1           Miscellaneous.
The provisions of Article X
of the Master Separation Agreement are hereby incorporated into this Agreement.

 

8.2           Conflicting
Agreements.  In the event of a
conflict between this Agreement and any other agreement executed in connection
with the Separation or Distribution, the provisions of this Agreement shall
control.

 

8.3           Further
Action.  Each Party shall
execute and deliver all documents, provide all information and take or refrain
from taking action as may be necessary or appropriate to achieve the purposes
of this Agreement, including the execution and delivery to the other Companies
and their Affiliates and representatives of such powers of attorney or other authorizing
documentation as is reasonably necessary or appropriate in connection with Tax
Contests under the control of any such other Party in accordance with Article IV.

 

8.4           Performance.  Each Party hereto will cause to be performed,
and hereby guarantees the performance of all actions, agreements and
obligations set forth herein to be performed by any member of such Party’s Tax
Group. If a corporation or other Entity ceases to be an Agilent Tax Group
Member or Verigy Tax Group Member as a result of a disposition of equity
interests in such entity, such entity shall be released from its obligation
under this Agreement upon such disposition, and Agilent or Verigy, as the case
may be, shall have no obligation to indemnify the other under Section 3.1 for any liability or
damage attributable to actions taken by such entity after such disposition.

 

[Signature
Pages Follow]

 

17

 

IN WITNESS WHEREOF, the Parties have caused this Tax Sharing Agreement to be duly executed
as of the date first above written.

 

	
   

  	
  AGILENT
  TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Eaton 

  
	
   

  	
   

  	
  Name: John Eaton

  Title: Vice President, Corporate
  Development

  

 

 

[AGILENT’S
SIGNATURE PAGE TO THE TAX SHARING AGREEMENT—

VERIGY’S
SIGNATURE PAGE FOLLOWS]

 

 

	
   

  	
  VERIGY PTE. LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Keith L. Barnes

  
	
   

  	
   

  	
  Name: Keith L. Barnes

  Title: President and Chief Executive
  Officer

  

 

 

[VERIGY’S
SIGNATURE PAGE TO THE TAX SHARING AGREEMENT]

 

 

Schedule 2.1(d)

 

Preparation and Filing of Tax Returns

 

•                  Verigy shall
prepare all IRS Forms 5471 (and any similar state and local forms) for the
Verigy Tax Group that are required to be filed with the Income Tax Returns of
the Agilent Tax Group. Verigy shall provide Agilent with a true, correct and
complete IRS Form 5471 with respect to each Verigy Tax Group Member (and
such additional information regarding such form as may reasonably be requested
by Agilent) at least sixty (60) calendar days prior to the due date for
the Income Tax Returns of the Agilent Tax Group (including extensions).Exhibit 10.71

 

TRANSITION
SERVICES AGREEMENT

 

This Transition Services
Agreement (together with Annex A
hereto) and the Transition Agreements (as defined herein), collectively, this “Agreement”) is entered into as of the 1st
day of June, 2006 (the “Separation Date”),
by and between Agilent Technologies, Inc., a Delaware corporation (“Agilent”), and Verigy Ltd., a company
organized under the laws of Singapore (“Verigy”).

 

W
I T N E S S E T H:

 

WHEREAS, Agilent and Verigy
have entered into a Master Separation and Distribution Agreement (the “MSA”) dated as of May 31, 2006,
pursuant to which, among other things, Verigy will acquire substantially all of
the assets and liabilities of the Business (as defined in the MSA), all on the
terms and conditions set forth in the MSA and the certain other agreements
between Agilent and Verigy (such other agreements, together with the MSA, the “Transaction Documents”), which are
exhibits to the MSA;

 

WHEREAS, capitalized terms used
in this Agreement but not defined herein shall have the meanings given to them
in the Transaction Documents;

 

WHEREAS, Agilent has agreed to
provide to Verigy and its Subsidiaries certain services as described herein;
and

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements of the parties contained
herein, the parties agree as follows:

 

 

1.             Services Provided.

 

1.1           During the period commencing on the Separation Date and
ending on the Termination Date (as defined below), subject to the terms hereof,
Agilent shall provide to Verigy, or at Agilent’s option shall cause one or more
of its Subsidiaries or one or more third parties to provide to Verigy and/or
Verigy’s Subsidiaries, the services and functions described in Annex A to this Agreement (each a Service
and collectively, the “Services”),
until such Services are terminated in accordance with the terms hereof.

