8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 24, 2006

TERADYNE, INC.

(Exact Name of Registrant as Specified in Charter)

Massachusetts	001-06462	04-2272148
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

321 Harrison Avenue, Boston, Massachusetts	02118
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (617) 482-2700

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Teradyne, Inc. 2006 Equity and Cash Compensation Incentive Plan

At the Annual Meeting of Shareholders of Teradyne, Inc. (the “Company”) held on May 25, 2006 (the “2006 Annual Meeting”), the Company’s shareholders approved the Teradyne, Inc. 2006 Equity and Cash Compensation Incentive Plan (the “Plan”). The Plan as approved on May 25, 2006 will expire on May 24, 2016. The Plan replaces the Teradyne, Inc. 1996 Non-Employee Director Stock Option Plan, which expires in 2006; the Teradyne, Inc. 1997 Employee Stock Option Plan, which will expire in 2007; and the Teradyne, Inc. 1991 Employee Stock Option Plan which will expire in 2011 (collectively, the “Terminated Plans”). Beginning in 2007, the Plan will also replace the Variable Compensation Plan, the Company’s cash compensation plan.

The purpose of the Plan is to motivate employees, officers, directors, consultants and advisors of the Company and its subsidiaries by providing equity ownership and compensation opportunities in the Company. The Compensation Committee of the Board of Directors or another committee designated by the Board of Directors (collectively with the Compensation Committee, the “Committee”), administers the Plan. All employees, officers, consultants and advisors of the Company or any of its subsidiaries and the Company’s directors are eligible to participate in the Plan.

Types of Awards

Generally. The Plan authorizes the grant of cash and stock-based awards. Stock-based awards may take the form of (1) non-qualified and incentive stock options, (2) stock appreciation rights, (3) restricted stock awards and restricted stock unit awards, (4) phantom stock, and (5) other stock-based awards. Awards may be tied to time-based vesting schedules and/or performance-based vesting measured by reference to performance criteria chosen by the Committee. Participants in the Plan may satisfy the purchase or exercise price of stock-based awards in cash, common stock, a combination of cash and common stock, as the Committee may determine.

Non-Employee Director Formula Grants. Each non-employee director will receive automatic cash or stock-based awards having a fair market value equal to (1) 300% of his or her annual cash retainer (excluding separate committee chair retainers) on the date first elected to the Board and (2) 180% of his or her annual cash retainer (excluding separate committee chair retainers) on the first Monday in February in each year such director continues to be a non-employee director of the Company.

Cash Awards. Cash awards can be granted alone, in addition to, or in tandem with stock-based awards. These awards may be based on a predetermined “variable compensation factor,” that is reviewed annually, and on performance criteria as determined by the Committee. The variable compensation factor is a percentage of the Plan participant’s base annual salary, starting at 10% for new participants and can increase up to 200% or beyond at the Committee’s discretion. The Committee may not authorize a variable compensation payout based on performance criteria in excess of 200%.

Available Shares

The aggregate number of shares available under the Plan is 12,000,000 shares of the Company’s common stock. Shares of common stock that were available for grant under the Terminated Plans as of May 25, 2006, are no longer available for grant under the Plan. The aggregate number of shares will not be reduced by shares granted by the Company in assumption of, or exchange for, awards granted by another company as a result of a merger or consolidation. The number of shares under the Plan may be adjusted for changes in the Company’s capital structure, such as a stock split or merger.

Award Limits

The maximum number of shares of stock-based Awards that may be granted to any one participant during any one fiscal year is 2,000,000 shares of common stock.

Other Terms

Vesting. Other than in limited circumstances, full-value stock-based awards are subject to a minimum vesting period of three years if such awards are time-based or one year if such awards are tied to performance criteria.

Transferability. Except as the Committee may otherwise determine, awards may be transferred only by will or by the laws of descent and distribution, provided that nonstatutory stock options may be transferred to a grantor retained annuity trust or a similar estate planning vehicle.

Effect of Termination, Disability or Death. In the event of a participant’s disability, death, retirement, authorized leave of absence or other change in the employment or other status, the Committee will determine, subject to applicable law, the effect of such event on an award, and the extent to which and the period during which the participant, or the participant’s legal representative, may exercise rights under the award. In connection therewith, the Committee is permitted to accelerate in full or in part any award that may be settled in cash, provided that with respect to restricted stock or restricted stock unit awards or other full-value stock-based awards, the Committee is permitted to accelerate such awards only in the event of the participant’s disability, death, retirement or upon the acquisition of the Company by another entity.

Amendment of Awards. The Committee may, without shareholder approval, amend, modify or terminate any outstanding award, except that: (1) the Committee may not materially and adversely change the terms of a participant’s award without the participant’s consent; (2) previously-issued options may not be amended without shareholder approval to reduce the price at which such previously issued options are exercisable or to extend the period of time beyond ten years for which such previously-issued option shall be exercisable; and (3) previously issued full-value stock-based awards may not be accelerated without shareholder approval other than in the event of death, disability or retirement of a participant or an acquisition of Teradyne.

Section 162(m) and Section 409A. It is the Company’s intention that the entire amount of “qualified performance-based compensation” issued under the Plan in excess of $1,000,000 will be deductible under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). In addition, the Plan and every award made pursuant to the Plan will be construed, administered and enforced as necessary to comply with applicable requirements of Section 409A of the Code and the related Treasury and IRS rulings and regulations so that no participant, without his or her express consent, incurs any additional tax or interest liabilities of Section 409A(a)(B) of the Code with respect to any award. The Plan provides that the provisions of the Plan and every award are modified and limited as necessary to comply with the applicable requirements of Section 409A.

Treatment upon Acquisition

Unless otherwise provided in the award agreement, in the event the Company is acquired by another entity, appropriate provision will be made for the continuation or the assumption by the surviving or acquiring entity of all awards granted under the Plan. In place of or in addition to the foregoing, the Committee may provide that awards granted under the Plan must be exercised by a certain date or shall be terminated in exchange for a cash payment or for stock and stock-based awards issued by the acquiring entity. The Committee may also authorize the acceleration in full or in part of any then outstanding award.

Termination and Amendment of Plan

Awards may be granted under the Plan at any time on or prior to May 24, 2016, and awards granted before that date may be exercised thereafter. The Committee may at any time amend, suspend or terminate the Plan in whole or in part, provided that any material amendment to the Plan will not be effective unless approved by the Company’s shareholders. Unissued shares covered by stock-based awards that have expired, terminated, surrendered or forfeited shall again be available for the grant of awards under the Plan.

Teradyne, Inc. Deferral Plan for Non-Employee Directors

At its meeting on May 24-25, 2006, the Board of Directors of the Company adopted an amendment and restatement of the Teradyne, Inc. Deferral Plan for Non-Employee Directors (the “Director Deferral Plan”). The Director Deferral Plan as amended and restated is intended to conform the terms of the plan originally adopted in 2001 (the “Prior Director Deferral Plan”) to the requirements of the recently enacted Section 409A of the Code and the guidance issued thereunder (“Section 409A”) and to enlarge the elections provided under the Plan.

The purpose of the Director Deferral Plan is to permit non-employee directors to defer receipt of the compensation they would otherwise receive as members of the Board of Directors of the Company. Each non-employee director makes independent elections concerning the deferral of his or her compensation.

Under the Prior Director Deferral Plan each non-employee director could elect to defer all of his or her cash compensation from the Company. Any cash deferral was allocated, at the election of the director, either to a notional account, which is credited with interest at the 10-year Treasury Note rate, or allocated to a deferred stock unit account and treated as invested in common stock of the Company. On termination of the director’s service with the Company, the entire deferred amount was distributed in cash or Company common stock to the director in a manner consistent with the director’s elections.

Under the restated Director Deferral Plan, each non-employee director will have the opportunity to elect to defer all of his or her cash compensation and all of his or her compensation in the form of restricted stock or restricted stock units. The director will continue to have the choice of allocating the deferred cash to a notional account or to deferred stock unit account. Any restricted stock or restricted stock units which a director elects to defer shall also be converted into deferred stock units, which shall continue to be subject to the vesting provisions applicable to such compensation. Any Company common stock issued to directors as part of the distribution of deferred compensation shall be issued from either the 1997 Employee Stock Option Plan (for deferrals made prior to May 25, 2006) or the 2006 Equity and Cash Compensation Incentive Plan (for deferrals made on or after May 25, 2006), depending on the director compensation to which the deferral relates. In addition, the restated Director Deferral Plan permits non-employee directors to elect to have any deferrals made after 2004 distributed in either installments (over up to 15 years) or in a lump sum after the director leaves the Board.

The restated Director Deferral Plan is unfunded and paid solely from the Company’s general assets.

Please refer to the amended and restated Director Deferral Plan, which is filed as an exhibit to this Current Report on Form 8-K and incorporated herein by reference, for the complete terms of the Plan.

Teradyne, Inc. Supplemental Executive Retirement Plan

At its meeting on May 24-25, 2006, the Board of Directors of the Company adopted a Section 409A compliant version of the Teradyne, Inc. Supplemental Executive Retirement Plan (the “SERP”) for benefits accrued and vested under the SERP after December 31, 2004. This SERP provides supplemental retirement benefits to employees, including executive officers, who are eligible for participation.

The purpose of the SERP is to provide the eligible executives with additional retirement benefits, taking into account the limitations imposed on the retirement benefits received by such employees under the Retirement Plan for Employees of Teradyne, Inc. (the “Retirement Plan”) due to restrictions imposed by the Code.

Employees accruing benefits under the SERP include those who were active members of the SERP on December 31, 2004 and those who become members thereafter. An employee who elected to continue participation in the Retirement Plan in 1999 in connection with an election concerning participation offered to employees, and whose base salary plus target variable compensation payout under the Company’s variable compensation plan exceeded the maximum amount of compensation taken into account under Section 401(a)(17) of the Code (“Section 401(a)(17) limits”) may become a member upon notice of eligibility by the Company.

Employees who became members under the SERP prior to January 1, 2003 receive a retirement benefit in the form of a life annuity based on a percentage of their final average compensation multiplied by their credited service with the Company less their benefit under the Retirement Plan. Employees who become members on or after January 1, 2003 receive a retirement benefit in the form of a life annuity equal to 1.5% of the member’s compensation in excess of the Section 401(a)(17) limits for each year with the Company (but only 1% for each year over 35).

In order to comply with Section 409A, the restated SERP provides that benefits will begin on the later of the employee’s termination of employment or his or her social security retirement age. Benefits may be paid in different forms of life annuity elected by the employee.

The SERP is unfunded and paid solely from the Company’s general assets.

Please refer to the amended and restated SERP, which is filed as an exhibit to this Current Report on Form 8-K and incorporated herein by reference, for the complete terms of the SERP.

Teradyne, Inc. Supplemental Savings Plan

At its meeting on May 24-25, 2006, the Board of Directors of the Company adopted an amendment and restatement of the Teradyne, Inc. Supplemental Savings Plan (the “Supplemental Plan”). The Supplemental Plan permits eligible employees, including executive officers, to elect to defer a portion of their compensation and to receive certain Company matching contributions. The primary purpose of the restatement is to conform the terms of the Supplemental Plan to the requirements of Section 409A.

The Company may designate any highly compensated or managerial employees as eligible to make deferral elections under the Supplemental Plan. Prior to the beginning of each plan year, an eligible employee may elect to defer up to that percentage of his or her compensation which the Company establishes as the limit on deferral of compensation in each year. Compensation for purposes of this deferral is compensation as defined under the Teradyne, Inc. Savings Plan (the “Savings Plan”) but without “VC Awards” (which are amounts of incentive remuneration payable under the Company’s variable compensation plan) and only in excess of certain dollar amounts set by the Company each year. Any eligible employee may also defer up to 85% of his or her VC Awards in any year. In addition the Company will make certain matching contributions with respect to these deferrals.

Amounts deferred and the matching contributions are treated as invested in such investment choices as the plan administrator makes available. The matching contributions are subject to vesting over time. Amounts deferred after 2004 are paid either upon termination of employment or on a date selected by the participant at the time he or she makes the deferral election. All distributions are made in a single lump sum, in cash.

The Supplemental Plan is unfunded and paid solely from the Company’s general assets.

Please refer to the amended and restated Supplemental Plan, which is filed as an exhibit to this Current Report on Form 8-K and incorporated herein by reference, for the complete terms of the Plan.

Item 1.02 Termination of a Material Definitive Agreement

Concurrent with the adoption of the Plan described above in Item 1.01, the Company has terminated the following plans: the Teradyne, Inc. 1996 Non-Employee Director Stock Option Plan, the Teradyne, Inc. 1997 Employee Stock Option Plan, and the Teradyne, Inc. 1991 Employee Stock Option Plan, each as described in the Company’s annual report on Form 10-K for the year ended December 31, 2005. As a result of this termination, no additional option grants or awards may be issued by the Company under these plans, while all options and awards currently outstanding under these plans will remain in effect.

Item 9.01 Financial Statements and Exhibits

The exhibit listed below and in the accompanying Exhibit Index is furnished as part of this Current Report on Form 8-K.

(d) Exhibits.

Exhibit No.	Description
10.1	Teradyne, Inc. 2006 Equity and Cash Compensation Incentive Plan
10.2	Teradyne, Inc. Deferral Plan for Non-Employee Directors, restated on May 25, 2006.
10.3	Teradyne, Inc. Supplemental Executive Retirement Plan, restated on May 25, 2006.
10.4	Teradyne, Inc. Supplemental Savings Plan, amended restated on May 25, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TERADYNE, INC.
Dated: May 25, 2006	By:	/s/ Gregory R. Beecher
	Name:	Gregory R. Beecher
	Title:	Vice President & Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
10.1	Teradyne, Inc. Equity and Cash Compensation Incentive Plan
10.2	Teradyne, Inc. Deferral Plan for Non-Employee Directors, restated on May 25, 2006.
10.3	Teradyne, Inc. Supplemental Executive Retirement Plan, restated on May 25, 2006.
10.4	Teradyne, Inc. Supplemental Savings Plan, amended restated on May 25, 2006.

EX-10.1

Exhibit 10.1

TERADYNE, INC.

2006 EQUITY AND CASH COMPENSATION INCENTIVE PLAN

1. Purpose and Eligibility.

The purpose of this 2006 Equity and Cash Compensation Incentive Plan (the “Plan”) of Teradyne, Inc. is to provide equity ownership and compensation opportunities in the Company (each an “Award”) to employees, officers, directors, consultants and advisors of the Company and its Subsidiaries, all of whom are eligible to receive Awards under the Plan. Any person to whom an Award has been granted under the Plan is called a “Participant.” Additional definitions are contained in Section 14(a).

2. Administration.

a. Administration by Committee of Independent Members of the Board of Directors. The Plan will be administered by a committee (the “Committee”) composed solely of members of the Board of Directors of the Company that are “independent,” as defined pursuant to Rule 10A-3(b)(1) of the Securities Exchange Act of 1934, as amended, and as prescribed under Rule 303A.02 of the New York Stock Exchange (“NYSE”) Listed Company Manual, or any amendment, supplement or modification thereto; provided, however, that at any time and on any one or more occasions the Board may itself exercise any of the powers and responsibilities assigned the Committee under the Plan and when so acting shall have the benefit of all of the provisions of the Plan pertaining to the Committee’s exercise of its authorities hereunder. The Committee, in its sole discretion, shall have the authority to grant Awards, to adopt, amend and repeal rules relating to the Plan, to interpret and correct the provisions of the Plan and any Award, and, subject to the limitations of the Plan, to modify and amend any Award. All decisions by the Committee shall be final and binding on all interested persons. Neither the Company nor any member of the Committee shall be liable for any action or determination relating to the Plan.

b. Delegation to Executive Officers. To the extent permitted by applicable law, the Committee may delegate to one or more executive officers of the Company the power to grant Awards and exercise such other powers under the Plan as the Committee may determine; provided, however, that the Committee shall fix the maximum number of Awards to be granted and the maximum number of shares issuable to any one Participant pursuant to Awards granted by such executive officer or officers. The Committee may, by a resolution adopted by the Committee, authorize one or more executive officers of the Company to do one or both of the following: (i) designate employees of the Company or of any of its subsidiaries to be recipients of Awards and (ii) determine the number, type and terms of such Awards to be received by such employees, subject to the limitations of the Plan; provided, however, that, in each case, the resolution so authorizing such officer or officers shall specify the maximum number and type of Awards such officer or officers may so award. The Committee may not authorize an officer to designate himself or herself as a recipient of any such Awards or to grant Awards to other executive officers of the Company.

