Exhibit 10.1
TERADYNE, INC.
1991 EMPLOYEE STOCK OPTION PLAN
(Amended and Restated as of May 23, 2002)
1. Purpose. This 1991 Employee Stock Option Plan (the "Plan") is intended
to provide incentives (a) to the employees of Teradyne, Inc. (the "Company"),
its parent (if any) and any present or future subsidiaries of the Company
(collectively, "Related Corporations") by providing them with opportunities to
purchase stock in the Company pursuant to options which qualify as "incentive
stock options" under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), granted hereunder ("ISO" or "ISOs"); and (b) to directors,
employees and consultants of the Company and Related Corporations by providing
them with opportunities to purchase stock in the Company pursuant to
non-statutory stock options granted hereunder ("NSO" or "NSOs"). Both ISOs and
NSOs are referred to hereafter individually as an "Option" and collectively as
"Options." As used herein, the terms "parent" and "subsidiary" mean "parent
corporation" and "subsidiary corporation" as those terms are defined in Section
424 of the Code.
2. Administration of the Plan.
A. Board or Committee Administration. The Plan shall be administered
by the Board of Directors of the Company (the "Board") or, subject to
paragraph 2(B) (relating to compliance with Section 162(m) of the Code), by
a committee appointed by the Board (the "Committee"); provided, that to the
extent required by Rule 16b-3 of the Securities and Exchange Commission
("Rule 16b-3") under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), with respect to specific grants of Options, the Plan shall be
administered by a disinterested administrator or administrators within the
meaning of Rule 16b-3. Hereinafter all references in this Plan to the
"Committee" shall mean the Board if no Committee has been appointed.
Subject to ratification of the grant of each Option by the Board (if so
required by applicable state law), and subject to the terms of the Plan,
the Committee shall have the authority to (i) determine the employees of
the Company and Related Corporations (from among the class of employees
eligible under paragraph 3 to receive ISOs) to whom ISOs may be granted,
and to determine the individuals and entities (from among the class of
individuals and entities eligible under paragraph 3 to receive NSOs) to
whom NSOs may be granted; (ii) determine the time or times at which Options
may be granted; (iii) determine the option price of shares subject to each
Option; (iv) determine whether each Option granted shall be an ISO or a
NSO; (v) determine (subject to paragraph 7) the time or times when each
Option shall become exercisable and the duration of the exercise period;
(vi) determine whether restrictions such as repurchase options are to be
imposed on shares subject to Options, and the nature of such restrictions
if any, and (vii) interpret the Plan and prescribe and rescind rules and
regulations relating to it. The interpretation and construction by the
Committee of any provisions of the Plan or of any Option granted under it
shall be final unless otherwise determined by the Board. The Committee may
from time to time adopt such rules and regulations for carrying out the
Plan as it may deem best. No member of the Board or the Committee shall be
liable for any action or determination made in good faith with respect to
the Plan or any Option granted under it.
B. Performance-Based Compensation. The Board, in its discretion, may
take such action as may be necessary to ensure that Options granted under
the Plan qualify as "qualified performance-based compensation" within the
meaning of Section 162(m) of the Code and applicable regulations
promulgated thereunder ("Performance-Based Compensation"). Such action may
include, in the Board's discretion, some or all of the following (i) if the
Board determines that Options granted under the Plan generally shall
constitute Performance-Based
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Compensation, the Plan shall be administered, to the extent required for
such Options to constitute Performance-Based Compensation, by a Committee
consisting solely of two or more "outside directors" (as defined in
applicable regulations promulgated under Section 162(m) of the Code,
(ii) if any NSOs with an exercise price less than the fair market value per
share of Common Stock are granted under the Plan and the Board determines
that such Options should constitute Performance-Based Compensation, such
Options shall be made exercisable only upon the attainment of a
pre-established, objective performance goal established by the Committee,
and such grant shall be submitted for, and shall be contingent upon
shareholder approval and (iii) Options granted under the Plan may be
subject to such other terms and conditions as are necessary for
compensation recognized in connection with the exercise of such Option or
the disposition of Common Stock (as defined herein) acquired pursuant to
such Option, to constitute Performance-Based Compensation.