 

1.2           Agilent and Verigy shall negotiate in good faith more
detailed descriptions of the Services, including those activities necessary to
transition the Services to Verigy and any additional Services agreed upon by
the parties, in various sub-transition agreements (“Transition Agreements” or “TAs”),
and any services jointly agreed to by Agilent and Verigy in such TAs will be
deemed part of the Services. The Services shall be no more extensive in scope
and content than the services and functions provided by Agilent to the Business
immediately preceding the Separation Date, and shall not include the exercise
of business judgment or general management for Verigy. The Services provided by
Agilent shall be delivered at a level and delivered with the same degree of
skill and care as Agilent exercises in providing similar services to itself.

 

1.3           Subject to Section 1.4.2, Agilent and Verigy may also
mutually agree on consulting or similar services to be provided by Agilent as
Services hereunder (“Additional Services”),
which are not included in Annex A.
Such Additional Services, if any, will be of such scope and content as mutually
agreed upon by the Parties in an applicable TA.

 

1.4           TAs.

 

1.4.1         
Verigy shall receive the Services under this Agreement and the TAs.
Agilent shall perform or shall cause its Subsidiaries to perform the Services
for the Verigy or its Subsidiaries in accordance with the terms of this
Agreement and the applicable TA. Each such TA will incorporate the terms and
conditions of this Agreement by reference, will not deviate from such terms,
except as may be expressly set forth in each such TA. Each TA shall be
considered an exhibit to this Agreement and not a standalone agreement. Unless
otherwise expressly agreed in

 

 

writing by the
parties, all invoices for such Services will be paid by Verigy in accordance
with Section 3 below.

 

1.4.2        Any request by Verigy for additional TAs
not specified on Annex A shall be made by Verigy within thirty (30) days
after the Separation Date, unless such deadline is otherwise extended by
Agilent.

 

1.4.3        TAs may need to be executed at a local
level between Agilent’s Subsidiaries and Verigy’s Subsidiaries in order to
provide Services under this Agreement. Each such TA will incorporate the terms
and conditions of this Agreement by reference, and may not deviate from such
terms and conditions except as required by local laws or except as may be set
forth therein, and only as documented in the applicable TA. However, no such
local TAs will be binding and enforceable against Agilent or Verigy or their
respective Subsidiaries unless and until they are approved in writing by the
Transition Managers (defined below). In connection with such local TAs, Agilent
shall issue or cause its Subsidiaries to issue invoices to the Verigy’s
ordering Subsidiaries, and Verigy shall pay or shall cause its Subsidiary to
pay such invoices, subject to the terms and conditions of this Agreement or the
applicable TA.

 

1.5           Transition Management.

 

1.5.1        Agilent and Verigy each agree to
(i) designate an appropriate point of contact for all questions and issues
relating to the Services for each of the related Transition Agreements during
the term of this Agreement (“Transition
Managers”) and (ii) make available the services of appropriate
qualified employees and resources to allow for the provision of the Services
and to allow each party to perform its duties, responsibilities and obligations
related to the Services.

 

1.5.2        Agilent’s and Verigy’s designated
transition team leads for each of the TAs will be included in such TAs.

 

1.6           Verigy shall make a commercially reasonable and good faith
effort to assume performance of all of the Services and functions as soon as
practicable and for each service included in the Services on or prior to the
date specified for such service in any related TA. In furtherance of the
foregoing, Verigy shall use commercially reasonable efforts to make or obtain
any approvals, permits and licenses and implement any systems as may be
necessary for it to provide the Services and functions independently in each
pertinent country as soon as practicable following the Separation Date.

