KEITHLEY INSTRUMENTS INC, DEF 14A, 1999-12-30

KEITHLEY INSTRUMENTS INC
DEF 14A, 1999-12-30
INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS

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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934

Filed by the registrant [X]

Filed by a party other than the registrant [ ]

Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to sec.
240.14a-11(c) or sec.240.14a-12

KEITHLEY INSTRUMENTS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

KEITHLEY INSTRUMENTS, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:________

(2) Aggregate number of securities to which transaction applies:___________

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):_____________

(4) Proposed maximum aggregate value of transaction:_______________________

(5) Total fee paid:________________________________________________________

[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount Previously Paid:________________________________________________

(2) Form, Schedule or Registration Statement No.:__________________________

(3) Filing Party:__________________________________________________________

(4) Date Filed:____________________________________________________________

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<TABLE>
<S> <C>
KEITHLEY LOGO KEITHLEY INSTRUMENTS, INC.
28775 Aurora Road
Solon, Ohio 44139
(440) 248-0400
Fax (440) 248-6168
</TABLE>

December 30, 1999

TO THE SHAREHOLDERS OF KEITHLEY INSTRUMENTS, INC.

This year's Annual Meeting of Shareholders of Keithley Instruments, Inc.
will be held at 12:00 Noon (EST), Saturday, February 12, 2000, at our corporate
headquarters, 28775 Aurora Road, Solon, Ohio.

In addition to acting on the matters outlined in the Proxy Statement, we
look forward to giving you a progress report on the first quarter which will end
on December 31, 1999. As in the past, there will be an informal presentation on
the Company's businesses.

We hope that you are planning to attend the Annual Meeting personally, and
we look forward to seeing you. Whether or not you expect to attend in person,
the return of the enclosed Proxy as soon as possible would be greatly
appreciated and will ensure that your shares will be represented at the Annual
Meeting. If you do attend the Annual Meeting, you may withdraw your Proxy should
you wish to vote in person.

On behalf of the Directors and management of Keithley Instruments, Inc., we
would like to thank you for your continued support and confidence in the
Company.

Sincerely yours,

/s/ Joseph P. Keithley
JOSEPH P. KEITHLEY
Chairman, President and Chief
Executive Officer
<PAGE> 3

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<TABLE>
<S> <C>
KEITHLEY LOGO KEITHLEY INSTRUMENTS, INC.
28775 Aurora Road
Solon, Ohio 44139
(440)248-0400
Fax (440) 248-6168
</TABLE>

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Keithley
Instruments, Inc. will be held at the Company's corporate headquarters, 28775
Aurora Road, Solon, Ohio, on Saturday, February 12, 2000, at 12:00 Noon (EST),
for the following purposes:

(1) To elect eight members of the Board of Directors;

(2) To vote on a proposal to amend the Keithley Instruments, Inc. 1992
Stock Incentive Plan to increase the number of shares subject to grant from
1,900,000 to 2,700,000;

(3) To vote on a proposal to approve the Board of Directors' selection
of PricewaterhouseCoopers LLP as independent accountants of the Company;
and

(4) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.

Only holders of Common Shares and Class B Common Shares of record at the
close of business on Tuesday, December 14, 1999, are entitled to notice of and
to vote at the Annual Meeting or any adjournment or postponement thereof.

By Order of the Board of Directors,

/s/ John M. Gherlein
JOHN M. GHERLEIN
Secretary

December 30, 1999

PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY.
A RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
<PAGE> 4

KEITHLEY INSTRUMENTS, INC.
28775 Aurora Road
Solon, Ohio 44139

PROXY STATEMENT
--------------------------------------

ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 12, 1999

GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Keithley Instruments, Inc. (the "Company")
to be used at the Annual Meeting of Shareholders of the Company to be held on
February 12, 2000, and any postponements or adjournments thereof. The time,
place and purposes of the Annual Meeting are stated in the Notice of Annual
Meeting of Shareholders which accompanies this Proxy Statement.

The expense of soliciting proxies, including the cost of preparing,
assembling and mailing the proxy materials will be borne by the Company. In
addition to solicitation of proxies by mail, solicitation may be made personally
and by telephone, and the Company may pay persons holding shares for others
their expenses for sending proxy materials to their principals. No solicitation
will be made other than by Directors, officers and employees of the Company.