3. Stock Available for Awards.

a. Number of Shares. Subject to adjustment under Section 3(c), the aggregate number of shares (the “Authorized Shares”) of the Company’s common stock, $0.125 par value per share (the “Common Stock”), that

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may be issued pursuant to the Plan shall be 12,000,000 shares of Common Stock. If any Award expires, is terminated, surrendered, forfeited, expires unexercised, is settled in cash in lieu of Common Stock or is exchanged for other Awards, in whole or in part, the unissued Common Stock covered by such Award shall again be available for the grant of Awards under the Plan. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares. Notwithstanding anything to the contrary in this Plan, the foregoing limitations shall be subject to adjustment under Section 3(c), but only to the extent that such adjustment will not affect the status of any Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code.

b. Per-Participant Limit. Subject to adjustment under Section 3(c), no Participant may be granted stock-based Awards during any one fiscal year to purchase more than 2,000,000 shares of Common Stock.

c. Adjustment to Common Stock. In the event of any stock split, stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off, split-up, or other similar change in capitalization or event, (i) the number and class of securities available for Awards under the Plan and the per-Participant share limit, (ii) the number and class of securities, vesting schedule and exercise price per share subject to each outstanding stock-based Award, (iii) the repurchase price per security subject to repurchase, and (iv) the terms of each other outstanding stock-based Award shall be adjusted by the Company (or substituted Awards may be made) to the extent the Committee shall determine, in good faith, that such an adjustment (or substitution) is appropriate. If Section 11(f)(i) applies for any event, this Section 3(c) shall not be applicable.

d. Fractional Shares. No fractional shares shall be issued under the Plan and the Participant shall, at the Committee’s discretion, receive either cash in lieu of such fractional shares or a full share for each fractional share.

4. Stock Options.

a. General. The Committee may grant options to purchase Common Stock (each, an “Option”) and determine the terms and conditions of each Option, including, but not limited to (i) the number of shares subject to such Option or a formula for determining such, (ii) subject to Section 4(e) hereof, the exercise price of the Options and the means of payment for the shares, (iii) the Performance Criteria (as defined in Section 11(d)), if any, and level of achievement of such Performance Criteria that shall determine the number of shares or Options granted, issued, retainable and/or vested, (iv) the terms and conditions of the grant, issuance and/or forfeiture of the shares or Options, and (v) such further terms and conditions as may be determined from time to time by the Committee, in each case not inconsistent with this Plan.

b. Incentive Stock Options. An Option that the Committee intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall be granted only to employees of the Company and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. The Committee and the Company shall have no liability if an Option or any part thereof that is intended to be an Incentive Stock Option does not qualify as such.

c. Nonstatutory Stock Options. An Option or any part thereof that does not qualify as an Incentive Stock Option is referred to herein as a “Nonstatutory Stock Option.”

d. Dollar Limitation. For so long as the Code shall so provide, Options granted to any employee under the Plan (and any other plans of the Company) which are intended to constitute Incentive Stock Options shall not constitute Incentive Stock Options to the extent that such Options, in the aggregate, become exercisable for the first time in any one calendar year for shares of Common Stock with an aggregate Fair Market Value (as defined in Section 14 and determined as of the respective date or dates of grant) of more than $100,000 (or such other limit as may be

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provided by the Code). To the extent that any such Incentive Stock Options exceed the $100,000 limitation (or such other limit as may be provided by the Code), such Options shall be Nonstatutory Stock Options.

e. Exercise Price. The Committee shall establish the exercise price (or determine the method by which the exercise price shall be established) at the time each Option is granted and specify the exercise price in the applicable Option agreement, provided, that the exercise price per share specified in the agreement relating to each Option 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 Incentive Stock Option to be granted to an employee owning stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, the price per share specified in the agreement relating to such Incentive Stock Option shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the date of grant (or such other limit as may be provided by the Code). For purposes of determining stock ownership under this subsection, the rules of Section 424(d) of the Code shall apply. Subject to Section 3(c), an Option may not be amended subsequent to its issuance to reduce the price at which it is exercisable unless such amendment is approved by the Company’s shareholders.

f. Duration of Options. Each Option shall be exercisable at such times and subject to such terms, conditions and expiration as the Committee may specify in the applicable Option agreement; provided, that no Option shall be exercisable for a period of time greater than ten (10) years from the date of grant of such Option; provided, further, that Incentive Stock Options granted to an employee owning stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company shall be exercisable for a maximum of five (5) years from the date of grant of such Option (or such other limit as may be provided by the Code). For purposes of determining stock ownership under this subsection, the rules of Section 424(d) of the Code shall apply.

g. Vesting of Options. Subject to Section 11(f) and Section 11(j) and except as provided in Section 13, at the time of the grant of an Option, the Committee shall establish a vesting date or vesting dates with respect to the shares of Common Stock covered by such Options. The Committee may establish vesting dates based upon the passage of time and/or the satisfaction of Performance Criteria or other conditions as deemed appropriate by the Committee.

h. Exercise of Option. Options may be exercised only by delivery to the Company at its principal office address or to such transfer agent as the Company shall designate of a written notice of exercise specifying the number of shares as to which such Option is being exercised, signed by the proper person, or by notification of the Company-designated third party commercial provider (the “Third Party Commercial Provider”), in accordance with the procedures approved by the Company and to which the holder of the Option shall have ongoing access by means of accessing such person’s account maintained with the Third Party Commercial Provider, together with payment in full as specified in Section 4(i) for the number of shares for which the Option is exercised.

i. Payment Upon Exercise. Common Stock purchased upon the exercise of an Option shall be paid for by one or any combination of the following forms of payment:

(i) in United States dollars in cash or by check payable to order of the Company or by funds transfer from the Option holder’s account maintained with the Third Party Commercial Provider;

(ii) at the discretion of the Committee, through delivery of shares of Common Stock having a Fair Market Value equal as of the date of the exercise to the cash exercise price of the Option, provided, that such shares were not acquired by the Participant in the prior six months;

(iii) at the discretion of the Committee and 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 Third Party Commercial Provider to pay that amount to the Company, which sale shall be at the Participant’s direction at the time of exercise; or

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(iv) at the discretion of the Committee, by any combination of (i), (ii), or (iii) above.

If the Committee exercises its discretion to permit payment of the exercise price of an Incentive Stock Option by means of the methods set forth in clauses (ii), (iii) or (iv) of the preceding sentence, such discretion shall be exercised in writing in the instrument evidencing the Award of the Incentive Stock Option.

j. Notice to Company of Disqualifying Disposition. By accepting an Incentive Stock Option granted under the Plan, each optionee agrees to notify the Company in writing immediately after such optionee makes a disqualifying disposition of any stock acquired pursuant to the exercise of the Incentive Stock Options. A “disqualifying disposition” is generally any disposition occurring on or before the later of (a) the date two years following the date the Incentive Stock Option was granted or (b) the date one year following the date the Incentive Stock Option was exercised.

k. Issuances of Securities. Except as provided in Section 3(c) or as otherwise 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.

5. Stock Appreciation Rights

a. General. A Stock Appreciation Right (a “SAR”) is an Award entitling the holder, upon exercise, to receive an amount in cash or Common Stock, or a combination thereof (such form to be determined by the Committee), determined solely by reference to appreciation, from and after the date of grant, in the Fair Market Value of a share of Common Stock. The date as of which such appreciation or other measure is determined shall be the exercise date of the SAR Award.

b. Grants. SARs may be granted in tandem with, or independently of, Options granted under the Plan.

(i) Tandem Awards. When SARs are expressly granted in tandem with Options: (i) the SARs will be exercisable only at such time or times, and to the extent, that the related Option is exercisable, and will be exercisable in accordance with the procedure required for exercise of the related Option; (ii) the SARs will terminate and no longer be exercisable upon the termination or exercise of the related Option, except that a SAR granted with respect to less than the full number of shares covered by an Option will not be terminated until and only to the extent that the number of shares as to which the related Option has been exercised or has terminated exceeds the number of shares not covered by the SAR; (iii) the Option will terminate and no longer be exercisable upon the exercise of the related SAR; and (iv) the SAR will be transferable only with the related Option.

(ii) Independent Stock Appreciation Rights. A SAR not expressly granted in tandem with an Option will become exercisable at such time or times, and on such conditions, as the Committee may specify in the SAR Award.

c. Terms and Conditions. The Committee shall determine all terms and conditions of a SAR Award, including, but not limited to (i) the number of shares subject to such SAR Award or a formula for determining such, (ii) the Performance Criteria, if any, and level of achievement of such Performance Criteria that shall determine the number of shares granted, issued, retainable and/or vested or the amount of cash payable, (iii) the terms and conditions on the grant, issuance and/or forfeiture of the shares, and (iv) such further terms and conditions as may be determined from time to time by the Committee, in each case not inconsistent with this Plan.

d. Vesting of SAR Awards. Subject to Section 11(f) and Section 11(j), at the time of the grant of a SAR Award, the Committee shall establish a vesting date or vesting dates with respect to such SAR Award, provided that SARs awarded in tandem with Options shall be subject to the same vesting date or vesting dates established by the Committee pursuant to Section 4(g) for such related Options and shall be exercisable only to the extent that such

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related Option shall then be exercisable. The Committee may establish vesting dates based upon the passage of time and/or the satisfaction of Performance Criteria or other conditions as deemed appropriate by the Committee.

6. Restricted Stock.

a. Grants. The Committee may grant Awards entitling recipients to acquire shares of Common Stock, subject to (i) delivery to the Company by the Participant of cash, a check or other sufficient legal consideration in an amount at least equal to the par value of the shares purchased, (ii) the right of the Company to repurchase or reacquire all or part of such shares at their issue price or other stated or formula price from the Participant in the event that conditions specified by the Committee in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Committee for such Award (each, a “Restricted Stock Award”), and (iii) Section 6(b).

b. Terms and Conditions. A Participant that is the holder of a Restricted Stock Award, whether vested or unvested, shall be entitled to enjoy all shareholder rights with respect to the shares of Common Stock underlying such Restricted Stock Award, including the right to receive dividends and vote such shares. Subject to Section 6(c), the Committee shall determine all terms and conditions of any such Restricted Stock Award, including, but not limited to (i) the number of shares subject to such Restricted Stock Award or a formula for determining such, (ii) the purchase price of the shares, if any, and the means of payment for the shares, (iii) the Performance Criteria, if any, and level of achievement of such Performance Criteria that shall determine the number of shares granted, issued, retainable and/or vested, (iv) the terms and conditions on the grant, issuance and/or forfeiture of the shares, and (v) such further terms and conditions as may be determined from time to time by the Committee, in each case not inconsistent with this Plan. At the Committee’s election, shares of Common Stock issued in respect of a Restricted Stock Award may be (i) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted Stock Award lapses, or (ii) evidenced by a stock certificate that may bear a legend indicating that the ownership of the shares of Common Stock represented by such certificate is subject to the restrictions, terms and conditions of this Plan and the Restricted Stock Award. Any stock certificates issued in respect of a Restricted Stock Award shall be registered in the name of the Participant. All certificates registered in the name of the Participant shall, unless otherwise determined by the Committee, be deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). After the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or, if the Participant has died, to the beneficiary designated by the Participant, in a manner determined by the Committee, to receive amounts due or exercise rights of the Participant in the event of the Participant’s death (the “Designated Beneficiary”). In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant’s estate.

c. Vesting of Restricted Stock. Subject to Section 11(f) and Section 11(j), at the time of the grant of a Restricted Stock Award, the Committee shall establish a vesting date or vesting dates with respect to the shares of Common Stock covered by such Restricted Stock Award, which vesting dates may be based upon the passage of time and/or the satisfaction of Performance Criteria or other conditions as deemed appropriate by the Committee; provided, that all Restricted Stock Awards, other than Awards granted under Section 11(l), shall have a minimum vesting period of no less than one (1) year for Restricted Stock Awards granted subject to Performance Criteria and no less than three (3) years for all other Restricted Stock Awards.

7. Restricted Stock Unit.

a. Grants. The Committee may grant Awards entitling recipients to acquire shares of Common Stock in the future, with the future delivery of the Common Stock subject to a risk of forfeiture or other restrictions that will lapse upon the satisfaction of one or more specified conditions (each, a “Restricted Stock Unit”).

b. Terms and Conditions. Subject to Section 7(c), the Committee shall determine all terms and conditions of any such Restricted Stock Unit, including, but not limited to (i) the number of shares subject to such Restricted

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Stock Unit or a formula for determining such, (ii) the purchase price of the shares, if any, and the means of payment for the shares, (iii) the Performance Criteria, if any, and level of achievement of such Performance Criteria that shall determine the number of shares granted, issued, retainable and/or vested, (iv) the terms and conditions on the grant, issuance and/or forfeiture of the shares, and (v) such further terms and conditions as may be determined from time to time by the Committee, in each case not inconsistent with this Plan. A Participant may not vote the shares represented by a Restricted Stock Unit. A Restricted Stock Unit may be settled in cash or Common Stock, as determined by the Committee, with the amount of the cash payment based on the Fair Market Value of the shares of Common Stock at the time of vesting. Any such settlements may be subject to such conditions, restrictions and contingencies as the Committee shall establish.

c. Vesting of Restricted Stock Unit. Subject to Section 11(f) and Section 11(j), at the time of the grant of a Restricted Stock Unit, the Committee shall establish a vesting date or vesting dates with respect to the shares of Common Stock covered by such Restricted Stock Unit, which vesting dates may be based upon the passage of time and/or the satisfaction of Performance Criteria or other conditions as deemed appropriate by the Committee; provided, that all Awards of Restricted Stock Units, other than Awards granted under Section 11(l), shall have a minimum vesting period of no less than one (1) year for Restricted Stock Units granted subject to Performance Criteria and no less than three (3) years for all other Restricted Stock Units.

8. Phantom Stock.

a. General. The Committee may grant Awards entitling recipients to receive, in cash or shares, the Fair Market Value of shares of Common Stock (“Phantom Stock”) upon the satisfaction of one or more specified conditions.

b. Terms and Conditions. Subject to Section 8(c), the Committee shall determine the terms and conditions of a Phantom Stock Award, including, but not limited to (i) the number of shares subject to or represented by such Phantom Stock Award or a formula for determining such, (ii) the purchase price of the shares, if any, and the means of payment for the shares, (iii) the Performance Criteria, if any, and level of achievement of such Performance Criteria that shall determine the number of shares granted, issued, retainable and/or vested or the amount of cash payable, (iv) the terms and conditions on the grant, issuance and/or forfeiture of the shares or Phantom Stock Award, and (v) such further terms and conditions as may be determined from time to time by the Committee, in each case not inconsistent with this Plan. A Participant may not vote the shares represented by a Phantom Stock Award. Any settlements of Phantom Stock Awards may be subject to such conditions, restrictions and contingencies as the Committee shall establish.

c. Vesting of Phantom Stock. Subject to Section 11(f) and Section 11(j), at the time of the grant of a Phantom Stock Award, the Committee shall establish a vesting date or vesting dates with respect to such Phantom Stock Award. The Committee may establish vesting dates based upon the passage of time and/or the satisfaction of Performance Criteria or other conditions as deemed appropriate by the Committee.

9. Other Stock-Based Awards.

The Committee shall have the right to grant other Awards based upon the Common Stock and having such terms and conditions as the Committee may determine, including, without limitation, the grant of shares based upon certain conditions and/or Performance Criteria, the grant of securities convertible into Common Stock and the grant of stock units. The Committee shall determine the terms and conditions of any such Awards, including, but not limited to (i) the number of shares subject to such Award or a formula for determining such, (ii) the purchase price of the shares, if any, and the means of payment for the shares, (iii) the Performance Criteria, if any, and level of achievement of such Performance Criteria that shall determine the number of shares granted, issued, retainable and/or vested, (iv) the terms and conditions on the grant, issuance and/or forfeiture of the shares or Award, and (v) such further terms and conditions as may be determined from time to time by the Committee, in each case not inconsistent with this Plan. Subject to Section 11(f) and Section 11(j), at the time of

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the grant of an Award under this Section 9, the Committee shall establish a vesting date or vesting dates with respect to such Award, which vesting date may be based upon the passage of time and/or the satisfaction of Performance Criteria or other conditions as deemed appropriate by the Committee; provided, that all Full Value Awards granted under this Section 9, other than Full Value Awards granted under Section 11(l) herein, shall have a minimum vesting period of no less than one (1) year for Full Value Awards subject to Performance Criteria and no less than three (3) years for all other Full Value Awards granted hereunder.

10. Cash Awards.

a. Grants. The Committee may grant cash awards (each, a “Cash Award”), either alone, in addition to, or in tandem with other Awards granted under the Plan.

b. Terms and Conditions. The Committee shall determine the terms and conditions of any such Cash Award. From time to time, the Committee shall establish administrative rules and procedures governing the administration of Cash Awards.

c. Variable Compensation Awards. A Cash Award that the Committee intends to be a “Variable Compensation Award” subject to Section 162(m) of the Code, provides a variable compensation payment each year to the Company’s executive officers and certain eligible senior employees each year based on certain Performance Criteria that may include, among other criteria, overall corporate and/or individual business group’s or division’s performance during the prior fiscal year, as determined by the Committee. Variable Compensation Awards are calculated based on a percentage of the Participant’s base annual salary (“Variable Compensation Factor”) and start at 10% for new Participants. At greater levels of responsibility, the Variable Compensation Factor may be up to 200% of base annual salary. Variable Compensation Factors are reviewed annually, and in connection with the review, the Committee may increase the Variable Compensation Factor beyond 200%, but the Committee may not authorize a Variable Compensation payout based on Performance Criteria in excess of 200%. A newly hired executive officer or employee, who is approved for eligibility for Variable Compensation Awards, will be eligible to receive a Variable Compensation Award for their first year of employment, pro-rated from the date of hire. The Committee may rely upon the recommendation of the Company’s senior management in granting Variable Compensation Awards to eligible Participants who do not constitute executive officers of the Company, including as to the amount and terms of any such Awards and the satisfaction of Performance Criteria.