 

1.7           Verigy shall provide Agilent with such information and
documentation as is reasonably necessary for Agilent to perform the Services
and perform such other duties and tasks as may be reasonably required to permit
Agilent to perform the Services.

 

1.8           Verigy acknowledges and agrees that during the term of
this Agreement, Agilent may engage in upgrades, testing and related activities
with respect to Agilent’s systems and IT infrastructure. To the extent the
Services received by Verigy during any Extension Periods continue to rely on
Agilent’s systems and IT infrastructure, Verigy will reasonably cooperate with
Agilent with respect to such upgrades, testing and activities.

 

2.             No Warranty and
Limitations.

 

2.1           NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, AGILENT MAKES NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
WITH RESPECT TO ANY SERVICES PROVIDED HEREUNDER.

 

2.2           Limitations.

 

2.2.1        Verigy hereby acknowledges that Agilent
utilizes outsourcing relationships with, and uses software of, third parties (“Service Providers”) who may, through
Agilent’s obligations under

 

2

 

this
Agreement, be delivering Services to Verigy or whose software may be used by
Agilent to provide Services to Verigy. Verigy further acknowledges that Agilent’s
provision of such Services or use of such software may be subject to the terms
and conditions of agreements between Agilent and such Service Providers. To the
extent required under any such Service Provider agreements governing such
Services or software, Verigy agrees to cooperate with Agilent and will assist
Agilent in obtaining third party consents, licenses, sublicenses, or approvals
necessary to permit Agilent or the applicable Service Provider to perform, or
otherwise make available to Verigy, the Services set forth in this Agreement
(including any TA) or to permit Agilent to use the applicable software to
provide the Services set forth in this Agreement (including any TA). Neither
Verigy nor Agilent shall have any obligation to expend funds or incur
obligations in order to obtain any such third party consents, licenses,
sublicenses, or approvals.

 

2.2.2        Except as may be set forth in an TA or
elsewhere in this Agreement, Agilent shall not be required to provide Verigy
with extraordinary levels of Services, special studies, training, or the like
or the benefit of systems, equipment, facilities, training, or improvements
procured, obtained or made after the Separation Date by Agilent. Nothing in
this Agreement will require Agilent to favor the businesses of Verigy over its
own businesses or those of any of its Subsidiaries or divisions.

 

3.             Fees.

 

3.1           The amount to be charged on a monthly basis for the
Services will be set forth in Annex A or each individual TA (for any Service,
the “Monthly Charge”). The
Monthly Charge will begin to be payable starting on the Separation Date,
provided that if for any reason the Separation Date does not occur at the
beginning of a calendar month, the initial Monthly Charge will be pro-rated.
The fees payable with respect to the month in which services are concluded may
be pro-rated to the extent provided for in the applicable TA.

 

3.2           Any Additional Services shall be billed by Agilent on a
time and materials basis (provided that the labor rates will be the rate paid
by Agilent to third party contractors where the Additional Services are
provided by third party contractors, and, for Additional Services provided by
Agilent employees, the hourly rate derived from the fully burdened cost of such
employee), and shall include reimbursement of any pre-approved out-of-pocket
expenses incurred in connection with providing such Additional Services.

 

3.3           Agilent shall invoice Verigy for the Services (including
any Additional Services) provided hereunder in arrears on a monthly basis
within twenty (20) days after the end of the month in which the charges
accrued. Verigy shall pay any invoice for Services promptly but in no event
later than fifteen (15) days after the date of invoice. Late payments
shall bear interest at the prime rate then in effect, plus 5% per annum or the
maximum amount allowed by law, whichever is less. Verigy shall notify Agilent
immediately, and in no event later than thirty (30) days following receipt
of Agilent’s invoice, of any disputed charges. After such thirty (30) day
time period, Verigy will be deemed to have accepted Agilent’s invoice. Agilent
shall provide supporting information and documentation as reasonably requested
by Verigy to validate any amounts payable by Verigy pursuant to this
Section 3.

