EX-10(BB)



 





Exhibit 10(bb)




KEITHLEY INSTRUMENTS, INC.

2002 STOCK INCENTIVE PLAN




PERFORMANCE AWARD AGREEMENT




     This performance award agreement (the “Agreement”) is made as of this                      day of                     , 2007 (the
“Award Date”), between Keithley Instruments, Inc., an Ohio corporation (the “Company”), and that
key employee of the Company named at the bottom of this Agreement (“Key Employee”). Subject to
the terms, conditions and limitations set forth in this Agreement (including, without limitation,
the vesting provisions of paragraph 6 hereof and the performance standards and operative
provisions set forth in paragraph 1 hereof and in Exhibits A and B hereto), Key Employee hereby is
granted and awarded                      performance units, each unit representing one common share of the
Company (the “Initial Award”). The number of Company common shares issued to or in respect of Key
Employee (if any) shall be determined strictly in accordance with this Agreement, based on the
number of units contained in any Final Award (as defined herein), subject to the general
provisions of the Plan.



     The number of units comprising the Initial Award shall be subject to adjustment, expansion or
reduction, to take into account the revenue performance of the Company as compared to its relevant
competition during the Revenue Measurement Period (as defined in Exhibit B), as further provided
in paragraph 1 hereof and in Exhibits A and B hereto, while achieving acceptable average rates of
return for the periods specified in Exhibit B (the “Returns Measurement Period”). The actual
number of Company common shares issued to Key Employee (if any) will only be determined by
applying the performance criteria to the Initial Award, and determining the number of units
finally awarded to such Employee (the “Final Award”).



     This Agreement (including any and all incorporated Exhibits hereto) and any Final Award made
hereunder, are subject to the terms and conditions of the Keithley Instruments, Inc. 2002 Stock
Incentive Plan, as amended and then in effect (the “Plan”). The Plan’s terms and conditions are
incorporated herein by this reference. Additional terms and conditions of this Agreement are as
follows:




	 	1.	 	Performance Standards; Determining the Final Award. The size of Key
Employee’s Final Award will depend on the Company’s performance during the Revenue
Measurement Period and the Returns Measurement Period.






     (a) General Performance Standards. To determine Key Employee’s Final Award,
the number of units comprising Key Employee’s Initial Award are adjusted (ranging
from a maximum of twice the number of units comprising the Initial Award, to a
minimum of no units), based on program metrics that compare the growth in the
Company’s net revenues (if any) occurring during the Revenue Measurement Period to
comparable growth in net revenues being reported by the Company’s principal
competitors (as determined by the Compensation Committee of the Company’s board of
directors, or its designee (for purposes of


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this Agreement only, the “Committee”)) during a period comparable in length to the
Revenue Measurement Period, taking into account the Company’s achievement of
specified rates of return.




     (b) Operative Provisions Incorporated By Reference. The operative provisions
of the program, and the metrics used to gauge Key Employee’s performance and
determine the number of units awarded in such Employee’s Initial Award and Final
Award, are set forth in Exhibits A and B hereto, all of which are individually and
collectively incorporated herein by this reference as if expressly set forth
herein.




     (c) Committee Determinations. The Committee shall make all operative
determinations hereunder, acting in its sole and exclusive discretion, including
those required to be made in Exhibits A and B hereto; provided, that all
performance criteria used to gauge the Company’s performance during any Measurement
Period shall be determined and finalized not later than the December
31st next following the Vesting Date specified in Section 6, excepting
only those changes directly resulting from events external to the Company, such as
mergers, dissolutions and consolidations involving the Company’s competitors.




	 	2.	 	Issuance & Transfer of Common Shares. In the event Key Employee is
determined to be entitled to receive Company common shares hereunder in connection
with the calculation and making of such Employee’s Final Award and otherwise becomes
qualified to receive such shares in accordance with the provisions of paragraph 6
hereof (subject, in any event to the provisions of paragraph 8 hereof), such shares
shall be transferred and issued to Key Employee (or such other person as may then be
entitled hereunder) on or before the December 31st next following the
Vesting Date set forth in paragraph 6 hereof. In the event said transfer date is a
weekend day or a national holiday, the transfer and issuance described in this
paragraph 2 shall occur on the business day next following said transfer date. In the
event the Committee determines that Key Employee is not entitled to a Final Award
pursuant to paragraph 1 and Exhibits A and B hereto, then all rights arising under
this Agreement shall terminate on the date of such determination.
	 