11. General Provisions Applicable to Awards.

a. Transferability of Awards. Except as the Committee may otherwise determine or provide in an Award, Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the life of the Participant, shall be exercisable only by the Participant, provided, however, that Nonstatutory Stock Options may be transferred to a grantor-retained annuity trust or a similar estate-planning vehicle in which the trust is bound by all provisions of the Option which are applicable to the Participant. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees of such an Option.

b. Documentation. Each Award granted under the Plan, with the exception of Cash Awards, shall be evidenced by a written Award agreement in such form as the Committee shall from time to time approve. Award agreements shall comply with the terms and conditions of the Plan and may contain such other provisions not inconsistent with the terms and conditions of the Plan as the Committee shall deem advisable. In the case of an Incentive Stock Option, the Award agreement shall contain, or refer to, such provisions relating to exercise and other matters as are required of “incentive stock options” under the Code. Award agreements may be evidenced by an electronic transmission (including an e-mail or reference to a website or other URL) sent to the Participant through the Company’s normal process for communicating electronically with its employees. As a condition to receiving an Award, the Committee may require the Participant to affirmatively accept the Award and agree to

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the terms and conditions set forth in the Award agreement by physically and/or electronically executing the Award agreement or by otherwise physically and/or electronically acknowledging such acceptance and agreement. With or without such affirmative acceptance, however, the Committee may prescribe conditions (including the exercise or attempted exercise of any benefit conferred by the Award) under which the proposed Participant may be deemed to have accepted the Award and agreed to the terms and conditions set forth in the Award agreement.

c. Committee Discretion. The terms of each type of Award need not be identical, and the Committee need not treat Participants uniformly.

d. Performance Criteria. For purposes of this Plan, the term “Performance Criteria” shall mean any one or more of the following performance criteria, applied to either the Company as a whole or to a division, business unit or Subsidiary, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee in the Award: cash flow; earnings per share; earnings before interest, taxes and amortization; return on equity; total shareholder return; share price performance; return on capital; return on assets or net assets; revenue; income or net income; operating income or net operating income; operating profit or net operating profit; operating margin or profit margin; return on operating revenue; return on invested capital; market segment share; product release schedules; new product innovation; product cost reduction; brand recognition/acceptance; product ship targets; process improvement results; verification of business strategy and/or business plan; improvement of strategic position; adaptation to changes in the marketplace or environment; or customer satisfaction. If the Award so provides, the Committee may appropriately evaluate achievement against Performance Criteria to take into account any of the following events that occurs during a performance period: asset write-downs; litigation or claim judgments or settlements; the effect of changes in tax law; accounting principles or other such laws or provisions affecting reported results; accruals for reorganization and restructuring programs and any extraordinary non-recurring charges or other events. The Committee may prescribe the foregoing criteria either individually or in combination. The Committee’s determination of the achievement of any Performance Criteria shall be conclusive. The minimum vesting period for all Full Value Awards granting shares of Common Stock subject to Performance Criteria, other than Full Value Awards granted under Section 11(l) herein, shall be no less than one (1) year.

e. Termination of Status. Except as otherwise specified herein, the Committee shall determine the effect on an Award of the disability, death, retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award under such circumstances, subject to applicable law and the provisions of the Code.

f. Acquisition or Liquidation of the Company.

(i) Consequences of an Acquisition. If the Company is to be consolidated with or acquired by another entity in a merger or other reorganization in which the holders of the outstanding voting stock of the Company immediately preceding the consummation of such event shall, immediately following such event, hold, as a group, less than a majority of the voting securities of the surviving or successor entity, or in the event of a sale of all or substantially all of the Company’s assets or otherwise (each, an “Acquisition”), the Committee or the board of directors of any entity assuming the obligations of the Company hereunder (the “Successor Committee”), shall, as to outstanding Awards, either (A) make appropriate provision for the continuation of such Awards by substituting on an equitable basis for the shares then subject to such Awards either (1) the consideration payable with respect to the outstanding shares of Common Stock in connection with the Acquisition, (2) shares of stock of the surviving or successor corporation or (3) such other securities as the Committee or the Successor Committee deems appropriate, the Fair Market Value of which shall not materially exceed the Fair Market Value of the shares of Common Stock subject to such Awards immediately preceding the Acquisition; or (B) upon written notice to the Participants, provide that all Awards must be exercised, to the extent then exercisable or to be exercisable as a result of the Acquisition, within a specified number of days of the date of such notice, at the end of which period the Awards shall

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terminate; or (C) terminate all Awards in exchange for a cash payment equal to the excess, if any, of the Fair Market Value of the shares subject to such Awards (to the extent then exercisable or to be exercisable as a result of the Acquisition) over the exercise price thereof, if any; or (D) in the case of Awards that may be settled in whole or in part in cash, provide for equitable treatment of such Awards.

(ii) Substitution of Awards Upon Certain Events. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Committee may grant Awards under the Plan in substitution for stock and stock-based awards issued by such entity or an affiliate thereof. The substitute Awards shall be granted on such terms and conditions as the Committee considers appropriate in the circumstances.

(iii) Liquidation or Dissolution. In the event of the proposed liquidation or dissolution of the Company, each Award, except for Cash Awards already earned, to the extent not then exercised or vested, 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.

g. Withholding. Each Participant shall pay to the Company, or make provisions satisfactory to the Company for payment, of any taxes required by law to be withheld in connection with Awards to such Participant no later than the date of the event creating the tax withholding obligation. The Committee may allow Participants to satisfy such tax withholding obligations in whole or in part by transferring shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value. The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to a Participant.

h. Amendment of Awards. The Committee may amend, modify or terminate any outstanding Award including, but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, the vesting provisions (subject to the minimum vesting requirements set forth herein), Performance Criteria, or level of achievement of Performance Criteria, and converting an Incentive Stock Option to a Nonstatutory Stock Option; provided that, except as otherwise provided in Section 11(f)(i), the Participant’s consent to such action shall be required unless the Committee determines that the action, taking into account any related action, would not materially and adversely affect the Participant; provided, further, that subject to Section 3(c), an Option may not be amended subsequent to its issuance either to reduce the price at which such previously issued Option is exercisable or to extend the period of time for which such previously-issued Option shall be exercisable beyond ten (10) years unless such amendment is approved by the Company’s shareholders. Furthermore, no Option shall be canceled and replaced with Options having a lower exercise price unless such cancellation and exchange is approved by the Company’s shareholders.

i. Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations, and (iv) the Participant has paid to the Company, or made provisions satisfactory to the Company for payment of, any taxes required by law to be withheld in connection with the Award.

j. Acceleration. The Committee may at any time provide (i) that any Option shall become immediately exercisable in full or in part, (ii) that Awards that may be settled in whole or in part in cash may become immediately exercisable in full or in part, and (iii) in connection with the disability, death or retirement of a Participant or in connection with an event contemplated by Section 11(f)(i), (A) that any Restricted Stock Award or Restricted Stock Unit shall become exercisable in full or in part or shall be free of some or all restrictions or the risk of forfeiture or (B) that any other Full Value Award shall become exercisable in full or in part or free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be. The Committee may take the

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actions contemplated by the preceding sentence despite the fact that such actions may (x) cause the application of Sections 280G and 4999 of the Code if an event contemplated by Section 11(f)(i) occurs, or (y) disqualify all or part of an Option as an Incentive Stock Option. In the event of the acceleration of the exercisability of one or more outstanding Options, including pursuant to Section 11(f)(i), the Committee may provide, as a condition of accelerated exercisability of any or all such Options, that the Common Stock or other substituted consideration, including cash, as to which exercisability has been accelerated shall be restricted and subject to forfeiture back to the Company at the election of the Company at the cost thereof upon termination of employment or other relationship, with the timing and other terms of the vesting of such restricted Common Stock or other consideration being not less favorable to the Participant than the timing and other terms of the superseded vesting schedule of the related Option.

k. Option or SAR Award Exchange. The Committee may, from time to time, upon obtaining shareholder approval therefor, undertake an exchange program under which employees deemed eligible by the Committee may elect to surrender for cancellation then existing Awards under the Plan or outstanding, unexercised options previously granted under the Company’s 1991 Employee Stock Option Plan, 1997 Employee Stock Option Plan and 1996 Non-Employee Director Stock Option Plan, that have, at the time, an exercise price at or above a level determined by the Board of Directors or the Committee in exchange for cash and/or another Award under the Plan, the form of such consideration to be determined by the Committee.

l. Exception to Minimum Vesting Periods. The Committee may grant up to 5% of the maximum, aggregate shares of Common Stock authorized for issuance hereunder in the form of Restricted Stock Awards, Restricted Stock Units and other Awards based upon Common Stock that do not comply with the minimum vesting periods set forth in Sections 6(c), 7(c), 9 and 13.

m. Compliance with Section 409A. Any other provision of the Plan or any Award to the contrary notwithstanding, the Plan and every Award hereunder shall be construed, administered and enforced as necessary to comply with applicable requirements of Section 409A of the Code and the Treasury and IRS rulings and regulations issued thereunder, so that no Participant shall (without such Participant’s express written consent) incur any of the additional tax or interest liabilities of Section 409A(a)(B) of the Code with respect to any Award. The Plan and each Award are hereby modified and limited as necessary to comply with applicable requirements of Section 409A.

12. Foreign Jurisdictions.

To the extent that the Committee determines that the material terms set by the Committee or imposed by the Plan preclude the achievement of the material purposes of the Plan in jurisdictions outside the United States, the Committee will have the authority and discretion to modify those terms and provide for such other terms and conditions as the Committee determines to be necessary, appropriate or desirable to accommodate differences in local law, policy or custom or to facilitate administration of the Plan. The Committee may adopt or approve sub-plans, appendices or supplements to, or amendments, restatements or alternative versions of, the Plan as it may consider necessary, appropriate or desirable for such purpose, without thereby affecting the terms of the Plan as in effect for any other purpose. The special terms and any appendices, supplements, amendments, restatements or alternative versions, however, shall not include any provisions that are inconsistent with the terms of the Plan as then in effect, unless the Plan could have been amended to eliminate such inconsistency without further approval by the shareholders. The Committee shall also have the authority and discretion to delegate the foregoing powers to appropriate officers of the Company.

13. Grant of Awards to Non-Employee Directors.

Each person who is a member of the Board of Directors and who is not an employee of the Company (each, a “Non-Employee Director”) shall be automatically granted Awards having a Fair Market Value or exerciseable for shares having a Fair Market Value, as the case may be, on the day of such grant as follows:

a. on the date such Non-Employee Director is first elected to the Board of Directors, equal to 300% of the annual cash retainer (excluding separate Committee Chair retainers) payable to such Non-Employee Director; and

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b. on the first Monday in February in each year, equal to 180% of the annual cash retainer (excluding separate Committee Chair retainers) payable to such Non-Employee Director.

Awards granted under this Section 13 may be any of the following: Restricted Stock Units, Restricted Stock, Nonstatutory Stock Options, SARs, or cash, or a combination of the foregoing. Awards granted under the Plan shall be in addition to the annual Board and Committee cash retainers paid by the Company to the Non-Employee Directors. The type of Awards granted under this Section 13 shall be determined, in each instance, at the Committee’s discretion (subject to the foregoing limitations). The number of shares, if any, covered by Awards granted under this Section 13 shall be subject to adjustment in accordance with the provisions of Section 3(c) of this Plan. Subject to Section 11(f) and Section 11(j), an Award of Restricted Stock or Restricted Stock Units granted pursuant to this Section 13 shall have a minimum vesting period of no less than one (1) year for Restricted Stock or Restricted Stock Units granted subject to Performance Criteria and no less than three (3) years for all other Restricted Stock or Restricted Stock Units granted, unless such Award is granted under Section 11(l), and shall expire on the date which is ten (10) years after the date of grant of such Award. Any Options, SARs or other cash Awards granted pursuant to this Section 13 may, at the Committee’s discretion, be immediately exercisable in their entirety on the date of grant.

14. Miscellaneous.

a. Definitions.

(i) “Company” for purposes of eligibility under the Plan, shall include Teradyne, Inc. and any present or future subsidiary corporations of Teradyne, Inc., as defined in Section 424(f) of the Code (a “Subsidiary”), and any present or future parent corporation of Teradyne, Inc., as defined in Section 424(e) of the Code. For purposes of Awards other than Incentive Stock Options, the term “Company” shall include any other entity in which the Company has a direct or indirect significant interest, as determined by the Committee in its sole discretion.

(ii) “Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder.

(iii) “Employee” for purposes of eligibility under the Plan shall include a person to whom an offer of employment has been extended by the Company and who has actually commenced employment with the Company, whether full or part-time status.

(iv) “Fair Market Value” of the Company’s Common Stock on any date means (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 (the “Nasdaq”), if the Common Stock is not then traded on a national securities exchange; or (iii) the average of the closing bid and asked prices last quoted (on that date) by an established quotation service for over-the-counter securities, if the Common Stock is not then traded on a national securities exchange or reported on the Nasdaq; or (iv) if the Common Stock is not publicly traded, the fair market 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; provided, that, in all events the Fair Market Value shall represent the Committee’s good faith determination of the fair market value of the Common Stock. The Committee’s determination shall be conclusive as to the Fair Market Value of the Common Stock.

(v) “Full Value Awards” means Restricted Stock, Restricted Stock Units and Awards other than (a) Options or (b) SARs or (c) Cash Awards or (d) other stock-based Awards for which the Participant pays the intrinsic value (whether directly or by forgoing a right to receive a cash payment from the Company).

b. Legal Consideration for Issuance of Shares. Unless otherwise determined by the Committee, in the case of Awards of Restricted Stock, Restricted Stock Units, or Awards that are settled in whole or in part with shares of Common Stock, to the extent such Awards do not otherwise require the payment by the Participant of cash

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consideration that exceeds the par value of the shares of Common Stock received in connection therewith, the services rendered or to be rendered by the Participant shall satisfy the legal requirement of payment of par value for such shares of Common Stock.

c. No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan.

d. No Rights As Shareholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a shareholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder thereof.

e. Effective Date and Term of Plan. The Plan shall become effective on the date on which it is approved by the shareholders of the Company (the “Effective Date”). No Awards shall be granted under the Plan after the completion of ten (10) years from the Effective Date, but Awards previously granted may extend beyond that date.

f. Amendment of Plan. The Committee may amend this Plan at any time, provided that any material amendment to the Plan will not be effective unless approved by the Company’s shareholders. For this purpose, a material amendment is any amendment that would (i) other than pursuant to Section 3(c), materially increase either the aggregate number of shares of Common Stock available for issuance under the Plan; or the maximum number of shares of Common Stock issuable in one fiscal year to a Participant; (ii) expand or limit the class of persons eligible to receive Awards or otherwise participate in the Plan; (iii) subject to Section 3(c), reduce the price at which a previously-issued Option is exercisable or extend the period of time for which a previously-issued Option shall be exercisable beyond ten (10) years; (iv) subject to Section 11(f) and Section 11(j), amend the minimum vesting provisions of Full Value Awards; or (v) require shareholder approval pursuant to the requirements of the NYSE and/or any other exchange on which the Company is then listed or pursuant to applicable law.

g. Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of The Commonwealth of Massachusetts, exclusive of reference to rules and principles of conflicts of law.

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EX-10.2

EXHIBIT 10.2

Teradyne, Inc.

Deferral Plan for Non-Employee Directors

(Restated on May 25, 2006)

WHEREAS, Teradyne, Inc. (the “Company”) has established the Teradyne, Inc. Deferral Plan for Non-Employee Directors, effective January 1, 2001, and amended as of March 1, 2003, (the “Prior Plan”) which provides each Non-Employee Director of the Company with an election to defer receipt of his or her Compensation from the Company; and

WHEREAS, the Company wishes to amend and restate such Prior Plan to comply with Section 409A with respect to Compensation deferred after December 31, 2004 and expand the elections permitted under the Prior Plan.

NOW, THEREFORE, the Company hereby amends and restates the Prior Plan to read in its entirety as set forth below, as so amended and restated (the “Plan”). The Plan has been operated in compliance with Section 409A since January 1, 2005 with respect to amounts subject to Section 409A. This amendment and restatement is intended to memorialize any changes in operation of the Plan as of that date as required by Section 409A. All other changes are effective as otherwise provided herein.