 

4.             Security

 

4.1           Each Party will and shall cause its Subsidiaries to, and
Agilent will use commercially reasonable efforts to cause the Service Providers
to, handle and protect from disclosure all proprietary and confidential
information and systems (including Verigy Data, as defined below, in the case
of Verigy proprietary and confidential information) disclosed to it by the
other party, or accessible within Agilent’s information technology
infrastructure, consistent with each party’s respective obligations under the
MSA with respect to confidentiality, and Article VII (Access to
Information) of the MSA is incorporated herein by reference.

 

3

 

4.2           During the term of this Agreement (and including any TAs),
Verigy’s access to Agilent’s information technology infrastructure for
applications and other data processing activities shall be through secured
controlled processes determined by Agilent in its sole discretion, and shall be
in accordance with Agilent’s (including its Subsidiaries) business control and
information protection policies, standards and guidelines as may be modified
from time to time. Except as set forth above and except to the extent otherwise
provided for in the MSA or the Intellectual Property Matters Agreement between
Agilent and Verigy dated as of the date of this Agreement (“IPMA”), or in connection with third party
agreements assigned or novated to Verigy pursuant to the MSA: (i) Agilent
shall not transfer to Verigy, and Verigy shall have no rights in or access to,
application software/systems source code associated with shared systems through
which Agilent is providing Services to Verigy hereunder; (ii) Verigy shall
not, through reverse engineering or any other technique or means, attempt to
access source code for any application software/systems that it is allowed to
access and shall use such application software/systems only for their intended
use; and (iii) any use of software applications as set forth herein will
be subject to Agilent’s standard software license terms or any additional terms
that may be referenced in a TA (which may in some cases, if so referenced,
include third party license terms if software is involved).

 

5.             Ownership.

 

5.1           This Agreement and the performance of the Services
hereunder will not affect the ownership of any assets or responsibility for any
liabilities allocated in the MSA or any of the Transaction Agreements,
including, without limitation the IPMA. Neither Party will gain, by virtue of
this Agreement or the Services hereunder, by implication or otherwise, any
rights of ownership of any property or Intellectual Property Rights owned by
the other. Unless otherwise expressly specified in Annex A or a TA, as between
the parties Agilent will own all copyrights, patents, trade secrets, trademarks
and other intellectual property rights, title and interest in or pertaining to
all work developed by Agilent, its Subsidiaries or Service Providers to perform
the Services (including computer programs, deliverables and software
deliverables) under this Agreement.

 

5.2           Verigy shall own all data assigned to Verigy pursuant to
the Transaction Documents as well as any changes or additions thereto made on
behalf of Verigy in the performance of the Services. In addition, Verigy will
own any other data with respect to Verigy, Verigy’s Subsidiaries or the
Business to the extent (and only to the extent) such data is developed,
processed, stored, used or generated by Agilent on behalf of Verigy, Verigy’s
Subsidiaries or the Business, in the performance of the Services. All such data
will collectively be referred to herein as “Verigy
Data.” The provisions of this Section 5.2 do not grant Verigy
any rights to any data concerning Agilent, Agilent’s Subsidiaries or the
Retained Business.

