Exhibit 10.1
GOLDMAN, SACHS & CO.
| ONE NEW YORK PLAZA | NEW YORK, NEW YORK 10004 | TEL:
(212) 902-1000
Opening Transaction
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To:
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Teradyne, Inc.
600 Riverpark Drive
North Reading, MA 01864
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A/C:
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028400547
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From:
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Goldman, Sachs
& Co.
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Re:
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Convertible
Bond Hedge Transaction
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Ref. No:
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SDB1630292323
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Date:
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March 31,
2009
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Dear Sir(s):
The purpose of this communication
(this “ Confirmation ”) is to set forth the
terms and conditions of the above-referenced transaction entered
into on the Trade Date specified below (the “
Transaction ”) between Goldman, Sachs & Co.
(“ Dealer ”) and Teradyne, Inc. (“
Counterparty ”). This communication constitutes a
“Confirmation” as referred to in the ISDA Master
Agreement specified below.
1. This Confirmation is subject to,
and incorporates, the definitions and provisions of the 2000 ISDA
Definitions (including the Annex thereto) (the “ 2000
Definitions ”) and the definitions and provisions of the
2002 ISDA Equity Derivatives Definitions (the “ Equity
Definitions ”, and together with the 2000 Definitions,
the “ Definitions ”), in each case as published
by the International Swaps and Derivatives Association, Inc.
(“ ISDA ”). In the event of any inconsistency
between the 2000 Definitions and the Equity Definitions, the Equity
Definitions will govern. Certain defined terms used herein have the
meanings assigned to them in the Indenture to be dated as of
April 6, 2009 between Counterparty and U.S. Bank National
Association, as trustee (the “ Indenture ”)
relating to the USD $175,000,000 principal amount of 4.50%
convertible senior notes due 2014 (the “ Convertible
Securities ”). In the event of any inconsistency between
the terms defined in the Indenture and this Confirmation, this
Confirmation shall govern. For the avoidance of doubt, references
herein to sections of the Indenture are based on the draft of the
Indenture most recently reviewed by the parties at the time of
execution of this Confirmation. If any relevant sections of the
Indenture are changed, added or renumbered between the execution of
this Confirmation and the execution of the Indenture, the parties
will amend this Confirmation in good faith to preserve the economic
intent of the parties, as evidenced by such draft of the Indenture.
The parties further acknowledge that references to the Indenture
herein are references to the Indenture as in effect on the date of
its execution and if the Indenture is amended following its
execution, any such amendment will be disregarded for purposes of
this Confirmation (other than Section 8(b)(ii) below) unless
the parties agree otherwise in writing. The Transaction is subject
to early unwind if the closing of the Convertible Securities is not
consummated for any reason, as set forth below in
Section 8(k).
Each party is hereby advised, and
each such party acknowledges, that the other party has engaged in,
or refrained from engaging in, substantial financial transactions
and has taken other material actions in reliance upon the
parties’ entry into the Transaction to which this
Confirmation relates on the terms and conditions set forth
below.
This Confirmation evidences a
complete and binding agreement between Dealer and Counterparty as
to the terms of the Transaction to which this Confirmation relates.
This Confirmation shall be subject to an agreement (the “
Agreement ”) in the form of the 2002 ISDA Master
Agreement as if Dealer and Counterparty had executed an agreement
in such form on the date hereof (but without any Schedule except
for (i) the election of New York law (without reference to its
choice of laws doctrine, other than Title 14 of the New York
General Obligations Law) as the governing law and US Dollars
(“ USD ”) as the Termination Currency, and
(ii) the election that the “Cross Default”
provisions of Section 5(a)(vi) of the Agreement shall apply to
Counterparty with a “Threshold Amount” of USD25
million); provided that Section 5(a)(vi)(1) is amended
by deleting the phrase “, or becoming capable at such time of
being declared,”.
All provisions contained in, or
incorporated by reference to, the Agreement will govern this
Confirmation except as expressly modified herein. In the event of
any inconsistency between this Confirmation and either the
Definitions or the Agreement, this Confirmation shall
govern.
The Transaction hereunder shall be
the sole Transaction under the Agreement. If there exists any ISDA
Master Agreement between Dealer and Counterparty or any
confirmation or other agreement between Dealer and Counterparty
pursuant to which an ISDA Master Agreement is deemed to exist
between Dealer and Counterparty, then notwithstanding anything to
the contrary in such ISDA Master Agreement, such confirmation or
agreement or any other agreement to which Dealer and Counterparty
are parties, the Transaction shall not be considered a Transaction
under, or otherwise governed by, such existing or deemed ISDA
Master Agreement.
2. The Transaction constitutes a
Share Option Transaction for purposes of the Equity Definitions.
The terms of the particular Transaction to which this Confirmation
relates are as follows:
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General
Terms:
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Trade Date:
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March 31,
2009
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Effective Date:
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The closing
date of the initial issuance of the Convertible
Securities.
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Option Style:
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Modified
American, as described under “Procedures for Exercise”
below.
