EXHIBIT 10(r)
KEITHLEY INSTRUMENTS, INC.
2002 STOCK INCENTIVE PLAN
(AS AMENDED SEPTEMBER 8, 2005)
1. General. This Stock Incentive Plan (the "Plan") provides key
employees of Keithley Instruments, Inc. (the "Company") with the opportunity to
acquire or expand their equity interest in the Company by making available for
award or purchase Common Shares, without par value, of the Company ("Common
Shares") through the granting of nontransferable options to purchase Common
Shares ("Stock Options"); the granting of Common Shares subject to temporal
restrictions on transfer and substantial risks of forfeiture ("Restricted
Stock"); and/or the granting of nontransferable options to receive payments
based on the appreciation of Common Shares ("SARs"). Stock Options, Restricted
Stock and SARs shall be collectively referred to herein as "Grants"; and an
individual grant of Stock Options, Restricted Stock or SARs shall be
individually referred to herein as a "Grant". It is intended that key employees
may be granted, simultaneously or from time to time, Stock Options that qualify
as incentive stock options ("Incentive Stock Options") under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") or Stock Options that do
not so qualify ("Non-qualified Stock Options"). No provision of the Plan is
intended or shall be construed to grant key employees alternative rights in any
Incentive Stock Option granted under the Plan so as to prevent such Option from
qualifying under Section 422 of the Code.
2. Purpose of the Plan. The purpose of the Plan is to provide
continuing incentives to key employees of the Company and of any subsidiary
corporation of the Company by encouraging such key employees to acquire new or
additional share ownership in the Company, thereby increasing their proprietary
interest in the Company's business and enhancing their personal interest in the
Company's success.
For purposes of the Plan, a "subsidiary corporation" consists of any
corporation fifty percent (50%) of the stock of which is directly or indirectly
owned or controlled by the Company.
3. Effective Date of the Plan. The Plan shall become effective upon
its adoption by the Board of Directors, subject to approval by holders of a
majority of the outstanding shares of voting capital stock of the Company. If
the Plan is not so approved within twelve (12) months after the date the Plan is
adopted by the Board of Directors, the Plan and any Grants made hereunder shall
be null and void. However, if the Plan is so approved, no further shareholder
approval shall be required with respect to the making of Grants pursuant to the
Plan, except as provided in Section 12 hereof.
4. Administration of the Plan. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company or by a
committee selected by such Board of Directors by majority vote and comprised of
no fewer than two (2) members of such Board of Directors (the "Committee"). No
person shall be appointed to, or serve on, the Committee who is not both an
"outside director," within the meaning of 26 C.F.R. Section 1.162-27(e)(3), and
a "non-employee director" as defined under Rule 16b-3(b)(3) of the Securities
Exchange Act of 1934. Notwithstanding the foregoing, Grants made to members of
the Board of Directors, which may include members of the Committee, must be
approved and granted by the Board of Directors (in connection to Grants made to
members of the Board of Directors, references to the "Committee" in the Plan
shall mean the Board of Directors).
A majority of the Committee shall constitute a quorum. The acts of a
majority of the members present at any meeting at which a quorum is present (or
acts unanimously approved in writing by the members of the Committee) shall
constitute binding acts of the Committee.
Subject to the terms and conditions of the Plan, the Committee shall
be authorized and empowered:
(a) To select the key employees to whom Grants may be made;
(b) To determine the number of Common Shares to be covered by any
Grant;
(c) To prescribe the terms and conditions of any Grants made under the
Plan, and the form(s) and agreement(s) used in connection with such
Grants, which shall include agreements governing the granting of
Restricted Stock, Stock Options and/or SARs;
(d) To determine the time or times when Stock Options and/or SARs will
be granted and when they will terminate in whole or in part;
(e) To determine the time or times when Stock Options and SARs that
are granted may be exercised;
(f) To determine, at the time a Stock Option is granted under the
Plan, whether such Option is an Incentive Stock Option entitled to the
benefits of Section 422 of the Code;
(g) To establish any other Stock Option agreement provisions not
inconsistent with the terms and conditions of the Plan or, where the
Stock Option is an Incentive Stock Option, with the terms and
conditions of Section 422 of the Code;
(h) To determine whether SARs will be made part of any Grants
consisting of Stock Options, and to approve any SARs made part of any
such Grants pursuant to Section 9 hereof; and
(i) To delegate to one (1) or more Company officers limited authority
to make de minimis Grants of Stock Options or Incentive Stock Options
(not to exceed 2,500 Common Shares per individual), to select
individuals to whom offers of Company employment are, or are expected
to be made, at Fair Market Value and otherwise under terms and
conditions approved in advance by the Committee, subject to
ratification by the Committee.
