Document:

Exhibit
10.2.14

RULES OF THE

VERIGY LTD. 2006 EQUITY INCENTIVE PLAN

FOR AWARDS GRANTED TO EMPLOYEES IN FRANCE

1.             Introduction.

(a)           The
Board of Directors (the “Board”) of Verigy Ltd. (the “Company”) has established
the Verigy Ltd. 2006 Equity Incentive Plan (the “U.S. Plan”) for the benefit of
certain employees of the Company and its Affiliate(s), including its French  subsidiary(ies) of which the Company holds directly or
indirectly at least 10% of the capital (the “French Entities”).

(b)           Section
2.2 of the U.S. Plan authorizes the Committee appointed by the Board (the “Administrator”)
to adopt such administrative rules, or guidelines as it deems appropriate to
implement the U.S. Plan, including rules and procedures relating to the
operation and administration of the U.S. Plan in order to accommodate the
specific requirements of local laws and procedures including the adoption of
such sub-plans as the Committee deems desirable to accommodate foreign tax
laws, regulations and practice.  This
sub-plan is established for the purpose of granting Share Units (“Awards” as
defined below) which are intended to qualify for favorable local tax and social
security treatment in France applicable to shares granted for no consideration
under the Sections L. 225-197-1 to L. 225-197-5 of the French Commercial Code
(as amended) to qualifying employees who are resident in France for French tax
purposes and/or subject to the French social security regime (the “French
Participants”) as of the date of the Award grant.  The terms of the U.S. Plan, as set out in
Appendix 1 hereto, shall, subject to the modifications in the following rules,
constitute the Rules of the Verigy Ltd. 2006 Equity Incentive Plan for Awards
Granted to Employees in France (the “French Share Units Plan”).

(c)           Under
the French Share Units Plan, the French Participants will be granted only
Awards as defined in Section 2(a) hereunder.

2.             Definitions.

Capitalized
terms not otherwise defined herein used in the French Share Units Plan shall
have the same meanings as set forth in the U.S. Plan.  The terms set out below will have the
following meanings:

(a)           Awards.

The
term “Awards” shall mean Share Units which is a promise by the Company to a
future issuance of shares of Common Stock of the Company, granted to the French
Participants, for no consideration and for which any dividend and voting rights
attach only upon the issuance of shares at the time of vesting of the
Awards.  Awards granted under this French
Share Units Plan will be settled only in shares. No dividend equivalents shall
be granted or paid.

 1
 

(b)           Grant Date.

The
term “Grant Date” shall be the date on which the Committee both (1) designates
the French Participants and (2) specifies the terms and conditions of the
Awards, including the number of shares, the vesting conditions and the
conditions of the transferability of the shares.

(c)           Vesting
Date.

The
term “Vesting Date” shall mean the relevant date on which the Awards become
non-forfeitable and convertible into shares, as specified by the Committee, and
shall not occur prior to the second anniversary of the Grant Date, or such
other period as is required by the vesting period applicable to
French-qualified Awards under Section L. 225-197-1 of the French Commercial
Code as amended, or in the French Tax Code or in the French Social Security
Code, as amended, unless otherwise permitted under French law, and provided any
additional conditions for the vesting that may be provided for in the Award
Agreement are satisfied.  In principle,
the issuance of shares is concomitant.

(d)           Closed
Period.

The
term “Closed Period” means:

(i)            Ten quotation days preceding and
following the disclosure to the public of the consolidated financial statements
or the annual statements of the Company; or

(ii)           The period as from the date the
corporate management entities (involved in the governance of the company, such
as the Board, Committee, supervisory directorate, etc.) of the Company have
been disclosed information which could, in the case it would be disclosed to
the public, significantly impact the quotation of the shares of the Company,
until ten quotation days after the day such information is disclosed to the
public.

If
the French Commercial Code is amended after adoption of this French Share Units
Plan to modify the definition and/or applicability of the Closed Periods to
French-qualified Awards, such amendments shall become applicable to any
French-qualified Awards granted under this French Share Units Plan, to the
extent required by French law.

(e)           Disability.

The
term “Disability” shall mean disability as determined in categories 2 and 3
under Section L. 341-4 of the French Social Security Code, as amended, and
subject to the fulfillment of related conditions.

 2
 

3.             Eligibility.

(a)           Notwithstanding
any other term of this French Share Units Plan, Awards may be granted only to
employees of the French Entities who hold less than ten percent (10%) of the
outstanding shares of the Company and who otherwise satisfy the eligibility
conditions of Section 4.2 of the U.S. Plan.

(b)           Subject
to Section 3(c) below, any French Participant who, on the Effective Grant Date
of the Awards, and to the extent required under French law, is employed under
the terms and conditions of an employment contract (“contrat de travail”) by a
French Entity or who is a corporate officer of a French Entity shall be
eligible to receive, at the discretion of the Committee, Awards under this
French Share Units Plan, provided he or she also satisfies the eligibility
conditions of the U.S. Plan.

(c)           Awards
may not be issued to corporate officers of French Entities, other than the
managing corporate officers  (e.g., Président du Conseil d’Administration,
Directeur Général, Directeur Général Délégué, Membre du Directoire, Gérant de
Sociétés par actions) unless the corporate officer is an employee of a French
Entity, as defined by French law.

4.             Conditions of the Awards.

(a)           Vesting
of Awards.

The
Awards will vest on the Vesting Date as defined under Section 2 above.  However, notwithstanding the above, in the
event of the death of a French Participant, all of his or her outstanding
Awards shall vest as set forth in Section 7 of the French Share Units Plan.

(b)           Sale of Shares.

The sale or transfer of the shares issued pursuant
to the Awards held by the French Participants must not occur prior to the relevant
anniversary of the Vesting Date specified by the Committee and in no case prior to the second
anniversary of each Vesting Date or such other period as is required to comply
with the minimum mandatory holding period applicable to shares underlying
French-qualified Awards under Section L. 225-197-1 of the French Commercial
Code, as amended or under the French Tax Code or French Social Security Code as
amended.  In addition, the underlying
shares cannot be sold during certain Closed Periods as provided for by Section
L. 225-197-1 of the French Commercial Code, as amended, and as interpreted by
the French administrative guideline, so long as those Closed Periods are
applicable to shares underlying French-qualified Awards.  These
restrictions apply even if the French Participant is no longer an employee or a
corporate officer of the French Entity.

The Committee may set a specific holding period for
the shares underlying the Awards for the French Participants who qualify
as corporate officers under French law (“mandataires sociaux”).

 3
 

(c)           French Participant’s Account.

The
shares acquired upon vesting of the Awards will be recorded in an account in
the name of the French Participant with a broker or in such other manner as the
Company may otherwise determine in order to ensure compliance with applicable
law.

5.                                      Non-transferability
of Awards.

Except
in the case of death, Awards cannot be transferred or surrendered to any third
party.  In addition, the Awards may vest
only for the benefit of the French Participant during the lifetime of the
French Participant.

6.                                      Adjustments.

If
the Awards or underlying shares are assumed/substituted in the event of an
adjustment, as described under Section 10 of the U.S. Plan, or in case of an
acceleration of vesting or holding periods or in case of implementation of any
other mechanism upon a corporate transaction to compensate the French
Participants, the Awards may no longer qualify for French favorable local tax
and social security treatment  In this case,
the Board may decide at its discretion to lift the restriction on sale of the
shares.

7.                                      Death
and Disability.

In
the event of the death of a French Participant, the Awards held by the French
Participant at the time of death become transferable to the Participant’s
heirs.  The Company shall issue the
underlying shares to the French Participant’s heirs, at their request, if such
request occurs within six months following the death, as provided in the Award
Agreement. If the Participant’s heirs do not request the issuance of the Shares
underlying the Awards within six months following the Participant’s death, the
Awards will be forfeited.

If a
French Participant’s service to the Company or any Affiliate of the Company
terminates by reason of his or her death or Disability (as defined herein), the
French Participant or the French Participant’s heirs, as applicable, shall not
be subject to the restriction on the sale of the shares set forth in Section 4 (b) above.

8.                                      Disqualification
of Restricted Stock Units.  

If
Awards are otherwise modified or adjusted in a manner in keeping with the terms
of the U.S. Plan or as mandated as a matter of law and the modification or
adjustment is contrary to the terms and conditions of this French Share Units
Plan, Awards may no longer qualify as French-qualified Awards.  If Awards no longer qualify as
French-qualified Awards, the Committee may, provided it is authorized to do so
under the U.S. Plan, determine to lift, shorten or terminate certain
restrictions applicable to the vesting of the Awards or the sale of the Shares
which may have been imposed under this French Share Units Plan or in the Awards
Agreement delivered to the Participant.