1. Eligibility.

Each person who is a Non-Employee Director on December 1, 2004 is eligible to participate in the Plan for the Plan Year beginning January 1, 2005. All other persons who are Non-Employee Directors on December 1 of any calendar year beginning in 2005 are eligible to participate in the Plan Year beginning the immediately following January 1. A Non-Employee Director who is eligible to participate may become a Participant by making a deferral election with respect to Compensation payable in the following Plan Year under Section 2. Eligibility to participate in the Plan for any Non-Employee Director automatically ends upon the termination of the individual’s status as a member of the Board of Directors. If the Non-Employee Director becomes an Employee then any deferral election for Compensation payable in the Plan Year in which such employment commences shall remain in effect for the balance of the Plan Year but no further deferral elections may be made under the Plan.

2. Participation.

A. Each Non-Employee Director who makes an election to defer the receipt of Compensation for any Plan Year must complete a Deferral Election Form, no later than the December 1 prior to the first day of the Plan Year with respect to which it is intended to be effective and deliver such completed form to the Company’s HR director. A Deferral Election Form may be modified or withdrawn by the Participant prior to December 1 preceding the Plan Year to which it relates. The last completed form delivered to the HR director prior to or on

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December 1 and not withdrawn as of that date, shall be considered the Deferral Election Form for the upcoming Plan Year and shall be irrevocable after such December 1.

B. Each Non-Employee Director who does not timely complete and deliver a Deferral Election Form for any Plan Year shall not defer receipt of any Compensation for such Plan Year and shall receive any and all Compensation to which he or she is entitled during such Plan Year in accordance with the Company’s customary practices.

3. Elections.

The Deferral Election Form for each Plan Year Deferral shall include the following elections:

A. An election to defer all the cash Compensation or, effective for Plan Years beginning January 1, 2007, all the Shares or both that are otherwise payable to the Non-Employee Director in the next Plan Year.

B. An election of the manner in which the cash portion of the Plan Year Deferral shall be allocated under the terms of Section 4(B)(1), as amended from time to time.

C. An election as to whether the Plan Year Deferral is payable, on distribution, in a lump sum or, effective for Plan Years beginning January 1, 2007, such number of annual installments (up to a maximum of 15) as the Non-Employee Director elects.

4. Accounting.

A. The Company or its designee shall establish an account for each Participant for recordkeeping purposes only, including sufficient subaccounts to reflect all of Participant’s elections in Section 3 for all such Participant’s Plan Year Deferrals. The account and subaccounts are intended only for the purposes of determining the amounts to be distributed to the Participant under the Plan. Grandfathered Accounts shall be subject only to the terms of the Plan which were in effect under the Prior Plan, unless the Board elects at any time, to make them subject to the terms of the amended and restated Plan by a resolution to that effect.

B. The account and subaccount shall be adjusted as follows:

1. Cash deferred by any Participant will be allocated, in accordance with the Participant’s election, to either (a) a notional account, or (b) a Deferred Stock Unit account (“DSU Account”).

a. Notional Account. Any amount which the Participant has allocated to a notional account, shall be credited with earnings, quarterly, at the rate in effect at the beginning of each Plan Year on 10 year Treasury Notes.

b. DSU Account. Any amount which the Participant has allocated to the DSU Account will be converted into a number of Deferred Stock Units on the date the cash amounts deferred would have been paid to the Participant. The number of Deferred Stock Units credited to the Participant’s DSU Account with respect to each cash deferral shall be determined by dividing the cash amount deferred by the Fair Market Value of the Common Stock on such date. If any cash dividends are subsequently declared with respect to the Common Stock then the cash that would

2

have been paid to the Participant as dividends if he or she had owned the number of whole shares of Common Stock represented by the Deferred Stock Units shall, on the date such dividend is paid, be credited to the notional account of the Participant with respect to the Plan Year Deferral to which such Deferred Stock Units relate and shall thereafter be credited with earnings as provided in Section 4(B)(1)(a).

2. Any Shares deferred by the Participant shall be separately accounted for under this Section 4(B)(2), in a subaccount of the DSU Account. The number of Shares deferred shall also be converted into Deferred Stock Units, crediting the Participant with one Deferred Stock Unit for each Share deferred. Any Shares which are not vested at the time they are credited to the DSU Account shall be continue to vest in accordance with the terms of the applicable agreement evidencing the award of such Shares. Any cash dividends payable with respect to the deferred Shares shall be treated as specified in Section 4(B)(1)(b) and shall vest in accordance with the terms applicable to the Shares.

5. Voting and Dividend Rights in Deferred Stock Units.

No Participant shall be entitled to any voting rights or to receive (except as provided in Section 4(B)) any dividends with respect to any amounts or Shares treated as converted into Deferred Stock Units.

6. Distributions.

A. Generally. Distributions of each Plan Year Deferral shall be made as a lump sum, or in installments, in accordance with the terms of the Deferral Election Form the Participant has completed with respect the Plan Year Deferral. A Participant shall become entitled to distributions following his or her separation from service as defined in Section 409A. Such distributions shall be made or commence within 90 days after the date of the Participant’s separation from service, subject to the provisions of Section 6(F). If distributions are to be made in installments then each annual installment shall be made on or about the anniversary of the first installment distribution, except that if the first installment is delayed in accordance with Section 6(F), then each successive annual installment will be made on the 90^th day following the anniversary of the Participant’s separation from service.

B. Lump Sum. Any distributions of a Plan Year Deferral to be made in a lump sum shall consist of (i) cash, which is an amount equal to the aggregate balance in the Participant’s notional account with respect to such Plan Year Deferral on the distribution date, and (ii) that number of shares of Common Stock equal to the aggregate number of vested Deferred Stock Units with respect to such Plan Year Deferral in the Participant’s DSU Account on the distribution date. Any unvested Deferred Stock Units shall be forfeited upon the Participant’s termination of service as a member of the Board of Directors. The cash and the shares of Common Stock may be distributed separately and at different times within the 90 day payment period.

C. Installments. Each installment distribution of any Plan Year Deferral shall consist of (i) such amount of cash as is determined by dividing the aggregate balance in the Participant’s notional account with respect to such Plan Year Deferral on the date of such installment

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distribution by the total number of remaining installment distributions elected by the Participant in his or her Deferral Election Form with respect to such Plan Year Deferral and (ii) that number of shares of Common Stock equal to the aggregate number of vested Deferred Stock Units in the Participant’s DSU Account with respect to such Plan Year Deferral on the date of such installment distribution divided by the total number of remaining installment distributions elected by the Participant in his or her Deferral Election Form with respect to such Plan Year Deferral; provided that the number of shares of Common Stock distributed may be rounded up or down by one share for ease of administration.

D. Form of Distribution. Amounts allocated to the notional account shall be distributed in cash and amounts allocated to DSU Account shall be distributed in shares of Common Stock. Shares of Common Stock distributed under the Plan shall be issued from either the 2006 Equity and Cash Compensation Incentive Plan of the Company (the “2006 Compensation Plan”) with respect to any Shares deferred subsequent to the adoption of the 2006 Compensation Plan by the Company’s shareholders, or the Company’s 1997 Employee Stock Option Plan with respect to any Shares deferred prior to the adoption of the 2006 Compensation Plan by the Company’s shareholders. Distribution shall be made to the Participant, or if the Participant has died to the Participant’s Beneficiary. The Company may distribute the value of any fractional Deferred Stock Unit in cash, based on the Fair Market Value on the date any shares of Common Stock are distributed.

E. Death. If the Participant dies prior to the total distribution of his or her account then the vested balance that is undistributed at the time of the Participant’s death, notwithstanding any prior election by the Participant for installment distributions, shall be distributed to the Participant’s Beneficiary, in a lump sum, within 90 days following the Participant’s death.

F. Specified Employee. If at the time of separation from service the Participant is considered a specified employee as defined in Section 409A then, notwithstanding the foregoing, the distribution of his or her account shall not be made, or commence, until six months and one day after such separation from service, but installments shall thereafter be distributed as if the initial installment had been made on the date of separation.

G. Special 2006 Election. Notwithstanding the foregoing terms of the Plan, in accordance with Section 409A the Participants who have previously made a proper election to defer Compensation for 2005 or 2006 may designate, in such manner as the HR director determines, prior to December 31, 2006, whether such Plan Year Deferrals shall be distributed in a lump sum or in installments, and if in installments, the number of such installments.

7. Amendments and Termination.

The Board of Directors may amend or terminate the Plan at any time, which may include, without limitation, action to prohibit any future deferral under the Plan; provided that no such action shall decrease the value of the Participant’s account with respect to Deferral Elections made prior to such termination or amendment and such amendment or termination shall be consistent with Section 409A.

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8. Definitions.

As used in the Plan, the following terms shall have the following meanings:

A. “Beneficiary” means the person designated or determined under Section 10(B).

B. “Board of Directors” means the Board of Directors of the Company.

C. “Committee” means the Compensation Committee, or any successor to such Compensation Committee, or any other Committee of the Board of Directors authorized by the Board of Directors to administer the Plan.

D. “Common Stock” means the common stock, $0.125 par value per share, of the Company.

E. “Compensation” means any meetings fees, retainer or other amounts, whether in cash or, effective January 1, 2007, in Shares, payable to the Non-Employee Director for services as such Non-Employee Director.

F. “Deferral Election Form” means the document or other communication by which the HR director has Non-Employee Directors elect to defer receipt of Compensation under the Plan.

G. “Deferred Stock Units”, which are expressed as a number in the DSU account of a Participant refer to the number of shares of Common Stock that a Participant will become entitled to receive upon distribution of his or her Plan Year Deferrals in accordance with Section 6.

H. “Employee” means a common law employee of Teradyne, Inc. or any of its subsidiaries.

I. “Fair Market Value” of the Common Stock means, prior to June 1, 2006, the opening price for the date it is being determined, as officially quoted by the New York Stock Exchange. Effective June 1, 2006, Fair Market Value shall have the meaning set forth in the 2006 Compensation Plan.

J. “Grandfathered Accounts” mean those accounts for Participants which were established with respect to deferrals prior to December 31, 2004 which had not been distributed on such date.

K. “Non-Employee Director” means any person who is (i) a member of the Board of Directors but who is not an Employee of the Company, and (ii) is eligible to receive awards under the 2006 Compensation Plan (or, prior to its approval by the Company’s shareholders, was eligible to receive awards under the Company’s 1997 Employee Stock Option Plan).

L. “Participant” means a Non-Employee Director who is eligible to defer receipt of Compensation under Section 1 and who has delivered a completed Deferral Election Form in accordance with Section 2.

M. “Plan Year” means the calendar year. The first plan year of the Plan, as amended and restated, begins January 1, 2005.

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N. “Plan Year Deferral” means cash or Shares deferred for any Plan Year in accordance with a Non-Employee Director’s Deferral Election Form.

O. “Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and guidance issued thereunder from time to time.

P. “Shares” means either Restricted Stock or Restricted Stock Units granted under the 2006 Compensation Plan of the Company.

9. Dilutions and Other Adjustments.

In the event of any change in the outstanding shares of the Common Stock by reason of any stock dividend or split, recapitalization, merger, consolidation, spin-off, reorganization, combination or exchange of shares or other similar corporate change, then if the Board of Directors or the Committee shall determine, in their sole discretion, that such change equitably requires an adjustment in the number or kind of shares then held in a Participant’s DSU account, then such adjustments shall be made and such determination shall be conclusive and binding for all purposes.

10. Miscellaneous Provisions.

A. The Plan shall be administered by the Committee, which shall have the exclusive right and full discretion to interpret the Plan and make all determinations necessary or advisable for its administration, including, without limitation, the authority to remedy ambiguities inconsistencies or omissions. All determinations by the Committee shall be final and binding on all persons. .

B. The Plan shall be an unfunded plan and a Participant’s rights and interest under the Plan may not be anticipated, mortgaged, assigned or otherwise encumbered, transferred, or conveyed in advance of actual receipt and any attempt so to do shall be null and void. No part of the amounts payable shall, prior to actual payment be subject to seizure, attachment, garnishment or sequestration for the payment of any debts or judgments of any kind. Any amounts deferred under the Plan shall remain the assets of the Company until paid in accordance with the provisions of the Plan, and in the event of the Company’s insolvency, will be subject to the claims of the Company’s general creditors. In the event of the Company’s insolvency, a Participant shall be a general creditor of the Company with respect to his or her claim for benefits hereunder.

C. Each Participant shall have the right to designate, from time to time, a beneficiary, primary as well as contingent, to receive benefits payable in accordance with the terms of the Plan. If the HR director has not received a completed beneficiary designation form during the Participant’s life then the Participant’s beneficiary under the Plan shall be his or her spouse, if any, and if none, his or her estate. The delivery of a completed beneficiary designation form to the HR Director shall replace any prior form.

D. The Company may establish one or more trusts pursuant to one or more trust agreements between the Company and a trustee named in such agreement, and as amended from time to time, on such terms as the Company shall determine (the “Trust”). The Company may transfer

6

assets to said Trust, as it determines in its sole discretion, for purposes of providing for the payment of its liabilities under the Plan. The provisions of the Plan shall govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust shall govern the rights of the Company, the Participants and any creditors of the Company to the assets of the Trust. To the extent any distributions are made from said Trust to any Participant for purposes of satisfying any obligation the Company may have under the Plan that distribution shall reduce the Company’s obligation hereunder.

E. The Plan is intended to comply with Section 409A with respect to those accounts which are subject to its terms and to such extent shall be administered in accordance with its terms and that intention; provided that the Company shall have no obligation to any Participant or his or her Beneficiary if there is any failure to comply with Section 409A or with respect to any liability incurred by such Participant or any other person as a result of such failure.

F. The Plan is established and shall be construed in accordance with the laws of the Commonwealth of Massachusetts.

G. The provisions of the Plan shall bind and inure to the benefit of the Company and its successors and assigns, or any Participant and his or her beneficiaries.

H. Distributions hereunder shall be subject to any applicable tax withholding and the Company shall have the discretion to withhold cash for such purpose to the extent available to satisfy any withholding obligation with respect to any cash or Common Stock distributed under the Plan.

I. If any distribution is to be made to any person who is a minor or is declared incompetent or to a person the Board of Directors determines in good faith to be incapable of handling the disposition of such person’s property (which the Board of Directors shall have no obligation to determine), the Board of Directors may direct payment to the guardian, legal representative or person having the care and custody of such person and such payment shall discharge the Company’s obligations hereunder to the extent of such payment.

Approved by the Teradyne, Inc. Board of Directors May 24-25, 2006.

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EX-10.3

EXHIBIT 10.3

TERADYNE, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(Restated on May 25, 2006)

Article I. Establishment and Purpose

1.1 Establishment. Teradyne, Inc. and certain Affiliates (the “Employer”) established a supplemental retirement plan known as the “TERADYNE, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN” (the “Prior Plan”), effective as of January 1, 1993 and thereafter amended from time to time. This restatement (the “Plan”) has been operated in compliance with Section 409A of the Internal Revenue Code of 1986, as amended and the guidance issued thereunder from time to time (“Section 409A”) since January 1, 2005, with respect to amounts subject to Section 409A. This amendment and restatement is intended to memorialize any changes in operation of the Plan as of January 1, 2005 as required by Section 409A. All other changes are effective as otherwise provided herein. As such, the Plan is effective as of January 1, 2005 only with respect to benefits accrued or vested under its terms on or after January 1, 2005, and is intended to comply with Section 409A. The terms of the Prior Plan, as amended from time to time, remain applicable to Grandfathered Benefits. The terms of this Plan shall apply to the payment of any benefit distributed under its terms.

1.2 Applicability. The provisions of this Plan are applicable only to Eligible Employees who were Members of the Prior Plan on December 31, 2004 and continue to be Eligible Employees of an Employer thereafter or who become Eligible Employees of the Plan after December 31, 2004.

1.3 Purpose. The purpose of this Plan is to provide Members with retirement benefits they are unable to receive due to certain restrictions on the Retirement Plan imposed by Code Sections 401(a) (17) and 415 and to supplement the benefits payable to such Members from the Retirement Plan (in addition to those benefits accrued and vested under the Prior Plan). The Plan is intended to be unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees as described in the Employee Retirement Income Security Act of 1974, as amended.

1.4 Invalidity of Particular Provision. The invalidity of any particular provision of this Plan shall not affect the other provisions, and the Plan shall be construed in all respects as if such invalid provision were omitted.

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Article II. Definitions

2.1 Definitions. Whenever used herein, the following terms shall have the respective meanings set forth below.

(a) Accrued Benefit has the same meaning as such term has in the Retirement Plan after December 31, 2004, but calculated under the terms of the Plan. If Retirement Benefits commence prior to Social Security Retirement Age, the factors in Appendix A, Column B of the Retirement Plan will be used for this calculation.

