Filed by Bowne Pure Compliance





Exhibit 10.3




KEITHLEY INSTRUMENTS, INC.




1997 DIRECTORS’ STOCK OPTION PLAN




(as Amended and Restated)




1. Purpose. The purpose of this 1997 Directors’ Stock Option Plan (the “Plan”) is to
enable Keithley Instruments, Inc. (the “Company”) to attract, retain and reward directors of the
Company and strengthen the mutuality of interest between such directors and the
Company‘s shareholders by offering such directors options (“Options”) to purchase shares
of the Company’s no par value Common Shares (“Common Shares”). This Plan replaces and supersedes
the Keithley Instruments, Inc. 1992 Directors’ Stock Option Plan (the “1992 Directors’ Option
Plan”), effective as of the date this Plan is adopted by the Board of Directors of the Company.
This Plan is amended and restated to conform to the requirements of Section 409A of the Internal
Revenue Code Section of 1986, as amended (the “Code”) and the regulations and guidance issued
thereunder, effective January 1, 2005.



2. Grant and Eligibility. All directors of the Company who are not employees of the
Company (“Outside Directors”) shall be granted Options under the Plan. From and after the Effective
Date, so long as the Plan remains in effect and has Common Shares available for grants hereunder,
each individual who qualifies as an Outside Director at the close of any annual meeting of the
shareholders of the Company (an “Optionee”) shall automatically be granted an Option to purchase
five thousand (5,000) Common Shares. In addition to the Options granted at the close of each annual
meeting of shareholders, the Board of Directors of the Company, in its sole discretion, may grant
additional Options under the Plan to newly-elected Outside Directors, as of the date of their
initial election and in such amounts as the Board shall specify. In the event Common Shares are
available for grants hereunder, but the number of such Shares is insufficient to provide an Outside
Director with an Option to purchase five thousand (5,000) Common Shares, such Outside Director
shall receive an Option to purchase the lesser of (i) the number of Common Shares remaining
available for grant under the Plan; or (ii) the number of Common Shares being granted to any other
Outside Director concurrently entitled to a grant of Options hereunder, so that Options are granted
to all such Outside Directors on a pro rata basis. The maximum aggregate number of Common
Shares available for issuance under the Plan is two hundred thousand (200,000); such Common Shares
may be treasury shares or authorized but unissued shares or a combination of the foregoing. If an
Option granted under the Plan shall expire, terminate or become forfeited for any reason other than
its exercise, the shares subject to, but not delivered under, such Option shall be available for
the grant of other Options pursuant to the Plan.


 


 









 





3. Term of Option, Exercise and Transferability. The term of each Option granted under
the Plan shall be ten years. An Optionee who has continuously served as a director of the Company
from the date of the grant of an Option through the date of vesting may first exercise such Option
after the date of vesting for all or part of the number of Common Shares in accordance with the
Plan. For this purpose, the “date of vesting” for any Option granted under the Plan shall be that
date which is six months and one day after the later to occur of: (i) the effective date of the
Plan; or (ii) the date such Optionee is elected as a director; or (iii) the date such Option is
granted. An Outside Director who resigns or is removed before the date of vesting for
any Options held by such Director shall forfeit such Options, unless otherwise approved by the
Board of Directors.



No Option shall be transferable by the Optionee other than by will or the laws of descent and
distribution. Options shall be exercisable during the Optionee’s lifetime only by an Optionee or by
his or her legal guardian or legal representative. Notwithstanding the first and second sentences
of this paragraph or the preceding paragraph, if any Optionee dies while holding unexercised
Options, any Option held by such Optionee at the time of his or her death shall thereafter be
exercised, to the extent such Option was exercisable at the time of death, by the estate of the
Optionee (acting through its fiduciary), within a period of one year from the date of such death
regardless of the term of the Option remaining at the Optionee’s death.



4. Option Price and Payment. The option price for each Common Share purchasable under
an Option shall be the fair market value of a Common Share on the date such Option is granted in
accordance with Section 2; for this purpose, “fair market value” shall be the average of the
highest and lowest price for a Common Share, as quoted on the New York Stock Exchange (or if Common
Shares are not then traded on such Exchange, on any other exchange on which Common Shares are then
traded) on the date preceding the date of grant. The option price shall be payable (i) in cash;
(ii) by check acceptable to the Company; (iii) by delivery of shares of the same class of stock
subject to such Option; or (iv) a combination of the above, so long as the sum of the fair market
value of any such cash, check or Common Shares equals the option price. The Company shall have the
right to require an Optionee who is entitled to receive Common Shares pursuant to the exercise of
an Option to pay to the Company the amount of any taxes which the Company is required to withhold
with respect to such Common Shares. Such amount shall be payable (i) in cash; (ii) by check
acceptable to the Company; (iii) by delivery of shares of the same class of stock subject to the
Option; or (iv) a combination of the above.