Any person giving a proxy pursuant to this solicitation may revoke it by
giving notice to the Company in writing or in open meeting. All validly executed
Proxies received by the Board of Directors of the Company pursuant to this
solicitation will be voted at the Annual Meeting, and the directions contained
in such Proxies will be followed in each instance. If no directions are given,
the Proxy will be voted FOR the election of the nominees listed in the Proxy and
FOR the proposals set forth in the Notice.

The close of business on December 14, 1999 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the meeting. This Proxy Statement and the accompanying President's letter,
notice and Proxy, together with the Company's annual report to shareholders for
the fiscal year ended September 30, 1999, are first being sent to shareholders
on or about December 30, 1999.

VOTING RIGHTS

As of the close of business on December 14, 1999, there were outstanding
4,354,386 Common Shares, without par value, of the Company (the "Common Shares")
and 2,692,028 Class B Common Shares, without par value, of the Company (the
"Class B Common Shares"). The holders of the outstanding Common Shares on that
date will be entitled to one vote for each share held and the holders of the
outstanding Class B Common Shares on that date will be entitled to ten votes for
each share held. Abstaining votes and broker non-votes will not count in favor
of, or against, election of a nominee for Director; however, such votes will
have the effect of a vote against approval of any other matter.

The Ohio Revised Code, as it applies to the Company, provides that if
notice in writing is given by any shareholder to the President, a Vice President
or the Secretary of the Company not less than 48 hours before the time fixed for
holding the meeting that he or she desires the voting at such election to be
cumulative, and an announcement of the giving of such notice is made upon the
convening of the meeting by the Chairman or the Secretary or by or on behalf of
the shareholder giving such notice, then each shareholder shall have cumulative
voting rights in the election of Directors, enabling him or her to give one
nominee for Director as many votes as is equal to the number of Directors to be
elected multiplied by the number of shares in respect of which such shareholder
is voting, or to distribute his or her votes on the same principle among two or
more nominees, as he or she sees fit.

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PRINCIPAL SHAREHOLDERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following persons are known to the Company to be the beneficial owners
of more than 5% of the voting securities of the Company as of December 14, 1999:

<TABLE>
<CAPTION>
CLASS B
COMMON SHARES COMMON SHARES(1)
------------------------ ------------------------
NUMBER OF NUMBER OF PERCENTAGE
SHARES SHARES OF TOTAL
BENEFICIALLY PERCENT BENEFICIALLY PERCENT VOTING
NAME OF BENEFICIAL OWNER OWNED OF CLASS OWNED OF CLASS POWER
------------------------ ------------ -------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C>
Joseph P. Keithley..................... 198,943(2) 4.4% 2,649,586(3) 98.4% 85.0%
First Pacific Advisors, Inc.(4)........ 674,000 15.5% -- -- 2.2%
Fleet Financial Group(5)............... 304,400 7.0% -- -- 1.0%
</TABLE>

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(1) Pursuant to the Company's Amended Articles of Incorporation, all holders of
Class B Common Shares are entitled to convert any or all of their Class B
Common Shares into Common Shares at any time, on a share-for-share basis.

(2) Includes Common Shares represented by options exercisable on or before
February 12, 2000, by Joseph P. Keithley (126,500 shares). Such shares are
deemed to be outstanding for the purpose of computing the percentage of
shares outstanding owned by Mr. Keithley and his percentage of total voting
power of the Company's capital stock, but are not deemed outstanding for the
purpose of computing the percentage of shares held by or total voting power
of any other person. Also includes 16,352 shares of restricted stock which
are subject to certain vesting requirements, 11,500 shares owned by a
partnership of which Joseph P. Keithley serves as the general partner and
1,224 shares owned by Joseph P. Keithley's wife. Joseph P. Keithley
disclaims beneficial ownership with respect to the shares owned by his wife.

(3) Includes 2,584,586 shares owned by two partnerships of which Joseph P.
Keithley serves as the general partner.

(4) Derived from information set forth on a Schedule 13G of First Pacific
Advisors, Inc. dated February 5, 1999.

