Filed by Bowne Pure Compliance





Exhibit 10.6




KEITHLEY INSTRUMENTS, INC.

SUPPLEMENTAL DEFERRAL PLAN




Amended and Restated January 1, 2008





 


 









 







TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE ONE
	 	 	4	 
	ARTICLE TWO
	 	 	4	 
	ARTICLE THREE
	 	 	5	 
	ARTICLE FOUR
	 	 	6	 
	ARTICLE FIVE
	 	 	7	 
	ARTICLE SIX
	 	 	8	 
	ARTICLE SEVEN
	 	 	9	 
	ARTICLE EIGHT
	 	 	9	 
	ARTICLE NINE
	 	 	10	 
	ARTICLE TEN
	 	 	10	 
	ARTICLE ELEVEN
	 	 	11	 
	ARTICLE TWELVE
	 	 	11	 
	ARTICLE THIRTEEN
	 	 	13	 
	ARTICLE FOURTEEN
	 	 	14	 
	ARTICLE FIFTEEN
	 	 	14	 
	ARTICLE SIXTEEN
	 	 	14	 
	ARTICLE SEVENTEEN
	 	 	15	 
	ARTICLE EIGHTEEN
	 	 	15	 





 


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KEITHLEY INSTRUMENTS, INC.


SUPPLEMENTAL DEFERRAL PLAN


(Amended and Restated January 1, 2008)




THIS AMENDED AND RESTATED KEITHLEY INSTRUMENTS, INC. SUPPLEMENTAL DEFERRAL PLAN (the “Plan”)
was originally established effective September 1, 1999, by Keithley Instruments, Inc., a
corporation with principal offices and place of business in the State of Ohio, hereinafter referred
to as the “Corporation.” The Corporation now amends and restates this Plan, effective January 1,
2008.



WITNESSETH:




WHEREAS, the Corporation currently maintains an unfunded deferred compensation plan primarily
for the purpose of providing additional deferred compensation benefits for a select group of
management or highly compensated employees; and



WHEREAS, the Corporation intends that the Plan at all times shall be administered and
interpreted in such a manner as to qualify for the limited exemption available under section 201(2)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) from selected
provisions of ERISA Title I; and



WHEREAS, the Corporation desires to amend and restate the Plan to comply with the relevant
requirements of Section 409A of the Internal Revenue Code of 1986 (the “Code”) and the Treasury
Regulations thereunder;



WHEREAS, any amounts deferred in the calendar years beginning on or after January 1, 2005
under this Plan, and any earning thereon shall be governed by the terms and conditions of this
amended and restated Plan; and



NOW, THEREFORE, in consideration of the premises, the Corporation hereby amends and restates,
and republishes the Keithley Instruments, Inc. Supplemental Deferral Plan as amended and restated
effective January 1, 2008:



DEFINITIONS:




Account. A bookkeeping account established by the Corporation in the name of a
Participant and kept as part of the Corporation’s regular books and records that indicates such
Participant’s interest in the Plan. Each individual participating in the Plan as a Participant
shall have an Account established and maintained in his or her name, and the Corporation (or its
designee) shall credit or charge to such Account (i) any and all amounts deferred hereunder by or
on behalf of such Participant, (ii) any and all amounts credited by the Corporation pursuant to
Paragraph 1.03 hereof, (iii) any interest or dividends credited thereto in accordance with this
Plan and (iv) any investment earnings or gains credited, or losses charged, thereto in accordance
with Article Four of this Plan, (v) any distributions directly or indirectly charged to such
Participant or his or her beneficiaries hereunder (including direct transfers, and tax withholdings
and remittances); and (vi) any Plan and Plan-related costs or expenses charged thereto. The
existence of such Account shall not create, and shall not be deemed to create, a trust of any kind,
or a fiduciary relationship between the Corporation and the Participant, his or her designated
beneficiary, or other beneficiaries under the Plan.


 


 









 





Affiliate. Any corporation, partnership, limited liability company, joint venture,
association, or similar organization or entity, which is a member of a controlled group of
corporations that includes, or which is an entity which is under common control with, the
Corporation. For purposes of determining the presence of a “controlled group of corporations, or
“common control,” the standards set forth in Section 414(b) and 414(c) of the Code and related
regulations, as interpreted and applied by the Corporation acting in its sole discretion, shall
apply.




Calendar Year. January 1 to December 31.



Compensation. As applicable, the total salary, bonuses and commissions, or director’s
and meeting fees, paid or due to be paid by the Corporation to a Participant in a Calendar Year,
including any amount deferred pursuant to Article One hereof.



Corporation. Keithley Instruments, Inc. is an Ohio corporation. The Corporation
shall act through its board of directors (the “Board”), which may delegate some or all of its
rights, duties and responsibilities to one (1) or more committees of the Board, and/or to one (1)
or more officers of the Corporation; provided, that any such delegation by the Board shall be in
writing.




Early Retirement Date. The date the Participant attains 55 years of age.



Effective Date. July 1, 1999. The effective date of this amendment and restatement,
however, is January 1, 2008.



Election to Defer. A written notice filed by the Participant with the Corporation in
substantially the form attached hereto as Exhibit A, specifying the amount (if any) of Compensation
to be deferred.



Eligible Individual. Any individual employed by the Corporation or an Affiliate (or
both) who satisfies the Minimum Eligible Compensation Level and has been selected by the President
of the Corporation (acting in his sole discretion) to participate herein. Such term shall include
any individual who provides personal services as a non-employee director of the Corporation without
regard to the Minimum Eligible Compensation Level. Any individual who qualifies as an Eligible
Individual shall be entitled to participate herein in accordance with the provisions of Paragraph
1.01 hereof.