In carrying out the foregoing, the Committee shall take such measures as the
Committee, in its discretion, considers necessary or appropriate to ensure that
any Grant made to a key employee who, as of the last day of the taxable year in
which such Grant is made, is identified for securities law disclosure purposes
as the Company's chief executive officer or one of the four (4) highest
compensated Company officers (other than the chief executive officer), within
the meaning of 26 C.F.R. Section 1.162-27(c)(2), (i) is based solely on an
increase in the value of Common Shares after the date of such Grant, and (ii) is
made by the Compensation Committee of the Board of Directors.
5. Key Employees Eligible for Grants. Grants may be made from time to
time to those key employees of the Company or a subsidiary corporation who are
designated by the Committee (or by the Committee's delegee(s) in accordance with
Section 4(i) hereof or by the Board in the case of grants to members of the
Board of Directors), acting in its sole and exclusive discretion. Key employees
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may include, but shall not necessarily be limited to, members of the Board of
Directors, and officers, of the Company and any subsidiary corporation; and
other salaried employees that the Committee identifies as strategically or
financially important to preserving and enhancing shareholder value.
Notwithstanding any contrary Plan provision, Stock Options intended to qualify
as Incentive Stock Options shall only be granted to key employees while actually
employed by the Company or a subsidiary corporation. The Committee may grant
more than one Stock Option, with or without SARs, to the same key employee. No
Stock Option shall be granted to any key employee during any period of time when
such key employee is on a leave of absence.
6. Shares Subject to the Plan. The shares to be issued pursuant to any
Grant made under the Plan shall be Common Shares. Either Common Shares held as
treasury stock, or authorized and unissued Common Shares, or both, may be so
issued, in such amount or amounts within the maximum limits of the Plan as the
Board of Directors shall from time to time determine. In the event a SAR is
granted in tandem with a Stock Option pursuant to Section 9 and such SAR is
thereafter exercised in whole or in part, then such Stock Option or the portion
thereof to which the duly exercised SAR relates shall be deemed to have been
exercised for purposes of such Option, but may be made available for re-offering
under the Plan to any eligible employee.
Subject only to the provisions of the next succeeding paragraph of
this Section 6, the aggregate number of Common Shares made subject to all Grants
under the Plan shall be three million (3,000,000) Common Shares and the maximum
number of Common Shares made subject to Grants under the Plan to any one (1) key
employee during any one (1)-year period shall be two hundred thousand (200,000)
Common Shares. Such aggregate number(s) of Common Shares shall not include any
Common Shares reacquired or never issued due to a forfeiture, exchange or
relinquishment of rights under a Grant made hereunder.
If, at any time subsequent to the date of adoption of the Plan by the
Board of Directors, the number of Common Shares are increased or decreased, or
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation (whether as a result
of a stock split, stock dividend, combination or exchange of shares, exchange
for other securities, reclassification, reorganization, redesignation, merger,
consolidation, recapitalization or otherwise): (i) there shall automatically be
substituted for each Common Share subject to an unexercised Stock Option or SAR
(in whole or in part) granted under the Plan, the number and kind of shares of
stock or other securities into which each outstanding Common Share shall be
changed or for which each such Common Share shall be exchanged; (ii) the option
price per Common Share or unit of securities shall be increased or decreased
proportionately so that the aggregate purchase price for the securities subject
to a Stock Option or SAR shall remain the same as immediately prior to such
event; and (iii) any outstanding Restricted Stock that is converted, exchanged
or otherwise changed into a different number or kind of stock or security, shall
continue to be subject to any and all terms, conditions and restrictions
originally applicable to such Restricted Stock. In addition to the foregoing,
the Committee shall be entitled in the event of any such increase, decrease or
exchange of Common Shares to make other adjustments to the securities subject to
a Stock Option or SAR, the provisions of the Plan, and to any related Stock
Option or SAR agreements (including adjustments which may provide for the
elimination of fractional shares), where necessary to preserve the terms and
conditions of any Grants hereunder.