 4
 

9.                                      Interpretation.

It
is intended that Awards granted under the French Share Units Plan shall qualify
for the French favorable tax and social security treatment applicable to Awards
granted under Sections L. 225-197-1 to L. 225-197-5 of the French Commercial
Code, as amended, and in accordance with the relevant provisions set forth by French
tax and social security laws.  The terms
of the French Share Units Plan shall be interpreted accordingly and in
accordance with the relevant Guidelines published by French tax and social
security administrations and subject to the fulfilment of certain legal, tax
and reporting obligations.

10.                               Employment
Rights.

The
adoption of this French Share Units Plan shall not confer upon the French
Participants, or any employees of a French Entity, any employment rights and
shall not be construed as part of any employment contract that a French Entity
has with its employees.

11.                               Effective
Date.

This French Share Units
Plan is adopted and effective for grants made on or after February 15, 2007.

Adoption and Amendment History:

	
  Action

  	
   

  	
  Date

  
	
  Adopted by the
  Compensation Committee of the Board of Directors:

  	
   

  	
  June 7, 2006

  
	
  Amended by the
  Board of Directors

  	
   

  	
  February 15, 2007

  

 

 5

APPENDIX
1

VERIGY LTD.

2006 EQUITY INCENTIVE PLAN

(AS AMENDED FEBRUARY 15, 2007)

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1.

  	
   

  	
  INTRODUCTION

  	
   

  	
  3

  
	
  ARTICLE
  2.

  	
   

  	
  ADMINISTRATION

  	
   

  	
  3

  
	
  2.1

  	
   

  	
  Committee Composition

  	
   

  	
  3

  
	
  2.2

  	
   

  	
  Committee Responsibilities

  	
   

  	
  3

  
	
  2.3

  	
   

  	
  Committee for Non-Officer Grants

  	
   

  	
  4

  
	
  2.4

  	
   

  	
  Administration with Respect to Substitute Awards

  	
   

  	
  4

  
	
  ARTICLE
  3.

  	
   

  	
  SHARES AVAILABLE FOR
  GRANTS

  	
   

  	
  4

  
	
  3.1

  	
   

  	
  Basic Limitation

  	
   

  	
  4

  
	
  3.2

  	
   

  	
  Shares Returned to Reserve

  	
   

  	
  4

  
	
  3.3

  	
   

  	
  Substitute Awards

  	
   

  	
  4

  
	
  3.4

  	
   

  	
  Dividend Equivalents

  	
   

  	
  5

  
	
  ARTICLE
  4.

  	
   

  	
  ELIGIBILITY

  	
   

  	
  5

  
	
  4.1

  	
   

  	
  Incentive Stock Options

  	
   

  	
  5

  
	
  4.2

  	
   

  	
  Other Grants

  	
   

  	
  5

  
	
  ARTICLE
  5.

  	
   

  	
  OPTIONS

  	
   

  	
  5

  
	
  5.1

  	
   

  	
  Option Agreement

  	
   

  	
  5

  
	
  5.2

  	
   

  	
  Number of Shares

  	
   

  	
  5

  
	
  5.3

  	
   

  	
  Exercise Price

  	
   

  	
  6

  
	
  5.4

  	
   

  	
  Exercisability and Term

  	
   

  	
  6

  
	
  5.5

  	
   

  	
  Effect of Change in Control

  	
   

  	
  7

  
	
  5.6

  	
   

  	
  Buyout Provisions

  	
   

  	
  7

  
	
  5.7

  	
   

  	
  Payment for Option Shares

  	
   

  	
  7

  
	
  ARTICLE
  6.

  	
   

  	
  SHARE APPRECIATION
  RIGHTS

  	
   

  	
  7

  
	
  6.1

  	
   

  	
  SAR Agreement

  	
   

  	
  7

  
	
  6.2

  	
   

  	
  Number of Shares

  	
   

  	
  7

  
	
  6.3

  	
   

  	
  Exercise Price

  	
   

  	
  8

  
	
  6.4

  	
   

  	
  Exercisability and Term

  	
   

  	
  8

  
	
  6.5

  	
   

  	
  Effect of Change in Control

  	
   

  	
  9

  
	
  6.6

  	
   

  	
  Exercise of SARs

  	
   

  	
  9

  
	
  ARTICLE
  7.

  	
   

  	
  RESTRICTED SHARES

  	
   

  	
  9

  
	
  7.1

  	
   

  	
  Restricted Share Agreement

  	
   

  	
  9

  
	
  7.2

  	
   

  	
  Number of Shares

  	
   

  	
  9

  
	
  7.3

  	
   

  	
  Payment for Awards

  	
   

  	
  9

  
	
  7.4

  	
   

  	
  Vesting Conditions

  	
   

  	
  9

  
	
  7.5

  	
   

  	
  Effect of Change in Control

  	
   

  	
  10

  
	
  7.6

  	
   

  	
  Voting and Dividend Rights

  	
   

  	
  10

  
	
  ARTICLE
  8.

  	
   

  	
  SHARE UNITS

  	
   

  	
  11

  
	
  8.1

  	
   

  	
  Share Unit Agreement

  	
   

  	
  11

  
	
  8.2

  	
   

  	
  Number of Shares

  	
   

  	
  11

  

 

 Exhibit 10 2 14                                                                                      i
 

 

	
  8.3

  	
   

  	
  Payment for Awards

  	
   

  	
  11

  
	
  8.4

  	
   

  	
  Vesting Conditions

  	
   

  	
  11

  
	
  8.5

  	
   

  	
  Effect of Change in Control

  	
   

  	
  12

  
	
  8.6

  	
   

  	
  Voting and Dividend Rights

  	
   

  	
  12

  
	
  8.7

  	
   

  	
  Form and Time of Settlement of Share Units

  	
   

  	
  12

  
	
  8.8

  	
   

  	
  Creditors’ Rights

  	
   

  	
  12

  
	
  ARTICLE
  9.

  	
   

  	
  AUTOMATIC OPTION GRANTS
  TO OUTSIDE DIRECTORS

  	
   

  	
  12

  
	
  9.1

  	
   

  	
  Initial Grants

  	
   

  	
  12

  
	
  9.2

  	
   

  	
  Annual Grants

  	
   

  	
  13

  
	
  9.3

  	
   

  	
  Cessation of Eligibility to Vest

  	
   

  	
  13

  
	
  9.4

  	
   

  	
  Accelerated Exercisability

  	
   

  	
  13

  
	
  9.5

  	
   

  	
  Exercise Price

  	
   

  	
  14

  
	
  9.6

  	
   

  	
  Term

  	
   

  	
  14

  
	
  9.7

  	
   

  	
  Affiliates of Outside Directors

  	
   

  	
  14

  
	
  ARTICLE
  10.

  	
   

  	
  PROTECTION AGAINST
  DILUTION

  	
   

  	
  14

  
	
  10.1

  	
   

  	
  Adjustments

  	
   

  	
  14

  
	
  10.2

  	
   

  	
  Dissolution or Liquidation

  	
   

  	
  14

  
	
  10.3

  	
   

  	
  Reorganizations

  	
   

  	
  15

  
	
  ARTICLE
  11.

  	
   

  	
  PAYMENT OF DIRECTOR’S
  FEES IN SECURITIES

  	
   

  	
  16

  
	
  11.1

  	
   

  	
  Effective Date

  	
   

  	
  16

  
	
  11.2

  	
   

  	
  Elections to Receive NSOs, Restricted Shares or
  Share Units

  	
   

  	
  16

  
	
  11.3

  	
   

  	
  Number and Terms of NSOs, Restricted Shares or Share
  Units

  	
   

  	
  16

  
	
  ARTICLE
  12.

  	
   

  	
  LIMITATION ON RIGHTS

  	
   

  	
  16

  
	
  12.1

  	
   

  	
  Retention Rights

  	
   

  	
  16

  
	
  12.2

  	
   

  	
  Shareholders’ Rights

  	
   

  	
  16

  
	
  12.3

  	
   

  	
  Regulatory Requirements

  	
   

  	
  16

  
	
  ARTICLE
  13.

  	
   

  	
  WITHHOLDING TAXES

  	
   

  	
  17

  
	
  13.1

  	
   

  	
  General

  	
   

  	
  17

  
	
  13.2

  	
   

  	
  Share Withholding

  	
   

  	
  17

  
	
  ARTICLE
  14.

