<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>3
<FILENAME>dex106.txt
<DESCRIPTION>1996 EMPLOYEE STOCK OPTION PLAN
<TEXT>
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                                                                    Exhibit 10.6
                                 TERADYNE, INC.

                        1996 EMPLOYEE STOCK PURCHASE PLAN

Article 1 - Purpose.

         This 1996 Employee Stock Purchase Plan (the "Plan") is intended to
encourage stock ownership by all eligible employees of Teradyne, Inc. (the
"Company"), a Massachusetts corporation, and its participating subsidiaries (as
defined in Article 17) so that they may share in the growth of the Company by
acquiring or increasing their proprietary interest in the Company. The Plan is
designed to encourage eligible employees to remain in the employ of the Company
and its participating subsidiaries. The Plan is intended to constitute an
"employee stock purchase plan" within the meaning of Section 423(b) of the
Internal Revenue Code of 1986, as amended (the "Code").

Article 2 - Administration of the Plan.

         The Plan may be administered by a committee appointed by the Board of
Directors of the Company (the "Committee"). The Committee shall consist of not
less than two members of the Company's Board of Directors. The Board of
Directors may from time to time remove members from, or add members to, the
Committee. Vacancies on the Committee, howsoever caused, shall be filled by the
Board of Directors. The Committee may select one of its members as Chairman, and
shall hold meetings at such times and places as it may determine. Acts by a
majority of the Committee, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee.

         The interpretation and construction by the Committee of any provisions
of the Plan or of any option granted under it shall be final, unless otherwise
determined by the Board of Directors. The Committee may from time to time adopt
such rules and regulations for carrying out the Plan as it may deem best,
provided that any such rules and regulations shall be applied on a uniform basis
to all employees under the Plan. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it.

         In the event the Board of Directors fails to appoint or refrains from
appointing a Committee, the Board of Directors shall have all power and
authority to administer the Plan. In such event, the word "Committee" wherever
used herein shall be deemed to mean the Board of Directors.

Article 3 - Eligible Employees.

         No option may be granted to any person serving as a member of the
Committee at the time of grant. Subject to the foregoing limitation, all
employees of the Company or any of its participating subsidiaries on United
States payroll who are employees of the

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Company or any of its participating subsidiaries (i) on or before the first day
of any Payment Period (as defined in Article 5) or (ii) for employees first
employed after the first day of a particular Payment Period, on or before the
first day of the next succeeding July in any such Payment Period, and whose
customary employment is not less than twenty hours per week and more than five
months in any calendar year shall be eligible to receive options under the Plan
to purchase common stock of the Company, par value $.125 per share ("Common
Stock"). An employee eligible under this Plan solely by virtue of clause (ii) of
the preceding sentence shall be referred to herein as a "July Employee." All
eligible employees shall have the same rights and privileges hereunder. Persons
who elect to enter the Plan in accordance with Article 7 and who are eligible
employees on the first business day of any Payment Period (as defined in Article
5) (or on the first business day of July with respect to July Employees) shall
receive their options as of such day. Persons who elect to enter the Plan in
accordance with Article 7 and who become eligible employees after any date on
which options are granted under the Plan shall be granted options on the first
business day of the next succeeding Payment Period or the first business day of
July (whichever is applicable) on which options are granted to eligible
employees under the Plan. In no event, however, may an employee be granted an
option if such employee, immediately after the option was granted, would be
treated as owning stock possessing five percent or more of the total combined
voting power or value of all classes of stock of the Company or of any parent
corporation or subsidiary corporation, as the terms "parent corporation" and
"subsidiary corporation" are defined in Section 424(e) and (f) of the Code. For
purposes of determining stock ownership under this paragraph, the rules of
Section 424(d) of the Code shall apply, and stock which the employee may
purchase under outstanding options shall be treated as stock owned by the
employee.

Article 4 - Stock Subject to the Plan.

         The stock subject to the options under the Plan shall be authorized but
unissued Common Stock, or shares of Common Stock reacquired by the Company,
including shares purchased in the open market. The aggregate number of shares
which may be issued pursuant to the Plan is 5,400,000, subject to adjustment as
provided in Article 12. If any option granted under the Plan shall expire or
terminate for any reason without having been exercised in full or shall cease
for any reason to be exercisable in whole or in part, the unpurchased shares
subject thereto shall again be available under the Plan.