(5) Derived from information set forth on a Schedule 13G of Fleet Financial
Group dated February 12, 1999.

The business address of Mr. Keithley is 28775 Aurora Road, Solon, Ohio
44139. First Pacific Advisors, Inc.'s address is 11400 West Olympic Boulevard,
Suite 1200, Los Angeles, California 90064; and Fleet Financial Group's address
is One Federal Street, Boston, Massachusetts 02110.

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SECURITY OWNERSHIP OF MANAGEMENT

The beneficial ownership of Common Shares and Class B Common Shares by each
of the Directors, each of the executive officers named in the Summary
Compensation Table and by all executive officers and Directors of the Company as
a group on December 14, 1999, is set forth in the table below:

<TABLE>
<CAPTION>
CLASS B
COMMON SHARES COMMON SHARES(1)
-------------------------- -----------------------------
NUMBER OF NUMBER OF PERCENTAGE
SHARES SHARES OF
NAME AND ADDRESS BENEFICIALLY PERCENT BENEFICIALLY PERCENT TOTAL VOTING
OF BENEFICIAL OWNER OWNED(2) OF CLASS OWNED OF CLASS POWER(2)
------------------- ------------ -------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C>
Brian R. Bachman.......................... 20,784 * -- -- *
James T. Bartlett......................... 55,365(3) 1.3% -- -- *
Dr. Arden L. Bement, Jr................... 31,080 * -- -- *
James B. Griswold......................... 51,139(4) 1.2% -- -- *
Leon J. Hendrix, Jr....................... 36,982 * -- -- *
William J. Hudson, Jr..................... 10,849 * -- -- *
Joseph P. Keithley........................ 198,943(5) 4.4% 2,649,586(6) 98.4% 85.0%
R. Elton White............................ 80,481(7) 1.8% -- -- *
David H. Patricy.......................... 40,440 * -- -- *
Mark J. Plush............................. 72,091(8) 1.6% -- -- *
Gabriel A. Rosica......................... 54,080 1.2% -- -- *
D. Sherman Willows........................ 18,022 * -- -- *
All officers and Directors as a group (13
persons)................................ 733,388 15.3 2,649,586 98.4% 85.9%
</TABLE>

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*Less than 1%

(2) Includes Common Shares represented by options exercisable on or before
February 12, 2000 by Brian R. Bachman (15,000 shares), James T. Bartlett
(18,000 shares), Dr. Arden L. Bement, Jr. (15,600 shares), James B.
Griswold (18,000 shares), Leon J. Hendrix, Jr. (18,000 shares), William J.
Hudson, Jr. (5,000 shares), Joseph P. Keithley (126,500 shares), R. Elton
White (16,800 shares), David H. Patricy (35,140 shares), Mark J. Plush
(50,162 shares), Gabriel A. Rosica (51,200 shares), D. Sherman Willows
(9,750 shares) and all officers and Directors as a group (429,728 shares).
Such shares are deemed to be outstanding for the purpose of computing the
percentage of shares outstanding owned by each of the individuals and all
officers and Directors as a group and their percentage of total voting
power of the Company's capital stock, respectively, but are not deemed
outstanding for the purpose of computing the percentage of shares held by
or total voting power of any other person. Also includes restricted shares
which are subject to certain vesting requirements for Mr. Keithley (16,352
shares), Mr. Plush (11,918 shares) and all officers as a group (40,301
shares). Includes shares held under the Keithley Instruments, Inc. 1996
Outside Directors Deferred Stock Plan for the benefit of Mr. Bachman (5,784
shares), Mr. Bartlett (9,815 shares), Dr. Bement (8,280 shares), Mr.
Griswold (10,424 shares), Mr. Hendrix (10,982 shares), Mr. Hudson (849
shares), Mr. White (9,681 shares) and Mr. Rosica (880 shares), as to which
such persons do not have current voting rights.

(3) Includes 10,500 shares owned by Mr. Bartlett's children and 2,050 shares
owned by his wife. Mr. Bartlett disclaims beneficial ownership with respect
to the shares owned by his wife.

(4) Includes 1,125 shares owned by a trust of which Mr. Griswold acts as
co-executor.