  	
   

  	
  LIMITATION ON PAYMENTS

  	
   

  	
  17

  
	
  14.1

  	
   

  	
  Scope of Limitation

  	
   

  	
  17

  
	
  14.2

  	
   

  	
  Basic Rule

  	
   

  	
  17

  
	
  14.3

  	
   

  	
  Reduction of Payments

  	
   

  	
  17

  
	
  14.4

  	
   

  	
  Overpayments and Underpayments

  	
   

  	
  18

  
	
  14.5

  	
   

  	
  Related Corporations

  	
   

  	
  18

  
	
  ARTICLE
  15.

  	
   

  	
  FUTURE OF THE PLAN

  	
   

  	
  18

  
	
  15.1

  	
   

  	
  Term of the Plan

  	
   

  	
  18

  
	
  15.2

  	
   

  	
  Amendment or Termination

  	
   

  	
  18

  
	
  15.3

  	
   

  	
  Shareholder Approval

  	
   

  	
  18

  
	
  ARTICLE
  16.

  	
   

  	
  DEFINITIONS

  	
   

  	
  19

  

 

 Exhibit 10 2 14                                                                                      ii

VERIGY LTD.

2006 EQUITY INCENTIVE PLAN

INTRODUCTION.

                The
purpose of the Plan is to promote the long-term success of the Company and the
creation of shareholder value by (a) encouraging Employees, Outside
Directors and Consultants to focus on critical long-range objectives,
(b) encouraging the attraction and retention of Employees, Outside
Directors and Consultants with exceptional qualifications and (c) linking
Employees, Outside Directors and Consultants directly to shareholder interests
through increased share ownership.  The
Plan seeks to achieve this purpose by providing for Awards in the form of
Options (which may constitute ISOs or NSOs), SARs, Restricted Shares or Share
Units.

                The
Plan shall be governed by, and construed in accordance with, the laws of the
Republic of Singapore (except its choice-of-law provisions).

ADMINISTRATION.

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

                Any
listing standards prescribed by the principal securities market on which the
Company’s equity securities are traded;

                Such
requirements as the Internal Revenue Service may establish for outside
directors acting under plans intended to qualify for exemption under
section 162(m)(4)(C) of the Code;

                Such
requirements as the Securities and Exchange Commission may establish for
administrators acting under plans intended to qualify for exemption under
Rule 16b-3 (or its successor) under the Exchange Act; and

                Any
other requirements imposed by applicable law, regulations or rules.

                Committee
Responsibilities.  The
Committee shall (a) select the Employees, Outside Directors and
Consultants who are to receive Awards under the Plan, (b) determine the
type, number, vesting requirements and other features and conditions of such
Awards, (c) interpret the Plan, (d) make all other decisions relating
to the operation of the Plan and (e) carry out any other duties delegated
to it by the Board.  The Committee may
adopt such rules or guidelines as it deems appropriate to implement the Plan,
including rules and procedures relating to the operation and administration of
the Plan in order to accommodate the specific requirements of local laws and
procedures.  Without limiting the
generality of the foregoing, the Committee is specifically authorized to adopt
(a) rules and procedures regarding the conversion 

 A-1
 

of
local currency, withholding procedures and handling of stock certificates that
vary with local requirements and (b) such sub-plans and Plan addenda as
the Committee deems desirable to accommodate foreign tax laws, regulations and
practice.  The Committee’s determinations
under the Plan shall be final and binding on all persons.

                Committee
for Non-Officer Grants. 
The Board may also appoint a secondary committee of the Board, which
shall be composed of one or more directors of the Company who need not satisfy
the requirements of Section 2.1. 
Such secondary committee may administer the Plan with respect to
Employees and Consultants who are not Outside Directors and are not considered
executive officers of the Company under section 16 of the Exchange Act,
may grant Awards under the Plan to such Employees and Consultants and may
determine all features and conditions of such Awards.  Within the limitations of this
Section 2.3, any reference in the Plan to the Committee shall include such
secondary committee.

                Administration
with Respect to Substitute Awards.   Notwithstanding any other provision of this
Plan, in connection with issuing Substitute Awards, the Committee may provide
that the Substitute Awards shall be subject to the terms and conditions of the
plan and/or agreements under which the awards being assumed or substituted were
originally issued, even where such terms are in conflict or inconsistent with
the terms of this Plan.

SHARES AVAILABLE FOR GRANTS.

                Basic
Limitation.  Shares
issued pursuant to the Plan may be authorized but unissued shares or treasury
shares.  The aggregate number of Shares
issued under the Plan shall not exceed (a) 10,300,000 plus (b) the
additional Shares described in Section 3.3.  The number of Shares that are subject to
Awards outstanding at any time under the Plan shall not exceed the number of
Shares that then remain available for issuance under the Plan.  Notwithstanding any other provision of this
Plan, the maximum number of Shares that may be issued upon the exercise of ISOs
under this Plan is 10,300,000.  The
limitations of this Section 3.1 shall be subject to adjustment pursuant to
Article 10.

                Shares
Returned to Reserve. 
If Options, SARs or Share Units (including Replacement Awards) are
forfeited or terminate for any other reason before being exercised or settled,
then the Shares subject to such Options, SARs or Share Units shall again become
available for issuance under the Plan. 
If SARs are exercised, then only the number of Shares (if any) actually
issued in settlement of such SARs shall reduce the number available under
Section 3.1 and the balance shall again become available for issuance
under the Plan.  If Share Units are
settled, then only the number of Shares (if any) actually issued in settlement
of such Share Units shall reduce the number available under Section 3.1
and the balance shall again become available for issuance under the Plan.  If Restricted Shares or Shares issued upon
the exercise of Options are reacquired by the Company pursuant to a forfeiture
provision or for any other reason, then such Shares shall again become
available for issuance under the Plan.

                Substitute
Awards.  Except with
respect to Substitute Awards issued with respect to awards previously issued by
Agilent Technologies, Inc., Substitute Awards shall not reduce the Shares
authorized for issuance under the Plan or authorized for grant to a Participant
in any calendar year.  Additionally, in
the event that a company acquired by the Company or any Subsidiary, or with
which the Company or any Subsidiary combines, has shares available under a 

 A-2
 

pre-existing
plan approved by shareholders and not adopted in contemplation of such
acquisition or combination, the shares available for grant pursuant to the
terms of such pre-existing plan (as adjusted, to the extent appropriate, using
the exchange ratio or other adjustment or valuation ratio or formula used in
such acquisition or combination to determine the consideration payable to the
holders of ordinary shares or common shares of the entities party to such
acquisition or combination) may be used for Awards under the Plan and shall not
reduce the Shares authorized for issuance under the Plan; provided that Awards
using such available Shares shall not be made after the date awards or grants
could have been made under the terms of the pre-existing plan, absent the
acquisition or combination, and shall only be made to individuals who were
employees, directors or consultants of such acquired or combined company before
such acquisition or combination.

                Dividend
Equivalents.  Any
dividend equivalents paid or credited under the Plan shall be applied against
the number of Shares that may be issued under the Plan if such dividend
equivalents are converted into Share Units.

ELIGIBILITY.

                Incentive
Stock Options.  Only
Employees who are common-law employees of the Company, a Parent or a
Subsidiary shall be eligible for the grant of ISOs.  In addition, an Employee who owns more than
10% of the total combined voting power of all classes of outstanding shares of
the Company or any of its Parents or Subsidiaries shall not be eligible for the
grant of an ISO unless the requirements set forth in
section 422(c)(5) of the Code are satisfied.

                Other
Grants.  Only
Employees, Outside Directors and Consultants shall be eligible for the grant of
Restricted Shares, Share Units, NSOs or SARs.

OPTIONS.

                Option Agreement.  Each grant of an Option under the Plan shall
be evidenced by an Option Agreement between the Optionee and the Company.  Such Option shall be subject to all
applicable terms of the Plan and may be subject to any other terms that are not
inconsistent with the Plan.  The Option
Agreement shall specify whether the Option is an ISO or an NSO.  The provisions of the various Option
Agreements entered into under the Plan need not be identical.  An Option Agreement may provide that a new
Option will be granted automatically to the Optionee when he or she exercises a
prior Option and pays the Exercise Price in the form described in
Section 5.7(b).

                Number
of Shares.  Each Option
Agreement shall specify the number of Shares subject to the Option and shall
provide for the adjustment of such number in accordance with
Article 10.  Options granted to any
Optionee in a single fiscal year of the Company shall not cover more than
750,000 Shares, except that Options granted to a new Employee in the fiscal
year of the Company in which his or her Service as an Employee first commences
shall not cover more than 1,500,000 Shares. 
The limitations set forth in the preceding sentence shall be subject to
adjustment in accordance with Article 10.

