Exhibit 10.22
EXECUTIVE OFFICER CHANGE IN CONTROL AGREEMENT
EXECUTIVE OFFICER CHANGE IN CONTROL AGREEMENT entered into this 19th
day of October, 2001, by and between Teradyne, Inc., a Massachusetts
corporation ("Teradyne"), and the undersigned executive officer of Teradyne
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("Employee").
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WITNESSETH:
WHEREAS, Teradyne and Employee desire to set forth certain terms and
conditions relating to benefits to be afforded to Employee upon the occurrence
of a Change in Control (as hereinafter defined) of Teradyne;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. Option Acceleration. (a) during the Term (as hereinafter
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defined), if within twenty-four (24) months following a Change in Control there
is a Termination Event (as hereinafter defined), all of Employee's unvested
Options granted prior to, on, or after the date hereof (but only (I) such
Options as have been granted to Employee by Teradyne as of the date of the
Change in Control or (II) such Options as have been assumed by an acquiring
company at the time of a Change in Control or such new options that have been
substituted by an acquiring company for Options existing at the time of a Change
in Control, each pursuant to the terms of any Teradyne option plan) shall
automatically become fully vested as of the date of such Termination Event. The
parties hereto acknowledge that the terms of this Agreement are intended to
modify the terms of Employee's existing Option agreements and to be a supplement
to future Option agreements.
(b) For purposes of this Agreement, the following terms shall
have the following meanings:
"Cause" shall mean conduct involving one or more of the
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following: (i) the substantial and continuing failure of Employee, after notice
thereof, to render services to Teradyne in accordance with the terms or
requirements of his or her employment; (ii) Employee's disloyalty, gross
negligence, willful misconduct, dishonesty, fraud or breach of fiduciary duty to
Teradyne; (iii) Employee's deliberate disregard of the rules or policies of, or
breach of an agreement with, Teradyne which results in direct or indirect loss,
damage or injury to Teradyne; (iv) the unauthorized disclosure by Employee of
any trade secret or confidential information of Teradyne; or (v) the commission
by Employee of an act which constitutes unfair competition with Teradyne.
A "Change in Control" shall be deemed to have occurred upon
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the occurrence of any of the following events: (i) any consolidation, cash
tender offer, reorganization, recapitalization, merger or plan of share exchange
following which the shareholders of Teradyne immediately prior to such
transaction own less than a majority of the combined voting power of the
then-outstanding securities of the combined corporation or person immediately
after such
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transaction; (ii) any sale, lease, exchange or other transfer of all or
substantially all of Teradyne's assets; (iii) the adoption by the Board of
Directors of Teradyne of any plan or proposal for the liquidation or dissolution
of Teradyne; (iv) a change in the majority of the Board of Directors of Teradyne
through one or more contested elections; or (v) any person (as that term is used
in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act of 1934, as amended)
becomes beneficial owner of 30% or more of the combined voting power of
Teradyne's outstanding voting securities.
"Good Reason" shall mean any one or more of the following: (i)
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any material reduction of Employee's responsibilities (other than for Cause or
as a result of death or disability); (ii) any material reduction in Employee's
model compensation as in effect on the date of the consummation of the Change in
Control, or as the same may be increased from time to time, or any failure by
Teradyne to pay to Employee any bonus accrued, but not yet paid, upon written
notice by Employee to Teradyne, within 45 days; (iii) a material reduction in
the value of Employee's benefit package from the value of Employee's benefit
package on the date of the consummation of the Change in Control; or (iv) any
permanent assignment of Employee to a job location situated more than 50 miles
away from his current job location.
"Option" shall mean an option to purchase shares of Teradyne
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Common Stock.
"Termination Event" shall mean (i) any termination of Employee
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by Teradyne without Cause or (ii) any voluntary termination by Employee for Good
Reason.
2. (a) Parachute Payment Gross-Up. If any Payments (as
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hereinafter defined) to Employee are subject to the Excise Tax (as hereinafter
defined), Teradyne shall pay to Employee a Gross-Up Payment (as hereinafter
defined). The Gross-Up Payment with respect to any Payment shall be paid no
later than 15 days prior to the date that the Excise Tax is due with respect to
such Payment.
(b) Definitions. For purposes of this Section 2, the
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following terms shall have the following meanings:
(i) "Code" shall mean the Internal Revenue Code
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of 1986, as amended.
(ii) "Excise Tax" shall mean the tax imposed by
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Section 4999 of the Code. The amount of the
Excise Tax (if any) imposed on any non-cash
benefits or any deferred payment or benefit
shall be reasonably determined by Teradyne,
after consultation with its legal and tax
advisors.
(iii) "Gross-Up Payment" shall mean, with respect
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to Payments to the Employee, the amount
necessary so that the amount retained by
Employee, after reduction for (1) any Excise
Tax on the Gross-Up Payment and (2) any
federal, state, or local income and
employment taxes imposed on the Gross-Up
Payment, is an
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amount equal to the Excise Tax on the
Payments to Employee, other than the
Gross-Up Payment. The amount of the Gross-Up
Payment shall be reasonably determined by
Teradyne after consultation with its legal
and tax advisors.