(5) Includes 11,500 shares owned by a partnership for which Mr. Keithley serves
as the general partner and 1,224 shares owned by his wife. Mr. Keithley
disclaims beneficial ownership with respect to the shares owned by his
wife.

(6) Includes 2,584,586 shares owned by two partnerships for which Mr. Keithley
serves as the general partner.

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(7) Includes 27,000 shares owned by a partnership for which Mr. White serves as
the general partner.

(8) Includes 2,180 shares owned by Mr. Plush's children and 804 shares owned by
his wife. Mr. Plush disclaims beneficial ownership with respect to the
shares owned by his wife.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act"),
as amended, requires the Company's directors, executive officers and holders of
more than 10% of the Company's Common Shares to file with the Commission initial
reports of ownership and reports of changes in beneficial ownership of Common
Shares. The Company believes that during the fiscal year ended September 30,
1999, its officers, Directors and holders of more than 10% of the Company's
Common Shares complied with all Section 16(a) filing requirements, with the
following exception. Mark J. Plush, an officer, was late reporting one
transaction with respect to the acquisition of 1,438 shares upon the exercise of
stock options.

ELECTION OF DIRECTORS

At the Annual Meeting, or any postponements or adjournments thereof, Common
Shares and Class B Common Shares represented by proxies for the election as
Directors of the eight nominees named below, unless the shareholder, by so
indicating on the Proxy, instructs that such authority to vote for any one or
more nominees is withheld.

Each of the Directors to be elected at the meeting is to serve until the
next Annual Meeting and until his successor shall have been duly elected and
qualified. Pursuant to the Company's Amended Articles of Incorporation,
one-fourth (calculated to the nearest whole number) of the number of authorized
Directors, which presently equals two Directors, is entitled to be elected by
the Common Shares voting separately as a class. Messrs. Bartlett and Hendrix
have been nominated as the Directors to be so elected by the holders of the
Common Shares of the Company. The remaining six nominees are to be elected by
the holders of the Common Shares and the Class B Common Shares voting together.
The two nominees receiving the greatest number of votes of the Common Shares
voting separately as a class and the six other nominees receiving the greatest
number of votes of the Common Shares and the Class B Common Shares voting
together without regard to class will be elected as Directors.

If cumulative voting is in effect, the persons named in the Proxies will
have full discretion and authority to vote for any one or more of the eight
nominees. In the event of cumulative voting, the persons named in the Proxies
will vote the shares represented by each Proxy so as to maximize the number of
the Company's nominees that will be elected to the Board.

Each of the nominees has indicated his willingness to serve as a Director,
if elected. In addition, each of the nominees is presently a member of the Board
of Directors. If any nominee at the time of election is unable or unwilling to
serve or is otherwise unavailable for election (which contingency is not now
contemplated or foreseen), it is intended that the shares represented by the
Proxy will be voted for each substitute nominee as may be named by the Board of
Directors.

NOMINEES FOR ELECTION

Set forth below is certain information furnished with respect to each
person nominated for election as a Director.

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<TABLE>
<CAPTION>
NAME AND AGE
OF NOMINEE BUSINESS EXPERIENCE DIRECTOR SINCE
------------ ------------------- --------------
<S> <C> <C>
Joseph P. Keithley Chairman of the Board of Directors since 1991, Chief 1986
Age 51 Executive Officer since November 1993 and President
since May 1994. Director of Brush Wellman, Inc., a
manufacturer of engineered materials supplying
worldwide markets with beryllium products, alloy
products, ceramic products, precious metal products
and engineered material systems.
Brian R. Bachman Senior Vice President and Group Executive, Eaton 1996
Age 54 Corporation since January 1996, responsible for
hydraulics, aerospace, commercial controls, Navy
controls and semiconductor equipment operations.
Previously Vice President, Standard Products
Business Group of Philips Semiconductor, one of the
world's largest semiconductor manufacturers, for
Philips Electronics N.V., from 1991 through 1995.
James T. Bartlett(1) Managing Director since 1986 of Primus Venture 1983
Age 62 Partners Inc., the manager of Primus Capital Fund
and Primus Capital Funds II, III and IV, venture
capital limited partnerships. Director of Oglebay
Norton Company, a provider of products and services
to the steelmaking and related industries, and
Lamson & Sessions Co., a provider of products for
the construction and telecommunications industries.
Dr. Arden L. Bement, Jr. Head of School of Nuclear Engineering at Purdue 1988
Age 67 University since 1998. Previously Professor of
Engineering and Director of Midwest Supercon-
ductivity Consortium at Purdue University from 1993
to 1998.
James B. Griswold(2) Partner in the law firm of Baker & Hostetler LLP 1989
Age 53 since 1982.
Leon J. Hendrix, Jr.(1) Principal, Clayton, Dubilier & Rice, Inc., a private 1990
Age 58 investment firm since 1993. Chairman of Remington
Arms Co., a manufacturer and marketer of firearms
and ammunition. Director of NACCO Industries, Inc.,
a holding company with subsidiaries that
manufacture forklift trucks, small electrical
appliances, mine and market lignite coal and
operate specialty retail stores, Cambrex Corp., a
manufacturer of specialty chemicals and commodity
chemical intermediates, and Riverwood International
Corp., a leading global provider of paperboard and
paperboard packaging systems.
</TABLE>