 A-3
 

 

                Exercise
Price.  Each Option
Agreement shall specify the Exercise Price; provided that the Exercise Price
shall in no event be less than 100% of the Fair Market Value of a Share on the
Date of Grant.  Other than in connection
with an event or transaction described in Article 10, Options may not be
repriced, replaced, regranted through cancellation or modified without
shareholder approval if the effect of such repricing, replacement, regrant or
modification would be to reduce the exercise price of such Options.

                Exercisability
and Term.

                                General.  Each Option Agreement shall specify the date
or event when all or any installment of the Option is to become
exercisable.  The Option Agreement shall
also specify the term of the Option; provided that the term of an ISO shall in
no event exceed 10 years from the Date of Grant.  Options may be awarded in combination with
SARs, and such an Award may provide that the Options will not be exercisable
unless the related SARs are forfeited.

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

                                Death,
Disability or Retirement of Optionee.  Unless otherwise provided by the Option
Agreement, if an Optionee ceases to be an Awardee Eligible to Vest as a result
of the Optionee’s death, total and permanent disability or retirement due to
age, in accordance with the Company’s or a Subsidiary’s or Affiliate’s
retirement policy, then (i) the vested portion of such Optionee’s Option
shall be determined by adding 12 months to the length of his or her actual Service,
(ii) such Optionee’s Option shall terminate immediately as to the unvested
Shares and such unvested Shares shall revert to the Plan, and (iii) such
Optionee’s Option shall be exercisable as to the vested Shares for one year
after the date such individual ceases to be an Awardee Eligible to Vest or, if
earlier, the expiration of the term of such Option.  Where an individual ceases to be an Awardee
Eligible to Vest as a result of death, the Option may be exercised by the
beneficiary designated by the Optionee, the executor or administrator of the
Optionee’s estate or, if none, by the person(s) entitled to exercise the Option
under the Optionee’s will or the laws of descent or distribution.  If, for any reason, the Option is not so
exercised within the time specified herein, the Option shall automatically
terminate, and the Shares covered by such Option shall revert to the Plan.

                                Voluntary
Severance Incentive Program. 
If an Optionee ceases to be an Awardee Eligible to Vest as a result of
participation in a voluntary severance incentive program or workforce
management plan approved by the Board or a Committee, unvested Options shall
vest and Options shall remain exercisable, to the extent provided by the Board
or a Committee in such voluntary severance incentive program or workforce
management plan.  Absent a specific
provision for acceleration or extended exercise period, the provisions of
Subsection (b) above shall apply.

 A-4
 

 

                Effect of Change in Control. 
The Committee may determine, at the time of granting an Option or
thereafter, that such Option shall become exercisable as to all or part of the
Shares subject to such Option if a Change in Control occurs with respect to the
Company or if the Optionee’s Service is terminated without Cause after a Change
in Control.  In addition, acceleration of
exercisability may be required under Section 10.3.

                Buyout Provisions. 
The Committee may at any time (a) offer to buy out for a payment in
cash or cash equivalents an Option previously granted or (b) authorize an Optionee
to elect to cash out an Option previously granted, in either case at such time
and based upon such terms and conditions as the Committee shall establish.

                Payment
for Option Shares.

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

                                Surrender of
Shares.  With the Committee’s
consent, all or any part of the Exercise Price may be paid by surrendering, or
attesting to the ownership of, Shares that are already owned by the
Optionee.  Such Shares shall be valued at
their Fair Market Value on the date when the new Shares are purchased under the
Plan.

                                Exercise/Sale.  With the Committee’s consent, all or any part
of the Exercise Price and any withholding taxes may be paid by delivering (in a
manner prescribed by the Company) an irrevocable direction to a securities
broker approved by the Company to sell all or part of the Shares being
purchased under the Plan and to deliver all or part of the sales proceeds to
the Company.

                                Other Forms
of Payment.  With the
Committee’s consent, all or any part of the Exercise Price and any withholding
taxes may be paid in any other form that is consistent with applicable laws,
regulations and rules.

SHARE APPRECIATION RIGHTS.

                SAR Agreement.  Each
grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the
Optionee and the Company.  Such SAR shall
be subject to all applicable terms of the Plan and may be subject to any other
terms that are not inconsistent with the Plan. 
The provisions of the various SAR Agreements entered into under the Plan
need not be identical.

                Number of Shares. 
Each SAR Agreement shall specify the number of Shares to which the SAR
pertains and shall provide for the adjustment of such number in accordance with
Article 10.  SARs granted to any
Optionee in a single fiscal year shall in no event pertain to more than 750,000
Shares, except that SARs granted to a new Employee in the fiscal year of the
Company in which his or her Service as an Employee first commences shall not
pertain to more than 1,500,000 Shares. 
The limitations set forth in the preceding sentence shall be subject to
adjustment in accordance with Article 10.

 A-5
 

 

                Exercise Price.  Each
SAR Agreement shall specify the Exercise Price; provided that the Exercise
Price shall in no event be less than 100% of the Fair Market Value of a Share
on the Date of Grant.  Other than in
connection with an event or transaction described in Article 10, SARs may
not be repriced, replaced, regranted through cancellation or modified without
shareholder approval if the effect of such repricing, replacement, regrant or
modification would be to reduce the exercise price of such SARs.

                Exercisability
and Term.

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

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

                                Death,
Disability or Retirement of Optionee.  Unless otherwise provided by the SAR
Agreement, if an Optionee ceases to be an Awardee Eligible to Vest as a result
of the Optionee’s total and permanent disability or retirement due to age, in
accordance with the Company’s or a Subsidiary’s or Affiliate’s retirement
policy, then (i) the vested portion of such Optionee’s SAR shall be
determined by adding 12 months to the length of his or her actual Service,
(ii) such Optionee’s SAR shall terminate immediately as to the unvested
Shares and such unvested Shares shall revert to the Plan, and (iii) such
Optionee’s SAR shall be exercisable as to the vested Shares for one year after
the date such individual ceases to be an Awardee Eligible to Vest or, if
earlier, the expiration of the term of such SAR.  Where an individual ceases to be an Awardee
Eligible to Vest as a result of death, the SAR may be exercised by the
beneficiary designated by the Optionee, the executor or administrator of the
Optionee’s estate or, if none, by the person(s) entitled to exercise the SAR
under the Optionee’s will or the laws of descent or distribution.  If, for any reason, the SAR is not so
exercised within the time specified herein, the SAR shall automatically
terminate, and the Shares covered by such SAR shall revert to the Plan.

                                Voluntary
Severance Incentive Program. 
If an Optionee ceases to be an Awardee Eligible to Vest as a result of
participation in a voluntary severance incentive program or workforce
management plan approved by the Board or a Committee, unvested SARs shall vest 

 A-6
 

and
SARs shall remain exercisable, to the extent provided by the Board or a
Committee in such voluntary severance incentive program or workforce management
plan.  Absent a specific provision for
acceleration or extended exercise period, the provisions of Subsection (b)
above shall apply.

                Effect of Change in Control. 
The Committee may determine, at the time of granting a SAR or
thereafter, that such SAR shall become exercisable as to all or part of the
Shares subject to such SAR if a Change in Control occurs with respect to the
Company or if the Optionee’s Service is terminated without Cause after a Change
in Control.  In addition, acceleration of
exercisability may be required under Section 10.3.

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

RESTRICTED SHARES.

                Restricted Share Agreement. 
Each grant of Restricted Shares under the Plan shall be evidenced by a
Restricted Share Agreement between the recipient and the Company.  Such Restricted Shares shall be subject to
all applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan.  The
provisions of the various Restricted Share Agreements entered into under the
Plan need not be identical.

                Number of Shares. 
Each Restricted Share Agreement shall specify the number of Shares to
which the Agreement pertains.  Such number
shall be subject to the limitation of Section 7.4(a), if applicable.

                Payment for Awards. 
Restricted Shares may be sold or awarded under the Plan for such
consideration as the Committee may determine, including (without limitation)
cash, cash equivalents, property, past services and future services.  Within the limitations of the Plan, the
Committee may accept the cancellation of outstanding options in return for the
grant of Restricted Shares.

                Vesting
Conditions.