(b) Actuarial Equivalent has the same meaning as such term has in the Retirement Plan.

(c) Affiliate shall mean—

(1) any corporation other than the Company which together with the Company is a member of a “controlled group” of corporations (as defined in Code Section 414 (b));

(2) any organization which together with the Company is under “common control” (as defined in Code Section 414 (c));

(3) any organization which together with the Company is an “affiliated service group” (as defined in Code Section 414 (m)); or

(4) any other entity required to be aggregated with the Company pursuant to regulations under Code Section 414 (o).

(d) Annual Compensation has the same meaning such term has under the Retirement Plan without the limitations of Section 401(a)(17) of the Code.

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(e) Beneficiary shall mean the person or persons last designated by a Member, in such manner as the Plan Administrator deems appropriate, to receive any benefits for which a Beneficiary is eligible under this Plan, or if there is no living Beneficiary the Member’s Spouse, and if no living Spouse, then the Member’s estate.

(f) Code shall mean the Internal Revenue Code of 1986, as the same shall from time to time be amended, and the guidance issued thereunder.

(g) Committee shall mean any Committee of the Board of Directors of the Company designated by the Board to have any responsibility with respect to the Plan.

(h) Company shall mean Teradyne, Inc.

(i) Compensation:

(1) for those Members who became Members under the Plan before 1/1/2003, shall mean for each Plan Year,

(A) an amount equal to the Annual Compensation minus

(B) actual payments to the Member under the Variable Compensation Plan for such Plan Year, plus

(C) target variable portions of the Member’s Model Compensation for the Plan Year as of the most recent effective date as of when the Model Compensation is fixed for the Member, for the number of months for which such Model Compensation is payable to the Member for such Plan Year.

(2) for Members who became Members after January 1, 2003 (or hereafter become Members), shall mean for each Plan Year, an amount equal to

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Annual Compensation, but only to the extent it exceeds the limit under Section 401(a)(17) of the Code during such Plan Year.

(j) Covered Compensation shall mean the Breakpoint for each Plan Year after 1988 as defined in Section 2.1(g)(3) of the Retirement Plan.

(k) Credited Service has the same meaning as such term has in the Retirement Plan.

(l) Disability has the same meaning as such term has in the Retirement Plan.

(m) Earliest Retirement Date has the same meaning as such term has in the Retirement Plan.

(n) Eligible Employee shall mean an Employee who is an “Eligible Employee” as defined in the Retirement Plan, and who had elected to continue to accrue benefits under the Retirement Plan after October 29, 1999, and either was a Member of the Prior Plan on December 31, 2004 (and who had elected to continue to accrue benefits under the Retirement Plan after October 29, 1999) or, thereafter is eligible for Model Compensation in excess of the Section 401(a)(17) limit in any Plan Year in which he was employed by Employer, and has been notified that he or she is an Eligible Employee under this Plan by the Plan Administrator.

No Employee shall be considered an Eligible Employee after October 29, 1999 if such Employee experiences a Break in Service under the Retirement Plan and any Retirement Benefits shall be based on the terms of this Plan (and the Prior Plan) prior to such Break in Service and such Member’s service and compensation at that time.

(o) Employee shall mean an individual who is employed by the Employer as a regular employee or an expatriate employee on the U.S. payroll and who is regularly

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scheduled for 20 or more hours of service per week taking into account Hours of Service as defined in the Retirement Plan.

(p) Employer shall mean the Company and any Affiliate that has been included in the Prior Plan (or is hereafter included in this Plan) with respect to some or all of its Eligible Employees.

(q) Final Average Compensation shall mean the sum of the Employee’s Monthly Compensation for the 5 Plan Years during which the Employee’s aggregate Monthly Compensation was the highest, divided by five; provided, however, that if the Employee’s employment is terminated on any day other than the last business day of the Plan Year, then, if higher, Final Average Compensation shall mean the sum of the Member’s Monthly Compensation during the 60 consecutive months ending with the month prior to the Member’s termination date, if higher; and provided further that if the Employee has fewer than sixty consecutive months of employment with the Employer or his or her termination date, Final Average Compensation shall mean the Employee’s average Monthly Compensation during the period of his or her employment with the Employer.

(r) Grandfathered Benefits shall mean the accrued and vested benefits under the terms of the Prior Plan as of December 31, 2004 as defined for purposes of Section 409A and subject to the terms of the Prior Plan as in effect on October 3, 2004 and as amended thereafter consistent with Section 409A.

(s) Member shall mean an Employee who has satisfied the requirements of Article III.

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(t) Model Compensation is Employee’s base salary plus target variable compensation payout under the terms of the Variable Compensation Plan.

(u) Monthly Compensation shall mean Compensation divided by 12.

(v) Normal Retirement Date is the date the Member reaches Social Security Retirement Age.

(w) Plan Administrator shall mean the Retirement Plan Committee, as described in the Retirement Plan, or any other person designated as Plan Administrator by the Board of Directors or a Committee.

(x) Plan Year shall mean the calendar year.

(y) Retirement Benefits shall mean the benefits provided under Section 4.1 of this Plan.

(z) Retirement Plan shall mean the Retirement Plan for Employees of Teradyne, Inc., as amended from time to time.

(aa) Separation from Service shall mean a Member’s termination of employment with an Employer within the meaning of Section 409A.

(bb) Social Security Retirement Age has the same meaning as such term has under the Retirement Plan.

(cc) Spouse, Surviving Spouse and the term “married” shall be interpreted under the law of the jurisdiction in which the Member was married.

(dd) Variable Compensation Plan shall mean the Teradyne, Inc. Variable Compensation Plan as modified and incorporated into the Teradyne, Inc. 2006 Equity and Cash Compensation Incentive Plan, each as amended from time to time.

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2.2 Gender and Number. Except where otherwise indicated by the context, any masculine terminology used herein shall also include the feminine gender, the definition of any term herein in the singular shall also include the plural, and the definition of any term herein in the plural shall also include the singular.

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Article III. Eligibility and Participation

Each Eligible Employee who was a Member prior to January 1, 2005 shall continue to be a Member under this Plan as of that date. However, amounts accrued and vested for such Member within the meaning of Section 409A prior to January 1, 2005 shall be subject only to the terms of the Prior Plan and no additional benefits shall be accrued or vested under the Prior Plan after December 31, 2004. Amounts accrued or vested on or after January 1, 2005 within the meaning of Section 409A shall be subject to the terms of this restated Plan and Section 409A. Each other Employee who becomes an Eligible Employee on or after January 1, 2005 shall become a Member on the day after becoming an Eligible Employee.

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Article IV. Retirement Benefits

4.1 Retirement Benefits.

(a) Entitlement to Retirement Benefits. Except as provided in Section 4.7, a Member who Separates from Service after December 31, 2004 and who is vested under the terms of Article V is entitled to the receipt of Retirement Benefits determined in Section 4.2, payable in the manner provided in the Member’s election under the Plan with respect to all amounts accrued or vested after December 31, 2004.

(b) Amount of Retirement Benefits. A Member who,

I. first became a Member prior to January 1, 2003, shall be entitled to a monthly Retirement Benefit equal to one-twelfth of the result of (1) minus (2) minus (3) where—

(1) is an amount payable in a straight life annuity form equal to the product of (i) the Member’s Credited Service and (ii) the sum of (A) and (B) as follows:

(A) 0.75 percent of the Member’s Final Average Compensation up to the Covered Compensation,

(B) 1.50 percent of the Member’s Final Average Compensation above the Covered Compensation,

(2) is the Member’s Accrued Benefit payable in a straight life annuity form from the Retirement Plan; and

(3) is the Member’s Accrued Benefit payable in a straight life annuity form under the Prior Plan with respect to amounts accrued and vested within the meaning of Section 409A prior to January 1, 2005; or

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II. first became a Member on or after January 1, 2003, shall be entitled to a monthly Retirement Benefit equal to one-twelfth of (1) minus (2) when

(1) is a straight life annuity form equal to the total of 1.5% of the Member’s Compensation for each Plan Year beginning January 1, 2003 in which the Member participated in the Plan; provided that 1% shall be substituted for 1.5% for any Plan Year (or fraction thereof) in which the Member had completed more than 35 years of Credited Service; and

(2) is the Member’s Accrued Benefit payable in a straight life annuity form under the Prior Plan with respect to amounts accrued and vested within the meaning of Section 409A prior to January 1, 2005.

4.2 Commencement of Benefits.

(a) Retirement Benefits under this Article IV shall commence as of the month coincident with or next following the later of:

(1) the Member’s Separation from Service, or

(2) the date on which such Member attains his or her Social Security Retirement Age;

provided that the Board of Directors or a Committee, in its sole discretion, may instruct the Plan Administrator to commence or advance such payments on an earlier date to satisfy an unforeseeable emergency as permitted and to the extent limited within the meaning of Section 409A(a)(2)(B)(ii) under Section 409A of the Code.

(b) Notwithstanding the provisions of the preceding paragraph, but acting in accordance with Section 409A(a)(2)(B) of the Code, distributions upon Separation from Service of any specified employee, as defined in Section 409A, may not commence earlier than the date 6 months and one day after the date of such separation (or the date of death, if earlier). Any distributions which would have been made prior to the actual commencement of benefits but for the delay

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required by Section 409A(a)(2)(B) of the Code under Section 409A shall be accumulated and paid in a lump sum once benefits may commence, without interest, to the Member or his or her Beneficiary as the case may be.

4.3 Preretirement Death Benefit. Benefits accrued or vested after December 31, 2004 shall be provided under this Section if the Member is married on the date of such Member’s death and if such Member dies before Retirement Benefits commence under the Plan, and in accordance with Section 4.3(a) or (b).

(a) On or After Vesting.

(1) Timing. If a Member dies after becoming vested under Article V and (a) such Member is married on the date of death, and (b) the Member has not yet begun to receive benefits, then in lieu of any other benefit herein, the Surviving Spouse shall be entitled to receive as a death benefit a monthly payment beginning during the month following the Member’s death and ending with the month in which the Spouse dies.

(2) Amount. The monthly benefit under this subsection (a) shall equal 50 percent of the Retirement Benefit which would have been payable under Section 4.1(b) to the Member if the Member had retired the day before death and benefit payments had commenced on that date in the form of a joint and 50 percent survivor annuity with the Surviving Spouse as the contingent annuitant.

(b) Prior to Earliest Retirement Date.

(1) Timing. If a Member dies while employed by an Employer prior to a Member’s Earliest Retirement Date under the Retirement Plan and such

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Member is married on the date of death, then the Surviving Spouse shall be entitled to receive as a death benefit a monthly payment beginning during the month following the earlier of—

(A) the date that would have been the Member’s Earliest Retirement Date under the Retirement Plan, or

(B) the date the Member would have attained age 65,

and ending with the month in which the death of the Spouse occurs.

(2) Amount. The monthly benefit under this subsection (b) shall equal the amount determined as if the Member:

(A) Separated from Service with the Employer on the day before the date of death,

(B) began receiving Retirement Benefits in the form of a joint and 50 percent survivor annuity on the date of the Member’s Separation from Service,

(C) died the day thereafter.

4.4 Form of Payment. Retirement Benefits under the Plan shall be paid as provided in this Section 4.4.

(a) Life annuity. The annual amount of Retirement Benefits payable to any Member who does not have a Spouse on the date his or her Retirement Benefits commence or who is married but has made a valid election to receive his or her Retirement Benefits in the form specified in this Section 4.4(a) rather than in the form specified in Section 4.4(b) shall be payable for the life of the Member only, unless another optional form of payment has been elected pursuant to Section 4.4(c) below.

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(b) Automatic Joint and Survivor Annuity for Married Members. Except as otherwise provided herein, Retirement Benefits payable hereunder to any Member who is married on the date his or her Retirement Benefits are to commence will be automatically paid to the Member and his or her Spouse in the form of a joint and survivor annuity. The joint and survivor annuity shall provide for retirement income to the Member and the Member’s Spouse in the same amount and the same manner as if the Member had elected Option 2 in Section 4.4(c) below, providing for 50 percent of the Member’s reduced Retirement Benefit to be continued to his or her Spouse as the contingent annuitant.

(c) Optional Forms. Notwithstanding the provisions of Sections 4.4(a) and (b), the Member may elect prior to the date with respect to which payments shall be made and only to the extent permitted by Section 409A the form in which his or her Retirement Benefits are to be made either by electing a life annuity under Section 4.4(a) or from among the choices in this Section 4.4(c).

(1) Option 1 – Period Certain and Life Option. A reduced rate of Retirement Benefits payable to the member during his or her retired life, but guaranteed for a period of 5, 10, or 20 years, at the election of the Member, from the date Retirement Benefits commence. If the Member dies before expiration of the period certain, payments shall be continued to the Member’s Beneficiary for the remainder of the period certain. If the Member’s Beneficiary dies while further payments are due, such further payments shall be made to any one or more persons designated by the Member as alternate Beneficiaries which designation can be made at any

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time during the Member’s life. In the absence of the designation of an alternate Beneficiary, the value of such payments shall be paid to the Member’s Surviving Spouse, and if none, to the Member’s estate. If the Member dies after this Option 1 has gone into effect, but has failed to designate a Beneficiary, the payments shall be made to the Member’s Surviving Spouse, or if none, to the Member’s estate.

(2) Option 2 – Contingent Annuitant Option. A reduced rate of Retirement Benefits payable during the lifetime of the Member with a percentage, either 50 percent, 75 percent, or 100 percent, designated by the Member, of said Retirement Benefits payable after the Member’s death to his or her designated contingent annuitant for such contingent annuitant’s lifetime.

(3) If either the Beneficiary under Option 1 or the contingent annuitant under Option 2 dies before the retirement commencement date, the election shall be deemed null and void, but the Member shall be entitled to make another election or designate a Beneficiary under Option 1 and a new contingent annuitant under Option 2 to the extent consistent with Section 409A, and if not, the benefit will be paid as an annuity under Section 4.4(a) or Section 4.4(b) as applicable.

(4) If the contingent annuitant under Option 2 dies after the option has become effective, the option shall continue in effect, the annual amount of Retirement Benefits payable to the Member at the time of the contingent annuitant’s death shall remain unchanged, and no further Retirement Benefits shall be payable upon the subsequent death of the Member. If the

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Beneficiary under Option 1 dies at any time prior to the Member’s death, the option shall remain effective and the Member may designate a new Beneficiary. In the event the Beneficiary under Option 1 dies after benefit payments have begun to the Member and the Member designates a new Beneficiary, the period of time over which the benefits are to be paid shall not be changed.

(5) Elections shall be made in accordance with a procedure established by the Plan Administrator from time to time. Each form of payment hereunder shall be the Actuarial Equivalent of the Retirement Benefit calculated under Section 4.1(b) and payable under the Plan.

4.5 Payment of Small Amounts. Notwithstanding the foregoing, if the value of the Retirement Benefits payable under Section 4.1 or 4.3 is $5,000 or less when calculated as if payable in a lump sum, which is the Actuarial Equivalent of the Retirement Benefit, at the time of Separation from Service or death, as applicable, under the terms of the Plan, then on the Member’s Separation from Service or death, the Plan Administrator shall direct that such lump sum be paid to the Member (or the Member’s Beneficiary) within 90 days following such Separation from Service or death. Should a Member receive a benefit under this Section and be reemployed by an Employer, any Retirement Benefits payable under this Plan after his or her reemployment shall be reduced by the Actuarial Equivalent of the benefits such Member received under this Section.

4.6 Separation from Service Prior to Vesting. Notwithstanding any provision herein to the contrary, a Member who Separates from Service with the Employer prior to vesting under Section 5.1 shall not be entitled to any Retirement Benefits (or death benefits) under the Plan.

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4.7 Non-Competition. The Member shall forfeit any Retirement Benefits that would otherwise be payable under this Plan if he or she, for any reason whatsoever, directly or indirectly, accepts employment or renders services, 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—

(a) in the event of voluntary termination of employment for a period of three years immediately following such termination, or

(b) in the event of involuntary termination of employment, for a period of one year immediately following such termination.

4.8 Delay of Payments. Notwithstanding the foregoing, any payment due under this Article IV, may be delayed in a manner that will not constitute a subsequent deferral under Section 409A and in such manner permitted by and subject to such conditions and limitations as imposed under Section 409A, including, without limitation, (a) if the Employer reasonably anticipates that its federal income tax deduction with respect to such payment will be limited or eliminated by application of Section 162(m) of the Code; provided that any payment so delayed will be paid at the earliest date at which the Employer reasonably anticipates that the federal income tax deduction will not be limited or eliminated by application of Section 162(m) of the Code, or the calendar year in which a Member has a Separator from Service, or (b) an Employer reasonably anticipates that the making of such payments will violate a term of a loan agreement to which the Employer is a party or other similar contract to which the Employer is a party, and such violation will cause material harm to the Employer; provided that such payments shall be made at the earliest date at which the Employer reasonably anticipates that the making of the

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payment will not cause such violation or such violation will not cause material harm to the Employer; provided that the facts and circumstances indicate that the Employer entered into such loan agreement (including such covenant) or other similar contract for legitimate business reasons and not to avoid the restrictions on deferral elections and subsequent deferral elections of Section 409A, and (c) if the Employer reasonably anticipates the payments will violate federal securities law or other applicable law; provided that the payments delayed will be made at the earliest date at which the Employer reasonably anticipates that the making of such payments will not cause a violation.