Article 5 - Payment Period and Stock Options.

         For the duration of the Plan, the Payment Period shall be defined as
the twelve-month period commencing on the first day of January and ending
annually on the last day of December of each calendar year. Notwithstanding the
foregoing, the first Payment Period during which payroll deductions will be
accumulated under the Plan shall commence on July 1, 1996 and shall end on
December 31, 1996.

         On the first business day of each Payment Period (or on the first
business day of July of such Payment Period in the case of a July Employee), the
Company will grant to

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each eligible employee who is then a participant in the Plan an option to
purchase on the last day of such Payment Period, at the Option Price hereinafter
provided for, a maximum of 6,000 shares, on condition that such employee remains
eligible to participate in the Plan throughout the remainder of such Payment
Period. The participant shall be entitled to exercise the option so granted only
to the extent of the participant's accumulated payroll deductions on the last
day of such Payment Period. If the participant's accumulated payroll deductions
on the last day of the Payment Period would enable the participant to purchase
more than 6,000 shares except for the 6,000 share limitation, the excess of the
amount of the accumulated payroll deductions over the aggregate purchase price
of the 6,000 shares shall be promptly refunded to the participant by the
Company, without interest. The Option Price per share for each Payment Period
shall be the lesser of (i) 85% of the fair market value of the Common Stock on
the first business day of the Payment Period (or, in the case of a July
Employee, on the first business day of July of such Payment Period) and (ii) 85%
of the fair market value of the Common Stock on the last business day of the
Payment Period, in either event rounded up to the nearest cent. The foregoing
limitation on the number of shares subject to option and the Option Price shall
be subject to adjustment as provided in Article 12.

         For purposes of the Plan, the term "fair market value" on any date
means (i) the average (on that date) of the high and low 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 Stock Market, 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 reported on The Nasdaq
Stock Market; 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.

         For purposes of the Plan, the term "business day" means a day on which
there is trading on The Nasdaq Stock Market or the aforementioned national
securities exchange, whichever is applicable pursuant to the preceding
paragraph; and if neither is applicable, a day that is not a Saturday, Sunday or
legal holiday in Massachusetts.

         Notwithstanding any other provision herein, no employee shall be
granted an option which permits the employee's right to purchase stock under the
Plan, and under all other Section 423(b) employee stock purchase plans of the
Company and any parent or subsidiary corporations, to accrue at a rate which
exceeds $25,000 of fair market value of such stock (determined on the date or
dates that options on such stock were granted) for each calendar year in which
such option is outstanding at any time. The purpose of the limitation in the
preceding sentence is to comply with Section 423(b)(8) of the Code. If the
participant's accumulated payroll deductions on the last day of the Payment
Period would otherwise enable the participant to purchase Common Stock in excess
of the Section 423(b)(8) $25,000 limitation described in this paragraph, the
excess of the

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amount of the accumulated payroll deductions over the aggregate purchase price
of the shares actually purchased shall be promptly refunded to the participant
by the Company, without interest.

Article 6 - Exercise of Option.

         Each eligible employee who continues to be a participant in the Plan on
the last day of a Payment Period shall be deemed to have exercised his or her
option on such date and shall be deemed to have purchased from the Company such
number of full shares of Common Stock reserved for the purpose of the Plan as
the participant's accumulated payroll deductions on such date will pay for at
the Option Price, subject to the 6,000 share limit of the option and the Section
423(b)(8) $25,000 limitation described in Article 5. If the individual is not a
participant on the last day of a Payment Period, then he or she shall not be
entitled to exercise his or her option. Only full shares of Common Stock may be
purchased under the Plan. Unused payroll deductions remaining in a participant's
account at the end of a Payment Period solely by reason of the inability to
purchase a fractional share (and for no other reason) shall be refunded.

Article 7 - Authorization for Entering the Plan.

         An employee may elect to enter the Plan by filling out, signing and
delivering to the Company an authorization:

         A. Stating the percentage to be deducted from the employee's pay;

         B. Authorizing the purchase of stock for the employee in each Payment
      Period in accordance with the terms of the Plan; and

         C. Specifying the exact name or names in which stock purchased for the
      employee is to be issued as provided under Article 11 hereof.