                General.  Each Award of Restricted Shares may or may
not be subject to vesting.  Vesting shall
occur, in full or in installments, upon satisfaction of the conditions
specified in the Restricted Share Agreement. 
The Committee may include among such conditions continued performance of
Service and/or the requirement that the performance of the 

 A-7
 

Company (or a Subsidiary, Affiliate or business unit
of the Company) for a specified period of not less than one fiscal year equal
or exceed a target determined by the Committee. 
Such target shall be based on one or more of the criteria set forth in
Appendix A, and shall be determined not later than the 90 days following
commencement of the specified performance period.  As to Awards with respect to which the Company
desires to secure an exemption from section 162(m) of the Code, no
Participant shall receive more than 400,000 Restricted Shares subject to
performance-based vesting conditions in a single fiscal year, except that a new
Employee may receive up to 800,000 Restricted Shares subject to performance-based
vesting conditions in the fiscal year of the Company in which his or her
Service as an Employee first commences. 
The limitations set forth in the preceding sentence shall be subject to
adjustment in accordance with Article 10.

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

(i)            To the extent that the Participant
did not purchase the Restricted Shares, all unvested Shares subject to a
Restricted Share Agreement shall immediately be forfeited and shall revert to
the Plan; and

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

                Death,
Disability or Retirement of Participant.  Unless otherwise provided by the Restricted
Share Agreement, if a Participant ceases to be an Awardee Eligible to Vest as a
result of the Participant’s death, total and permanent disability or retirement
due to age, in accordance with the Company’s or a Subsidiary’s or Affiliate’s
retirement policy, the provisions of Subsection (b) above will apply except
that the vested portion of such Participant’s Restricted Shares shall be
determined by adding 12 months to the length of his or her actual Service.

                Voluntary
Severance Incentive Program. 
If a Participant ceases to be an Awardee Eligible to Vest as a result of
participation in a voluntary severance incentive program or workforce
management plan approved by the Board or a Committee, unvested Restricted
Shares shall vest to the extent provided by the Board or a Committee in such
voluntary severance incentive program or workforce management plan.  Absent a specific provision for acceleration,
the provisions of Subsection (b) above shall apply.

                Effect of Change in Control. 
The Committee may determine, at the time of granting Restricted Shares
or thereafter, that all or part of such Restricted Shares shall become vested
if a Change in Control occurs with respect to the Company or if the Participant’s
Service is terminated without Cause after a Change in Control.

                Voting and Dividend Rights. 
The holders of Restricted Shares awarded under the Plan shall have the
same voting, dividend and other rights as the Company’s other
shareholders.  A Restricted Share
Agreement, however, may require that the holders of Restricted Shares invest
any cash dividends received in additional Restricted Shares.  Such additional Restricted Shares shall be
subject to the same conditions and restrictions as the Award with respect to
which the dividends were paid.

 A-8
 

SHARE UNITS.

                Share Unit Agreement. 
Each grant of Share Units under the Plan shall be evidenced by a Share
Unit Agreement between the recipient and the Company.  Such Share Units shall be subject to all
applicable terms of the Plan and may be subject to any other terms that are not
inconsistent with the Plan.  The
provisions of the various Share Unit Agreements entered into under the Plan
need not be identical.

                Number of Shares. 
Each Share Unit Agreement shall specify the number of Shares to which
the Share Unit pertains and shall provide for the adjustment of such number in
accordance with Article 10.  Such
number shall be subject to the limitation of Section 8.4(a), if
applicable.

                Payment for Awards. 
To the extent that an Award is granted in the form of Share Units, no
cash consideration shall be required of the Award recipients.

                Vesting
Conditions.

                General.  Each Award of Share Units may or may not be
subject to vesting.  Vesting shall occur,
in full or in installments, upon satisfaction of the conditions specified in
the Share Unit Award.  The Committee may
include among such conditions continued performance of Service and/or the
requirement that the performance of the Company (or a Subsidiary, Affiliate or
business unit of the Company) for a specified period of not less than one
fiscal year equal or exceed performance targets determined by the
Committee.  Such targets shall be based
on one or more of the criteria set forth in Appendix A, and shall be determined
not later than the 90 days following commencement of the specified performance
period.  As to Awards with respect to
which the Company desires to secure an exemption from section 162(m) of
the Code, no Participant shall receive more than 400,000 Share Units subject to
performance-based vesting conditions in a single fiscal year, except that a new
Employee may receive up to 800,000 Share Units subject to performance-based
vesting conditions in the fiscal year of the Company in which his or her
Service as an Employee first commences. 
The limitations set forth in the preceding sentence shall be subject to
adjustment in accordance with Article 10.

                Cessation
of Eligibility to Vest. 
Unless otherwise provided by the Share Unit Award, if a Participant
ceases to be an Awardee Eligible to Vest, other than as a result of
circumstances described in Subsection (c) or (d) below, then all unvested
Share Units subject to a Share Unit Agreement shall immediately be forfeited
and shall revert to the Plan.

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

 A-9
 

 

                Voluntary
Severance Incentive Program. 
If a Participant ceases to be an Awardee Eligible to Vest as a result of
participation in a voluntary severance incentive program or workforce
management plan approved by the Board or a Committee, unvested Share Units
shall vest to the extent provided by the Board or a Committee in such voluntary
severance incentive program or workforce management plan.  Absent a specific provision for acceleration,
the provisions of Subsection (b) above shall apply.

                Effect
of Change in Control. 
The Committee may determine, at the time of granting Share Units or
thereafter, that all or part of such Share Units shall become vested if a
Change in Control occurs with respect to the Company or if the Participant’s
Service is terminated without Cause after a Change in Control.  In addition, acceleration of vesting may be
required under Section 10.3.

                Voting
and Dividend Rights. 
The holders of Share Units shall have no voting rights.  Prior to settlement or forfeiture, any Share
Unit awarded under the Plan may, at the Committee’s discretion, carry with it a
right to dividend equivalents.  Such
right entitles the holder to be credited with an amount equal to all cash
dividends paid on one Share while the Share Unit is outstanding.  Dividend equivalents may be converted into
additional Share Units.  Settlement of
dividend equivalents may be made in the form of cash, in the form of Shares, or
in a combination of both.  Prior to
distribution, any dividend equivalents that are not paid shall be subject to
the same conditions and restrictions as the Share Units to which they attach.

                Form and Time of Settlement of Share Units.  Settlement of vested Share Units may be made
in the form of (a) cash, (b) Shares or (c) any combination of
both, as determined by the Committee. 
The actual number of Share Units eligible for settlement may be larger
or smaller than the number included in the original Award, based on
predetermined performance factors. 
Methods of converting Share Units into cash may include (without
limitation) a method based on the average Fair Market Value of Shares over a
series of trading days.  Vested Share
Units may be settled in a lump sum or in installments.  The distribution may occur or commence when
all vesting conditions applicable to the Share Units have been satisfied or
have lapsed, or it may be deferred to any later date.  The amount of a deferred distribution may be
increased by an interest factor or by dividend equivalents.  Until an Award of Share Units is settled, the
number of such Share Units shall be subject to adjustment pursuant to
Article 10.

                Creditors’ Rights.  A
holder of Share Units shall have no rights other than those of a general
creditor of the Company.  Share Units
represent an unfunded and unsecured obligation of the Company, subject to the
terms and conditions of the applicable Share Unit Agreement.

AUTOMATIC OPTION GRANTS TO OUTSIDE DIRECTORS.

                Initial
Grants.  In connection
with joining the Board, each Outside Director shall receive:

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

 A-10
 

 

                A
one-time grant of Share Units with an Accounting Value of $110,000.  Such Share Units shall be granted on the date
when such Outside Director first joins the Board and shall vest on the first
anniversary of the Date of Grant. 
Settlement of vested Share Units shall be made in a lump sum on the
third anniversary of the Date of Grant. 
Such lump sum shall consist of a number of Shares equal to the number of
vested Share Units.

                With
respect to an Outside Director who first becomes a member of the Board prior to
completion of the Company’s initial public offering, the initial grants
referred to in subparagraphs (a) and (b) above shall be granted on the date of
the Company’s initial public offering and the prices shall be calculated by
reference to the initial public offering price reflected in the final
prospectus related to the offering.

An
Outside Director who was previously an Employee shall not receive grants under
this Section 9.1.