7. Stock Option Provisions.
(a) General. The Committee may grant to key employees (also referred
to as "optionees") nontransferable Stock Options that either qualify as
Incentive Stock Options under Section 422 of the Code or do not so qualify.
However, any Stock Option which is an Incentive Stock Option
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shall only be granted within 10 years from the earlier of (i) the date this Plan
is adopted by the Board of Directors of the Company; or (ii) the date this Plan
is approved by the shareholders of the Company.
(b) Stock Option Price. The option price per Common Share which may be
purchased under an Incentive Stock Option under the Plan shall be determined by
the Committee at the time of Grant, but shall not be less than one hundred
percent (100%) of the fair market value of a Common Share, determined as of the
date such Option is granted; however, if a key employee to whom an Incentive
Stock Option is granted is, at the time of the grant of such Option, an "owner,"
as defined in Section 422(b)(6) of the Code (modified as provided in Section
424(d) of the Code) of more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any subsidiary corporation (a
"Substantial Shareholder"), the price per Common Share of such Option, as
determined by the Committee, shall not be less than one hundred ten percent
(110%) of the fair market value of a Common Share on the date such Option is
granted. The option price per Common Share under each Stock Option granted
pursuant to the Plan which is not an Incentive Stock Option shall be determined
by the Committee at the time of Grant. Except as specifically provided above,
the fair market value of a Common Share shall be determined in accordance with
procedures to be established by the Committee. The day on which the Committee
approves the granting of a Stock Option shall be considered the date on which
such Option is granted.
(c) Period of Stock Option. The Committee shall determine when each
Stock Option is to expire. However, no Incentive Stock Option shall be
exercisable for a period of more than ten (10) years from the date upon which
such Option is granted. Further, no Incentive Stock Option granted to an
employee who is a Substantial Shareholder at the time of the grant of such
Option shall be exercisable after the expiration of (5) years from the date of
grant of such Option.
(d) Limitations on Exercise and Transfer of Stock Options. Except as
otherwise provided herein, only the key employee to whom a Stock Option is
granted may exercise such Option, and no Stock Option granted hereunder shall be
transferable by an optionee, other than by will or the laws of descent and
distribution. Notwithstanding the preceding sentence, an optionee may transfer
and assign Stock Options (other than Incentive Stock Options) if (and then, only
to the extent) the optionee obtains the prior consent of the Committee and
otherwise complies with the requirements of this Section 7(d) (a "Permitted
Transfer"). For this purpose, a Permitted Transfer consists of either (i) an
irrevocable transfer by an optionee to a family member (or a trust or
partnership whose beneficiaries or partners are comprised of family members), if
made by without payment of consideration (as further defined in 17 C.F.R.
Section 240.16b-3); or (ii) an irrevocable transfer by an optionee to an
alternate payee, made under a qualified domestic relations order (as defined in
29 C.F.R. Section 240.16a-12 and 26 U.S.C. Section 414(p)(1)(B)). Also for this
purpose, a "family member" of an optionee includes the optionee's spouse,
children, grandchildren, nieces and nephews. Following a Permitted Transfer, the
Grants transferred shall be exercisable only by the transferee. Except as
specifically provided in this Section 7(d), no Stock Option granted hereunder
can be pledged or hypothecated, nor shall any such Option be subject to
execution, attachment or similar process.