	 	3.	 	Tax, Withholding Matters. Any Key Employee or other person receiving
Company common shares in connection with a Final Award shall provide for the
satisfaction of all applicable federal, state and local withholding taxes and
assessments arising in respect of such issuance and transfer of shares; the amount of
such withholding taxes and assessments shall be determined by the Company, acting in
its sole discretion (the “Total Withholding”). Upon request, the Company shall
provide Key Employee with the information needed to determine the Total Withholding.
At the Company’s discretion, the Total Withholding shall be paid with cash or check,
or with a surrender of Company common shares having a fair market value on the date of
transfer equal to that portion of the Total Withholding for which payment in cash or
check is not made. The Committee





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	 	 	 	may, in its sole discretion, specify other methods
for transferring Company common shares in satisfaction of Final Awards, but any such specification shall
only be made in writing.
	 
	 	4.	 	Interests Are Not Transferable. Any and all Awards made hereunder
shall not be transferable or assignable, or capable of alienation or anticipation, by
Key Employee except as otherwise expressly permitted by the Plan. Likewise, except as
specifically provided in the Plan, Company common shares issued hereunder shall only
be issued to Key Employee or his personal representative (except in the event of Key
Employee’s death or disability, in which event otherwise-issuable Company common shares owed to Key Employee at death or disability shall be issued only to or for Key
Employee’s estate (in the case of death) or to Key Employee’s legal representative (in
the case of disability).
	 
	 	5.	 	Units Carry No Dividend or Voting Rights. Awards made hereunder are
at all times subject to all restrictions contained in this Agreement and in the Plan.
Key Employee shall not have, or accrue, any shareholder rights as a result of being
credited with units hereunder in respect of an Initial Award or a Final Award. The
right to receive dividends, and to vote or otherwise assert shareholders’ rights,
shall only arise and accrue as and when Company common shares are issued and
transferred to Key Employee in accordance with, and in satisfaction of, the Company’s
obligations under the terms of the Plan and this Agreement. Key Employee understands
and acknowledges that the Committee, acting in its sole discretion, may require Key
Employee, or his successor, to represent and warrant that he will comply with all
applicable laws and regulations or confirm certain factual matters, if requested by
the Company’s legal counsel.
	 
	 	6.	 	Vesting, Expiration and Termination Rules. Key Employee’s right to
receive an Award hereunder (subject to determining whether Key Employee qualifies to
receive Company common shares in connection with any units awarded as part of his or
her Final Award) will fully vest at 11:59 p.m. on September 30, 2010 (the “Vesting
Date”), subject to application of this paragraph 6 and the provisions of paragraph 8
hereof. Nothing contained in this Agreement, or in the Plan, shall give Key Employee
any substantive right to the Company common shares represented by the units that
comprise the Initial Award; rather, Key Employee shall only vest in, and have an
enforceable right to, those units (if any) that comprise the Final Award.
Notwithstanding the preceding two sentences, in the event Key Employee’s employment by
the Company terminates (including any employment with Company subsidiaries and
affiliates whose financial results are reported on a consolidated basis with the
Company) prior to the Vesting Date other than on account of a retirement approved by
the Committee (but otherwise without regard to the reason(s) therefor), the Initial
Award, and all Key Employee’s rights thereunder, shall terminate immediately and be
extinguished, and thereafter shall have no value. In the event Key Employee retires
prior to the Vesting Date but otherwise under conditions satisfactory to the Company,
the Committee, in its sole discretion, may nevertheless make and approve payment of a
Final Award to Key Employee following the Vesting Date to recognize Key





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	 	 	 	Employee’s contributions during that portion of the period from the date hereof to
the Vesting Date in which Key Employee was employed by the Company and covered by
this Agreement.
	 
	 	7.	 	Coordination With Other Rules. None of the terms, conditions or
provisions in this Agreement shall be interpreted or applied to cause any common share
of the Company, issued in connection with this Agreement, not to be a fully paid and
non-assessable common share of the Company.
	 