ERISA. The Employee Retirement Income Security Act of 1974, as amended and then in
effect.


 


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Minimum Eligible Compensation Level. For the Plan Year starting January 1, 2008,
Compensation of at least $120,000 as determined for the preceding Calendar Year.




Normal Retirement Date. The date a Participant attains 65 years of age.



Participant. An Eligible Individual who participates in the Plan, for as long as such
Individual maintains an interest in the Plan.



Participant Annual Deferral. The portion of a Participant’s Compensation that he or
she elects to defer for a Calendar Year.




Plan. This Plan, together with any and all amendments or supplements thereto.



Plan Administrator. The Corporation, acting by and through the Board or its
designee(s).




Plan Year. The Calendar Year.



Separation from Service. Termination of employment with the Corporation and all
Affiliates (whether by death, disability, retirement, or otherwise) which ends or substantially
reduces the personal services that a Participant performs (or is expected to perform) for the
Corporation and all Affiliates. Except in the case of a Participant on a bona fide leave of
absence as provided below, a Participant is deemed to have incurred a Separation from Service if
the level of services to be performed by the Participant after a date certain is reasonably
expected to be reduced to twenty percent (20%) or less of the average services rendered by the
Participant during the immediately preceding 36-month period (or the total period of employment, if
less than 36 months), disregarding period during which such Participant was on a bona fide leave of
absence.



A Participant absent from work due to military leave, sick leave, or other bona fide leave of
absence shall incur a Separation from Service on the first date immediately following the later of:
(a) the six month anniversary of the commencement of the leave, or (b) the expiration of the
Participant’s right, if any, to reemployment under statute or contract. Notwithstanding the
foregoing, a Participant who is absent from work due to a physical or mental impairment that is
expect to result in death or last for a continuous period of at least six months and that prevents
the Participant from performing the duties of his or her position of employment or a similar
position shall be deemed to have incurred a Separation from Service on the first date immediately
following the 29-month anniversary of the commencement of the leave.



Specified Employee. A Participant who, as of the date of his or her Separation from
Service, is a “key employee” of the Corporation or any Affiliate, so long as the Corporation’s
stock (or the stock of any Affiliate) is publicly traded on an established securities market or
otherwise. A Participant is a key employee if he or she meets the requirements of Code Section
416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and
disregarding Section 416(i)(5)) at any time during the 12-month period ending on a given “specified
employee identification date.” Such key employee shall be treated as a key employee for the entire
12-month period beginning on the “specified employee effective date.” For purposes of this
paragraph the “specified employee identification date” shall mean December 31. The “specified
employee effective date” shall mean the first day of the fourth month following the “specified
employee identification date,” or such earlier date as is selected by the Corporation.


 


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For purposes of determining whether a Participant is a Specified Employee, the compensation of
the Participant shall be determined in accordance with the definition of compensation provided
under Treasury Regulation Section 1.415(c)-2(a) (i.e., wages within the meaning of Code Section
3401(a) for purposes of income tax withholding at the source, plus amounts excludible from gross
income under Code Section 125(a), 132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k) or 457(b), without
regard to rules that limit the remuneration included in wages based on the nature or location of
the employment or the services performed). Notwithstanding the foregoing, if a different
definition of compensation has been designated by the Corporation with respect to another
nonqualified deferred compensation plan in which a key employee participates, the definition of
compensation shall be the definition as provided under Treasury Regulation Section 1.415(c)-2(a),
unless the Corporation elects (by applicable corporate action) to use a different definition of
compensation with respect to all nonqualified deferred compensation plan maintained by the Company.



ARTICLE ONE




1.01  Eligibility. (a) Any individual who is an Eligible Individual may
become a Participant in the Plan as of the first day of the Plan Year next following the date such
individual becomes an Eligible Individual. As a condition of participation, each Eligible
Individual shall be required to execute a participation agreement in the form annexed hereto as
Exhibit B. (b) Once an Eligible Individual becomes a Participant, he or she shall remain a
Participant until death, or if earlier, until his or her Account is fully distributed; however, an
individual shall only be an active Participant while an Eligible Individual. (c) In the case of
any Eligible Individual who first becomes a Participant after the Effective Date, the Plan
Administrator shall specify the date as of which such Individual commences participation hereunder.



1.02  Deferral Election. Commencing on the Effective Date, and continuing
through the date on which an Eligible Individual ceases to qualify as an Eligible Individual, an
Eligible Individual shall be entitled to elect to defer, and have credited to his or her Account,
up to 100% of his or her Compensation. Any amounts not paid to an Eligible Individual because it
has been deferred shall be credited to such Individual’s Account within thirty (30) days of the
date such amounts otherwise would have been paid to such Individual.



1.03  Crediting Corporate Amounts. From time to time, the Corporation may
credit each Participant’s Account, in amounts and using such methods, allocation criteria and
standards as the Corporation shall determine in its sole discretion. Any amounts so credited shall
be credited to each Participant’s Account within thirty (30) days following the date such amounts
are declared.