3. Eligible Employees and Others. ISOs may be granted to any employee of
the Company or any Related Corporation. NSOs may be granted to any employee,
consultant or director of the Company or any Related Corporation; provided, that
no Option may be granted hereunder to any non-employee director. Granting of any
option to any individual or entity shall neither entitle that individual or
entity to, nor disqualify him from, participation in any other grant of Options.
4. Stock. The stock subject to Options shall be authorized but unissued
shares of Common Stock of the Company, par value $.125 per share (the "Common
Stock"), or shares of Common Stock reacquired by the Company in any manner. The
aggregate number of shares which may be issued pursuant to the Plan is
30,000,000, subject to adjustment as provided in paragraph 13. If any Option
granted under the Plan shall expire or terminate for any reason without having
been exercised in full or shall cease for any reason to be exercisable in whole
or in part, the unpurchased shares subject thereto shall again be available for
grants of Options under the Plan.
No employee of the Company or any Related Corporation may be granted
Options to acquire, in the aggregate, more than 300,000 shares of Common Stock
under the Plan during any fiscal year of the Company. If any Option granted
under the Plan shall expire or terminate for any reason without having been
exercised in full or shall cease for any reason to be exercisable in whole or in
part or shall be repurchased by the Company, the shares subject to such Option
shall be included in the determination of the aggregate number of shares of
Common Stock deemed to have been granted to such employee under the Plan.
5. Granting of Options. Options may be granted under the Plan at any time
after March 13, 1991 and prior to March 13, 2011. The date of grant of an Option
under the Plan will be the date specified by the Committee at the time it grants
the Option; provided, however, that such date shall not be prior to the date on
which the Committee acts to approve the grant. The Committee shall have the
right, with the consent of the optionee, to convert an ISO granted under the
Plan to a NSO pursuant to paragraph 16.
6. Minimum Option Price; ISO Limitations.
A. Price for NSOs. The price per share specified in the agreement
relating to each NSO granted under the Plan shall in no event be less than
the minimum legal consideration therefor required under the laws of the
Commonwealth of Massachusetts. No more than 200,000 NSOs may be granted
under the Plan for less than "fair market value" (as hereinafter defined).
B. Price for ISOs. The price per share specified in the agreement
relating to each ISO granted under the Plan shall not be less than the fair
market value per share of Common Stock on the date of such grant. In the
case of an ISO to be granted to an employee owning stock
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possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or any Related Corporation, the price per
share specified in the agreement relating to such ISO shall not be less
than 110 percent of the fair market value of Common Stock on the date of
grant.
C. $100,000 Annual Limitation on ISOs. Each eligible employee may be
granted ISOs only to the extent that, in the aggregate under this Plan and
all incentive stock option plans of the Company and any Related
Corporation, such ISOs do not become exercisable for the first time by such
employee during any calendar year in a manner which would entitle the
employee to purchase more than $100,000 in fair market value (determined at
the time the ISOs were granted) of Common Stock in that year. Any options
granted to an employee in excess of such amount will be granted as NSOs.
D. Determination of Fair Market Value. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded,
"fair market value" shall be determined as of the date such Option is
granted and shall mean (i) the average (on that date) of the high, low and
closing prices of the Common Stock on the principal national securities
exchange on which the Common Stock is traded, if the Common Stock is then
traded on a national securities exchange; or (ii) the last reported sale
price (on that date) of the Common Stock on the NASDAQ National Market
List, if the Common Stock is not then traded on a national securities
exchange; or (iii) the closing bid price (or average of bid prices) last
quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the
NASDAQ National Market List. However, if the Common Stock is not publicly
traded at the time an Option is granted under the Plan, "fair market value"
shall be deemed to be the fair value of the Common Stock as determined by
the Committee after taking into consideration all factors which it deems
appropriate, including, without limitation, recent sale and offer prices of
the Common Stock in private transactions negotiated at arm's length.
7. Option Duration. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than (i) ten years and one day from the date of grant in
the case of NSOs, (ii) ten years from the date of grant in the case of ISOs
generally, and (iii) five years from the date of grant in the case of ISOs
granted to an employee owning stock possessing more than ten percent of the
total combined voting power of all classes of stock of the Company or any
Related Corporation. Subject to earlier termination as provided in paragraphs 9
and 10, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into a NSO pursuant to paragraph 16.
8. Exercise of Option. Subject to the provisions of paragraphs 9 through
12, each option granted under the Plan shall be exercisable as follows:
A. Vesting. The Option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments as the
Committee may specify.