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Option Type:
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Call
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Seller:
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Dealer
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Buyer:
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Counterparty
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Shares:
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The Common
Stock of Counterparty, par value USD 0.125 (Ticker Symbol:
“TER”).
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Number of Options:
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The number of
Convertible Securities in denominations of USD1,000 principal
amount issued by Counterparty on the closing date for the initial
issuance of the Convertible Securities; provided that the
Number of Options shall be automatically increased as of the date
of exercise by the Underwriters (as defined in the Underwriting
Agreement), of their option (the “ Additional Convertible
Securities Option ”) pursuant to Section 2 of the
Underwriting Agreement dated as of March 31, 2009 between
Counterparty and the Underwriters (the “ Underwriting
Agreement ”) by the number of
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2
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Convertible
Securities in denominations of USD1,000 principal amount issued
pursuant to such exercise (such Convertible Securities, the “
Additional Convertible Securities ”. For the avoidance
of doubt, the Number of Options outstanding shall be reduced by
each exercise of Options hereunder and in no event shall be less
than zero.
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Option Entitlement:
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As of any date,
a number of Shares per Option equal to the “Conversion
Rate” (as defined in the Indenture, but without regard to any
adjustments to the Conversion Rate pursuant to Sections 15.03 or
15.04(i) of the Indenture).
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Strike Price:
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As of any date,
an amount in USD, rounded to the nearest cent (with 0.5 cents being
rounded upwards), equal to USD1,000 divided by the Option
Entitlement as of such date.
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Number of Shares:
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The product of
the Number of Options and the Option Entitlement.
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Premium:
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USD59,515,000
(Premium per Option USD1.8619693); provided that if the
Number of Options is increased pursuant to the proviso to the
definition of “Number of Options” above, an additional
Premium equal to the product of the number of Options by which the
Number of Options is so increased and the Premium per Option shall
be paid on the Additional Premium Payment Date.
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Premium Payment Date:
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The Effective
Date
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Additional Premium Payment Date:
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The closing
date for the purchase and sale of the Additional Convertible
Securities.
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Exchange:
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New York Stock
Exchange
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Related Exchange:
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All
Exchanges
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Procedures for
Exercise:
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Exercise Date:
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Each Conversion
Date.
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Conversion Date:
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Each
“Conversion Date” (as defined in the Indenture)
occurring during the Exercise Period for Convertible Securities
each in denominations of USD1,000 principal amount, (such
Convertible Securities, the “ Relevant Convertible
Securities ” for such Conversion Date).
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Exercise Period:
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The period from
and excluding the Effective Date to and including the Expiration
Date.
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Expiration Date:
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The earlier of
(i) the last day on which any Convertible Securities remain
outstanding and (ii) the second “Scheduled Trading Day”
(as defined in the Indenture) immediately preceding the
“Maturity Date” (as defined in the
Indenture).
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3
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Automatic Exercise on Conversion
Dates:
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Subject to
“Notice of Exercise” below, on each Conversion Date, a
number of Options equal to the number of Relevant Convertible
Securities for such Conversion Date in denominations of USD1,000
principal amount shall be automatically exercised.
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Notice Deadline:
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In respect of
any exercise of Options hereunder, 12:00 P.M., New York City time,
on the Scheduled Trading Day immediately following the relevant
Exercise Date.
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Final Conversion Period:
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The period from
and including the 30th Scheduled Trading Day (as defined in the
Indenture) prior to the Maturity Date to and including the
Expiration Date.
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Final Conversion Notice Period:
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The period from
and including the 60th Scheduled Trading Day (as defined in the
Indenture) prior to the Maturity Date to and including the
Expiration Date.
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Notice of Exercise:
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Notwithstanding
anything to the contrary in the Equity Definitions, Dealer shall
have no obligation to make any payment or delivery in respect of
any exercise of Options hereunder unless:
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(a) in respect of
Exercise Dates occurring prior to the Final Conversion Notice
Period, Counterparty notifies Dealer in writing prior to the Notice
Deadline in respect of such exercise of (i) the Conversion Date and
the number of Relevant Convertible Securities being converted on
such Conversion Date, (ii) whether Convertible Cash Settlement,
Convertible Net Share Settlement or Convertible Gross Share
Settlement is applicable to such Relevant Convertible Securities,
(iii) the scheduled settlement date under the Indenture for the
Relevant Convertible Securities for such Conversion Date, and (iv)
the first Scheduled Trading Day (as defined in the Indenture) of
the relevant Observation Period (as defined in the Indenture), if
Convertible Cash Settlement or Convertible Net Share Settlement is
applicable;
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(b) in respect of
Exercise Dates occurring during the Final Conversion Notice Period
but prior to the Final Conversion Period, Counterparty notifies
Dealer in writing (i) on or prior to the Scheduled Trading Day
immediately preceding the first day of the Final Conversion Notice
Period, whether Counterparty has made the Final Cash Settlement
Election or the Final Gross Share Settlement Election, and
(ii) prior to the Notice Deadline in respect of such exercise,
of (A) the number of Relevant Convertible Securities being
converted on the related Conversion Date, (B) the scheduled
settlement date under the Indenture for the Relevant Convertible
Securities for such Conversion Date and (C) if Counterparty has not
made the Final Gross Share Settlement Election, the first Scheduled
Trading Day (as defined in the Indenture) of the relevant
Observation Period (as defined in the Indenture); or
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(c) in respect of
Exercise Dates occurring during the Final Conversion Period,
Counterparty notifies Dealer in writing (i) on or prior to the
first day of the Final Conversion Notice Period, whether
Counterparty has made the Final Cash Settlement Election or the
Final Gross Share Settlement Election, and (ii) prior to the
Notice Deadline in respect of such exercise, of the number of
Relevant Convertible Securities being converted on the related
Conversion Date.