5
<PAGE> 9

<TABLE>
<CAPTION>
NAME AND AGE
OF NOMINEE BUSINESS EXPERIENCE DIRECTOR SINCE
------------ ------------------- --------------
<S> <C> <C>
William J. Hudson, Jr. Private Investor. Former President and Chief Exec- 1999
Age 65 utive Officer of AMP, Inc., a leading manufac-
turer of electrical, electronic, fiber-optic and
wireless interconnection devices from 1993 to 1998.
Director of Carpenter Technology Corporation, a
manufacturer, fabricator, and distributor of
specialty metals, and The Goodyear Tire & Rubber
Company, an international company that develops,
manufactures, distributes and sells tires, and
rubber products and provides automotive repair
services. Member of the Executive committee of the
U.S. Council for International Business.
R. Elton White Private Investor. Director of Kohl's Corporation, 1994
Age 57 which owns specialty department stores.
</TABLE>

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(1) Elected by holders of Common Shares only.

(2) Baker & Hostetler LLP served as general outside legal counsel to the Company
during the fiscal year ended September 30, 1999 and is expected to render
services in such capacity to the Company in the future.

INFORMATION REGARDING MEETINGS AND
COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation and Human Resources Committee and a Strategy Committee. The Board
of Directors does not have a nominating committee. The Executive Committee
possesses and may exercise all of the powers of the Board of Directors, to the
extent permitted by law, during intervals between meetings of the Board of
Directors. All actions of the Executive Committee are reported to the Board of
Directors at its first meeting following such action or actions. The Audit
Committee reviews the activities of the Company's independent accountants and
various Company policies and practices. The Compensation and Human Resources
Committee approves the grant of stock options and reviews and determines the
compensation of certain key executives. The Strategy Committee reviews the
appropriateness of current business and technical strategies and explores new
business possibilities.

Set forth below is the current membership of each committee of the Board,
with the number of meetings held during the fiscal year ended September 30,
1999, in parentheses.

<TABLE>
<CAPTION>
EXECUTIVE AUDIT COMPENSATION AND HUMAN STRATEGY
COMMITTEE (NONE) COMMITTEE (TWO) RESOURCES COMMITTEE (THREE) COMMITTEE (FOUR)
---------------- --------------- --------------------------- ----------------
<S> <C> <C> <C>
Joseph P. Keithley James T. Bartlett R. Elton White Brian R. Bachman
(Chairman) (Chairman) (Chairman) (Chairman)
James T. Bartlett James B. Griswold Brian R. Bachman James T. Bartlett
Leon J. Hendrix, Jr. R. Elton White James B. Griswold Dr. Arden L. Bement, Jr.
Leon J. Hendrix, Jr. James B. Griswold
Leon J. Hendrix, Jr.
William J. Hudson, Jr.
Joseph P. Keithley
R. Elton White
</TABLE>

The Board of Directors held seven meetings during the fiscal year ended
September 30, 1999. During that fiscal year, no incumbent Director attended
fewer than 75% of the aggregate of (i) the total number of

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<PAGE> 10

meetings of the Board of Directors held during the period he served as a
Director and (ii) the total number of meetings held by committees of the Board
on which he served, during the periods that he served.