(e) Employment, Holding Period Requirements For Certain Options. The
Committee may condition any Stock Option granted hereunder upon the continued
employment of the optionee by the Company or by a subsidiary corporation, and
may make any such Stock Option immediately exercisable. However, the Committee
will require that, from and after the date of grant of any Incentive Stock
Option until the day three (3) months prior to the date such Option is
exercised, such optionee must be an employee of the Company or of a subsidiary
corporation, but always subject to the right of the Company or any such
subsidiary corporation to terminate such optionee's employment during such
period. Each Stock Option shall be subject to such additional restrictions as to
the time and method of exercise as shall be prescribed by the Committee. Upon
completion of such requirements, if any, a
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Stock Option or the appropriate portion thereof may be exercised in whole or in
part from time to time during the option period; however, such exercise right(s)
shall be limited to whole shares.
(f) Payment for Stock Option Price. A Stock Option shall be exercised
by an optionee giving written notice to the Company of his intention to exercise
the same, accompanied by full payment of the purchase price together with any
federal, state and local income and employment taxes required to be withheld by
the Company from the optionee's wages as a result of such exercise. Such
purchase price shall be paid with cash or check, or with a surrender of Common
Shares having a fair market value on the date of exercise equal to that portion
of the purchase price for which payment in cash or check is not made. The
Committee may, in its sole discretion, approve other methods of exercise for a
Stock Option or payment of the option price, provided that no such method shall
cause any option granted under the Plan as an Incentive Stock Option to not
qualify under Section 422 of the Code, or cause any Common Share issued in
connection with the exercise of a Stock Option not to be a fully paid and
non-assessable Common Share.
(g) Certain Reissuances of Stock Options. In the discretion of the
Committee and to the extent Common Shares are surrendered by an optionee in
connection with the exercise of a Stock Option in accordance with Section 7(f),
new Stock Options shall be granted to such optionee (to the extent Common Shares
remain available for Grants). If granted, such Stock Options will have the
following terms and conditions:
(i) The number of Common Shares shall be equal to the number of Common
Shares being surrendered by the optionee;
(ii) The option price per Common Share shall be equal to the fair
market value of Common Shares, determined on the date of exercise of
the Stock Options whose exercise caused such Grant; and
(iii) The terms and conditions of such Stock Options shall in all
other respects replicate such terms and conditions of the Stock
Options whose exercise caused such Grant, except to the extent such
terms and conditions are determined to not be wholly consistent with
the general provisions of this Section 7, or in conflict with the
remaining provisions of this Plan.
(h) Cancellation and Replacement of Stock Options and Related Rights.
The Committee may at any time or from time to time permit the voluntary
surrender by an optionee who is the holder of any outstanding Stock Options
under the Plan, where such surrender is conditioned upon the granting to such
optionee of new Stock Options for such number of shares as the Committee shall
determine, or may require such a voluntary surrender as a condition precedent to
the grant of new Stock Options. The Committee shall determine the terms and
conditions of new Stock Options, including the prices at and periods during
which they may be exercised, in accordance with the provisions of this Plan, all
or any of which may differ from the terms and conditions of the Stock Options
surrendered. Any such new Stock Options shall be subject to all the relevant
provisions of this Plan. The Common Shares subject to any Stock Option so
surrendered shall no longer be charged against the limitation provided in
Section 6 of this Plan and may again become shares subject to the Plan. The
granting of new Stock Options in connection with the surrender of outstanding
Stock Options under this Plan shall be considered for the purposes of the Plan
as the granting of new Stock Options and not an alteration, amendment or
modification of the Plan or of the Stock Options being surrendered.
(j) Limitation on Exercisable Incentive Stock Options. The aggregate
fair market value of the Common Shares first becoming subject to exercise as
Incentive Stock Options by a key
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employee during any given calendar year shall not exceed the sum of One Hundred
Thousand Dollars ($100,000). Such aggregate fair market value shall be
determined as of the date such Option is granted, taking into account, in the
order in which granted, any other incentive stock options granted by the
Company, or by a parent or subsidiary corporation thereof.