         Such authorization must be received by the Company on or before the
first day of the next succeeding Payment Period or on or prior to the first day
of July of such Payment Period in the case of a July Employee.

         Unless a participant files a new authorization or withdraws from the
Plan, the deductions and purchases under the authorization the participant has
on file under the Plan will continue from one Payment Period to succeeding
Payment Periods as long as the Plan remains in effect.

         The Company will accumulate and hold for each participant's account the
amounts deducted from his or her pay. No interest will be paid on these amounts.

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Article 8 - Maximum Amount of Payroll Deductions.

         An employee may authorize payroll deductions in an amount (expressed as
a whole percentage) not less than two percent (2%) but not more than ten percent
(10%) of the employee's cash compensation.

Article 9 - Change in Payroll Deductions.

         Deductions may not be increased during a Payment Period. Deductions may
be decreased during a Payment Period, provided that an employee may not decrease
his deduction more often than twice during any Payment Period (and with respect
to July Employees once during any Payment Period).

Article 10 - Withdrawal from the Plan.

         A participant may withdraw from the Plan (in whole but not in part) at
any time prior to the last day of a Payment Period by delivering a withdrawal
notice to the Company.

         To re-enter the Plan, an employee who has previously withdrawn must
file a new authorization on or before the first day of the next Payment Period
in which he or she wishes to participate. The employee's re-entry into the Plan
becomes effective at the beginning of such Payment Period, provided that he or
she is an eligible employee on the first business day of the Payment Period.

Article 11 - Issuance of Stock.

         Certificates for stock issued to participants shall be delivered as
soon as practicable after each Payment Period by the Company's transfer agent.

         Stock purchased under the Plan shall be issued only in the name of the
participant, or if the participant's authorization so specifies, in the name of
the participant and another person of legal age as joint tenants with rights of
survivorship.

Article 12 - Adjustments.

         Upon the happening of any of the following described events, a
participant's rights under options granted under the Plan shall be adjusted as
hereinafter provided:

         A. In the event that the shares of Common Stock shall be subdivided or
      combined into a greater or smaller number of shares or if, upon a
      reorganization, split-up, liquidation, recapitalization or the like of the
      Company, the shares of Common Stock shall be exchanged for other
      securities of the Company, each participant shall be entitled, subject to
      the conditions herein stated, to purchase such number of shares of Common
      Stock or amount of other securities of the Company as were exchangeable
      for the number of shares of Common Stock that such participant would have
      been entitled to purchase except for such action, and appropriate

<PAGE>
      adjustments shall be made in the purchase price per share to reflect such
      subdivision, combination or exchange; and

         B. In the event the Company shall issue any of its shares as a stock
      dividend upon or with respect to the shares of stock of the class which
      shall at the time be subject to options hereunder, each participant upon
      exercising such an option shall be entitled to receive (for the purchase
      price paid upon such exercise) the shares as to which the participant is
      exercising his or her option and, in addition thereto (at no additional
      cost), such number of shares of the class or classes in which such stock
      dividend or dividends were declared or paid, and such amount of cash in
      lieu of fractional shares, as is equal to the number of shares thereof and
      the amount of cash in lieu of fractional shares, respectively, which the
      participant would have received if the participant had been the holder of
      the shares as to which the participant is exercising his or her option at
      all times between the date of the granting of such option and the date of
      its exercise.

         Upon the happening of any of the foregoing events, the class and
aggregate number of shares set forth in Article 4 hereof which are subject to
options which have been or may be granted under the Plan and the limitations set
forth in the second paragraph of Article 5 shall also be appropriately adjusted
to reflect the events specified in paragraphs A and B above. Notwithstanding the
foregoing, any adjustments made pursuant to paragraphs A or B shall be made only
after the Committee, based on advice of counsel for the Company, determines
whether such adjustments would constitute a "modification" (as that term is
defined in Section 424 of the Code). If the Committee determines that such
adjustments would constitute a modification, it may refrain from making such
adjustments.