 

6.             Limitation of
Liabilities.  AGILENT, ITS
SUBSIDIARIES AND SERVICE PROVIDERS SHALL NOT BE LIABLE, WHETHER IN TORT, BREACH
OF CONTRACT OR OTHERWISE, FOR ANY DAMAGES SUFFERED OR INCURRED BY VERIGY OR ANY
OF ITS SUBSIDIARIES ARISING OUT OF OR IN CONNECTION WITH THE RENDERING OF A
SERVICE OR ANY FAILURE TO PROVIDE A SERVICE, EXCEPT TO THE EXTENT THAT SUCH
DAMAGES ARE CAUSED BY THE MATERIAL BREACH, WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE OF AGILENT, ITS SUBSIDIARIES OR SERVICE PROVIDERS. IN NO EVENT SHALL
EITHER PARTY OR ITS RESPECTIVE SUBSIDIARIES BE LIABLE FOR ANY LOST PROFITS OR
CONSEQUENTIAL, PUNITIVE, SPECIAL OR INDIRECT DAMAGES, REGARDLESS IF SUCH PARTY
OR SUBSIDIARY WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

7.             Dispute Resolution.  In the event of any dispute between Agilent
and Verigy with respect to the provision of any Service pursuant to this
Agreement, such dispute shall be resolved in accordance with the provisions in
Section 9.3 of the MSA.

 

4

 

8.             Term, Extension and
Termination.

 

8.1           Term.  This Agreement shall become effective on the
Separation Date and, unless sooner terminated in accordance with the terms
hereof, shall continue in effect until the earlier of the last TA to expire, or
no later than twenty-four (24) months following the Separation Date (the “Final Termination Date”).

 

8.2           Extension of TAs and
the Agreement.

 

8.2.1        Each TA will specify a termination date
(the “Initial Termination Date”).
Verigy may request an extension of specific individual TA’s to continue past
the Initial Termination Date, up to two (2) times. Vergiy shall, to the
extent possible, make such request in writing at least thirty (30) days
prior to the expiration of the applicable term for such Service (as set forth
in the applicable TA) or expiration of the first Extension Period (as defined
below), as applicable. Each such extension must be mutually agreed to by both
Agilent and Verigy. Each extension will be in a three (3) month increment
(an “Extension Period” or the “Extension Periods”) period unless a
shorter time is set forth in the applicable Extension Period request. This
Agreement shall not terminate as long as an Extension Period is effective;
provided however that in no case will this Agreement continue beyond the Final
Termination Date. For purposes hereof, each of the Termination Dates noted
herein shall be referred to as a “Termination
Date” in connection with the Transition Services being rendered
hereunder.

 

8.2.2        For the avoidance of doubt, (i) if
an Extension Period is not agreed to by both Parties with respect to a
particular TA or Service, then that TA or Service shall terminate on the
Initial Termination Date, and (ii) if one or more Extension Periods become
effective with respect to a particular TA or Service, then that TA or Service
shall terminate upon the end of the final Extension Period; provided that in no
case will any TA or Service continue beyond the Final Termination Date.

 

8.2.3         
Unless otherwise provided in the applicable TA, all the Monthly Charges
for the second Extension Period will increase 10% from the original fees. For
the avoidance of doubt, there will be no increase in fees for the first
Extension Period.

 

8.2.4         
In no event will Agilent provide Services beyond the Final Termination
Date.

 

8.3           Termination.    This Agreement, any individual TA or any
individual Service under any TA may be terminated earlier in accordance with
any of the following provisions:

 

8.3.1        By mutual written consent of both
Agilent and Verigy;

 

8.3.2        By Verigy effective as of the last day
of the month immediately following the month in which written notice is given;

 

8.3.3        By either party entitled to the benefit
of the performance of any of the obligations under this Agreement (the “Non Defaulting Party”), if the other party
(the “Defaulting Party”) shall
fail to perform or default in such performance in any material respect, subject
to compliance with the remainder of this paragraph. The Non Defaulting Party
shall give written notice to the Defaulting Party specifying the nature of such
failure or default and stating that the Non Defaulting Party intends to
terminate this Agreement with respect to the Defaulting Party if such failure
or default is not cured within thirty (30) days after receipt of such
written notice. If any failure or default so specified is not cured within such
period, the Non Defaulting Party may elect to immediately terminate the
applicable TA with respect to the Defaulting Party; provided, however, that if
the failure or default relates to a dispute contested in good faith by the
Defaulting Party, the Non Defaulting Party may not terminate this Agreement
pending the resolution of such dispute in accordance with Section 7
hereof. Such termination shall be effective upon giving a written notice of
termination from the Non Defaulting Party to the Defaulting Party and shall be