ARTICLE TWO




2.01  Responsibility for Administration of the Plan. (a) The Plan
Administrator shall be responsible for the management, operation and administration of the Plan.
The Plan Administrator may employ others to render advice with regard to its responsibilities under
this Plan. It may also allocate its responsibilities to others and may exercise any other powers
necessary for the discharge of its duties. (b) The primary responsibility of the Plan
Administrator is to administer the Plan for the benefit of the Participants and their
beneficiaries, subject to the specific terms of the Plan. The Plan Administrator shall administer
the Plan in accordance with its terms and shall have the power to determine all questions arising
in connection with its administration, interpretation and application. Any such determination
shall be conclusive and binding upon all persons. The Plan Administrator shall have all powers
necessary or appropriate to accomplish its duties.


 


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2.02  Information from Corporation. The Corporation and each Affiliate shall
provide to the Plan Administrator, on an accurate and timely basis, the information needed to
properly administer the Plan. The Plan Administrator may rely upon the correctness of all such
information as is so supplied and shall have no duty or responsibility to verify such information.
The Plan Administrator shall also be entitled to rely conclusively upon all tables, valuations,
certifications, opinions and reports furnished by any actuary, accountant, controller, counsel or
other person employed or engaged by the Plan Administrator with respect to the Plan.



2.03  Investment. The Corporation shall determine, in its sole discretion,
whether to dedicate or encumber corporate assets, or engage in investment activities, to place the
Corporation in a position to discharge and otherwise satisfy its liabilities under the Plan.
Notwithstanding the preceding sentence to the contrary, each Participant with an interest in the
Plan acknowledges, consents and agrees that his or her rights under the Plan are defined by, and
limited to, such Participant’s Account, and that he or she has no right, title or interest to, or
any interest in or claim to (whether at law or in equity) any investments made or funds established
by the Corporation to facilitate the discharge of the Company’s Plan liabilities.



ARTICLE THREE




3.01  Vesting of Plan Interests. Regardless of the circumstances under which
a Participant’s relationship with the Corporation terminates, that portion of the Participant’s
Account attributable to deferrals made pursuant to Paragraph 1.02, including any investment gains
or losses on such Deferrals, shall be one hundred percent (100%) vested. Contributions by the
Corporation credited to said Participant’s Account (whether pursuant to Paragraph 1.03, or
otherwise), including any investment gains or losses on such contributions, will vest in accordance
with the following schedule:



	 	 	 	 	 
	Completed Years Of Plan Participation	 	Vested Percentage	 
	Less than 1
	 	 	0	%
	1 but less than 2
	 	 	33	%
	2 but less than 3
	 	 	67	%
	3 or more
	 	 	100	%






provided, that if a Participant’s relationship with the Corporation and all Affiliates terminates
prior to the completion of three (3) Completed Years of Plan Participation, such Participant shall
forfeit the forfeitable portion of his or her Account; and provided, further, that if a
Participant’s relationship with the Corporation and all Affiliates terminates or is terminated “for
cause,” no benefits of any kind will be payable under the terms of this Plan, other than such
Participant’s interest in deferrals made pursuant to Paragraph 1.02 hereof.


 


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3.02  Vesting Upon Change in Control. Immediately upon any Change in Control
(as defined below), notwithstanding any other contrary provisions herein (including, without
limitation, Paragraph 3.01 hereof), each Participant’s interest in all amounts credited to his
Account under this Plan shall fully and immediately vest and become nonforfeitable, and all
forfeiture provisions otherwise imposed hereunder (including those set forth in Paragraph 3.01
hereof) shall be null, void and unenforceable and have no further force or effect.



For purposes of this paragraph, a Change in Control shall be deemed to have occurred if and
when: (a) any tender offer is made and consummated for the ownership of twenty-five percent (25%)
or more of the outstanding voting securities of the Corporation; (b) the Corporation is merged or
consolidated with another entity and, as a result of such merger, reorganization or consolidation,
less than seventy-five (75%) of the outstanding voting interests of the surviving or resulting
entity is owned in the aggregate by the Corporation, or by the former shareholders of the
Corporation, as determined immediately prior to such merger, reorganization or consolidation; (c)
the Corporation sells substantially all of its assets to another entity (including one or more
Affiliated Companies, as defined below if applicable) which is not at least eighty percent (80%)
owned by the Corporation; 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 Securities Exchange Act of 1934 (the “Exchange
Act”), acquires, other than by reason of inheritance, twenty-five percent (25%) or more of the
outstanding voting securities of the Corporation (whether directly, indirectly, beneficially or of
record). In making any such determination, transfers made by a person to an affiliate of such
person (as determined by the Board prior to such transfer), whether by gift, devise or otherwise,
shall not be taken into account. 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.



For purposes of this paragraph, “Affiliated Company” or “Affiliated Companies” means the
Corporation, any and all corporations, limited and/or general partnerships, limited liability
companies, business trusts, or other trades or businesses, in which the Corporation holds a direct
or indirect ownership interest, or a profits or beneficial interest, in excess of fifty percent
(50%).



ARTICLE FOUR




4.01  Earnings or Losses on Deferred Amounts. The Corporation hereby agrees
that it will credit the Participant’s Retirement Account in an amount equal to the investment
earnings or losses attributable to such Participant’s Retirement Account. For this purpose,
contributions to the Retirement Account as defined in Paragraphs 1.02 and 1.03 above shall be
assumed to have been invested in the fund or funds selected by the Participant on or about the day
the monies would otherwise have been payable were it not for the election to defer. Commencing
with the first calendar quarter that follows the Participant’s commencement of participation in the
Plan and continuing thereafter for each subsequent calendar quarter in which the Participant
participates in the Plan, no later than the next to last business day of the calendar quarter the
Participant may (but is not required to) elect, by submitting a new Allocation Election Change Form
to the Plan Administrator, to add or delete one or more Investment Option(s) to be used to
determine the additional amounts to he credited to his or her Account Balance. If an election is
made in accordance with the previous sentence, it shall apply to the next calendar quarter and
continue thereafter for each subsequent calendar quarter in which a Participant participates in the
Plan, unless changed in accordance with the previous sentence.