B. Full Vesting of Installments. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of
the Option, unless otherwise specified by the Committee.
C. Partial Exercise. Each Option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable.
D. Acceleration of Vesting. The Committee shall have the right to
accelerate the date of exercise of any installment of any Option; provided,
that the Committee shall
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not, without the consent of the optionee, accelerate the exercise date of
any installment of any Option granted to any employee as an ISO (and not
previously converted into a NSO pursuant to paragraph 16) if such
acceleration would violate the annual vesting limitation contained in
Section 422 of the Code, as described in paragraph 6(C).
9. Termination of Employment. If an optionee ceases to be employed by the
Company and all Related Corporations other than by reason of death or disability
as defined in paragraph 10, no further installments of his Options shall become
exercisable, and his Options shall terminate after the passage of 90 days from
the date of termination of his employment; provided, that the Committee may
specify that NSOs may remain exercisable for more than 90 days from the date of
termination of employment; provided, further, that in no event shall any Option
or part or installment thereof become or remain exercisable after its specified
expiration date. Employment shall be considered as continuing uninterrupted
during any bona fide leave of absence (such as those attributable to illness,
military obligations or governmental service) provided that the period of such
leave does not exceed 90-days or, if longer, any period during which such
optionee's right to reemployment is guaranteed by statute. A bona fide leave of
absence with the written approval of the Committee shall not be considered an
interruption of employment under the Plan, provided that such written approval
contractually obligates the Company or any Related Corporation to continue the
employment of the optionee after the approved period of absence. Options granted
under the Plan shall not be affected by any change of employment within or among
the Company and Related Corporations, so long as the optionee continues to be an
employee of the Company or any Related Corporation. Nothing in the Plan shall be
deemed to give any grantee of any Option the right to be retained in employment
or other service by the Company or any Related Corporation for any period of
time.
Notwithstanding anything to the contrary contained above, in the case of an
optionee who ceases to be employed by the Company and all Related Corporations
by reason of Normal Retirement (as defined herein), NSOs granted to such
optionee shall continue to vest and shall remain exercisable until the date
which is the earlier of (i) the NSOs' specified expiration date, or (ii)
immediately upon the date upon which such optionee becomes Engaged by a
Competitor (as defined herein), to the extent of the number of shares which have
vested prior to and during such period. Normal Retirement shall mean such
optionee's retirement from the Company or a Related Corporation either (a) in
accordance with any combination of age and years of service or any other
standard as shall have been established by the Committee as a prerequisite to
being eligible to receive retirement benefits then in effect, or (b) as
determined by the Committee, in its sole discretion. An optionee shall be deemed
to be Engaged by a Competitor on the date such optionee directly or indirectly
accepts employment, a directorship or consulting position, or otherwise renders
services, within a country in which the optionee had been actively employed by
the Company or a Related Corporation at any time during the ten-year period
immediately prior to such optionee's Normal Retirement, with or without
compensation, by or for any person, firm, or organization engaged in the sale,
servicing, developing, manufacturing or merchandising of products or services in
competition with any product or service of the Company. The Committee shall have
the absolute discretion to determine whether and as of what date an optionee is
Engaged by a Competitor.
10. Death; Disability.
A. Death. If an optionee ceases to be employed by the Company and all
Related Corporations by reason of his death, any Option of his may be
exercised, to the extent of the number of shares with respect to which he
has theretofore been granted Options (whether or not such Options have
vested in accordance with their terms) by his estate, personal
representative or beneficiary who has acquired the Option by will or by the
laws of descent and distribution, (i) in the case of ISOs, at any time
prior to the earlier of the ISOs' specified expiration date or 180 days
from the date of the optionee's death or
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(ii) in the case of NSOs, at any time prior to the earlier of the NSOs'
specified expiration date or one year from the date of the optionee's
death.
B. Disability. If an optionee ceases to be employed by the Company and
all Related Corporations by reason of his disability, any Option
theretofore granted to such optionee shall remain exercisable until the
date which is (i) in the case of ISOs, the earlier of the ISOs, specified
expiration date or 180 days from the date of the termination of the
optionee's employment or (ii) in the case of NSOs, the earlier of the NSOs'
specified expiration date or 33 months from the date of the termination of
the optionee's employment, to the extent of the number of shares (a) which,
in the case of ISOs, have vested prior to and during the period specified
in clause (i) and (b) which, in the case of NSOs, have vested prior to and
during the period which is 30 months from the date the optionee ceases to
be employed by the Company. For the purposes of this Plan, the term
"disability" shall mean "permanent and total disability" as defined in
Section 22(e)(3) of the Code or any successor statute.