 

5

 

without
prejudice to any other remedy which may be available to the Non Defaulting
Party against the Defaulting Party;

 

8.3.4        Automatically, without notice by or to
either party, if: (i) Verigy shall (1) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its properties,
(2) make a general assignment for the benefit of its creditors,
(3) commence a voluntary case under the United States Bankruptcy Code, as
now or hereafter in effect (the “Bankruptcy
Code”), (4) file a petition seeking to take advantage of
any law (the “Bankruptcy Laws”)
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or readjustment of debts, (5) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it
in any involuntary case under the Bankruptcy Code, or (6) take any
corporate action for the purpose of effecting any of the foregoing; or
(ii) a proceeding or case shall be commenced against Verigy in any court
of competent jurisdiction, seeking (1) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its debts,
(2) the appointment of a trustee, receiver, custodian, liquidator or the
like of Verigy or of all or any substantial part of its assets, or
(3) similar relief under any Bankruptcy Laws, or an order, judgment or
decree approving any of the foregoing shall be entered and continue unstayed
for a period of ninety (90) days, or an order for relief against Verigy
shall be entered in an involuntary case under the Bankruptcy Code; or

 

8.3.5        By Agilent, effective immediately upon
notice to Verigy, if any of the following shall occur: (a) the sale,
transfer or other disposition of all or substantially all of the assets of
Verigy on a consolidated basis to any competitor or (b) any competitor
acquires beneficial ownership of a majority of the outstanding shares of common
stock of Verigy.

 

8.4           Effect of Termination.  Verigy specifically agrees and acknowledges
that all obligations of Agilent to provide each Service hereunder shall
immediately cease upon the Termination Date, or the date of termination of such
Service, and Agilent’s obligations to provide all of the Services for which
Agilent is responsible hereunder shall immediately cease upon the termination
of this Agreement. The treatment upon termination of any work in progress shall
be governed by the applicable TA.

 

8.5           Survival.  Notwithstanding the expiration or early
termination of this Agreement or any Services hereunder, this provision,
Sections 2, 4 through 7 and 10 through 17 will survive.

 

9.             Personnel Matters.

 

9.1           Access to Agilent’s
Facility.  Agilent and Verigy
agree that all Verigy Transferred Employees located at Agilent’s facilities may
remain on site through the term of the relevant TA (as applicable). Except as
otherwise contemplated by this agreement (including the TAs) or any of the
Transaction Documents, Verigy will not permit any of its employees, agents or
subcontractors to perform any activities at Agilent’s facilities without
Agilent’s prior written approval. Verigy will ensure that all obligations
imposed upon Verigy pursuant to this Agreement, including without limitation
any Agilent insurance obligations are similarly imposed upon any authorized
non-Verigy employee. Verigy’s execution of any subcontracts or other agreements
with any agents, subcontractors or other third Parties will not relieve, waive
or diminish any obligation that Verigy may have to Agilent under this
Agreement.

 

6

 

9.2           Access to Computer Systems.  During the term of any TAs, the Verigy
Transferred Employees and any other employees, agents or subcontractors of
Verigy (other than Agilent, Agilent’s Subsidiaries or Service Providers) who
are authorized by Agilent (collectively, “On-Site
Personnel”) may have access to the computer systems and related
equipment of Agilent as detailed in the TAs that are necessary to fulfill the
activities directly related to this Agreement; provided, however, that Agilent
may restrict such access to protect commercially sensitive resources and
maintain the confidentiality of other Agilent businesses.