5. Change In Control.



(a) Impact of Event. In the event of a “Change in Control” as defined in Section 5(b),
all Options granted under the Plan shall vest upon the later to occur of (i) such Change in
Control; or (ii) six months and one day after the date of grant of such Options.


 


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(b) Definition of Change in Control. For purposes of Section 5(a), a “Change in 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 Securities Exchange Act of 1934 (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). In making any such
determination, transfers made by a person to an affiliate of such person (as determined by the
Board of Directors of the Company), 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.



6. Adjustments. (a) If, at any time subsequent to the date of adoption of the Plan,
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 Option (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; and (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 an Option shall remain the same as
immediately prior to such event.



(b) No adjustment pursuant to this Section 6 shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in such number or price; however, any
adjustments which by reason of this Section 6 are not required to be made shall be carried forward.
Calculations under this Section 6 shall be made to the nearest cent or to the nearest full share,
as the case may be. Anything in this Section 6 to the contrary notwithstanding, the Company shall
be entitled to make such reductions in the option price, in addition to those required by this
Section 6, as it, in its discretion shall determine to be advisable in order that any stock
dividends, subdivisions or splits of shares, distribution of rights to purchase stock or
securities, or a distribution of securities convertible into or exchangeable for stock hereafter
made by the Company to its shareholders shall not be taxable.



7. Other Terms. Each grant of Options hereunder shall be evidenced by a Shares Option
Agreement in substantially the form attached hereto as Exhibit A. When exercisable in accordance
with Section 3, Options may be exercised, in whole or in part, by giving written notice of exercise
to the Company specifying the number of Common Shares to be purchased. Such notice shall be accompanied by
payment of the option price of the Common Shares for which the Option is exercised in accordance
with Section 4.



8. Amendment. The Board of Directors of the Company (the “Board”) may at any time
amend, modify, suspend or terminate this Plan, except with respect to Options already granted.


 


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9. Termination of Plan. The Plan shall be terminated and no further Options shall be
granted hereunder as of the tenth (10th) anniversary of the date this Plan is adopted by the Board.
Options granted prior to such tenth anniversary may extend beyond that date.



10. Compliance with Law and Approval of Regulatory Body. No Option shall be
exercisable and no Common Shares will be delivered under this Plan except in compliance with all
applicable federal and state laws and regulations, including, without limitation, compliance with
applicable withholding tax requirements, if any, and with the rules of all domestic stock exchanges
on which the Company’s stock may be listed. Any stock certificates issued to evidence Common Shares
as to which an Option is exercised may bear such legends and statements as the Company shall deem
advisable to assure compliance with federal and state laws and regulations; the Company may, if it
deems appropriate, condition its grant of any Options 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.”



No Option shall be exercisable, and no stock will be delivered under this Plan, until the Company
has obtained such consent or approval from the regulatory body, federal or state, having
jurisdiction over such matters as the Company may deem advisable. In the case of the exercise of an
Option by a person or estate acquiring the right to exercise such Option by bequest or inheritance,
the Company may require reasonable evidence as to the ownership of such Option and may require such
consents and releases of taxing authorities as the Committee may deem advisable.



11. Effective Date. The original effective date of the Plan is February 15, 1997. The
effective date for this amended and restated plan document is January 1, 2005.



12. Governing Law. The Plan, all options and actions taken thereunder and any
agreements relating thereto shall be governed by and controlled in accordance with Ohio law.



13. Code Section 409A Compliance. This Plan is intended to be operated in compliance
with the provisions of Code Section 409A (including any applicable rulings or regulations
promulgated thereunder). In the event that any provisions of this Plan fails to satisfy the
provisions of Code Section 409A, then such provision shall be reformed so as to comply with Code
Section 409A and to preserve as closely as possible the intention of the Company in maintaining the
Plan.


 


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IN WITNESS WHEREOF, the Board of Directors of the Company has caused this instrument to be
executed by its duly authorized designee this 31st day of December, 2008.



	 	 	 	 	 
	 	KEITHLEY INSTRUMENTS, INC.

 	 
	 	By:  	/s/ Mark J. Plush
 	 
	 	 	Title:  	Vice President and Chief Financial Officer 	 




 


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