8. Restricted Stock.
(a) Grant. The Committee shall determine the key employees to whom,
and the time or times at which, Grants of Restricted Stock will be made, the
number of shares of Restricted Stock to be granted, the price (if any) to be
paid by such key employees (subject to Section 8(b)), the time or times within
which such Restricted Stock grants may be subject to forfeiture, and the other
terms and conditions of the grants in addition to those set forth in Section
8(b). The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors as the Committee
may determine in its sole discretion.
(b) Terms and Conditions. Restricted Stock granted under the Plan
shall contain any terms and conditions, not inconsistent with the provisions of
the Plan, which are deemed desirable by the Committee. A key employee who
receives a grant of Restricted Stock shall not have any rights with respect to
such Grant, unless and until such key employee has executed an agreement
evidencing such Grant in the form approved from time to time by the Committee,
has delivered a fully executed copy thereof to the Company, and has otherwise
complied with the applicable terms and conditions of such Grant. In addition,
Restricted Stock granted under the Plan shall be subject to the following terms
and conditions:
(i) The purchase price for Common Shares consisting of Restricted
Stock, if any, will be equal to their stated value.
(ii) Grants of Restricted Stock shall only be accepted by executing a
Restricted Stock agreement and paying whatever price (if any) is
required under Section 8(b)(i).
(iii) Each key employee granted Restricted Stock will be issued a
stock certificate in respect of such shares of Restricted Stock. Such
certificate shall be registered in the name of such key employee, and
shall bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such Grant.
(iv) Any stock certificates evidencing Common Shares consisting of
Restricted Stock shall either (A) be held in custody by the Company
until the employment and other restrictions thereon shall all have
lapsed; or (B) be affixed with a legend, identifying such Shares as
Restricted Stock and expressly prohibiting the sale, transfer, tender,
pledge, assignment or encumbrance of such Shares, as the Committee
shall determine. With respect to any Restricted Stock held in custody
by the Company, the key employee granted such Restricted Stock shall
deliver to the Company a stock power, endorsed in blank, relating to
the Common Shares represented by such Stock. With respect to any
Restricted Stock held by a key employee under legend, the key employee
granted such Restricted Stock shall deliver to the Company an
acknowledgment that such Stock remains subject to a substantial risk
of forfeiture in the event of termination of employment under certain
circumstances.
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(v) Subject to the provisions of the Plan and the Restricted Stock
agreement, during a temporal period set by the Committee and
commencing with the date of such Grant (the "Restriction Period"), a
key employee shall not be permitted to sell, transfer, tender, pledge,
assign or otherwise encumber any Restricted Stock granted under the
Plan. However, the Committee, in its sole discretion, may provide for
the lapse of such transfer or other restrictions in installments, or
accelerate or waive such restrictions in whole or in part, based on
service, performance or other factors and criteria selected by the
Committee.
(vi) Except as provided in this Section 8(b)(vi) and Section 8(b)(v),
a key employee shall have, with respect to shares of Restricted Stock
granted to him, all of the rights of a shareholder of the Company,
including the right to vote such Stock and the right to receive any
dividends thereon. The Committee, in its sole discretion and as
determined at the time of a Grant of Restricted Stock, may permit or
require cash dividends otherwise due and payable to be deferred and,
if the Committee so determines, reinvested either in additional
Restricted Stock (to the extent Common Shares are available), or
otherwise. Stock dividends issued with respect to Restricted Stock
shall be treated as additional shares of Restricted Stock. As
Restricted Stock, such additional Common Shares will be subject to the
same restrictions, terms and conditions applicable to the Restricted
Stock with respect to which such additional Common Shares were issued.
(vii) No Restricted Stock shall be transferable by a key employee
other than by will or by the laws of descent and distribution.
(c) Minimum Value Provisions. To ensure that Grants of Restricted
Stock actually reflect the performance of the Company and service of the key
employee, the Committee may provide, in its sole discretion, for a tandem
performance-based award, or other grant, designed to guarantee a minimum value,
payable in cash or Common Shares, to the recipient of a Restricted Stock Grant,
subject to such performance, future service, deferral and other terms and
conditions as may be specified by the Committee.