                Annual Grants.  Upon
the conclusion of each regular annual meeting of the Company’s shareholders
held in the year 2007 or thereafter, each Outside Director who will continue
serving as a member of the Board thereafter shall receive:

                A
grant of an NSO covering Shares with an Accounting Value of $55,000.  Such NSO shall vest and become exercisable on
the first anniversary of the Date of Grant; and

                A
grant of Share Units with an Accounting Value of $55,000.  Such Share Units shall vest on the first
anniversary of the Date of Grant. 
Settlement of vested Share Units shall be made in a lump sum on the
third anniversary of the Date of Grant, unless deferred to a later date.  Such lump sum shall consist of a number of
Shares equal to the number of vested Share Units.

Notwithstanding
the foregoing, no grants shall be made pursuant to this Section 9.2 in the
calendar year in which the same Outside Director received grants described in
Section 9.1.  An Outside Director
who previously was an Employee shall be eligible to receive grants under this
Section 9.2.

Cessation of Eligibility to Vest.  Unless otherwise provided by the Award
Agreement, if an Outside Director’s Service terminates prior to the vesting
date specified in such agreement other than as a result of circumstances
described in Section 9.4 below, then such Director’s unvested Award shall
immediately be forfeited and such unvested Shares shall revert to the Plan.

                Accelerated
Exercisability.  All
Awards granted to an Outside Director under this Article 9 shall also
become exercisable in full, and Restricted Shares and Share Units shall be
distributed, in the event that:

                Such
Outside Director’s Service terminates because of death, total and permanent
disability, or retirement at or after age 65;

 A-11
 

 

The Company is subject to a Change in Control before
such Outside Director’s Service terminates; or

                As
otherwise required by Section 10.3.

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

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

                Affiliates of Outside Directors.  The Committee may provide that the NSOs that
otherwise would be granted to an Outside Director under this Article 9
shall instead be granted to an affiliate of such Outside Director.  Such affiliate shall then be deemed to be an
Outside Director for purposes of the Plan, provided that the Service-related
vesting and termination provisions pertaining to the NSOs shall be applied with
regard to the Service of the Outside Director.

PROTECTION AGAINST DILUTION.

                Adjustments.  In the
event of a subdivision of the outstanding Shares, a declaration of a dividend
payable in Shares or a combination or consolidation of the outstanding Shares
(by reclassification or otherwise) into a lesser number of Shares,
corresponding adjustments shall automatically be made in each of the following:

                The
number of Options, SARs, Restricted Shares and Share Units available for future
Awards under Article 3;

                The
limitations set forth in Sections 5.2, 7.2, 8.4(a) and 9.4(a);

                The
number of Shares covered by each outstanding Option and SAR;

                The
Exercise Price under each outstanding Option and SAR; or

                The
number of Share Units included in any prior Award that has not yet been
settled.

1.     In
the event of a declaration of an extraordinary dividend payable in a form other
than Shares in an amount that has a material effect on the price of Shares, a
recapitalization, a spin-off or a similar occurrence, the Committee shall make
such adjustments as it, in its sole discretion, deems appropriate in one or
more of the foregoing.  Except as
provided in this Article 10, a Participant shall have no rights by reason
of any issuance by the Company of shares of any class or securities convertible
into shares of any class, any subdivision or consolidation of shares of any
class, the payment of any share dividend or any other increase or decrease in
the number of shares of any class.

                Dissolution or Liquidation. 
To the extent not previously exercised or settled, Options, SARs and
Share Units shall terminate immediately prior to the dissolution or liquidation
of the Company.

 A-12
 

 

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

                The
continuation of such outstanding Awards by the Company (if the Company is the
surviving corporation).

                The
assumption of such outstanding Awards by the surviving corporation or its
parent, provided that the assumption of Options or SARs shall comply with
sections 409A and 424(a) of the Code (whether or not the Options are
ISOs).

                The
substitution by the surviving corporation or its parent of new awards for such
outstanding Awards, provided that the substitution of Options or SARs shall
comply with sections 409A and 424(a) of the Code (whether or not the
Options are ISOs).

                Full
exercisability of outstanding Options and SARs and full vesting of the Shares
subject to such Options and SARs, followed by the cancellation of such Options
and SARs.  The full exercisability of
such Options and SARs and full vesting of such Shares may be contingent on the
closing of such merger or consolidation. 
The Optionees shall be able to exercise such Options and SARs during a
period of not less than five full business days preceding the closing date of
such merger or consolidation, unless (i) a shorter period is required to
permit a timely closing of such merger or consolidation and (ii) such
shorter period still offers the Optionees a reasonable opportunity to exercise
such Options and SARs.  Any exercise of
such Options and SARs during such period may be contingent on the closing of
such merger or consolidation.

                The
cancellation of outstanding Options and SARs and a payment to the Optionees
equal to the excess of (i) the Fair Market Value of the Shares subject to
such Options and SARs (whether or not such Options and SARs are then
exercisable or such Shares are then vested) as of the closing date of such
merger or consolidation over (ii) their Exercise Price.  Such payment shall be made in the form of
cash, cash equivalents, or securities of the surviving corporation or its
parent with a Fair Market Value equal to the required amount.  Such payment may be made in installments and
may be deferred until the date or dates when such Options and SARs would have
become exercisable or such Shares would have vested.  Such payment may be subject to vesting based
on the Optionee’s continuing Service, provided that the vesting schedule shall
not be less favorable to the Optionee than the schedule under which such
Options and SARs would have become exercisable or such Shares would have
vested.  If the Exercise Price of the
Shares subject to such Options and SARs exceeds the Fair Market Value of such
Shares, then such Options and SARs may be cancelled without making a payment to
the Optionees.  For purposes of this
Subsection (e), the Fair Market Value of any security shall be determined
without regard to any vesting conditions that may apply to such security.

                The
cancellation of outstanding Share Units and a payment to the Participants equal
to the Fair Market Value of the Shares subject to such Share Units (whether or
not such Share Units are then vested) as of the closing date of such merger or
consolidation.  Such payment shall be
made in the form of cash, cash equivalents, or securities of the surviving
corporation or its parent with a Fair Market Value equal to the required
amount.  Such payment may be made in
installments and may be deferred until the date or dates when such Share Units 

 A-13
 

would have vested. 
Such payment may be subject to vesting based on the Participant’s
continuing Service, provided that the vesting schedule shall not be less
favorable to the Participant than the schedule under which such Share Units
would have vested.  For purposes of this
Subsection (f), the Fair Market Value of any security shall be determined
without regard to any vesting conditions that may apply to such security.

PAYMENT OF DIRECTOR’S FEES IN SECURITIES.

                Effective Date.  No
provision of this Article 11 shall be effective unless and until the Board
has determined to implement such provision.

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

                Number and Terms of NSOs, Restricted Shares or Share Units.  The number of NSOs, Restricted Shares or
Share Units to be granted to Outside Directors in lieu of annual retainers and
meeting fees that would otherwise be paid in cash shall be calculated in a
manner determined by the Board.  The Board
shall also determine the terms of such NSOs, Restricted Shares or Share Units.

LIMITATION ON RIGHTS.

                Retention Rights. 
Neither the Plan nor any Award granted under the Plan shall be deemed to
give any individual a right to remain an Employee, Outside Director or
Consultant.  The Company and its Parents,
Subsidiaries and Affiliates reserve the right to terminate the Service of any
Employee, Outside Director or Consultant at any time, with or without cause,
subject to applicable laws, the Company’s Articles of Association and a written
employment agreement (if any).

                Shareholders’ Rights. 
A Participant shall have no dividend rights, voting rights or other
rights as a shareholder with respect to any Shares covered by his or her Award
prior to the time when such Shares are issued or, if applicable, the time when
he or she becomes entitled to receive such Shares by filing any required notice
of exercise and paying any required Exercise Price.  No adjustment shall be made for cash
dividends or other rights for which the record date is prior to such time,
except as expressly provided in the Plan.

                Regulatory
Requirements.  Any
other provision of the Plan notwithstanding, the obligation of the Company to
issue Shares under the Plan shall be subject to all applicable laws, rules and
regulations and such approval by any regulatory body as may be required.  The Company reserves the right to restrict,
in whole or in part, the delivery of Shares pursuant to any Award prior to the
satisfaction of all legal requirements relating to the issuance of such Shares,
to their registration, qualification or listing or to an exemption from
registration, qualification or listing.

 

 A-14

WITHHOLDING TAXES.

                General.  To the extent required by applicable federal,
state, local or foreign law, a Participant or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any
withholding tax obligations that arise in connection with the Plan.  The Company shall not be required to issue
any Shares or make any cash payment under the Plan until such obligations are
satisfied.