 


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ARTICLE FIVE




5.01  Election to Defer Compensation. The Participant may defer all or a
portion of his or her Compensation by filing an Election of Deferral. An Election of Deferral must
be filed no later than December 31 of the year prior to the Calendar Year in which it pertains and
shall be effective on the first day of such Calendar Year; however, for the Plan Year in which an
Eligible Individual first becomes eligible to participate in the Plan, such election must be made
within thirty (30) days of the date such Individual first becomes eligible and in any event before
the effective date of participation, and only Compensation earned after the date of election shall
be taken into account. Each Election of Deferral shall be effective only in the Calendar Year to
which the Election of Deferral applies. Any subsequent Election of Deferral, to be effective must
be filed no later than December 31 of the year prior to the Calendar Year in which deferral is
sought.



5.02  Transfer, Consolidation of Corporate Interests. A Participant with a
vested interest in one (1) or more other unfunded, elective deferred compensation plans maintained
by the Corporation (including, without limitation, interests held under the Keithley Instruments,
Inc. Deferred Compensation Plan (as amended)) may effect a transfer of interests between such plans
and this Plan by accepting an interest in the Plan in lieu of some or all of the interest(s) then
held under such other deferred compensation plan. To do so, however, such Participant and the
Corporation must agree to compromise and extinguish outright such Participant’s interest under such
other Plan, in full accord and satisfaction of such other plan interest, and in addition consent
and agree to each of the following terms and conditions: (a) extinguishment of the interest held
under the other Keithley maintained plan shall be a condition precedent to the creation of the
indicated Plan interest; (b) a Plan interest created as a result of this paragraph shall only be
created (and other plan interests are only extinguished) as of the last day of a calendar month
selected by the Participant, based on the interests then held under such other plan; (c) both the
Participant and the Corporation must consent and agree to such transfer of interest; (d) the
extinguishment of such other deferred compensation plan interests must not be prohibited under the
terms of such other plan(s); (e) any such transfer of interest must not materially accelerate the
date such other plan interest(s) otherwise would be paid to (or in respect of) the Participant; and
(f) any such transfer of interest must not have the effect of accelerating the interest held under
such other plan(s) for federal tax purposes (including, without limitation, the economic benefit
and constructive receipt income tax doctrines).



5.03  Petition to Cease Deferrals Mid-Year. In the event a Participant
incurs an unforeseeable emergency as defined in Paragraph 10.03, the Participant may petition the
Plan Administrator to allow for a cessation of the monies being deferred hereunder during the
Calendar Year. It shall be at the sole discretion of the Plan Administrator, after considering the
circumstances of each such case, to either grant or reject such a request and, if granted, the
Participant shall be prohibited from making deferrals under Paragraph 1.02 for the remainder of the
Calendar Year in question and for the next succeeding Calendar Year.


 


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ARTICLE SIX




6.01  Retirement and Termination Benefit. Following the date the Participant
Separates from Service with the Corporation and all Affiliates, or if later, attains his or her
Normal Retirement Date or Early Retirement Date, the Corporation shall thereafter pay to the
Participant, his or her Account. A Participant’s Account shall be payable in substantially equal
annual installments for the period of time selected by the Participant in Exhibit A (Election
Deferral Form) attached hereto. The amount of each annual installment shall be determined at the
sole discretion of the Plan Administrator based on the value of the Participant’s Account at the
date payment is due, based on the interest rates prevailing at that time. Such payments shall
commence on or about the first day of the first month following the Participant’s Separation from
Service or retirement date (as applicable).



In the event the Participant is a Specified Employee (as previously defined herein) such
payment shall not begin before the date that is six (6) months after the date that the Participant
experiences a Separation from Service (other than due to the Participant’s death or Disability).
In the event a Participant who is a Specified Employee has elected to receive benefits under this
Plan in annual installment payments, such installments that would normally be paid during the six
(6) months following the date that the Participant experiences a Separation from Service, shall be
accumulated and paid no earlier than the first day of the seventh (7th) month following
the date of Participant’s Separation from Service.



6.02  Accelerated Payments. The Plan Administrator shall make payment of all
or a part of the Participant’s Account balance, in accordance with Paragraph 3.02, before any
payments would otherwise be due, in each of the following circumstances (subject to the indicated
conditions and restrictions): (a) if the Plan fails to meet the requirements of Code Section 409A
and the Treasury Regulations thereunder (but limited to the amount required to be included in
income as a result of the failure to comply with the requirements of Code Section 409A and the
Treasury Regulations thereunder); or (b) to the extent such Plan interest is awarded or otherwise
becomes payable to a former spouse of a Participant, under the terms of a domestic relations order
(as defined in Code Section 414(p)(1)(B)); or (c) if there occurs a Change in Control (as defined
under Paragraph 3.02 hereof) that also qualifies as a Change in Control within the meaning of
Treasury Regulation Section 1.409A-2(i)(5)(i)-(vii) and as described in this Section 6.02.