9. Stock Appreciation Rights. A key employee may be granted the right
to receive a payment based on the increase in the value of Common Shares
occurring after the date of such Grant; such rights shall be known as Stock
Appreciation Rights ("SARs"). SARs may (but need not) be granted to a key
employee in tandem with, and exercisable in lieu of exercising, a Grant of Stock
Options. SARs will be specifically granted upon terms and conditions specified
by the Committee, if the Company is the employer of the key employee, or by a
subsidiary corporation subject to the Committee's approval, if such subsidiary
corporation is the employer of the key employee. No optionee shall be entitled
to SAR rights solely as a result of the grant of a Stock Option to him. Any such
rights, if granted, may only be exercised by the holder thereof, either with
respect to all, or a portion, of the Stock Option to which it applies. When
granted in tandem with a Stock Option, an SAR shall provide that the holder of a
Stock Option shall have the right to receive an amount equal to one hundred
percent (100%) of the excess, if any, of the fair market value of the Common
Shares covered by such Option, determined as of the date of exercise of such SAR
by the Committee (in the same manner as such value is determined for purposes of
the granting of Stock Options), over the price to be paid for such Common Shares
under such Option. Such amount shall be payable by either the Company or the
subsidiary corporation, whichever such corporation is the employer of the key
employee, in one or more of the following manners, as determined by the
Committee, if the Company is the employer of the key employee, or by the
subsidiary corporation subject to the Committee's approval, if such subsidiary
corporation is the employer of the key employee:
(a) cash (or check);
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(b) fully paid Common Shares having a fair market value equal to such
amount; or
(c) a combination of cash (or check) and Common Shares.
In no event may any person exercise any SARs granted hereunder unless (i) such
person is then permitted to exercise the Stock Option or the portion thereof
with respect to which such SARs relate, and (ii) the fair market value of the
Common Shares covered by the Stock Option, determined as provided above, exceeds
the option price of such Common Shares. Upon the exercise of any SARs, the Stock
Option, or that portion thereof to which such SARs relate, shall be canceled and
automatically extinguished. A SAR granted in tandem with a Stock Option
hereunder shall be made a part of the Stock Option agreement to which such SAR
relates, in a form approved by the Committee and not inconsistent with this
Plan. The granting of a Stock Option or SAR shall impose no obligation upon the
optionee to exercise such Stock Option or SAR. The Company's or a subsidiary
corporation's obligation to satisfy SARs shall not be funded or secured in any
manner. No SAR granted hereunder shall be transferable by the key employee
granted such SAR, other than by will or the laws of descent and distribution.
After the Grant of an SAR, an optionee intending to rely on an
exemption from Section 16(b) of the Securities Exchange Act of 1934 (the
"Exchange Act") shall be required to hold such SAR for six (6) months from the
date the price for such SAR is fixed to the date of cash settlement.
Additionally, in order to remain exempt from Section 16(b) of the Exchange Act,
an SAR must be exercised by an optionee subject to such Section only during the
period beginning on the third business day following the release of a summary
statement of the Company's quarterly or annual sales and earnings and ending on
the twelfth business day following said date.
10. Termination of Employment. If a key employee ceases to be an
employee of the Company and every subsidiary corporation for a reason other than
death, retirement, or permanent and total disability, such key employee's Grants
shall terminate on the effective date of such termination of employment, unless
(and then, only to the extent) such Grants by their terms specifically provide
otherwise, or unless (and then, only to the extent) the Committee extends such
Grants on or before such key employee's date of termination of employment.
Neither the key employee nor any other person shall have any right after such
date to exercise all or any part of his Stock Options or SARs, and all
Restricted Stock which is not vested or otherwise subject to restriction shall
thereupon be forfeited, and/or declared void and without value.