                Share
Withholding.  To the
extent that applicable law subjects a Participant to tax withholding
obligations, the Committee may permit such Participant to satisfy all or part
of such obligations by having the Company withhold all or a portion of any
Shares that otherwise would be issued to him or her or by surrendering all or a
portion of any Shares that he or she previously acquired.  Such Shares shall be valued at their Fair
Market Value on the date when they are withheld or surrendered.

LIMITATION ON PAYMENTS.

                Scope of Limitation. 
This Article 14 shall apply to an Award only if:

                The
independent auditors selected for this purpose by the Committee (the “Auditors”)
determine that the after-tax value of such Award to the Participant, taking
into account the effect of all federal, state and local income taxes,
employment taxes and excise taxes applicable to the Participant (including the
excise tax under section 4999 of the Code), will be greater after the
application of this Article 14 than it was before the application of this
Article 14; or

                The
Committee, at the time of making an Award under the Plan or at any time
thereafter, specifies in writing that such Award shall be subject to this
Article 14 (regardless of the after-tax value of such Award to the
Participant).

2.     If
this Article 14 applies to an Award, it shall supersede any contrary provision
of the Plan or of any Award granted under the Plan.

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

                Reduction of Payments. 
If the Auditors determine that any Payment would be nondeductible by the
Company because of section 280G of the Code, then the Company shall
promptly give the Participant notice to that effect and a copy of the detailed
calculation thereof and of the Reduced Amount, and the Participant may then
elect, in his or her sole discretion, which and how much of the Payments shall
be eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall advise the Company
in writing of his or her election within 10 days of receipt of
notice.  If no 

 A-15
 

such
election is made by the Participant within such 10-day period, then the
Company may elect which and how much of the Payments shall be eliminated or
reduced (as long as after such election the aggregate present value of the
Payments equals the Reduced Amount) and shall notify the Participant promptly
of such election.  For purposes of this Article 14,
present value shall be determined in accordance with section 280G(d)(4) of
the Code.  All determinations made by the
Auditors under this Article 14 shall be binding upon the Company and the
Participant and shall be made within 60 days of the date when a Payment
becomes payable or transferable.  As
promptly as practicable following such determination and the elections
hereunder, the Company shall pay or transfer to or for the benefit of the
Participant such amounts as are then due to him or her under the Plan and shall
promptly pay or transfer to or for the benefit of the Participant in the future
such amounts as become due to him or her under the Plan.

                Overpayments and Underpayments.  As a result of uncertainty in the application
of section 280G of the Code at the time of an initial determination by the
Auditors hereunder, it is possible that Payments will have been made by the
Company which should not have been made (an “Overpayment”) or that additional
Payments which will not have been made by the Company could have been made (an “Underpayment”),
consistent in each case with the calculation of the Reduced Amount
hereunder.  In the event that the
Auditors, based upon the assertion of a deficiency by the Internal Revenue
Service against the Company or the Participant that the Auditors believe has a
high probability of success, determine that an Overpayment has been made, such
Overpayment shall be treated for all purposes as a loan to the Participant that
he or she shall repay to the Company, together with interest at the applicable
federal rate provided in section 7872(f)(2) of the Code; provided,
however, that no amount shall be payable by the Participant to the Company if
and to the extent that such payment would not reduce the amount that is subject
to taxation under section 4999 of the Code.  In the event that the Auditors determine that
an Underpayment has occurred, such Underpayment shall promptly be paid or
transferred by the Company to or for the benefit of the Participant, together
with interest at the applicable federal rate provided in
section 7872(f)(2) of the Code.

                Related Corporations. 
For purposes of this Article 14, the term “Company” shall include
affiliated corporations to the extent determined by the Auditors in accordance
with section 280G(d)(5) of the Code.

FUTURE OF THE PLAN.

                Term of the Plan.  The
Plan, as set forth herein, shall become effective on the date of the Company’s
initial public offering.  The Plan shall
remain in effect until the earlier of (a) the date when the Plan is
terminated under Section 15.2 or (b) the 10th anniversary of the date when the Board adopted
the Plan.

                Amendment or Termination. 
The Board may, at any time and for any reason, amend or terminate the
Plan.  No Awards shall be granted under
the Plan after the termination thereof. 
The termination of the Plan, or any amendment thereof, shall not affect
any Award previously granted under the Plan.

                Shareholder Approval. 
An amendment of the Plan shall be subject to the approval of the Company’s
shareholders only to the extent required by applicable laws, regulations or
rules.  However, section 162(m) of
the Code may require that the Company’s shareholders approve:

 A-16
 

                The
Plan not later than the first regular meeting of shareholders that occurs in
the fourth calendar year following the calendar year in which the Company’s
initial public offering occurred; and

                The
performance criteria set forth in Appendix A not later than the first
meeting of shareholders that occurs in the fifth year following the year in
which the Company’s shareholders previously approved such criteria.

DEFINITIONS.

                “Awardee Eligible to Vest” means a Participant who is in
active service with the Company or a Subsidiary or Affiliate (or who is on an
approved leave of absence or taking vacation or otherwise approved flexible time
off (“FTO”) in accordance with the Company’s FTO policy) on the vesting date
fixed in the Award Agreement, subject to the exceptions provided in
Articles 5, 7, 8 and 9.  With
the exception of an individual who is on an approved leave of absence or taking
FTO, in no event shall an individual be considered an Awardee Eligible to Vest
if and at the time the individual ceases or has ceased to perform job duties
for which he or she is compensated directly by the Company or a Subsidiary or
Affiliate. The foregoing shall be true in the event that the individual, prior
to ceasing to perform job duties for which he or she is compensated directly by
the Company or a Subsidiary or Affiliate, received or provided notice of
termination (irrespective of any notice period or similar period prescribed
under the laws of a jurisdiction outside the United States) whether such notice
of termination or transfer is lawful or unlawful under applicable employment
law or is in breach of an employment contract. 
Continued affiliation or relationship with the Company or a Subsidiary
or Affiliate pursuant to a statutory or contractual notice period shall not
constitute continuation of an individual’s status as an Awardee Eligible to
Vest.  In accordance with the definition
above, status as an Awardee Eligible to Vest will always cease upon termination
of employment with the Company or a Subsidiary or Affiliate except as provided
in Articles 5, 7, 8 and 9.

                “Accounting Value” means, with respect to an Award, a value
calculated using the same methodology as was applied by the Company for
purposes of determining the accounting charge associated with similar Awards
for the fiscal period immediately preceding the date on which the subject Award
is granted.

                “Affiliate” means any entity other than a Subsidiary, if the
Company and/or one or more Subsidiaries own not less than 50% of such entity.

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

                “Board” means the Company’s Board of Directors, as constituted
from time to time.

 A-17
 

 

                “Cause” means:

                An
unauthorized use or disclosure by the Participant of the Company’s confidential
information or trade secrets, which use or disclosure causes material harm to
the Company;

                A
material breach by the Participant of any agreement between the Participant and
the Company;

                A
material failure by the Participant to comply with the Company’s written
policies or rules;

                The
Participant’s conviction of, or plea of “guilty” or “no contest” to, a felony
under the laws of the United States or any State thereof or the equivalent
under the applicable laws outside of the United States;

                The
Participant’s gross negligence or willful misconduct;

                A
continuing failure by the Participant to perform assigned duties after receiving
written notification of such failure; or

                A
failure by the Participant to cooperate in good faith with a governmental or
internal investigation of the Company or its directors, officers or employees,
if the Company has requested the Participant’s cooperation.

                “Change in Control” means:

                The
consummation of a merger or consolidation of the Company with or into another
entity or any other corporate reorganization, if persons who were not
shareholders of the Company immediately prior to such merger, consolidation or
other reorganization own immediately after such merger, consolidation or other
reorganization 50% or more of the voting power of the outstanding securities of
each of (i) the continuing or surviving entity and (ii) any direct or
indirect parent corporation of such continuing or surviving entity;

                The
sale, transfer or other disposition of all or substantially all of the Company’s
assets;

                A
change in the composition of the Board, as a result of which fewer than 50% of
the incumbent directors are directors who either:

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

                (ii)           Were appointed to the Board, or nominated for election to
the Board, with the affirmative votes of at least a majority of the aggregate
of (A) the Original Directors who were in office at the time of their
appointment or nomination and (B) the directors whose appointment or
nomination was previously approved in a manner consistent with this
Paragraph (ii); or

 A-18
 

 

                Any
transaction as a result of which any person is the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing at least 30% of the total voting power
represented by the Company’s then outstanding voting securities.  For purposes of this Subsection (d), the
term “person” shall have the same meaning as when used in sections 13(d)
and 14(d) of the Exchange Act but shall exclude (i) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
of a Parent or Subsidiary and (ii) a corporation owned directly or
indirectly by the shareholders of the Company in substantially the same
proportions as their ownership of Shares.