11. Assignability. No Option shall be assignable or transferable by the
optionee except by will or by the laws of descent and distribution, and during
the lifetime of the optionee each Option shall be exercisable only by him.
12. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. The Committee may from time to time confer
authority and responsibility on one or more of its own members and/or one or
more officers of the Company to execute and deliver such instruments. The proper
officers of the Company are authorized and directed to take any and all action
necessary or advisable from time to time to carry out the terms of such
instruments.
13. Adjustments. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
written agreement between the optionee and the Company relating to such Option:
A. Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable
upon the exercise of Options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase
price per share to reflect such subdivision, combination or stock dividend.
B. Consolidations or Mergers. If the Company is to be consolidated
with or acquired by another entity in a merger, sale of all or
substantially all of the Company's assets or otherwise (an "Acquisition"),
the Committee or the board of directors of any entity assuming the
obligations of the Company hereunder (the "Successor Board"), shall, as to
outstanding Options, either (i) make appropriate provision for the
continuation of such Options by substituting on an equitable basis for the
shares then subject to such Options the consideration payable with respect
to the outstanding shares of Common Stock in connection with the
Acquisition; or (ii) upon written notice to the optionees, provide that all
Options must be exercised, to the extent then exercisable, within a
specified number of days of the date of such notice, at the end of which
period the options
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shall terminate; or (iii) terminate all Options in exchange for a cash
payment equal to the excess of the fair market value of the shares subject
to such Options (to the extent then exercisable) over the exercise price
thereof.
C. Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the
Company or of another corporation are issued with respect to the
outstanding shares of Common Stock, an optionee upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise
the securities he would have received if he had exercised his Option prior
to such recapitalization or reorganization.
D. Modification of ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with respect to ISOs
shall be made only after the Committee, after consulting with counsel for
the Company, determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in Section 424 of the
Code) or would cause any adverse tax consequences for the holders of such
ISOs. If the Committee determines that such adjustments made with respect
to ISOs would constitute a modification of such ISOs, it may refrain from
making such adjustments.
E. Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such
other time and subject to such other conditions as shall be determined by
the Committee.
F. Issuances of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to Options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the Company.
G. Fractional Shares. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.
H. Adjustments. Upon the happening of any of the events described in
subparagraphs A, B or C above, the class and aggregate number of shares set
forth in paragraph 4 hereof that are subject to Options which previously
have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such
subparagraphs. The Committee or the Successor Board shall determine the
specific adjustments to be made under this paragraph 13 and, subject to
paragraph 2, its determination shall be conclusive.
If any person or entity owning restricted Common Stock obtained by exercise
of an Option receives shares or securities or cash in connection with a
corporate transaction described in subparagraphs A, B or C above as a result of
owning such restricted Common Stock, such shares or securities or cash shall be
subject to all of the conditions and restrictions applicable to the restricted
Common Stock with respect to which such shares or securities or cash were
issued, unless otherwise determined by the Committee or the Successor Board.
14. Means of Exercising Options. An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company at its
principal office address. Such notice shall identify the Option being exercised
and specify the number of shares as to which such Option is being exercised,
accompanied by full payment of the purchase price therefor either
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(a) in United States dollars in cash or by check, or (b) at the discretion of
the Committee, through delivery of shares of Common Stock having fair market
value equal as of the date of the exercise to the cash exercise price of the
Option, or (c) at the discretion of the Committee in exceptional cases, by
delivery of the optionee's personal recourse note bearing interest payable not
less than annually at no less than 100% of the lowest applicable Federal rate,
as defined in Section 1274(d) of the Code, or (d) at the discretion of the
Committee, by any combination of (a), (b) and (c) above. If the Committee
exercises its discretion to permit payment of the exercise price of an ISO by
means of the methods set forth in clauses (b) or (c) of the preceding sentence,
such discretion shall be exercised in writing at the time of the grant of the
ISO in question. Alternatively, payment may be made in whole or in part in
shares of the Common Stock of the Company already owned by the person or persons
exercising the Option or shares subject to the Option being exercised (subject
to such restrictions and guidelines as the Board may adopt from time to time),
or consistent with applicable law, through the delivery of an assignment to the
Company of a sufficient amount of the proceeds from the sale of the Common Stock
acquired upon exercise of the Option and an authorization to the broker or
selling agent to pay that amount to the Company, which sale shall be at the
participant's direction at the time of exercise. The holder of an Option shall
not have the rights of a shareholder with respect to the shares covered by his
option until the date of issuance of a stock certificate to him for such shares.