In the absence of specific Grant provisions prescribing a longer
period, if termination of employment is due to death or permanent and total
disability, outstanding Stock Options and SARs may be exercised within the one
(1) year period ending on the anniversary of such death or permanent and total
disability. In the case of death, such outstanding Stock Options and SARs shall
be exercised by such key employee's estate, or by that person designated by such
key employee by will, or as otherwise indicated by the laws of descent and
distribution. Notwithstanding the foregoing, in no event shall any Stock Option
or SAR be exercisable after the expiration of the option period, and in the case
of exercises made after a key employee's death, not to any greater extent than
the key employee would have been entitled to exercise such Option or SAR at the
time of his death. Restricted Stock held by a key employee whose employment by
the Company or any subsidiary corporation terminates by reason of death shall
thereupon vest and all restrictions and risks of forfeiture thereon shall
thereupon lapse.
Subject to the discretion of the Committee, in the event a key
employee terminates employment with the Company and all subsidiary corporations
because of normal, early or disability retirement under the Keithley
Instruments, Inc., Employees' Pension Plan (or any successor pension plan), (a)
any then outstanding Stock Options and/or SARs held by such key employee shall
lapse at the earlier of (i) the end of the term of such Stock Option or SAR, or
(ii) twelve (12) months after such
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retirement or permanent and total disability (subject only to the three (3)
month exercise limitation applicable to Incentive Stock Options); and (b) any
Restricted Stock held by such key employee shall thereafter vest and any
applicable restrictions shall lapse, to the extent such Restricted Stock would
have become vested or no longer subject to restriction within twelve (12) months
from the time of termination had the key employee continued to fulfill all of
the conditions of the Restricted Stock during such period (or on such
accelerated basis as the Committee may determine at or after date of Grant).
For purposes of this Plan and all Grants made hereunder, if an
employee of the Company or one of its subsidiary corporations is granted a leave
of absence by the Company or such subsidiary corporation, to serve in the
uniformed services (within the meaning of chapter 43, title 38 of the United
States Code) or on account of sickness, his employment with the Company or such
subsidiary corporation shall not be considered to have terminated and he shall
be deemed an employee of the Company or such subsidiary corporation during such
leave of absence. The provisions of this paragraph shall apply with equal force
to any extension of any such leave of absence granted by the Company or such
subsidiary corporation.
11. Change of Control. Upon the occurrence of a Change of Control (as
defined below), notwithstanding any other provisions hereof or of any agreement
to the contrary, all Stock Options and SARs granted under this Plan shall become
immediately exercisable in full and all Restricted Stock grants shall become
immediately vested and any applicable restrictions shall lapse.
For purposes of this Plan, a Change of Control shall be deemed to have
occurred if: (i) a tender offer shall be made and consummated for the ownership
of 25% or more of the outstanding voting securities of the Company; (ii) the
Company shall be merged or consolidated with another corporation and, as a
result of such merger or consolidation, less than 75% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the former shareholders of the Company as the same shall have
existed immediately prior to such merger or consolidation; (iii) the Company
shall sell substantially all of its assets to another corporation which is not a
wholly owned subsidiary; or (iv) a person, within the meaning of Section 3(a)(9)
or of Section 13(d)(3) (as in effect on the date hereof) of the Exchange Act,
shall acquire, other than by reason of inheritance, twenty-five percent (25%) or
more of the outstanding voting securities of the Company (whether directly,
indirectly, beneficially or of record). For purposes of this Plan, ownership of
voting securities shall take into account and shall include ownership as
determined by applying the provisions of Rule 13d-3(d)(1)(i) as in effect on the
date hereof pursuant to the Exchange Act.
12. Amendments to Plan. The Committee is authorized to interpret this
Plan and from time to time adopt any rules and regulations for carrying out this
Plan that it may deem advisable. Subject to the approval of the Board of
Directors of the Company, the Committee may at any time amend, modify, suspend
or terminate this Plan. In no event, however, without the approval of the
Company's shareholders, shall any action of the Committee or the Board of
Directors result in:
(a) Materially amending, modifying or altering the eligibility
requirements provided in Section 5 hereof;
(b) Materially increasing, except as provided in Section 6 hereof, the
maximum number of shares subject to Grants;
(c) Materially increasing the benefits accruing to optionees under
this Plan; or
(d) Retroactively altering the material terms of any Grants made to
individuals described in the flush language at the end of Section 4
hereof;
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except to conform this Plan and any agreements made hereunder to changes in the
Code or governing law.