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Article V. Rights of Members

5.1 Vesting. A Member shall have a nonforfeitable right to Retirement Benefits payable pursuant to Article IV upon the earliest to occur of the following:

(a) the Member’s Normal Retirement Date under the Retirement Plan,

(b) the Member’s Earliest Retirement Date under the Retirement Plan,

(c) the date the Member retires on account of Disability under the Retirement Plan, and

(d) the Member’s death.

If the Member Separates from Service prior to having a nonforfeitable right under this Section 5.1 no Retirement Benefits will be paid hereunder.

5.2 Unsecured Interest. No Member or Surviving Spouse shall have any interest whatsoever in any specific asset of the Employer. To the extent any person acquires a right to receive payments under this Plan, such right shall be no greater than the right of any unsecured general creditor of the Employer.

5.3 Employment. Nothing in this Plan shall interfere with or limit in any way the right of the Employer to terminate any Member’s employment at any time, nor confer upon any Member any right to continue in the employ of the Employer.

5.4 Member’s Rights. Nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall create or be construed to create a fiduciary relationship between the Employer or the Plan Administrator and any Member or Surviving Spouse or any other person. Members and Surviving Spouses have the status of general unsecured creditors of the Employer. The Plan constitutes a mere promise by the Employer to make benefit payments in the future. Neither Members nor Surviving Spouses (nor any other person) shall have any claim

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to any specific assets of the Employer, including any assets transferred to any trust described in Section 6.5 and all such assets shall remain owned by the Employer at all times.

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Article VI. Administration and Financing

6.1 Administration. The Plan will be administered by the Plan Administrator, which shall have the exclusive right and full discretion subject to the provisions of 409A—

(a) to interpret the Plan,

(b) to decide any and all matters arising hereunder (including the right to remedy possible ambiguities, inconsistencies, or admissions),

(c) to require information and documents from any person who may be helpful to the fulfillment of the Plan Administrator’s responsibilities.

(d) to make, amend, and rescind such rules as it deems necessary for the proper administration of the Plan, including the adoption of written administrative procedures which may modify or eliminate provisions of this Plan in order to conform them more closely to Section 409A.

(e) to make all other determinations necessary or advisable for the administration of the Plan, including determinations regarding eligibility for benefits under the Plan and the amount of benefits payable under the Plan.

6.2 Finality of Determination. The determination of the Plan Administrator as to any disputed questions arising under this Plan, including questions of fact and construction and interpretation of such facts and all applicable documents, shall be final, binding, and conclusive upon all persons.

6.3 Indemnification. To the extent permitted by law, and without limiting the applicability of any other indemnification provided by the Employer, the Plan Administrator, and all agents and representatives of the Plan Administrator, shall be indemnified by the Employer against any claims, and the expenses of defending against such claims, resulting from any action

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or conduct (or failure to act) relating to the administration of the Plan except claims arising from a finding of gross negligence, willful neglect, or willful misconduct.

6.4 Expenses. The cost of payment from this Plan and the expenses of administering the Plan shall be borne by the Employer.

6.5 Financing. The Employer may pay benefits under this Plan from its general assets or it may establish a trust and transfer to that trust such assets as it determines to assist the Employer in payment of such benefits under this Plan. To the extent distributions from any trust are not sufficient to make any benefit payment, the balance of such payment shall be made by the Employer.

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Article VII. Claims Procedure

7.1 Claims Procedure.

(a) Submission of Claims. Claims for benefits under the Plan shall be submitted in writing to the Plan Administrator or to an individual designated by the Plan Administrator for this purpose.

(b) Denial of Claim. If any claim for benefits is wholly or partially denied, the claimant shall be given written notice within 90 days following the date on which the claim is filed, which notice shall set forth—

(1) the specific reason or reasons for the denial,

(2) specific references to pertinent Plan provisions on which the denial is based,

(3) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary, and

(4) an explanation of the Plan’s claim review procedure.

If special circumstances require an extension of time for processing the claim, written notice of an extension shall be furnished to the claimant prior to the end of the initial period of 90 days following the date on which the claim is filed. Such an extension may not exceed a period of 90 days beyond the end of said initial period.

If the claim has not been granted, and if written notice of the denial of the claim is not furnished within 90 days following the date on which the claim is filed, the

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claim shall be deemed denied for the purpose of proceeding to the claim review procedure.

(c) Claim Review Procedure. The claimant or his or her authorized representative shall have 60 days after receipt of written notification of denial of a claim to request a review of the denial by making written request to the Plan Administrator, and may review pertinent documents and submit issues and comments in writing within such 60-day period.

Not later than 60 days after receipt of the request for review, the Plan Administrator shall render and furnish to the claimant a written decision, which shall include specific reasons for the decision, and shall make specific references to pertinent Prior Plan provisions on which it is based. If special circumstances require an extension of time for processing, the decision shall be rendered as soon as possible, but not later than 120 days after receipt of the request for review, provided that written notice and explanation of the delay are given to the claimant prior to commencement of the extension. Such decision by the Prior Plan Administrator shall not be subject to further review. If a decision on review is not furnished to a claimant within the specified time period, the claim shall be deemed to have been denied on review.

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Article VIII. Amendment and Termination

8.1 Amendment and Termination. The Employer expects the Plan to be permanent but since future conditions affecting the Employer cannot be anticipated or foreseen, the Employer necessarily must and does hereby reserve the right to amend, modify, or terminate the Plan (in all circumstances as permitted by Section 409A) at any time, by action of the Board of Directors or a Committee. Any such amendment, modification, or termination shall not reduce or diminish the value of the benefit to be paid hereunder prior to the date of such amendment. Distribution of all benefits on termination of the Plan shall be made in such manner permitted by and subject to such conditions and limitations as imposed by Section 409A including, without limitation, (a) a termination within 12 months of a corporate dissolution taxed under Section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), (b) a termination within 30 days preceding or 12 months following a change in control event as defined under Section 409A, and (c) a termination of the Plan if all similar arrangements sponsored by the Employer that would be aggregated with the Plan under Section 409A are terminated, subject in each event to compliance with all provisions of Section 409A with respect to such events of termination. Notice of such amendment or termination shall be given in writing to each Member and Beneficiary of a deceased Member having an interest in the Plan. The Employer may, at any time, provide for the cessation of the accrual of benefits under the Plan for some or all of the Members.

8.2 409A. It is the intention of the Company and any other Employer that the terms of this Plan shall be consistent with the provisions of Section 409A including rights that are grandfathered and the administration and interpretation of this Plan shall be consistent with such intention; provided that the Company, any other Employer and the Plan Administrator or its

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agents shall have no obligation to any Member or any other person if there is any failure to comply with said Section 409A or with respect to any liability, including, without limitation, any liability for taxes, additional taxes or interest incurred by the Member or any other person as a result of such failure.

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Article IX. Miscellaneous

9.1 Nontransferability. In no event shall the Employer make any payment under this Plan to any assignee or creditor of a Member, a Surviving Spouse or a Beneficiary except to the extent consistent with any court order to make payments to someone other than a Member in connection with a domestic relations order as defined in Section 414(p)(1)(B). Prior to the time of payment hereunder, a Member, a Surviving Spouse or Beneficiary shall have no rights by way of anticipation or alienation nor shall such rights be assigned or transferred by operation of law.

9.2 Withholding. The Employer shall have the right to deduct from all payments made from the Plan any applicable withholding required by law to be withheld with respect to such payments.

9.3 Permitted Distributions. In addition to the provisions of Section 9.1, distribution may be made in such manner permitted by and subject to such conditions and limitations as imposed by Section 409A, including, without limitation, (i) to comply with a certificate of divestiture in accordance with Section 1043(b)(2) of the Code, (ii) to pay employment taxes under Sections 3101, 3121(a) and 3121(v)(2) of the Code on amounts accrued under this Plan, (iii) to pay income taxes under Section 3401 of the Code or corresponding state, local or foreign withholding rules as a result of the payments under (ii), (iv) to pay additional income tax on wages attributable to the pyramiding Section 3401 wages and taxes, and (v) to pay any amount due as a result of some being under this Plan being included in income as a result of a failure to comply with Section 409A.

9.4 Applicable Law. This Plan shall be governed and construed in accordance with the Employee Retirement Income Security Act of 1974, as amended, and to the extent not pre-exempted, the laws of the Commonwealth of Massachusetts.

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Approved by the Teradyne, Inc. Board of Directors May 24-25, 2006.

* * * * * * * * * *

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EX-10.4

EXHIBIT 10.4

Teradyne, Inc.

Supplemental Savings Plan

(Restated on May 25, 2006)

TABLE OF CONTENTS

PURPOSE AND EFFECTIVE DATE

ARTICLE 1—DEFINITIONS

1.1 Account

1.2 Administrator

1.3 Beneficiary

1.4 Change in Control

1.5 Code

1.6 Compensation

1.7 Disability

1.8 Eligible Employee

1.9 Employer

1.10 ERISA

1.11 Grandfathered Account

1.12 Key Employee

1.13 Matchable Compensation

1.14 Matching Contribution

1.15 Participant

1.16 Plan

1.17 Plan Sponsor

1.18 Plan Year

1.19 Related Employer

1.20 Retirement

1.21 Savings Plan

1.22 Separation from Service

1.23 Unforeseeable Emergency

1.24 Valuation Date

1.25 VC Award

1.26 Vesting Service

ARTICLE 2—PARTICIPATION

2.1 Participation

2.2 Termination of Participation

ARTICLE 3 – PARTICIPANT ELECTIONS

3.1 Deferral Agreement

3.2 Election to Defer Compensation

3.3 Election to Defer VC Award

3.4 Timing of Election to Defer

3.5 Election of Distribution Event

3.6 Transitional Rule

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ARTICLE 4 – MATCHING CONTRIBUTIONS

4.1 General Rules

4.2 Rate of Matching Contributions

ARTICLE 5 – PARTICIPANT ACCOUNTS

5.1 Establishment of Account

5.2 Credits to Account

5.3 Investment Options

5.4 Adjustment of Accounts

ARTICLE 6—RIGHT TO BENEFITS

6.1 Vesting

6.2 Death

ARTICLE 7—DISTRIBUTION OF BENEFITS

7.1 Amount of Benefits

7.2 Method and Timing of Distributions from Account

7.3 Distributions and Withdrawals from Grandfathered Account

7.4 Cashouts of Amounts Not Exceeding $50,000

7.5 Permissible Delays in Payment

7.6 Key Employees

7.7 Unforeseeable Emergency

ARTICLE 8—AMENDMENT AND TERMINATION

8.1 Amendment by Employer

8.2 Retroactive Amendments

8.3 Plan Termination

8.4 Distribution Upon Termination of the Plan

8.5 Change in Control

ARTICLE 9—THE TRUST

9.1 Establishment of Trust

9.2 Investment of Trust Funds

ARTICLE 10—PLAN ADMINISTRATION

10.1 Powers and Responsibilities of the Administrator

10.2 Claims and Review Procedures

10.3 Arbitration

10.4 Plan Administrative Costs

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ARTICLE 11 – MISCELLANEOUS

11.1 Unsecured General Creditor of the Employer

11.2 Employer’s Liability

11.3 Limitation of Rights

11.4 Anti-alienation of Benefits

11.5 Facility of Payment

11.6 Notices

11.7 Tax Withholding

11.8 Indemnification

11.9 Permitted Acceleration of Payment

11.10 Illegality of Particular Provision

11.11 Governing Law

iii

PURPOSE AND EFFECTIVE DATE

Teradyne, Inc. established the Teradyne, Inc. Supplemental Savings Plan (the “Plan”) effective as of December 1, 1994 for the benefit of a select group of its highly paid employees. The Plan was subsequently amended by the First Amendment, which was generally effective as of January 1, 2002. The Plan has been operated in compliance with Code Section 409A since January 1, 2005 with respect to amounts subject to Code Section 409A. This amendment and restatement is intended to memorialize any changes in operation in the Plan as of January 1, 2005 as required by Code Section 409A. All other changes are effective as otherwise provided herein.

Teradyne, Inc. adopted this written amendment and restatement of the Plan on May 24-25, 2006 for elective and non-elective amounts deferred on or after January 1, 2005 and for amounts deferred before January 1, 2005 that were not both earned and vested on December 31, 2004. The Plan as amended and restated is intended to conform with the requirements of Code Section 409A and shall be administered in a manner consistent therewith. All amounts deferred under the Plan that are subject to Code Section 409A shall be separately accounted for and administered within each Participant’s Account.

Amounts attributable to a Participant’s vested account under the Plan on December 31, 2004 shall be separately accounted for in each Participant’s Grandfathered Account. Elections made with respect to amounts credited to a Participant’s Grandfathered Account and amounts payable from a Participant’s Grandfathered Account shall be subject to the provisions of the Plan as in effect on December 31, 2004 and the law as in effect prior to Code Section 409A.

The purpose of the Plan is to permit eligible employees to elect to defer receipt of compensation otherwise payable currently and to enable the employer to credit eligible employees with matching contributions.

The Plan is intended to be a “plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and shall be administered in a manner consistent therewith.

ARTICLE 1 – DEFINITIONS

Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the context clearly indicates otherwise. Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

1.1 “Account” means an account established for the purpose of recording amounts credited on behalf of a Participant for periods after December 31, 2004 and unvested amounts credited for periods prior to January 1, 2005 that are subject to Code Section 409A plus any income, expenses, gains, losses or distributions included thereon. The Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant pursuant to the Plan. Vested amounts credited on behalf of the Participant under the Plan attributable to periods prior to January 1, 2005 that are not subject to Code Section 409A are accounted for separately in the Participant’s Grandfathered Account.

1.2 “Administrator” means the Plan Sponsor, or such other person or persons formally or informally designated by the Plan Sponsor to be responsible for the administration of the Plan.

1.3 “Beneficiary” means the persons, trusts, estates or other entitities entitled under Section 6.2 to receive benefits under the Plan upon the death of a Participant.

1.4 “Change in Control” means the occurrence of an event involving the Employer that is described in Section 8.5.

1.5 “Code” means the Internal Revenue Code of 1986, as amended from time to time.

1.6 “Compensation” means ‘Compensation’ as defined under the Savings Plan except that the limitation contained in Code Section 401(a)(17) shall be disregarded, a VC Award deferral shall not be included and only amounts in excess of the Compensation limit announced each year during the annual enrollment period by the Plan Sponsor shall be considered.

1.7 “Disability” means as defined under the Savings Plan on the date of the Participant’s Separation from Service.

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1.8 “Eligible Employee” means an employee of the Employer who is determined by the Employer to be a member of a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and who is designated by the Employer as an Eligible Employee for purposes of the Plan.

1.9 “Employer” means the Plan Sponsor and any other entity which is authorized by the Plan Sponsor to participate in and, in fact, does adopt the Plan. The term “Employer” shall in each instance that it appears in the Plan refer to any one of the foregoing entities and in no case shall refer to the entities collectively or to more than one such entity.

1.10 “ERISA” means the Employee Retirement Income Security Act of 1974, as from time to time amended.

1.11 “Grandfathered Account” means an account established for the purpose of recording earned and vested amounts credited on behalf of a Participant under the Plan for periods prior to January 1, 2005 and any income, expenses, gains, losses or distributions included thereon.

1.12 “Key Employee” means a ‘specified employee’ within the meaning of Code Section 409A(a)(2)(B)(i) who satisfies the conditions of Section 7.7.

1.13 “Matchable Compensation” means, for purposes of determining the Matching Contribution attributable to a VC Award deferral, the amount of the Participant’s VC Award deferral for the Plan Year. For purposes of determining the Matching Contribution attributable to a Compensation deferral, Matchable Compensation means the Participant’s Compensation except that only amounts in excess of the Code Section 401(a)(17) limit for the Plan Year (rather than the special Compensation limit announced for the Plan Year by the Plan Sponsor) shall be considered.

1.14 “Matching Contribution” means a contribution credited by the Employer pursuant to Article 4.

1.15 “Participant” means any Eligible Employee who participates in the Plan in accordance with Article 2.

1.16 “Plan” means the Teradyne, Inc. Supplemental Savings Plan as set forth herein and as it may be amended from time to time.

1.17 “Plan Sponsor” means Teradyne, Inc.

1.18 “Plan Year” means the 12-consecutive month period beginning January 1^st and ending December 31^st.

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1.19 “Related Employer” means the Employer and (a) any corporation that is a member of a controlled group of corporations as defined in Section 414(b) of the Code that includes the Employer, and (b) any trade or business that is under common control as defined in Section 414(c) of the Code that includes the Employer.