         If the Company is to be consolidated with or acquired by another entity
in a merger, a sale of all or substantially all of the Company's assets or
otherwise (an "Acquisition"), the Committee or the board of directors of any
entity assuming the obligations of the Company hereunder (the "Successor Board")
shall, with respect to options then outstanding under the Plan, either (i) make
appropriate provision for the continuation of such options by arranging for the
substitution on an equitable basis for the shares then subject to such options
either (a) the consideration payable with respect to the outstanding shares of
the Common Stock in connection with the Acquisition, (b) shares of stock of the
successor corporation, or a parent or subsidiary of such corporation, or (c)
such other securities as the Successor Board deems appropriate, the fair market
value of which shall not exceed the fair market value of the shares of Common
Stock subject to such options immediately preceding the Acquisition; or (ii)
terminate each participant's options in exchange for a cash payment equal to the
excess of the fair market value on the date of the Acquisition of the number of
shares of Common Stock that the participant's accumulated payroll deductions as
of the date of the Acquisition could purchase, at an option price determined
with reference only to the first business day of the applicable Payment Period
(or the first business day of July of such Payment Period in the case of a July
Employee) and subject to the 6,000 share limit, Code Section 423(b)(8) and

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fractional-share limitations on the amount of stock a participant would be
entitled to purchase over the aggregate option price to such participant
thereof.

         The Committee or Successor Board shall determine the adjustments to be
made under this Article 12, and its determination shall be conclusive.

Article 13 - No Transfer or Assignment of Employee's Rights.

         An option granted under the Plan may not be transferred or assigned,
otherwise than by will or by the laws of descent and distribution. Any option
granted under the Plan may be exercised, during the participant's lifetime, only
by the participant.

Article 14 - Termination of Employee's Rights.

         Whenever a participant ceases to be an eligible employee because of
retirement, voluntary or involuntary termination, resignation, layoff,
discharge, death or for any other reason, his or her rights under the Plan shall
immediately terminate, and the Company shall promptly refund, without interest,
the entire balance of his or her payroll deduction account under the Plan;
provided, however, that if an employee is laid off during the last three months
of any Payment Period, he shall nevertheless be deemed to be a participant in
the Plan on the last day of the Payment Period. Notwithstanding the foregoing,
eligible employment shall be treated as continuing intact while a participant is
on military leave, sick leave or other bona fide leave of absence, for up to 90
days, or, if such leave is longer than 90 days, for so long as the participant's
right to re-employment is guaranteed either by statute or by written contract.
Notwithstanding any other provision herein, if a participant's employment is
terminated by reason of retirement, and the date of such termination occurs
after the date that is 3 months prior to the last day of the Payment Period,
such participant's rights under the Plan are not immediately terminated, and if
the participant has not withdrawn from the Plan, such participant's options
shall be deemed to have been exercised on the last day of the Payment Period in
accordance with the terms of the Plan.

Article 15 - Termination and Amendments to Plan.

         The Plan may be terminated at any time by the Company's Board of
Directors but such termination shall not affect options then outstanding under
the Plan. If at any time shares of stock reserved for the purpose of the Plan
remain available for purchase but not in sufficient number to satisfy all then
unfilled purchase requirements, the available shares shall be apportioned among
participants in proportion to the amount of payroll deductions accumulated on
behalf of each participant that would otherwise be used to purchase stock, and
the Plan shall terminate. Upon such termination or any other termination of the
Plan, all payroll deductions not used to purchase stock will be refunded,
without interest.

         The Committee or the Board of Directors may from time to time adopt
amendments to the Plan provided that, without the approval of the shareholders
of the

<PAGE>
Company, no amendment may (i) increase the number of shares that may be issued
under the Plan; (ii) change the class of employees eligible to receive options
under the Plan, if such action would be treated as the adoption of a new plan
for purposes of Code Section 423(b) and the regulations thereunder; or (iii)
cause Rule 16b-3 under the Securities Exchange Act of 1934 to become
inapplicable to the Plan.

Article 16 - Limits on Sale of Stock Purchased under the Plan.

         The Plan is intended to provide shares of Common Stock for investment
and not for resale. The Company does not, however, intend to restrict or
influence any employee in the conduct of his or her own affairs. An employee
may, therefore, sell stock purchased under the Plan at any time the employee
chooses, subject to compliance with any applicable federal or state securities
laws and subject to any restrictions imposed under Article 21 to ensure that tax
withholding obligations are satisfied. THE EMPLOYEE ASSUMES THE RISK OF ANY
MARKET FLUCTUATIONS IN THE PRICE OF THE STOCK.