13. Investment Representation, Approvals and Listing. The Committee
may, if it deems appropriate, condition its grant of any Stock Option hereunder
upon receipt of the following investment representation from the optionee:
"I agree that any Common Shares of Keithley Instruments, Inc. which I may
acquire by virtue of this Stock Option shall be acquired for investment
purposes only and not with a view to distribution or resale, and may not be
transferred, sold, assigned, pledged, hypothecated or otherwise disposed of
by me unless (i) a registration statement or post-effective amendment to a
registration statement under the Securities Act of 1933, as amended, with
respect to said Common Shares has become effective so as to permit the sale
or other disposition of said shares by me; or (ii) there is presented to
Keithley Instruments, Inc. an opinion of counsel satisfactory to Keithley
Instruments, Inc. to the effect that the sale or other proposed disposition
of said Common Shares by me may lawfully be made otherwise than pursuant to
an effective registration statement or post-effective amendment to a
registration statement relating to the said shares under the Securities Act
of 1933, as amended."
The Company shall not be required to issue any certificate or
certificates for Common Shares upon the exercise of any Stock Option or a SAR
granted under this Plan prior to (i) the obtaining of any approval from any
governmental agency which the Company shall, in its sole discretion, determine
to be necessary or advisable; (ii) the admission of such shares to listing on
any national securities exchange on which the Common Shares may be listed; (iii)
the completion of any registration or other qualifications of the Common Shares
under any state or federal law or ruling or regulations of any governmental body
which the Company shall, in its sole discretion, determine to be necessary or
advisable or the determination by the Company, in its sole discretion, that any
registration or other qualification of the Common Shares is not necessary or
advisable; and (iv) the obtaining of an investment representation from the
optionee in the form stated above or in such other form as the Company, in its
sole discretion, shall determine to be adequate.
14. General Provisions. The form and substance of Stock Option
agreements, Restricted Stock agreements, and SAR agreements made hereunder,
whether granted at the same or different times, need not be identical. Nothing
in this Plan or in any agreement shall confer upon any employee any right to
continue in the employ of the Company or any of its subsidiary corporations, to
be entitled to any remuneration or benefits not set forth in this Plan or such
Grant, or to interfere with or limit the right of the Company or any subsidiary
corporation to terminate his employment at any time, with or without cause.
Nothing contained in this Plan or in any Stock Option agreement or SAR shall be
construed as entitling any optionee to any rights of a shareholder as a result
of the grant of a Stock Option or an SAR, until such time as Common Shares are
actually issued to such optionee pursuant to the exercise of such Option or SAR.
This Plan may be assumed by the successors and assigns of the Company. The
liability of the Company under this Plan and any sale made hereunder is limited
to the obligations set forth herein with respect to such sale and no term or
provision of this Plan shall be construed to impose any liability on the Company
in favor of any employee with respect to any loss, cost or expense which the
employee may incur in connection with or arising out of any transaction in
connection with this Plan. The cash proceeds received by the Company from the
issuance of Common Shares pursuant to this Plan will be used for general
corporate purposes. The expense of administering this Plan shall be borne by the
Company. The captions and section numbers appearing in this Plan are inserted
only as a matter of convenience. They do not define, limit, construe or describe
the scope or intent of the provisions of this Plan. Ohio law controls the
enforcement and interpretation of this Plan, and any Grants or other contractual
agreements made pursuant to this Plan.
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15. Termination of This Plan. This Plan shall terminate on February
11, 2012; thereafter, no Stock Options or Restricted Stock or SARs shall be
granted hereunder. All Stock Options and SARs outstanding at the time of
termination of this Plan shall continue in full force and effect according to
their terms and the terms and conditions of this Plan.
IN WITNESS WHEREOF, the Company, by order of its Board of Directors,
has caused the undersigned, duly authorized officers to execute this Plan as of
the day and year first above written.
KEITHLEY INSTRUMENTS, INC.
By /s/ Mark J. Plush
-------------------------------------
And /s/ Philip R. Etsler
------------------------------------
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