For purposes of this Paragraph 6.02, a Change in Control under Treasury Regulation Sections
1.409A-2(i)(5)(i)-(vii) occurs if (a) a change in ownership occurs whereby a person, or a group of
persons acting together, acquires more than fifty percent (50%) of the stock of the Corporation,
measured by voting power or value; (b) a change in effective control occurs if, over a twelve (12)
month period: (i) a person or group acquires stock representing thirty percent (30%) of the voting
power of the Corporation; (ii) a majority of the members of the Board of Directors of the parent
corporation is replaced by directors not endorsed by the persons who were members of the Board
before the new directors’ appointment; or (iii) a Change in Control based on the sale of assets
occurs if a person or group acquires forty percent (40%) or more of the gross fair market value of
the assets of the Corporation over a twelve (12) month period. The determination as to the
occurrence of a Change in Control shall be based on objective facts and in accordance with the
requirements of Code Section 409A.



In the event the Participant is a Specified Employee (as previously defined herein) any
payment otherwise permitted or required by this Paragraph 6.02 shall not begin before the date that
is six (6) months after the date of the Change in Control. In the event a Participant who is a
Specified Employee has elected to receive benefits under this Plan in annual installment payments,
such installments that would normally be paid during the six (6) months following the Change in
Control, shall be accumulated and paid no earlier than the first day of the seventh
(7th) month following the date of the Change in Control.


 


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ARTICLE SEVEN




7.01  Disability Benefit. The Participant shall be entitled to receive
payments hereunder following such Participant’s Separation from Service date but prior to his or
her Normal Retirement Date or Early Retirement Date (as applicable), if it is determined by a duly
licensed physician selected by the Corporation that, because of ill health, accident, or
disability, the Participant was no longer able to properly and satisfactorily perform his or her
regular duties for the Corporation. If the Participant’s relationship with the Corporation
terminated pursuant to this paragraph, the benefit payable hereunder shall be the vested value of
the Participant’s Account on the date of the physician’s disability determination. The Disability
Benefit payable under this Article shall be payable in equal annual installments for the period of
time selected by the Participant in Exhibit A (Election Deferral Form) attached hereto, with the
first payment due on or about the first day of the third month following the determination of
disability.



ARTICLE EIGHT




8.01  Death Benefit Prior to Commencement of Benefits. In the event of the
Participant’s death prior to commencement of benefit payments, the Corporation shall distribute
such Participant’s Account as soon as practicable, however, no later than ninety (90) days
following the date of such Participant’s death. The benefit payable under this Article shall be
distributed to the Participant’s beneficiary in a lump sum payment (less any applicable
withholding) and will be paid according to the last beneficiary designation received by the
Corporation from the Participant prior to his or her death. If no such designation has been
received by the Corporation, such payment shall be made to the Participant‘s surviving
legal spouse. If the Participant is not survived by a legal spouse, or if such spouse shall fail
to so appoint, the said payment shall be made to the then living children of the Participant, if
any, in equal shares. If there are no surviving children, the payment will be made to the estate
of the later to die of the Participant and (if any) his or her legal spouse. Such payment shall be
made on or about the first day of the third month following the Participant’s death; provided, that
the Plan Administrator in its sole discretion may delay payment of the benefit described in this
paragraph for a period not to exceed one hundred eighty (180) days, in order to resolve any dispute
arising over the proper identity of the parties entitled to receive such payment.



8.02  Death Benefit After Commencement of Benefits. In the event a
Participant dies after the commencement of benefit payments, but prior to the completion of all
such payments due and owing hereunder, the Corporation shall continue to make such payments, in
installments over the remainder of the period specified in Exhibit A hereof, as if the Participant
had survived. Such continuing payments shall be made to the Participant’s designated beneficiary
in accordance with the last such designation received by the Corporation from the Participant prior
to his or her death. If no such designation has been received by the Corporation, such payments
shall be made to the Participant’s surviving legal spouse. If such spouse dies before receiving
all payments to which he or she is entitled hereunder, then payments shall continue, for the
remainder of the payment period, to such person or persons, including his or her estate, as he or
she may designate in the last beneficiary designation received by the Corporation from such spouse
prior to his or her death. If the Participant is not survived by a legal spouse, or if such spouse
shall fail to so appoint, then said payments shall be made to the then living children of the
Participant, if any, in equal shares. If there are no surviving children, the payments will be
made to the estate of the later to die of the Participant and (if any) his or her legal spouse.
Such continuing payments shall commence as of the first day of the first month following the
Participant’s death.


 


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ARTICLE NINE




9.01  Termination Benefits. In the event the Participant’s relationship with
the Corporation and all Affiliates terminates for any reason other than death, Disability or for
cause, the Corporation shall pay to the Participant a Termination Benefit upon the Separation from
Service. The amount payable shall be equal to the Participant’s vested Account as of the date of
the Separation from Service and shall be payable in equal annual installments for the period of
time selected by the Participant in Exhibit B (Participation Agreement) attached hereto. Such
payments shall commence no later than ninety (90) days following the Participant’s Separation from
Service.



In the event the Participant is a Specified Employee (as previously defined herein) such
payment shall not begin before the date that is six (6) months after the date that the Participant
experiences a Separation from Service (other than due to the Participant’s death or Disability).
In the event a Participant who is a Specified Employee has elected to receive benefits under this
Plan in annual installment payments, such installments that would normally be paid during the six
(6) months following the date that the Participant experiences a Separation from Service, shall be
accumulated and paid to such Participant (or in the event of his death, to his estate) no earlier
than the first day of the seventh (7th) month following the date of such Participant’s
Separation from Service.