Article 17 - Participating Subsidiaries.

         The term "participating subsidiary" shall mean any present or future
subsidiary of the Company, as that term is defined in Section 424(f) of the
Code, that is designated from time to time by the Board of Directors to
participate in the Plan. The Board of Directors shall have the power to make
such designation before or after the Plan is approved by the shareholders.

Article 18 - Optionees Not Shareholders.

         Neither the granting of an option to an employee nor the deductions
from his or her pay shall constitute such employee a stockholder of the shares
covered by an option until such shares have been actually purchased by the
employee.

Article 19 - Application of Funds.

         The proceeds received by the Company from the sale of Common Stock
pursuant to options granted under the Plan will be used for general corporate
purposes.

Article 20 - Notice to Company of Disqualifying Disposition.

         By electing to participate in the Plan, each participant agrees to
notify the Company in writing immediately after the participant transfers Common
Stock acquired under the Plan, if such transfer occurs within two years after
the first business day of the Payment Period in which such Common Stock was
acquired. Each participant further agrees to provide any information about such
a transfer as may be requested by the Company or any subsidiary corporation in
order to assist it in complying with the tax laws. Such dispositions generally
are treated as "disqualifying dispositions" under

<PAGE>
Sections 421 and 424 of the Code, which have certain tax consequences to
participants and to the Company and its participating subsidiaries.

Article 21 - Withholding of Additional Income Taxes.

         By electing to participate in the Plan, each participant acknowledges
that the Company and its participating subsidiaries are required to withhold
taxes with respect to the amounts deducted from the participant's compensation
and accumulated for the benefit of the participant under the Plan, and each
participant agrees that the Company and its participating subsidiaries may
deduct additional amounts from the participant's compensation, when amounts are
added to the participant's account, used to purchase Common Stock or refunded,
in order to satisfy such withholding obligations. Each participant further
acknowledges that when Common Stock is purchased under the Plan the Company and
its participating subsidiaries may be required to withhold taxes with respect to
all or a portion of the difference between the fair market value of the Common
Stock purchased and its purchase price, and each participant agrees that such
taxes may be withheld from compensation otherwise payable to such participant.
It is intended that tax withholding will be accomplished in such a manner that
the full amount of payroll deductions elected by the participant under Article 7
will be used to purchase Common Stock. However, if amounts sufficient to satisfy
applicable tax withholding obligations have not been withheld from compensation
otherwise payable to any participant, then, notwithstanding any other provision
of the Plan, the Company may withhold such taxes from the participant's
accumulated payroll deductions and apply the net amount to the purchase of
Common Stock, unless the participant pays to the Company, prior to the exercise
date, an amount sufficient to satisfy such withholding obligations. Each
participant further acknowledges that the Company and its participating
subsidiaries may be required to withhold taxes in connection with the
disposition of stock acquired under the Plan and agrees that the Company or any
participating subsidiary may take whatever action it considers appropriate to
satisfy such withholding requirements, including deducting from compensation
otherwise payable to such participant an amount sufficient to satisfy such
withholding requirements or conditioning any disposition of Common Stock by the
participant upon the payment to the Company or such subsidiary of an amount
sufficient to satisfy such withholding requirements.

Article 22 - Governmental Regulations.

         The Company's obligation to sell and deliver shares of Common Stock
under the Plan is subject to the approval of any governmental authority required
in connection with the authorization, issuance or sale of such shares.

         Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
identify shares of Common Stock issued under the Plan on its stock ownership
records and send tax information statements to employees and former employees
who transfer title to such shares.

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Article 23 - Governing Law.

         The validity and construction of the Plan shall be governed by the laws
of Massachusetts, without giving effect to the principles of conflicts of law
thereof.

Article 24 - Approval of Board of Directors and Stockholders of the Company.

         The Plan was adopted by the Board of Directors on March 19, 1996 and on
such date the Board of Directors resolved that the Plan was to be submitted to
the shareholders of the Company for approval at the next meeting of
shareholders. If the Plan does not receive such approval, all payroll deductions
shall be returned without interest and the Plan shall be terminated.

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