Except as expressly provided above in paragraph 13 with respect to changes in
capitalization and stock dividends, no adjustment shall be made for dividends or
similar rights for which the record date is before the date such stock
certificate is issued.
15. Term and Amendment of Plan. This Plan was adopted by the Board and
effective on March 13, 1991, and shall expire on the end of the day on the date
twenty years following the date of effectiveness (except as to Options
outstanding on that date). The Board may at any time terminate the Plan or make
such modification or amendment thereof as it deems advisable; provided, however,
that the Board may not, without approval by the affirmative vote of the holders
of a majority of the securities of the Company present, or represented, and
entitled to vote at a meeting duly held in accordance with the applicable laws
of the state in which the Company is incorporated, (i) materially increase the
benefits accruing to participants under the Plan; (ii) increase the number of
shares for which Options may be granted under the Plan; or (iii) materially
modify the requirements as to eligibility for participation in the Plan.
Termination or any modification or amendment of the Plan shall not, without
consent of a participant, affect his rights under an option previously granted
to him.
16. Conversion of ISOs into NSOs; Termination of ISOs. The Committee, with
the written approval of any optionee, may in its discretion take such actions as
may be necessary to convert such optionee's ISOs (or any installments of
portions of installments thereof) that have not been exercised on the date of
conversion into NSOs at any time prior to the expiration of such ISOs,
regardless of whether the optionee is an employee of the Company or a Related
Corporation at the time of such conversion. Such actions may include, but not be
limited to, extending the exercise period or reducing the exercise price of the
appropriate installments of such Options. At the time of such conversion, the
Committee (with the consent of the optionee) may impose such conditions on the
exercise of the resulting NSOs as the Committee in its discretion may determine,
provided that such conditions shall not be inconsistent with this Plan. Nothing
in the Plan shall be deemed to give any optionee the right to have such
optionee's ISOs converted into NSOs, and no such conversion shall occur until
and unless the Committee takes appropriate action. The Committee, with the
consent of the optionee, may also terminate any portion of any ISO that has not
been exercised at the time of such termination.
17. Application of Funds. The proceeds received by the Company from the
sale of shares pursuant to Options granted under the Plan shall be used for
general corporate purposes.
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18. Governmental Regulation. The Company's obligation to sell and deliver
shares of Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
19. Withholding of Additional Income Taxes. Upon the exercise of a NSO, the
making of a Disqualifying Disposition (as defined in paragraph 20) or the
vesting of restricted Common Stock acquired on the exercise of an Option, the
Company, in accordance with Section 3402(a) of the Code, may require the
optionee to pay additional withholding taxes in respect of the amount that is
considered compensation includible in such person's gross income. The Committee
in its discretion may condition (i) the exercise of an Option or (ii) the
vesting of restricted Common Stock acquired by exercising an Option, on the
optionee's payment of such additional withholding taxes.
20. Notice to Company of Disqualifying Disposition. Each employee who
receives ISO shall agree to notify the Company in writing immediately after the
employee makes a disqualifying disposition of any Common Stock received pursuant
to the exercise of an ISO (a "Disqualifying Disposition"). Disqualifying
Disposition means any disposition (including any sale) of such stock before the
later of (a) two years after the employee was granted the ISO under which he
acquired such stock, or (b) one year after the employee acquired such stock by
exercising such ISO. If the employee has died before such stock is sold, these
holding period requirements do not apply and no Disqualifying Disposition will
thereafter occur.
21. Governing Laws; Construction. The validity and construction of the Plan
and the instruments evidencing Options shall be governed by the laws of the
Commonwealth of Massachusetts. In construing this Plan, the singular shall
include the plural and the masculine gender shall include the feminine and
neuter, unless the context otherwise requires.