3.     A
transaction shall not constitute a Change in Control if its sole purpose is to
change the jurisdiction of the Company’s incorporation or to create a holding
company that will be owned in substantially the same proportions by the persons
who held the Company’s securities immediately before such transaction.

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

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

                “Company” means Verigy Ltd., a Singapore corporation.

                “Consultant” means a consultant or adviser who provides bona
fide services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor.

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

                “Employee” means a full time or part time employee of the
Company or any Subsidiary or Affiliate, including Officers and Directors, who
is treated as an employee in the personnel records of the Company or a
Subsidiary or Affiliate for the relevant period, but shall exclude individuals
who are classified by the Company or a Subsidiary or Affiliate as (a) leased
from or otherwise employed by a third party, (b) independent contractors
or (c) intermittent or temporary, even if any such classification is
changed retroactively as a result of an audit, litigation or otherwise.  A Participant shall not cease to be an
Employee in the case of (i) any vacation or sick time or otherwise
approved FTO in accordance with the Company’s (or a Subsidiary’s or Affiliate’s)
FTO policy or (ii) transfers between locations of the Company or between
the Company and/or any Subsidiary or Affiliate. 
Neither service as a Director nor payment of a director’s fee by the
Company shall be sufficient to constitute “employment” by the Company.

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

                “Exercise Price,” in the case of an Option, means the amount
for which one Share may be purchased upon exercise of such Option, as specified
in the applicable Option Agreement. 

 A-19
 

“Exercise Price,”
in the case of a SAR, means an amount, as specified in the applicable SAR Agreement,
which is subtracted from the Fair Market Value of one Share in determining the
amount payable upon exercise of such SAR.

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

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

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

                “ISO” means an incentive stock option described in
section 422(b) of the Code.

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

                “Option” means an ISO or NSO granted under the Plan and
entitling the holder to purchase Shares.

                “Option Agreement” means the agreement between the Company
and an Optionee that contains the terms, conditions and restrictions pertaining
to his or her Option.

                “Optionee” means an individual or estate that holds an Option
or SAR.

                “Outside Director” means a member of the Board who is not an
Employee.

                “Parent” means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns shares possessing 50% or more of the total
combined voting power of all classes of shares in one of the other corporations
in such chain.  A corporation that
attains the status of a Parent on a date after the adoption of the Plan shall
be considered a Parent commencing as of such date.

                “Participant” means an individual or estate that holds an
Award.

                “Plan” means this Verigy Ltd. 2006 Equity Incentive Plan, as
amended from time to time.

                “Replacement Awards” means Awards granted or Shares issued by
the Company in the conversion, assumption, substitution, or exchange of awards
previously granted under the Agilent Technologies, Inc. 1999 Stock Plan or the
Agilent Technologies, Inc. 1999 Non-employee Director Stock Plan.

 A-20
 

 

                “Restricted Share” means a Share awarded under the Plan.

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

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

                “SAR Agreement” means the agreement between the Company and
an Optionee that contains the terms, conditions and restrictions pertaining to
his or her SAR.

                “Service” means service as an Employee, Outside Director or
Consultant.

                “Shares” means the Ordinary Shares of the Company.

                “Share Unit” means a bookkeeping entry representing the
equivalent of one Share, as awarded under the Plan.

                “Share Unit Agreement” means the agreement between the
Company and the recipient of a Share Unit that contains the terms, conditions
and restrictions pertaining to such Share Unit.

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

                “Substitute Awards” means:

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

                Awards
granted or Shares issued by the Company in assumption of, or in substitution or
exchange for, awards previously granted by Agilent Technologies, Inc.

Adoption
and Amendment History:

	
  Action

  	
   

  	
  Date

  
	
  Adopted by the
  Board of Directors:

  	
   

  	
  June 7, 2006

  
	
  Approved by the
  sole shareholder:

  	
   

  	
  June 7, 2006

  
	
  Amended by the
  Board of Directors to revise definition of “Fair Market Value” (Section 16.16)

  	
   

  	
  August 29, 2006

  
	
  Amended by the
  Board of Directors to add definition of Date of Grant (Section 16.12)

  	
   

  	
  December 13, 2006

  
	
  Amended by the
  Board of Directors to add provision regarding RSU awards granted to
  individuals in China

  	
   

  	
  February 15, 2007

  

 A-21
 

ADDENDUM TO THE VERIGY LTD. 2006 EQUITY INCENTIVE PLAN

Pursuant to Section 2.2 of the Verigy Ltd. 2006 Equity Incentive Plan the following modifications
to the Plan will apply in the countries as set forth below:

CHINA

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

All restricted stock units granted in China will be
subject to mandatory same-day sale pursuant to which all shares must be sold
immediately upon vesting so that the Participant receives only the cash
proceeds and is not entitled to hold shares.

FRANCE

All options and restricted stock units (“RSUs”)
granted in France shall be subject to the additional terms and conditions of
the Verigy Ltd. 2006 Equity Incentive
Plan  Option  Sub-Plan for French Employees and
the Verigy Ltd. 2006 Equity Incentive
Plan  RSU  Sub-Plan for French Employees, as applicable.

ITALY

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

 

 A-22

APPENDIX A

PERFORMANCE CRITERIA FOR
RESTRICTED SHARES AND SHARE UNITS

The
Committee may apply any one or more of the following performance criteria,
individually, alternatively or in any combination, either to the Company as a
whole or to a business unit, Subsidiary or Affiliate, measured annually,
quarterly or cumulatively over a period of years, either on an absolute basis
or relative to a pre-established target, with respect to previous years’
results or a designated comparison group, in each case as specified by the
Committee: (i) cash flow (before or after dividends), (ii) earnings
per share (including earnings before interest, taxes, depreciation and
amortization), (iii) share price, (iv) return on equity,
(v) total shareholder return, (vi) return on capital (including
return on total capital or return on invested capital), (vii) return on
assets or net assets, (viii) market capitalization, (ix) economic
value added, (x) debt leverage (debt to capital), (xi) revenue or net
revenue, (xii) income or net income, (xiii) operating income,
(xiv) operating profit or net operating profit, (xv) operating margin
or profit margin, (xvi) return on operating revenue, (xvii) cash from
operations, (xviii) operating ratio, (xix) operating revenue,
(xx) customer satisfaction measures, (xxi) net order dollars,
(xxii) guaranteed efficiency measures; (xxiii) service agreement renewal
rates; (xxiv) service revenues as a percentage of product revenues, either with
respect to one or more particular transactions or with respect to revenues as a
whole; or (xxv) individual performance. 
To the extent consistent with section 162(m) of the Code, the
Committee may appropriately adjust any evaluation of performance under a
performance criterion to exclude any of the following events that occurs during
a performance period: (i) asset write-downs, (ii) litigation, claims,
judgments or settlements, (iii) the effect of changes in tax law,
accounting principles or other such laws or provisions affecting reported
results, (iv) accruals for reorganization and restructuring programs and
(v) any extraordinary, unusual or non-recurring items.Exhibit
10.2.15

OPTION AMENDMENT AGREEMENT

This
Option Amendment Agreement (the “Amendment”) is entered into as of the latest date
set forth below by and between Verigy Ltd. a Singapore Corporation (“Verigy”) and                                 ,
a member of Verigy’s Board of Directors (“Director”).

WHEREAS,
on [DATE] Director was awarded an option to purchase [QUANTITY] Verigy ordinary
shares at an exercise price of [PRICE PER SHARE] (the “Option”); and

WHEREAS,
the Option had a term of seven years from the date of grant; and

WHEREAS,
the parties desire to shorten the term of the option to five years;

NOW,
THEREFORE, The parties hereby agree as follows:

1.             Amendment. 
The Option is hereby amended such that the Option will expire on the earlier of (a) the date five years after
the date of grant or (b) the date 12 months after the termination of your
Service for any reason.

2.             Miscellaneous.  This Amendment may be signed in two
counterparts, each of which shall be deemed to be an original and both of which
together shall be deemed to be one instrument. 
Except as expressly amended hereby, the Option shall remain in full
force and effect on the terms provided at the time of issuance, and shall
continue to be governed by the terms of the Company’s 2006 Equity Incentive
Plan.

	
  VERIGY LTD.

  	
  DIRECTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  Keith Barnes

  	
   

  
	
   

  	
  President & CEO

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

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