9.02  Termination for Cause. Termination “for cause” shall mean (i)
conviction of robbery, bribery, extortion, embezzlement, fraud, grand larceny, burglary, perjury,
income tax evasion, misapplication of company funds, false statements in violation of 18 U.S.C.
Sec. 1001, and any other felony that is punishable by a term of imprisonment of more than one year,
or (ii) any breach of the participant‘s duty of loyalty to the corporation, any acts of
omission in the performance of his company duties not in good faith or which involve intentional
misconduct or a knowing violation of law, or any transaction in the performance of his company
duties from which the participant derived an improper personal benefit. In the event the
Participant’s relationship with the Corporation and all Affiliates is terminated for cause, no
benefits of any kind will be due or payable under the terms of the Plan and such Participant’s
Account (less such Participant’s interest in the Account attributable to deferrals) shall be
forfeited.



ARTICLE TEN




10.01  Application for Unforeseeable Emergency Distribution. In the event a
Participant incurs an unforeseeable emergency, as defined in Paragraph 10.03, such Participant may
apply to the Plan Administrator for an unforeseeable emergency distribution. After a Participant’s
death, his or her beneficiary may apply for an unforeseeable emergency distribution, and references
herein to the Participant shall include the beneficiary. The Plan Administrator shall consider the
circumstances of each such case, and the best interests of the Participant and his or her family,
and shall have the right, in its sole discretion, to allow such application, in full or in part, or
to refuse to make an unforeseeable emergency distribution.



10.02  Amount of Distribution. In no event shall the amount of any
unforeseeable emergency distribution exceed the amount that is reasonably necessary to satisfy the
emergency need. Whether a Participant is faced with an unforeseeable emergency is to be determined
based on the relevant facts and circumstances of each case, but, in any such case, a distribution
on account of an unforeseeable emergency may not be made to the extent that such emergency is or
may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation
of the Participant’s assets, to the extent the liquidation of such assets would not cause severe
financial hardship, or by cessation of deferrals under the Plan. Payment of any such distribution
shall be made within thirty (30) days following the determination that a distribution will be
permitted under this Article 10.


 


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10.03  Unforeseeable Emergency. For purposes of this Article, an
“unforeseeable emergency” means: (a) a severe financial hardship to the Participant resulting from
an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary,
or the Participant’s dependent (as defined in Code Section 152, without regard to Code Section
152(b)(1), (b)(2), and (d)(1)(B)); (b) loss of the Participant’s property due to casualty
(including the need to rebuild a home following damage to a home not otherwise covered by
insurance, for example, not as a result of a natural disaster); or (c) other similar extraordinary
and unforeseeable circumstances arising as a result of events beyond the control of the
Participant.



10.04  Further Deferrals. A Participant who receives an unforeseeable
emergency distribution shall be prohibited from making deferrals under Paragraph 1.02 for the
remainder of the Calendar Year in which the distribution is made and for the next succeeding
Calendar Year.



10.05  Rules Adopted by Plan Administrator. The Plan Administrator shall
have the authority to adopt additional rules relating to unforeseeable emergency distributions. In
administering these rules, The Plan Administrator shall act in accordance with the principle that
the primary purpose of this Plan is to provide additional retirement income, not additional funds
for current consumption.



10.06  Limit on Number of Distributions Due to Unforeseeable Emergency. No
Participant may receive more than one unforeseeable emergency distribution in any Calendar Year



10.07  In-Service Distribution. At the time of completing an “Election of
Deferral”, a Participant may elect to receive an In-Service Distribution, so long as such
Distribution specifies a date of distribution or prescribes a fixed schedule of distributions.



10.08  Timing of Distribution. An In-Service Distribution shall be made (or
in the case of a schedule, commence) on the date elected by the Participant. In all cases, such
date elected must be before the Normal Retirement Date.



10.09  Amount of In-Service Distribution. The amount of an In-Service
Distribution shall in any event be specified by the Participant, up to one hundred percent (100%)
of the amounts deferred by the Participant under Paragraph 1.02 hereof, plus any investment gains
or losses attributable thereto.



ARTICLE ELEVEN




11.01  Beneficiary Designation. The Participant shall have the right, at any
time, to submit in substantially the form attached hereto as Exhibit C, a written designation of
primary and secondary beneficiaries to whom payment under this Plan shall be made in the event of
his or her death prior to complete distribution of the benefits payable. Each beneficiary
designation shall become effective only when receipt there of is acknowledge in writing by the
Corporation. The Corporation shall have the right, in its sole discretion, to reject any
beneficiary designation which is not in substantially the form attached hereto as Exhibit C. Any
attempt to designate a beneficiary, otherwise than as provided in this Article, shall be
ineffective.



ARTICLE TWELVE




12.01  No Trust Created. Nothing contained in this Plan, and no action taken
pursuant to its provisions by any individual shall create, or be construed to create, a trust of
any kind, or a fiduciary relationship between the Corporation and any other individual.


 


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12.02  Benefits Payable Only From General Corporate Assets: (Unsecured
General Creditor Status of Participant). (a) Payments to the Participant or any
beneficiary hereunder shall be made from assets which shall continue, for all purposes, to be part
of the general, unrestricted assets of the Corporation; and no individual shall have any interest
in any such asset by virtue of any provision of this Plan. The Corporation’s obligation hereunder
shall be an unfunded and unsecured promise to pay money in the future. To the extent that any
individual acquires a right to receive payments from the Corporation under the provisions hereof,
such right shall be no greater than the right of any unsecured general creditor of the Corporation;
no such individual shall have or acquire any legal or equitable right, interest or claim in or to
any property or assets of the Corporation. (b) In the event that, in its discretion, the
Corporation purchases an insurance policy or policies insuring the life of a Participant (or any
other property), to allow the Corporation to recover or meet the cost of providing benefits, in
whole or in part, hereunder, no Participant or beneficiary shall have any rights whatsoever therein
or in the proceeds therefrom. The Corporation shall be the sole owner and beneficiary of any such
insurance policy or property and shall possess and may exercise all incidents of ownership therein.