(1) For purposes of determining the
amount of the Gross-Up Payment,
Employee shall be deemed to pay
federal income taxes at the highest
marginal rate of federal, state and
local income tax in the calendar
year in which the Gross-Up Payment
is made (determined by reference to
Employee's residence for such
calendar year), net of the maximum
reduction in federal income taxes
which could be obtained from
deduction of such state and local
taxes.
(2) In the event that the Excise Tax
with respect to the Payments is
determined to exceed the amount
taken into account hereunder,
Teradyne shall make an additional
Gross-Up Payment in respect of such
excess. For purposes of calculating
such Gross-Up Payment, any interest
or penalties imposed in connection
with such excess Excise Tax shall
be treated as an Excise Tax.
(3) In the event that the Excise Tax
with respect to the Payments is
subsequently determined to be less
than the amount taken into account
for purposes of calculating the
Gross-Up Payment, Employee shall
promptly repay to Teradyne the
after-tax portion of the Gross-Up
Payment that exceeds the Gross-Up
Payment that otherwise would have
been payable in connection with the
actual Excise Tax imposed on the
Payments.
(iv) "Payment" shall mean, with respect to the
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Employee, any payment in the nature of
compensation to (or for the benefit of) such
individual, if such payment is contingent on
a change (i) in the ownership or effective
control of Teradyne or (ii) in the ownership
of a substantial portion of the assets of
Teradyne (in each case, as reasonably
determined by Teradyne in accordance with
Section 280G(b)(2) of the Code and the
regulations promulgated thereunder).
Notwithstanding the foregoing, any amount
payable to (or for the benefit of) the
Employee shall be a Payment if an Excise Tax
is imposed on the Employee with respect to
such payment or benefit, and such payment or
benefit is contingent on a change (i) in the
ownership or effective control of Teradyne
or (ii) in the ownership of a substantial
portion of the assets of Teradyne
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(in each case, determined in accordance with
Section 280G(b)(2) of the Code and the
regulations promulgated thereunder).
3. No Obligation of Employment. Employee understands that the
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employment relationship between Employee and Teradyne will be "at will" and
Employee understands that, prior to any Change in Control, Teradyne may
terminate Employee with or without "Cause" at any time. Following any Change in
Control, Teradyne may also terminate Employee with or without "cause" at any
time subject to Employee's rights and Teradyne's obligations specified in this
Agreement.
4. Governing Law. This Agreement shall be governed by and
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construed in accordance with the internal laws of the Commonwealth of
Massachusetts and this Agreement shall be deemed to be performable in
Massachusetts.
5. Severability. In case any one or more of the provisions
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contained in this Agreement for any reason shall be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement and this Agreement shall
be construed to the maximum extent permitted by law.
6. Waivers and Modifications. This Agreement may be modified, and
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the rights, remedies and obligations contained in any provision hereof may be
waived, only in accordance with this Section 6. No waiver by either party of any
breach by the other or any provision hereof shall be deemed to be a waiver of
any later or other breach thereof or as a waiver of any other provision of this
Agreement. This Agreement may not be waived, changed, discharged or terminated
orally or by any course of dealing between the parties, but only by an
instrument in writing signed by the party against whom any waiver, change,
discharge or termination is sought.
7. Assignment. Employee may not assign any of his rights or
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delegate any of his duties or obligations under this Agreement. The rights and
obligations of Teradyne under this Agreement shall inure to the benefit of, and
shall be binding upon, the successors and assigns of Teradyne. For purposes of
this Agreement, "Teradyne" shall be deemed to include all successors and assigns
of Teradyne.
8. Entire Agreement. This Agreement constitutes the entire
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understanding of the parties relating to the subject matter hereof and
supersedes and cancels all agreements, written or oral, made prior to the date
hereof between Employee and Teradyne relating to the subject matter hereof;
provided, however, that Employee's existing option agreements, as modified
hereby, shall remain in effect.
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9. Notices. All notices hereunder shall be in writing and shall
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be delivered in person or mailed by certified or registered mail, return receipt
requested, addressed as follows:
If to Teradyne, to: Teradyne, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxx Xxxxx
If to Employee, at Employee's address set forth on the signature page
hereto.
10. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11. Section Headings. The descriptive section headings herein have
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been inserted for convenience only and shall not be deemed to define, limit, or
otherwise affect the construction of any provision hereof.
12. Term. The term of this Agreement (the "Term") shall commence
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upon the date hereof and terminate upon the earlier of (i) twenty-four (24)
months following any Change in Control of Teradyne, (ii) the date prior to any
Change in Control of Teradyne that employee for any reason ceases to be an
employee of Teradyne and (iii) the date following any Change in Control of
Teradyne that Employee is terminated for Cause or voluntary terminates his
employment (other than for Good Reason).
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
TERADYNE, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxxx
Title: Chairman, Chief Executive
Officer and President of
Teradyne, Inc.
EMPLOYEE
/s/ Xxxxxxx XxxXxxxxx
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Name: Xxxxxxx X. XxxXxxxxx
Address: 000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