1.20 “Retirement” means a Participant’s Separation from Service that occurs on or after the date the Participant: (a) attains age sixty-five (65) and has at least five (5) years of Vesting Service or (b) attains age fifty-five (55) with at least ten (10) years of Vesting Service.

1.21 “Savings Plan” means the Teradyne, Inc. Savings Plan as in effect on January 1, 2005 and as it may thereafter be amended from time to time.

1.22 “Separation from Service” means the date that the Participant dies, retires or otherwise has a termination of employment with respect to all entities comprising the Related Employer. A Separation from Service does not occur if the Participant is on military leave, sick leave or other bona fide leave of absence, if the period of leave does not exceed six months or such longer period during which the Participant’s right to reemployment is provided by statute or contract. If the period of leave exceeds six months and the Participant’s right to reemployment is not provided either by statute or contract, a Separation from Service will be deemed to have occurred on the first day following the six month period.

1.23 “Unforeseeable Emergency” means a severe financial hardship of the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or the Participant’s dependent (as defined in Code Section 152(a)); loss of the Participant’s property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

1.24 “Valuation Date” means each business day of the Plan Year and such other date(s) as designated by the Employer.

1.25 “VC Award” means the amount of incentive remuneration payable by the Employer to a Participant under the Teradyne, Inc. Variable Compensation Plan as modified and incorporated into the Teradyne, Inc. 2006 Equity and Cash Compensation Incentive Plan, each as amended from time to time.

1.26 “Vesting Service” has the meaning such term has under the Savings Plan.

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ARTICLE 2 – PARTICIPATION

2.1 Participation. Participation in the Plan is limited to Eligible Employees. The Employer shall notify an employee of his status as an Eligible Employee at such time and in such manner as the Employer shall determine. Each Eligible Employee shall become a Participant in the Plan by executing a deferral agreement in accordance with the provisions of Article 3. An Eligible Employee who has become a Participant remains eligible to participate until his participation terminates in accordance with Section 2.2

2.2 Termination of Participation. The Administrator may terminate a Participant’s participation in the Plan but any such termination at the discretion of the Administrator shall not take effect until the first day of the next Plan Year. Upon any termination of participation at the discretion of the Administrator, a Participant’s deferrals shall cease but the provisions of Article 7 shall continue to apply.

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ARTICLE 3 – PARTICIPANT ELECTIONS

3.1. Deferral Agreement. Each Eligible Employee may elect to defer amounts otherwise payable to him currently for the Plan Year by executing a deferral agreement in accordance with rules and procedures established by the Administrator and the provisions of this Article 3. The deferral agreement must separately specify for each discrete type of compensation (i.e., Compensation and VC Award) the whole number percentage multiple that the Participant elects to defer and the timing of payment of the deferred amount.

A new deferral agreement must be timely executed for each Plan Year during which the Eligible Employee elects to defer compensation. An Eligible Employee who does not timely execute a deferral agreement shall be deemed to have elected zero deferrals for such Plan Year.

A deferral agreement may be changed or revoked at any time during the respective periods specified in Section 3.4. A deferral agreement becomes irrevocable at the close of the respective period and remains in effect throughout the applicable Plan Year even if the Eligible Employee transfers from one Employer to another Employer.

3.2 Election to Defer Compensation. An Eligible Employee may elect to defer Compensation (in 1% increments) from 1% to the maximum percentage established for the Plan Year by the Employer. The maximum percentage shall be communicated annually to Eligible Employees prior to the annual election period described in Section 3.4 for the relevant Plan Year.

3.3. Election to Defer VC Award. An Eligible Employee may elect to defer (in 1% increments) from 1% to 85% of his VC Award for a Plan Year.

3.4 Timing of Election to Defer. Each Eligible Employee who desires to defer Compensation otherwise payable during a Plan Year must execute a deferral agreement within the period preceding the Plan Year specified by the Administrator. Each Eligible Employee who desires to defer a VC Award must execute a deferral agreement within the period preceding the Plan Year during which the VC Award is earned that is specified by the Administrator, except that if the VC Award can be treated as “performance based compensation which is based upon services performed over a period of at least twelve months” as described in Section 409A(a)(4)(B)(iii) of the Code and Treasury Regulations promulgated thereunder, such deferral agreement must be executed no later than the date established for this purpose by the Administrator which, in no event, shall be after the date which is six months before the end of the performance period in which the VC Award is earned.

Except as otherwise provided below, an employee who is classified or designated as an Eligible Employee during a Plan Year may elect to defer

3-1

Compensation and/or VC Award otherwise payable during the remainder of such Plan Year in accordance with the rules of this Section 3.4 by executing a deferral agreement within the thirty (30) day beginning on the date the employee is classified or designated as an Eligible Employee. If a VC Award is based on a specific performance period that begins before the Eligible Employee executes his deferral agreement, the election will be deemed to apply to that portion of the VC Award equal to the total amount of the VC Award for the performance period multiplied by the ratio of the number of days remaining in the performance period after the election to the total number of days in the performance period. The rules of this paragraph shall not apply if the Eligible Employee has ever participated or is participating in a “plan” within the meaning of Prop. Reg. Section 1.409A-1(c) sponsored by the Employer.

3.5 Election of Distribution Event. At the time an Eligible Employee completes a deferral agreement, the Eligible Employee must separately elect for each type of remuneration being electively deferred (i.e., for Compensation and for VC Award), a distribution event that will trigger payment of the related deferred remuneration. Matching Contributions credited to a Participant’s Account during a Plan Year shall automatically be paid following the distribution event selected by the Participant for the related deferred remuneration because of which the Matching Contribution was credited.

The permissible distribution events are Separation from Service and a specified date that is at least five years after the first day of the Plan Year during which the related deferral agreement is effective. Payment will occur following the distribution event within the time period required by Code Section 409A and the regulations thereunder.

All distributions will be made in a single lump sum.

3.6 Transitional Rule. The following transitional rule shall apply during calendar years 2005 and 2006. It will be implemented in accordance with rules and procedures established by the Administrator.

A Participant may make new distribution elections with respect to amounts subject to Code Section 409A if the elections are made no later than December 31, 2006, except that the Participant cannot in 2006 change distribution elections with respect to amounts that would otherwise have become payable in 2006 or cause payments to be made in 2006. The new distribution elections may apply to amounts deferred before the date of the election and can be made without regard to Code Sections 409A(a)(3) and (4) and any inconsistent provisions in the Plan to the contrary. A Participant who fails to make a new distribution election in accordance with this Section 3.6 with respect to an amount for which a valid election under Code Section 409A has not been made will be deemed to have elected a lump sum distribution upon his Separation from Service.

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ARTICLE 4 – MATCHING CONTRIBUTIONS

4.1 General Rules. For each Plan Year, the Employer shall credit Matching Contributions at the rate specified in Section 4.2 to the Account of each Participant who makes deferrals during the Plan Year and otherwise satisfies the requirements of this Section 4.1. Matching Contributions shall only be made on behalf of a Participant who is employed by the Employer on the last day of the Plan Year, provided, however, that a Participant whose Separation from Service occurs before the last day of the Plan Year because of death, Disability, layoff or Retirement shall be treated, for this purpose, as if employed on the last day of the Plan Year.

4.2 Rate of Matching Contributions Each Participant who (a) was actively employed by the Employer on October 29, 1999 and (b) elected to continue accruing benefits under the Retirement Plan for Employees of Teradyne, Inc. shall be eligible to be credited with (i) Matching Contributions equal to fifty percent (50%) of the Participant’s deferrals not exceeding six percent (6%) of the Participant’s Matchable Compensation and (ii) a discretionary Matching Contribution of up to an additional 50% of Participant deferrals not exceeding six percent (6%) of Matchable Compensation. Each other Participant shall be eligible to be credited with (i) Matching Contributions equal to one hundred percent (100%) of the Participant’s deferrals not exceeding five percent (5%) of the Participant’s Matchable Compensation and (ii) a discretionary match of up to an additional 50% of Participant deferrals not exceeding five percent (5%) of Matchable Compensation.

The amount of Matching Contributions credited to the Account of each eligible Participant shall be calculated separately with respect to his Compensation deferrals and separately with respect to his VC Award deferrals and shall equal the sum of the amounts so determined.

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ARTICLE 5 – PARTICIPANT ACCOUNTS

5.1 Establishment of Account. For accounting and computational purposes only, the Administrator will establish and maintain an Account for each Participant which will reflect the credits made pursuant to Section 5.2 and the adjustments provided in Section 5.4. The Administrator will establish and maintain such other records and accounts, including Grandfathered Accounts, as it decides in its discretion to be reasonably required or appropriate to discharge its duties under the Plan.

5.2 Credits to Account. A Participant’s Account will be credited for each Plan Year with (a) the amount of Compensation and VC Award he elects to defer in accordance with the provisions of Article 3 at the time the amount subject to the deferral election would otherwise have been paid to him but for his election to defer; and (b) the amount of Matching Contributions the Employer credits on his behalf pursuant to Article 4 as soon as administratively possible following the Plan Year.

5.3 Investment Options. The amount in a Participant’s Account and Grandfathered Account, if any, shall be treated as invested in the investment options designated for this purpose by the Administrator.

5.4 Adjustment of Accounts. The amount in a Participant’s Account and Grandfathered Account, if any, shall be adjusted for hypothetical investment earnings or losses in an amount equal to the gains or losses reported for the investment options selected by the Participant or Beneficiary (or by the Administrator if no selections are made by Participant or Beneficiary) from among the investment options provided in Section 5.3. A Participant may, in accordance with rules and procedures established by the Administrator and consistent with Code Section 409A, change the investments to be used for the purpose of calculating future hypothetical investment adjustments to the Participant’s Account and/or Grandfathered Account or to future credits to the Account under Section 5.2 effective as of the Valuation Date coincident with or next following notice to the Administrator. The Account and Grandfathered Account of each Participant shall be adjusted as of each Valuation Date to reflect: (a) the hypothetical investment earnings and/or losses described above; (b) amounts credited pursuant to Section 5.2; and (c) distributions or withdrawals.

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ARTICLE 6 – RIGHT TO BENEFITS

6.1 Vesting. A Participant, at all times, has a 100% nonforfeitable interest in the amounts credited to his Account attributable to Participant deferrals made in accordance with Article 3. A Participant shall fully vest in the amounts credited to his Account attributable to Matching Contributions upon his death while in the employ of the Employer, or upon Disability. Prior to January 1, 2007, a Participant shall vest in the amounts credited to his Account attributable to Matching Contributions upon the completion of five years of Vesting Service. Beginning January 1, 2007, a Participant shall vest in the amounts credited to his Account attributable to Matching Contributions at the rate of 25% per year of Vesting Service. A Participant, at all times, has a 100% nonforfeitable interest in all amounts credited to his Grandfathered Account.

6.2 Death. The balance or remaining balance credited to a Participant’s Account at the time of his death shall be paid to his Beneficiary in the form of a single lump sum payment. If multiple Beneficiaries have been designated each shall receive his specified portion of the Account in the form of a single lump sum payment. A Participant’s Beneficiary or Beneficiaries shall be the party or parties entitled to receive benefits under the Savings Plan upon the Participant’s death. Actual payment will be made following the date of death within the time period permitted by Code Section 409A and the regulations thereunder.

A copy of the death notice or other sufficient documentation must be filed with and approved by the Administrator. If upon the death of the Participant there is, in the opinion of the Administrator, no designated Beneficiary for part or all of the Participant’s Account, such amount will be paid to his estate in a single lump sum payment (such estate shall be deemed to be the Beneficiary for purposes of the Plan).

The balance or remaining balance credited to a Participant’s Grandfathered Account shall be paid in accordance with the provisions of the Plan as in effect on December 31, 2004.

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ARTICLE 7 – DISTRIBUTION OF BENEFITS

7.1 Amount of Benefits. The vested amount credited to a Participant’s Account as determined under Articles 5 and 6 and the amount credited to his Grandfathered Account shall determine and constitute the basis for the value of benefits payable to or on behalf of the Participant under the Plan.

7.2 Method and Timing of Distributions from Account. Subject to Sections 7.4 and 7.6, distributions under the Plan shall be made following the occurrence of the distribution event specified by the Participant in accordance with the provisions of Article 3. At least twelve months before a scheduled distribution event, a Participant may elect, in accordance with rules and procedures established by the Administrator, to delay the date of payment for a minimum period of sixty months from the originally scheduled payment date.

7.3 Distributions and Withdrawals from Grandfathered Account. Subject to Section 7.4, distributions and withdrawals from a Participant’s Grandfathered Account shall be made in accordance with the provisions of the Plan as in effect on December 31, 2004.

7.4 Cashouts of Amounts Not Exceeding $25,000. If the aggregate amount credited to the Participant’s Account and Grandfathered Account does not exceed $25,000 at the time he incurs a Separation from Service, the Employer shall pay such amount to the Participant in a single lump sum payment regardless of whether the Participant had made different elections of distribution events or forms of payment as to the amount credited to his Account and/or Grandfathered Account, except as otherwise provided in this Section 7.4. Subject to Section 7.6, actual payment will occur within the time period required by Code Section 409A and the regulations thereunder following the Participant’s Separation from Service. If a Participant had a valid election of a form of payment on file with the Administrator on December 31, 2004, the amount credited to the Participant’s Grandfathered Account shall be distributed in accordance with such election regardless of any provisions of this Section 7.4 to the contrary.

7.5 Permissible Delays in Payment. Distributions may be delayed beyond the date payment would otherwise occur in accordance with the provisions of Articles 6 and 7 in any of the following circumstances. The Employer may delay payment if it reasonably anticipates that its deduction with respect to such payment would be limited or eliminated by the application of Code Section 162(m). Payment must be made at the earliest date at which the Employer reasonably anticipates that the deduction of the payment amount will not be eliminated or limited by Code Section 162(m) or the calendar year in which the Participant incurs a Separation from Service. The Employer may also delay payment if it reasonably anticipates that the payment will violate a term of a loan agreement or other similar contract to which the Employer is a party and such violation will cause material harm to the Employer. Payment must be made at the earliest date on which the Employer reasonably anticipates that the making of the payment will not cause a violation or the violation will no longer cause material harm to the Employer. Payment cannot be delayed if the facts and circumstances indicate that the Employer entered into the loan agreement or similar contract not for legitimate business reasons but to avoid the restrictions on deferral elections and subsequent deferral elections under Code Section 409A. The Employer may also delay payment if it reasonably anticipates that the making of the payment will violate Federal Securities Laws or other applicable laws provided payment is made at the earliest date on which the Employer reasonably anticipates that the making of the payment will not cause such violation. The Employer also reserves the right to delay payment upon such other events and conditions as the Secretary of the Treasury may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

7.6 Key Employees. In no event shall a distribution made to a Key Employee from his Account occur before the date which is six months after the date of his Separation from Service with the Employer. For purposes of this Section 7.6, a Key Employee means an employee of an Employer any of whose stock is publicly traded on an established securities market or otherwise who satisfies the requirements of Code Section 416(i)(1)(A)(1), (ii) or (iii) determined without regard to Code Section 416(i)(5) at any time during the twelve-month period ending on date as of which the Employer annually identifies Key Employees (the ‘Identification Date’). An employee who is determined to be a Key Employee on an Identification Date shall be treated as a Key Employee for purposes of the six-month delay in distributions set forth in this Section 7.6 for the twelve-month period beginning on the first day of the fourth month following the Identification Date. Whether any stock of the Employer is traded on an established securities market or otherwise is determined on the date a Participant experiences a Separation from Service.

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7.7 Unforeseeable Emergency. A Participant may request a distribution due to an Unforeseeable Emergency. The request must be in writing and must be submitted to the Administrator along with evidence that the circumstances constitute an Unforeseeable Emergency. The Administrator has the discretion to require whatever evidence it deems necessary to determine whether a distribution is warranted. Whether a Participant has incurred an Unforeseeable Emergency will be determined by the Administrator on the basis of the relevant facts and circumstances in its sole discretion, but in no event, will an Unforeseeable Emergency be deemed to exist if the hardship can be relieved: (a) through reimbursement or compensation by insurance or otherwise, (b) by liquidation of the Participant’s assets to the extent such liquidation would not itself cause severe financial hardship, or (c) by cessation of deferrals under the Plan. A distribution due to an Unforeseeable Emergency must be limited to the amount reasonably necessary to satisfy the emergency need and may include any amounts necessary to pay any federal, state or local income tax penalties reasonably anticipated to result from the distribution. The distribution will be made in the form of a single lump sum cash payment. A Participant’s deferral elections for the remainder of the Plan Year will be cancelled upon a withdrawal due to Unforeseeable Emergency.