12.03  No Contractual Relationship. Nothing contained herein shall be
construed to be a contract for personal services for any term of years, or as conferring upon the
Participant the right to continue to render services to the Corporation in his or her present
capacity or in any capacity. It is expressly understood that this Plan relates to the payment of
deferred compensation for the Participant’s services, payable after such Participant’s relationship
with the Corporation terminates, and is not intended to be a personal services contract.



12.04  Interests Not Transferable. No Participant or beneficiary under this
Plan shall have any power or right to transfer, assign, anticipate, hypothecate or otherwise
encumber any part of all of the interest otherwise distributable hereunder. No such Plan interest
shall be subject to seizure by any creditor of any such Participant or beneficiary, by any
proceeding at law or in equity, nor shall such interest be transferable by operation of law in the
event of bankruptcy, insolvency or death of the Participant or beneficiary. Any such attempted
assignment shall be void. No such right, benefit or interest shall be liable for or subject to the
debts, contracts, liabilities, or torts of the individual entitled to such benefits, including
claims for alimony, support, or separate maintenance by the spouse or ex-spouse of the Participant.
If a Participant should become insolvent or bankrupt, or attempt to anticipate, alienate, sell,
assign, pledge, encumber or charge any right to benefits under this Plan, such Participant’s
interest in the Plan, in the discretion of the Plan Administrator, shall be extinguished. In such
event, the Plan Administrator in its sole discretion may hold or apply the interest at issue, or
any part thereof, for the benefit of such Participant, such Participant’s spouse, or such
Participant’s beneficiary, in such manner as the Plan Administrator in its sole discretion may deem
proper. Notwithstanding the generality of the foregoing, the Corporation shall have the
unrestricted right to set off against or recover out of any payments or benefits becoming payable
to or for the benefit of a Participant, at the time such payments or benefits otherwise become
payable hereunder, any amounts owed or owing to the Corporation by such Participant.



12.05  Indemnification Against Third Party Claims. Each Participant, by
executing a Participation Agreement and becoming a Participant hereunder, acknowledges and agrees
to indemnify and hold the Corporation harmless from and against any damages, losses and expenses
(including without limitation litigation costs incurred by the Corporation in connection with the
administration of the Plan) arising from third-party claims disputes involving such Participant’s
Plan interest (including without limitation, tax liens and levies, creditors’ claims, garnishment
and bankruptcy proceedings, and proceedings in domestic relations court).



12.06  Hold Harmless of Corporate Agents. The Corporation, and its
directors, officers and employees, shall be free from liability, joint or several, for personal
acts, omissions, and conduct, and for the acts, omissions and conduct of duly appointed agents, in
the administration of this Plan so long as taken in good faith.


 


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12.07  Taxes; No Guarantee of Tax Consequences. The Corporation shall be
entitled to withhold and remit any federal, state and local taxes from any distribution (including
any interest earned) made hereunder which such Corporation believes are necessary, appropriate, or
required by relevant law, regulation or ruling. The Corporation makes no representation, warranty
or guarantee of any federal, state or local tax consequences of participation in the Plan to any
Participant or beneficiary thereof, or any personal representative or attorney-in-fact for any such
Participant or beneficiary.



ARTICLE THIRTEEN




13.01  Claim Procedure. A person who believes that he or she is being denied
a benefit to which he or she is entitled under the Plan (hereinafter referred to as a “Claimant”)
may file a written request for such benefit with the Corporation, setting forth his or her claim.
The request must be addressed to the Board.



13.02  Claim Decision. Upon receipt of a claim, the Corporation shall advise
the Claimant that a reply will be forthcoming within ninety (90) days and the Plan Administrator
shall, in fact, deliver such reply within such period. The Plan Administrator may, however, extend
the reply period for an additional ninety (90) days for reasonable cause. If the claim is denied
in whole or in part, the Plan Administrator shall adopt a written opinion, using language
calculated to be understood by the Claimant, setting forth:



i The specific reason or reasons for such denial;



ii Specific reference to pertinent provisions of this Plan on which such denial is based;



iii A description of any additional material or information necessary for the Claimant to
perfect his or her claim and an explanation why such material or such information is necessary;



iv Appropriate information as to the steps to he taken if the Claimant wishes to submit the
claim for review; and



v The time limits for requesting a review under subsection iii and for review under subsection
iv hereof.



13.03  Request for Review. Within sixty (60) days after receipt by the
Claimant of the written opinion described above, the Claimant may request in writing that the
Corporation review the Plan Administrator’s determination. Such request must be addressed to the
Secretary of the Corporation at its then principal place of business. The Claimant or his or her
duly authorized representative may, but need not, review the pertinent documents and submit issues
and comments in writing for consideration by the Corporation. If the Claimant does not request a
review of the determination within such sixty (60)-day period, he or she shall be barred and
estopped from challenging the determination.