 

9.3           Identification and
Activities of On-Site Personnel. 
Agilent will provide identification badges to On-Site Personnel that
identify the On-Site Personnel as non-Agilent employees. Verigy will ensure
that such On-Site Personnel conspicuously display such badges at all times when
present at Agilent’s facility. In addition, to the extent provided by Agilent
to Verigy in writing, Verigy will ensure that On-Site Personnel are informed of
and comply with all written restrictions and prohibitions associated with
Verigy’s use of Agilent’s facilities, including without limitation the
restriction that such On-Site Personnel may not participate in any activity
reserved for Agilent’s employees (e.g., use of exercise and sport facilities;
participation in Agilent-sponsored network groups, athletic leagues or teams;
attendance at social events reserved for Agilent’s employees; participation in
staff meetings led by Agilent), and the restrictions provided by the relevant
Lease Agreements and the Transaction Documents.

 

9.4           Conduct.  Verigy will be solely responsible for the
proper conduct of all On-Site Personnel. Immediately upon the written request
from an authorized representative of Agilent that any On-Site Personnel be
removed for misconduct, Verigy will remove such On-Site Personnel from Agilent’s
facilities, and will provide written confirmation of such removal. Verigy will
also immediately take possession and return such On-Site personnel’s badge
identification to Agilent. Agilent will not be notified of or participate in
any disciplinary action regarding any On-Site Personnel.

 

10.           Independent Contractor.  The parties hereto understand and agree that
this Agreement does not make either of them an agent or legal representative of
the other for any purpose whatsoever. No party is granted, by this Agreement or
otherwise, any right or authority to assume or create any obligation or responsibilities,
express or implied, on behalf of or in the name of any other party, or to bind
any other party in any manner whatsoever. The parties expressly acknowledge
(i) that Agilent is an independent contractor with respect to Verigy in
all respects, including, without limitation, the provision of the Services, and
(ii) that the parties are not partners, joint venturers, employees or
agents of or with each other.

 

11.           Beneficiary of
Services; No Third Party Beneficiaries.  This Agreement is for the sole benefit of the
parties hereto, and nothing expressed or implied shall give or be construed to
give any person any legal or equitable rights hereunder, whether as a third
party beneficiary or otherwise. Agilent and Verigy agree, and Verigy represents
and warrants, that the Services will be provided solely to, and will be used
solely by, Verigy, its Subsidiaries and, to the extent reasonably necessary and
appropriate with respect to particular Services, its suppliers. Except as set
forth in Section 16, Verigy shall not resell or provide the Services to
any other Person, or permit the use of the Services by any Person other than
Verigy and its Subsidiaries.

 

12.           Force Majeure.  Neither party will be held liable to the
other for any delay or failure of performance to the extent such delay or
failure results from events beyond that party’s control, including without
limitation acts of God, earthquakes, fires, floods, civil disturbance, strikes,
labor disputes, and lawful governmental action (a “Force Majeure Event”). The party claiming suspension due to
a Force Majeure Event shall give prompt notice to the other party hereto of the
occurrence of the Force Majeure Event giving rise to the delay or failure to
perform under this Agreement and of its nature and anticipated duration, and
such party will use its reasonable efforts to cure the cause of the delay or
failure to perform promptly and shall resume performance as soon as the Force
Majeure Event has ended.

 

7

 

13.           Miscellaneous.  Sections 10.1, 10.2, 10.3, 10.4, 10.5,
10.6, 10.7, 10.8, 10.10, and 10.11 of the MSA are hereby incorporated into this
Agreement.

 

14.           Definitions and Rules
of Construction.

 

14.1         Defined terms used in this Agreement have the meanings
ascribed to them by definition in this Agreement or in the Transaction
Documents.

 

14.2         This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.

 

14.3         Whenever the words “include,” “including,” or “includes”
appear in this Agreement, they shall be read to be followed by the words “without
limitation” or words having similar import.