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ARTICLE 8 – AMENDMENT AND TERMINATION

8.1 Amendment by Employer. The Plan Sponsor reserves the right to amend the Plan (for itself and each Employer) through action of its Board of Directors or any committee of the Board of Directors. An amendment must be in writing and executed by an officer authorized to take such action. Each amendment shall be effective when approved by the Board of Directors or any committee of the Board of Directors in its resolution. No amendment can directly or indirectly deprive any current or former Participant or Beneficiary of all or any portion of his Account or Grandfathered Account which had accrued and vested prior to the amendment.

8.2 Retroactive Amendments. An amendment made by the Plan Sponsor in accordance with Section 8.1 may be made effective on a date prior to the first day of the Plan Year in which it is adopted if such amendment is necessary or appropriate to enable the Plan to satisfy the applicable requirements of the Code or ERISA or to conform the Plan to any change in federal law or to any regulations or ruling thereunder. Any retroactive amendment by the Plan Sponsor shall be subject to the provisions of Section 8.1.

8.3 Plan Termination. The Plan Sponsor reserves the right to terminate the Plan and distribute all amounts credited to all Participant accounts within the thirty day period preceding or the twelve months following a Change in Control as determined in accordance with the rules set forth in Section 8.5 through action of its Board of Directors or any committee of the Board of Directors. For this purpose, the Plan will be treated as terminated only if all substantially similar arrangements sponsored by the Plan Sponsor are terminated so that all Participants under the Plan and all similar arrangements are required to receive all amounts deferred under the terminated arrangements within twelve months of the date of termination of the arrangements. In addition, the Plan Sponsor reserves the right to terminate the Plan within twelve months of a corporate dissolution taxed under Section 331 of the Code or with the approval of a bankruptcy court pursuant to United States Code Section 503(b)(1)(A) provided that amounts deferred under the Plan are included in the gross incomes of Participants in the latest of (a) the calendar year in which the termination occurs, (b) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture, or (c) the first calendar year in which payment is administratively practicable. The Plan Sponsor retains the discretion to terminate the Plan if (a) all arrangements sponsored by the Plan Sponsor that would be aggregated with any terminated arrangement under Prop. Reg. Section 1.409A-1(c) are terminated, (b) no payments other than payments that would be payable under the terms of the arrangements if the termination had not occurred are made within twelve months of the termination of the arrangements, (c) all payments are made within twenty-four

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months of the termination of the arrangements, (d) the Plan Sponsor does not adopt a new arrangement that would be aggregated with any terminated arrangement under Prop. Reg. Section 1.409A-1(c) at any time within the five year period following the date of termination of the arrangement. The Plan Sponsor also reserves the right to terminate the Plan under such conditions and events as may be prescribed by the Secretary of the Treasury in generally applicable guidance published in the Internal Revenue Bulletin.

8.4 Distribution Upon Termination of the Plan. Except as provided in Section 8.3, the Plan may not be terminated before the date on which all amounts credited to all Participant accounts have been distributed in accordance with Articles 6 and 7.

8.5 Change in Control. A Change in Control will occur upon a change in the ownership of the Employer, a change in the effective control of the Employer or a change in the ownership of a substantial portion of the assets of the Employer. The Employer, for this purpose, includes any corporation identified in this Section 8.5.

Whether a Change in Control has occurred will be determined by the Plan Sponsor in accordance with the rules and definitions set forth in this Section 8.5. A distribution to a Participant will be treated as occurring upon a Change in Control if the Plan Sponsor terminates the Plan and distributes the Participant’s benefits within twelve months of a Change in Control as provided in Section 8.3.

(a) Relevant Corporations. To constitute a Change in Control for purposes of the Plan, the event must relate to (i) the corporation for whom the Participant is performing services at the time of the Change in Control, (ii) the corporation that is liable for the payment of the Participant’s benefits under the Plan (or all corporations liable if more than one corporation is liable), or (iii) a corporation that is a majority shareholder of a corporation identified in (i) or (ii), or any corporation in a chain of corporations in which each corporation is a majority corporation of another corporation in the chain, ending in a corporation identified in (i) or (ii). A majority shareholder is defined as a shareholder owning more than fifty percent (50%) of the total fair market value and voting power of such corporation.

(b) Stock Ownership. Code Section 318(a) applies for purposes of determining stock ownership. Stock underlying a vested option is considered owned by the individual who owns the vested option (and the stock underlying an unvested option is not considered owned by the individual who holds the unvested option). If, however, a vested option is exercisable for stock that is not substantially vested (as defined by Treasury Regulation Section 1.83-3(b) and (j)) the stock underlying the option is not treated as owned by the individual who holds the option.

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Mutual and cooperative corporations are treated as having stock for purposes of this Section 8.5.

(c) Change in the Ownership of a Corporation. A change in the ownership of a corporation occurs on the date that any one person or more than one person acting as a group, acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of such corporation. If any one person or more than one person acting as a proxy is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of a corporation, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the corporation (or to cause a change in the effective control of the corporation as discussed below in Section 8.5(d)). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the corporation acquires its stock in exchange for property will be treated as an acquisition of stock. Section 8.5(c) applies only when there is a transfer of stock of a corporation (or issuance of stock of a corporation) and stock in such corporation remains outstanding after the transaction. For purposes of this Section 8.5(c), persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time or as a result of a public offering. Persons will, however, be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.

(d) Change in the effective control of a corporation. A change in the effective control of a corporation occurs on the date that either (i) any one person, or more than one person acting as a group, acquires (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing thirty-five percent (35%) or more of the total voting power of the stock of such corporation, or (ii) a majority of members of the corporation’s board of directors is replaced during any twelve month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of directors prior to the date of the appointment or election, provided that for purposes of this paragraph (ii), the term corporation refers solely to

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the relevant corporation identified in Section 8.5(a) for which no other corporation is a majority shareholder for purposes of Section 8.5(a). In the absence of an event described in Section 8.5(d)(i) or (ii), a change in the effective control of a corporation will not have occurred. A change in effective control may also occur in any transaction in which either of the two corporations involved in the transaction has a change in the ownership of such corporation as described in Section 8.5(c) or a change in the ownership of a substantial portion of the assets of such corporation as described in Section 8.5(e). If any one person, or more than one person acting as a group, is considered to effectively control a corporation within the meaning of this Section 8.5(d), the acquisition of additional control of the corporation by the same person or persons is not considered to cause a change in the effective control of the corporation or to cause a change in the ownership of the corporation within the meaning of Section 8.5(c). For purposes of this Section 8.5(d), persons will or will not be considered to be acting as a group in accordance with rules similar to those set forth in Section 8.5(c) with the following exception. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation only with respect to the ownership in that corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.

(e) Change in the ownership of a substantial portion of a corporation’s assets. A change in the ownership of a substantial portion of a corporation’s assets occurs on the date that any one person, or more than one person acting as a group (as determined in accordance with rules similar to those set forth in Section 8.5(d)), acquires (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation or the value of the assets being disposed of determined without regard to any liabilities associated with such assets. There is no Change in Control event under this Section 8.5(e) when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer. A transfer of assets by a corporation is not treated as a change in ownership of such assets if the assets are transferred to (i) a shareholder of the corporation (immediately before the asset transfer) in exchange for or with respect to its stock, (ii) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the corporation, (iii) a person, or more than one person

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acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the corporation, or (iv) an entity, at least fifty (50%) of the total value or voting power of which is owned, directly or indirectly, by a person described in Section 8.5(e)(iii). For purposes of the foregoing, and except as otherwise provided, a person’s status is determined immediately after the transfer of assets.

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ARTICLE 9 – THE TRUST

9.1 Establishment of Trust. The Plan Sponsor may but is not required to establish a trust to hold amounts which the Plan Sponsor may contribute from time to time to correspond to some or all of the amounts credited to Participants under Article 5. If the Plan Sponsor elects to establish a trust the provisions of Section 9.2 will become operative.

9.2 Investment of Trust Funds. Any amounts contributed to the trust by the Employer shall be invested by the trustee in accordance with the provisions of the trust and the instructions of the Administrator. Trust investments need not reflect the hypothetical investments selected by Participants under Section 5.1 for the purpose of adjusting Accounts and Grandfathered Accounts and the earnings or investment results of the trust shall not affect the hypothetical investment adjustments to Participant Accounts and Grandfathered Accounts under the Plan.

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ARTICLE 10 – PLAN ADMINISTRATION

10.1 Powers and Responsibilities of the Administrator. The Administrator has the full power and the full responsibility to administer the Plan in all of its details, subject, however, to the applicable requirements of ERISA. The Administrator’s powers and responsibilities include, but are not limited to, the following:

(a) To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan;

(b) To interpret the Plan, its interpretation thereof in good faith to be final and conclusive on all persons claiming benefits under the Plan;

(c) To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;

(d) To administer the claims and review procedures specified in Section 10.2;

(e) To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisions of the Plan;

(f) To determine the person or persons to whom such benefits will be paid;

(g) To authorize the payment of benefits;

(h) To comply with the reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA;

(i) To appoint such agents, counsel, accountants, and consultants as may be required to assist in administering the Plan;

(j) By written instrument, to allocate and delegate its responsibilities, including the formation of an Administrative Committee to administer the Plan.

10.2 Claims and Review Procedures.

(a) Claims Procedure. If any person believes he is being denied any rights or benefits under the Plan, such person may file a claim in writing with the Administrator. If any such claim is wholly or partially denied, the Administrator will notify such person of its decision in writing. Such notification will contain (i) specific reasons for the denial,

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(ii) specific reference to pertinent Plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (iv) information as to the steps to be taken if the person wishes to submit a request for review. Such notification will be given within 90 days after the claim is received by the Administrator (or within 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial 90-day period). If such notification is not given within such period, the claim will be considered denied as of the last day of such period and such person may request a review of his claim.

(b) Review Procedure. Within 60 days after the date on which a person receives a written notification of denial of claim (or, if written notification is not provided, within 60 days of the date denial is considered to have occurred), such person (or his duly authorized representative) may (i) file a written request with the Administrator for a review of his denied claim and of pertinent documents and (ii) submit written issues and comments to the Administrator. The Administrator will notify such person of its decision in writing. Such notification will be written in a manner calculated to be understood by such person and will contain specific reasons for the decision as well as specific references to pertinent Plan provisions. The decision on review will be made within 60 days after the request for review is received by the Administrator (or within 120 days, if special circumstances require an extension of time for processing the request, such as an election by the Administrator to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial 60-day period). If the decision on review is not made within such period, the claim will be considered denied.

10.3 Arbitration. Any controversy or claim arising under or relating to a claim for benefits under the Plan shall be resolved by binding arbitration in accordance with the rules and procedures of the American Arbitration Association. The Plan shall not be required to submit any such claim or controversy until the claimant has first exhausted the procedures described in Section 10.2 although the Administrator may voluntarily do so at any point in processing an appeal from a prior claim denial or other disputed benefit determination.

The Employer against whom the claim is brought shall bear all costs of an arbitration, except that the arbitrator shall have the power to apportion among the parties other expenses such as prehearing discovery, travel costs and attorney’s fees. The decision of the arbitrator shall be final and binding on all parties and judgment on the arbitrator’s award may be entered in any court of competent jurisdiction.

10.4 Plan Administrative Costs. All reasonable costs and expenses (including legal, accounting, and employee communication fees) incurred by the Administrator in administering the Plan shall, unless allocable to the Accounts and Grandfathered Accounts of particular Participants, be charged against the Accounts and Grandfathered Accounts of all Participants on a pro rata basis or in such other reasonable manner as may be directed by the Administrator unless paid for by the Employer.

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ARTICLE 11 – MISCELLANEOUS

11.1 Unsecured General Creditor of the Employer. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of the Employer. For purposes of the payment of benefits under the Plan, any and all of the Employer’s assets shall be, and shall remain, the general, unpledged, unrestricted assets of the Employer. Each Employer’s obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.

11.2 Employer’s Liability. Each Employer’s liability for the payment of benefits under the Plan shall be defined only by the Plan and by the deferral agreements entered into between a Participant and the Employer. An Employer shall have no obligation or liability to a Participant under the Plan except as provided by the Plan and a deferral agreement or agreements. An Employer shall have no liability to Participants employed by other Employers.

11.3 Limitation of Rights. Neither the establishment of the Plan, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits, will be construed as giving to the Participant or any other person any legal or equitable right against the Plan Sponsor, Employer or Administrator, except as provided herein; and in no event will the terms of employment or service of the Participant be modified or in any way affected hereby.

11.4 Anti-alienation of Benefits. None of the benefits or rights of a Participant or any Beneficiary of a Participant shall be subject to the claim of any creditor. In particular, to the fullest extent permitted by law, all such benefits and rights shall be free from attachment, garnishment, or any other legal or equitable process available to any creditor of the Participant and his or her Beneficiary. Neither the Participant nor his or her Beneficiary shall have the right to alienate, anticipate, commute, pledge, encumber, or assign any of the payments which he or she may expect to receive, contingently or otherwise, under this Plan, except the right to designate a Beneficiary to receive death benefits provided hereunder.

11.5 Facility of Payment. If the Administrator determines, on the basis of medical reports or other evidence satisfactory to the Administrator, that the recipient of any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity or other incapacity, the Administrator may disburse such payments to a person or institution designated by a court which has jurisdiction over such recipient or a person or institution otherwise having the legal authority under State law for the care and control of such recipient. The receipt by such person or institution of any such payments therefore, and

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any such payment to the extent thereof, shall discharge the liability of the Plan for the payment of benefits hereunder to such recipient.

11.6 Notices. Any notice or other communication in connection with the Plan shall be deemed delivered in writing if addressed to the Employer or Administrator at the address specified by the Employer and if either actually delivered at said address or, in the case or a letter, five business days shall have elapsed after the same shall have been deposited in the United States mail, first-class postage prepaid and registered or certified.

11.7 Tax Withholding. The Employer shall have the right to deduct from all payments or deferrals made under the Plan any tax required by law to be withheld. If the Employer concludes that tax is owing with respect to any deferral or payment hereunder, the Employer shall withhold such amounts from any payments due the Participant, as permitted by law, or otherwise make appropriate arrangements with the Participant or his Beneficiary for satisfaction of such obligation. Tax, for purposes of this Section 11.7 means any federal, state, local or any other governmental income tax, employment or payroll tax, excise tax, or any other tax or assessment owing with respect to amounts deferred, any earnings thereon, and any payments made to Participants under the Plan. Neither the Employer nor the Administrator shall have any obligation to any Participant or any other person if there is a failure to comply with Code Section 409A or with respect to any liability, including, without limitation, any liability for taxes, additional taxes or interest incurred by the Participant or any other person as a result of such failure.

11.8 Indemnification. To the extent permitted by law, and without limiting the applicability of any other indemnification provided by the Employer, each Employer shall indemnify and hold harmless the Plan Sponsor, the Administrator, each employee, officer, or director of the Employer to whom is delegated duties, responsibilities, and authority with respect to the Plan against all claims, liabilities, fines and penalties, and all expenses reasonably incurred by or imposed upon him (including but not limited to reasonable attorney fees) which arise as a result of his actions or failure to act in connection with the operation and administration of the Plan to the extent lawfully allowable and to the extent that such claim, liability, fine, penalty, or expense is not paid for by liability insurance purchased or paid for by an Employer. Notwithstanding the foregoing, an Employer shall not indemnify any person for any such amount incurred through any settlement or compromise of any action unless the Employer consents in writing to such settlement or compromise.

11.9 Permitted Acceleration of Payment. The Plan may permit acceleration of the time or schedule of any payment or amount scheduled to be paid pursuant to a payment under the Plan as provided in Section 8.3 and this Section 11.9. The Plan may permit acceleration of payment (1) to an individual other than the Participant as may be necessary to fulfill a domestic

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relations order within the meaning of Code Section 414(p)(1)(B), (2) to comply with a certificate of divestiture as defined in Code Section 1043(b)(2), (3) to pay the Federal Insurance Contributions Act (FICA) tax imposed under Code Sections 3101, 3121(a) and 3121(v)(2) on compensation deferred under the Plan, (4) to pay the income tax under Code Section 3401 or the corresponding withholding provisions of the applicable state, local or foreign tax laws as a result of the payment of any FICA tax described in (3) and to pay the additional income tax at source on wages attributable to the pyramiding Code Section 3401, wages and taxes, and (5) to pay the amount required to be included in gross income as a result of the failure of the Plan to comply with the requirements of Code Section 409A. The total payment under (3) or (4) shall, in no event, exceed the aggregate of the FICA tax and the income tax withholding related to such FICA tax. The total payment under (5) shall, in no event, exceed the amount required to be included as a result of the failure to comply with the requirements of Code Section 409A.

11.10 Illegality of Particular Provision. The illegality any particular provision of the Plan shall not affect the other provisions, and the document shall be construed in all respects as if such invalid provisions were omitted.

11.11 Governing Law. The Plan will be construed, administered and enforced according to ERISA, and to the extent not preempted thereby, the laws of the Commonwealth of Massachusetts.

Approved by the Teradyne, Inc. Board of Directors May 24-25, 2006

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