 


13









 





13.04  Review of Decision. Within sixty (60) days after the Corporation’s
receipt of a request for review, it will review the Plan Administrator’s determination. After
considering all materials presented by the Claimant, the Corporation will render a written opinion,
written in a manner calculated to be understood by the Claimant, setting forth the specific reasons
for the decision and containing specific references to the pertinent provisions of this Plan on
which the decision is based. If special circumstances require that the sixty (60)-day time period
be extended, the Corporation will so notify the Claimant and will render the decision as soon as
possible, but no later than one hundred twenty (120) days after receipt of the request for review.



13.05  Effect of Reviewed Decision. A final decision by the Corporation,
made following a review conducted in accordance with the provisions of Paragraph 13.04 hereof,
shall be final, conclusive and binding on the Claimant, such Claimant‘s dependents
and/or beneficiaries, and such Claimants heirs and assigns.



ARTICLE FOURTEEN




14.01  Amendment. This Plan may be amended or terminated by the Corporation
at any time, without notice to or consent of any person. Any such amendment or termination shall
take effect as of the date specified therein and, to the extent permitted by law, may have
retroactive effect. However, no such amendment or termination shall reduce (i) the amount then
credited to the Participant’s Account, or (ii) his or her vested percentage under Paragraph 3.01.
If the Plan is terminated, benefits will be distributed in accordance with Article Six hereof. Any
other provision of this Plan to the contrary notwithstanding, the Plan may be amended by the
Corporation at any time, and retroactively if required to the extent that, in the opinion of the
Corporation, such amendment is needed to ensure that the Plan will be characterized as a plan
maintained principally for a select group of management or highly compensated employees, as
described in sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, or to conform the Plan to the
requirements of any applicable law, including ERISA and the Code. No such amendment shall be
considered prejudicial to any interest of a Participant or beneficiary hereunder.



ARTICLE FIFTEEN




15.01  Notice. Any notice, consent or demand required or permitted to be
given under the provisions of this Plan shall be in writing, and shall be signed by the party
giving or making the same. If such notice, consent or demand is mailed, it shall be sent by United
States certified mail, postage prepaid, addressed to the addressee’s last known address as shown on
the records of the Corporation. The date of such mailing shall be deemed the date of notice
consent or demand. Any person may change the address to which notice is to be sent by giving notice
of the change of address in the manner aforesaid.



ARTICLE SIXTEEN




16.01  Facility of Payment. If a distribution is to be made to a minor, or
to a person who is otherwise incompetent, then the Plan Administrator may, in its discretion, make
such distribution (i) to the legal guardian, or if none, to a parent of a minor payee with whom the
payee maintains his or her residence, or (ii) to the conservator or committee or, if none, to the
person having custody of an incompetent payee. Any such distribution shall fully discharge the
Plan Administrator, the Corporation and Plan from further liability on account thereof.


 


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ARTICLE SEVENTEEN




17.01  Board Authority. The Board shall have full power and authority to
interpret, construe, and administer this Agreement and the Board’s interpretations and
constructions thereof, and actions thereunder, including any valuation of a Participant’s Account
or the amount or recipient of any distribution to be made therefrom, shall be binding and
conclusive on all persons for all purposes, subject to the terms and conditions of Article Twelve.
No member of the Board shall be liable to any person for any action taken or admitted in connection
with the interpretation and administration of this Agreement unless attributable to their willful
misconduct or lack of good faith.



ARTICLE EIGHTEEN




18.01  Governing Law. The Plan and the rights and obligations of all persons
hereunder shall be governed by and construed in accordance with the laws of the State of Ohio,
other than its laws regarding choice of law, to the extent that such state law is not preempted by
federal law.



18.02  Entire Agreement. This Plan instrument, and Exhibits A, B and C
(incorporated herein by reference) represent the entire agreement and understanding between the
Corporation and those individuals having or acquiring an interest hereunder. Accordingly, all
prior or contemporaneous oral statements and writings hereby are superseded.



18.03  Transition Relief for Payment Election. A Participant may no later
than December 31, 2008, or such date as permitted under Code Section 409A, elect to change the time
or form of payment to a date otherwise permitted for such payment; provided, however, that no
amount subject to the election shall be otherwise payable in the year in which the election is made
and that such election shall not cause an amount to be paid in the year of election what would not
otherwise be payable in such year. This Paragraph 18.03 is intended to comply with Internal
Revenue Service Notice 2006-79, as modified and superseded by Internal Revenue Service Notice
2007-86, and any other guidance issued under Code Section 409A.



18.04  Pre-2005 Deferrals. Any amounts deferred and any earning thereon in
taxable years beginning before January 1, 2005 under the Plan shall be exempt from the application
of Section 409A of the Code.



18.05  Code Section 409A Compliance. This Plan is intended to be operated in
compliance with the provisions of Code Section 409A (including any rulings or regulations
promulgated thereunder). In the event that any provision of this Plan fails to satisfy the
provisions of Code Section 409A, such provision shall be reformed so as to comply with Code Section
409A and to preserve as closely as possible the intention of the Corporation in maintaining the
Plan; provided that, in the event it is determined not to be feasible to so reform a provision of
this Plan as it applies to a payment or benefit due to a Participant or his or her
Beneficiary(ies), such payment shall be made without complying with Code Section 409A.


 


15









 





IN WITNESS WHEREOF, the Corporation has executed this Plan as of the day and year above first
written.



	 	 	 	 	 
	 	KEITHLEY INSTRUMENTS, INC.

 	 
	 	By:  	/s/ Mark J. Plush
 	 
	 	 	Title:  Vice President and Chief Financial Officer 	 
	 	 	Date: December 31, 2008	 




 


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