 

14.4         As used in this Agreement, the plural shall include the
singular and the singular shall include the plural.

 

15.           Annexes and TAs.  The Annexes and TAs shall be construed with
and as an integral part of this Agreement to the same extent as if the same had
been set forth verbatim herein. In the event of any inconsistency between the
terms of any Annex or TA and the terms set forth in the main body of this
Agreement, the terms of the Agreement shall govern unless expressly stated
otherwise in a TA.

 

16.           Subcontractors and
Outsourcing.  Agilent shall
have the right to subcontract or outsource any of its obligations hereunder;
provided, however that Agilent give Verigy prior notice of such outsourcing.

 

17.           Taxes.  All amounts expressed in each TA are
exclusive of value added taxes, sales taxes and any other similar taxes. Verigy
will be responsible for such taxes (other than taxes based on net income or net
profits of Agilent or its Subsidiaries) imposed by applicable taxing
authorities on the procurement of Services hereunder. If Agilent or any of its
Subsidiaries are required to pay such taxes, Verigy shall promptly reimburse
Agilent therefore.

 

[SIGNATURE PAGE FOLLOWS]

 

8

 

IN WITNESS WHEREOF, the parties
hereto have executed this Agreement as of the day and year first above written.

 

	
   

  	
  VERIGY LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Keith L. Barnes

  
	
   

  	
   

  	
  Name: Keith L. Barnes

  
	
   

  	
   

  	
  Title: President and Chief Executive
  Officer

  

 

 

[VERIGY’S SIGNATURE PAGE TO THE
TSA AGILENT’S SIGNATURE PAGE FOLLOWS]

 

9

 

	
   

  	
  AGILENT TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Eaton

  
	
   

  	
   

  	
  Name: John Eaton

  
	
   

  	
   

  	
  Title: Vice President, Corporate

  Development

  

 

 

[AGILENT’S SIGNATURE PAGE TO
THE TSA]

 

10

 

ANNEX
A

 

Verigy and Agilent have entered into the
Transition Services Agreement (the “Agreement”) to which this Annex A is
attached. Capitalized terms used but not defined herein have the meaning
assigned thereto in the Agreement and the MSA, as applicable. 

 

	
  ID

  	
   

  	
  Name

  	
   

  	
  Description

  	
   

  	
  Scheduled

  Termination

  Date

  
	
  1

  	
   

  	
  Transition Employees

  	
   

  	
  Services to be provided by transition
  employees to Verigy

  	
   

  	
  1-Jun-07

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  China

  	
   

  	
  Services for delayed close country

  	
   

  	
  31-Aug-06

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Additional Services

  	
   

  	
  Consulting services provided by Agilent
  under rate card

  	
   

  	
  1-Jun-08

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Source Forge

  	
   

  	
  Application support services and applicable
  interface services

  	
   

  	
  31-Oct-06

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  Site Infrastructure

  	
   

  	
  Select IT services to be provided by
  Agilent to Verigy employees who shall remain on Agilent sites following the
  Separation Date

  	
   

  	
  31-Oct-06

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  Enterprise Infrastructure

  	
   

  	
  Support of Inter-company link and remote
  access services

  	
   

  	
  31-Oct-06

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  Business Partners

  	
   

  	
  Point-to-point connectivity services
  between Agilent and Verigy business partners

  	
   

  	
  31-Oct-06

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  IT Security Risk Mgmt & CIO Services

  	
   

  	
  Services to assess, manage and resolve IT
  security risk and other issues

  	
   

  	
  31-Oct-06

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  CLS/IBM Applications

  	
   

  	
  Centralized License hosting and
  administration on the Agilent Central License Server (CLS) for Verigy users.

  	
   

  	
  31-Oct-06

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  New Site Setup

  	
   

  	
  Design, construction, project management,
  and move services to complete fit-out of Verigy’s new locations

  	
   

  	
  31-Oct-06

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  Logistics Services

  	
   

  	
  Logistics services to Verigy businesses at
  Agilent sites

  	
   

  	
  31-Oct-06

  

 

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}]]