	 	8.	 	Forfeiture; Set Off & Recoupment. Notwithstanding any other provision
of this Agreement or the Plan, Key Employee’s rights hereunder with respect to the
Award evidenced hereby (whether or not then vested) shall immediately terminate, and
otherwise be subject to forfeiture, set off and reduction for and against any claims
the Company may have or asserts against Key Employee for any of the following actions
by Key Employee, taken while employed by the Company and, with respect to subparagraphs
(a) and (e), within a three (3)-year period commencing with the cessation of Key
Employee’s Company employment:






	 	a)	 	Any direct or indirect disclosure or publication (or, during
the three (3)- year period commencing with the cessation of Key Employee’s
Company employment, an use) by Key Employee of any Company trade secret or
confidential information;
	 
	 	b)	 	Any act of embezzlement, fraud or breach of fiduciary duty
during Key Employee’s employment with the Company that contributed to a
restatement of the Company’s financial statements;
	 
	 	c)	 	Any material violation (as determined by the Board of
Directors) by Key Employee of the terms of any written agreement between Key
Employee of the Company;
	 
	 	d)	 	Any act of embezzlement, fraud, dishonesty, nonpayment of any
obligation to the Company, breach of fiduciary duty or deliberate disregard of
Company rules resulting in a loss, damage or injury to the Company;
	 
	 	e)	 	Any attempt by Key Employee to induce any Company employee or
consultant, agent or sub agent under contract with the Company to terminate his
or her employment or other contractual relationship with the Company.






In the event of any violation by Key Employee of any subparagraph above, the Award
evidenced hereby then held by Key Employee hereunder (whether or not then vested)
shall immediately terminate, be extinguished or forfeited, and have no further
effect. In addition if there is a violation of subparagraphs (a), (b)



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and/or (e) above, with respect to all units awarded hereunder, and with respect to any
Company common shares issued or expected to be issued in connection with the Final
Award, Key Employee shall promptly forfeit, relinquish and surrender to the Company
all gains, profits, and income Key Employee has realized from such Award if the
profit or income was realized within thirty-six (36) months of the violations in
question. Any failure by the Company to assert its set off, forfeiture and
recoupment rights under this paragraph with respect to specific claims against Key
Employee shall not waive, or operate to waive, the Company’s right to later assert
its rights hereunder with respect to other or subsequent claims against Key
Employee.




	 	9.	 	Change of Control Consequences. In the event Key Employee’s rights
hereunder vest on account of a Change of Control (determined in accordance with
Section 11 of the Plan) occurring prior to the Vesting Date, the number of Company
common shares Key Employee shall be entitled to receive will be based on the Initial
Award, subject only to the remaining terms of this Agreement (which shall continue to
apply). In the event such Change in Control (or any event subsequent thereto)
satisfies the requirements imposed by Section 409A(a)(2) of the Internal Revenue Code
and related regulations (pertaining to changes in ownership or effective control), the
issuance and transfer of such shares shall occur as soon as practicable after such
Change in Control or subsequent event.
	 
	 	10.	 	Choice of Law; Consent to Jurisdiction. Key Employee hereby consents
and agrees that Ohio law controls the parties’ procedural and substantive rights and
obligations under this Agreement, and also consents and agrees to the jurisdiction of
the state court of general jurisdiction sitting in Cuyahoga County, Ohio, as the
exclusive forum for resolving all claims and issues arising under, out of, or in
respect of, this Agreement.
	 
	 	11.	 	Severability; Survival of Certain Provisions. The unenforceability of
one (1) or more of the provisions in this Agreement shall not vitiate or render void
or unenforceable the remaining provisions of this Agreement; rather, such remaining
provisions will remain fully enforceable to the extent permitted by law.
Notwithstanding any contrary provision contained in the Plan or this Agreement, the
provisions of paragraph 8 hereof shall specifically survive the termination, lapse or
expiration of the Plan and/or this Agreement.





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	 	12.	 	Definitions. Unless otherwise defined in this Agreement, capitalized
terms will have the same meanings given them in the Plan.





	 	 	 	 	 
	 	KEITHLEY INSTRUMENTS, INC.

 	 
	DATE OF GRANT:                                          	By:  	 
 	 
	 	 	Joseph P. Keithley	 
	 	 	Title: 	    Chairman of the Board, President 
and Chief Executive Officer 	 
	 	 	 	 
	 



ACCEPTANCE BY KEY EMPLOYEE





     The undersigned has read and understood, and hereby accepts, the terms, conditions, and
obligations and restrictions imposed hereunder, as well as the terms, conditions and limitations
of the Plan to which this Agreement is subject and subordinate.



	 	 	 	 	 
	 	 	 
	DATE:                                          	  	 	 
	 	  	Name	 



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