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For the
avoidance of doubt, if Counterparty fails to give such notice prior
to the Notice Deadline in respect of any exercise of Options
hereunder, Dealer’s obligation to make any payment or
delivery in respect of such exercise shall be permanently
extinguished, and late notice shall not cure such
failure.
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Payment upon Conversion of Relevant Convertible
Securities:
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For any
Conversion Date, the Relevant Convertible Securities may, at
Counterparty’s election in accordance with Section 15.02(a)
of the Indenture, either be (a) net share settled pursuant to
Section 15.02(a)(iii) of the Indenture (such settlement, “
Convertible Net Share Settlement ”), in which case the
terms set forth herein as being applicable to Convertible Net Share
Settlement shall apply in respect of the related Exercise Date, (b)
gross physical share settled pursuant to Section 15.02(a)(i) of the
Indenture (such settlement, “ Convertible Gross Share
Settlement ”), in which case the terms set forth herein
as being applicable to Convertible Gross Share Settlement shall
apply in respect of the related Exercise Date, or (c) cash settled
pursuant to Section 15.02(a)(ii) of the Indenture (such settlement,
“ Convertible Cash Settlement ”), in which case
the terms set forth herein as being applicable to Convertible Cash
Settlement shall apply in respect of the related Exercise Date. In
accordance with the Indenture, in order for Convertible Cash
Settlement or Convertible Gross Share Settlement to be applicable
in respect of Conversion Dates occurring during the Final
Conversion Notice Period, Counterparty must make an irrevocable
election in accordance with Section 15.02(b) of the Indenture prior
to the commencement of such period (such notice, the “
Final Cash Settlement Election ” or the “
Final Gross Share Settlement Election ”, as the case
may be).
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Dealer’s Telephone Number and Telex and/or
Facsimile Number and Contact Details for purpose of Giving
Notice:
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To:
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Goldman, Sachs
& Co.
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One New York
Plaza
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New York, NY
10004
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Attn:
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Serge
Marquié,
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Equity Capital
Markets
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Telephone:
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212-902-9779
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Facsimile:
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917-977-4253
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Email:
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marqse@am.ibd.gs.com
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With a copy
to:
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Attn:
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Brian
Smith,
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Equity Capital
Markets
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Telephone:
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212-902-0058
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Facsimile:
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212-412-9881
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Email:
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smibri@am.ibd.gs.com
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And email
notification to the following address:
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Eq-derivs-notifications@am.ibd.gs.com
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Settlement
Terms:
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Settlement Date:
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For any
Exercise Date, (i) if Convertible Net Share Settlement is
applicable, the settlement date for the Shares to be delivered in
respect of the Relevant Convertible Securities for the relevant
Conversion Date under the terms of the Indenture, (ii) if
Convertible Gross Share Settlement is applicable, the date that is
one Settlement Cycle following the last day of the applicable
Deemed Observation Period, or (iii) if Convertible Cash Settlement
is applicable, the settlement date for the cash to be paid in
respect of the Relevant Convertible Securities for the relevant
Conversion Date under the terms of the Indenture; provided,
that, in each case, the Settlement Date shall not be prior to the
Exchange Business Day immediately following the date Counterparty
provides the Notice of Exercise.
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Delivery Obligation:
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In lieu of the
obligations set forth in Sections 8.1 and 9.1 of the Equity
Definitions, and subject to “Notice of Exercise” above,
in respect of an Exercise Date, Dealer will deliver or pay, as
applicable, the following to Counterparty on the related Settlement
Date (the “ Delivery Obligation ” for such
Exercise Date):
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(a) If Convertible
Cash Settlement is applicable to the Relevant Convertible
Securities, an amount of cash in USD equal to the aggregate amount
of cash in USD that Counterparty is obligated to deliver to the
holder(s) of the Relevant Convertible Securities for such
Conversion Date pursuant to Section 15.02(a)(ii) of the
Indenture
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(collectively, the “ Convertible Cash
Obligation ”) minus the aggregate principal amount of
such Relevant Convertible Securities; provided that the
Delivery Obligation set forth in this clause (a) shall be
determined excluding any cash that Counterparty is obligated to
deliver to holder(s) of the Relevant Convertible Securities as a
direct or indirect r
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