Directors who are not employees of the Company receive an annual fee of
$10,000 paid in five installments. Unless Chairman of a committee, such
Directors receive an additional $1,000 for each Board meeting attended and $575
for each committee meeting attended, except for Executive Committee meetings for
which no additional fees are paid. Each Committee Chairman who is not an
employee of the Company is paid $1,150 for presiding as Chairman at a committee
meeting. Directors may defer their fees under the Keithley Instruments, Inc.
1996 Outside Directors Deferred Stock Plan.

EXECUTIVE COMPENSATION AND BENEFITS

The Company's compensation and benefit programs are designed to enable the
Company to attract, retain and motivate the best possible employees to operate
and manage the Company at all levels.

In general, all U.S. based employees receive a base salary, participate in
a Company supported retirement savings plan, are provided with medical and other
welfare benefit coverages and participate in a Company funded pension plan.
Employees outside of the United States are similarly covered by comprehensive
compensation and benefit programs.

EMPLOYMENT AGREEMENTS

Employment Agreement with Named Executive Officers of the Company. Pursuant
to an employment agreement which was entered into on September 26, 1988, Joseph
P. Keithley is required to be compensated at the rate of at least $120,000 per
year initially for a five-year period which ended September 26, 1993 and is
automatically renewable for one-year periods thereafter. Pursuant to an
employment agreement which was entered into on April 7, 1994, Mr. Plush is
required to be compensated at the rate of at least $109,800 per year. Mr.
Plush's agreement initially covered a three-year period and is automatically
renewable for one-year periods thereafter.

EMPLOYEE BENEFIT PLANS

Retirement Plans. The Company's United States pension plan provides
retirement benefits to eligible participants who terminate employment at or
after age 65, or who terminate employment before age 65 with at least five years
of service. Benefits commence after termination of employment, but generally not
before age 55. Retirement benefits are computed on the basis of pension credits
for each year of the employee's service. Generally, an employee's pension
credits will be equal to the sum of (i) 0.9% of the employee's high five-year
average annual compensation, not in excess of the employee's Social Security
"covered compensation" (as defined by Section 401(l)(5)(E) of the Internal
Revenue Code) as of September 30, 1999, plus 1.5% of such average annual
compensation in excess of "covered compensation," with such sum multiplied by
the employee's years of credited service (up to 30 years) through September 30,
1999; plus (ii) 1.2% of the employee's annual compensation for each plan year
beginning on or after October 1, 1999. The employee's annual retirement benefit,
when paid as a life annuity commencing at age 65, will equal the total of the
pension credits he has earned. If the individuals listed in the compensation
table were to continue to be employees until their attainment of age 65 at the
rate of compensation they received during fiscal 1999, their annual retirement
benefits would be as follows: Joseph P. Keithley, $83,034; Mr. Rosica, $18,083;
Mr. Patricy, $68,769 Mr. Plush, $56,221 and Mr. Willows, $15,005.

Keithley Retirement Savings Trust and Plan. Effective January 1, 1988, the
Company implemented the Keithley Instruments, Inc. Retirement Savings Trust and
Plan (the "Plan"). The Plan permits all eligible employees of the Company and
its subsidiaries who elect to participate in the Plan to make payroll deductions
for contribution by the Company or subsidiary to the Plan. Payroll deductions
cannot be less than 1% or more than 15% of a participant's total compensation
(excluding certain fringe benefits and some types of incentive compensation) for
the Plan year. The Plan qualifies under Sections 401(a), 401(k) and 501(a) of
the Internal Revenue Code.

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<PAGE> 11

The Plan provides for matching contributions at the Company's discretion
which will not exceed 6% of a participant's compensation during the Plan year.
All contributions under the Plan may be invested at the election of the
participant in a variety of investment options. Participants' contributions are
fully vested at all times. A participant's interest in the Company's
contributions is fully vested after three years of eligible service with the
Company.

Keithley Instruments, Inc. Supplemental Deferral Plan. This Plan was
implemented effective September 30, 1999, and permits all eligible employees and
Directors of the Company to defer a minimum of $2,500 and up to a maximum of 100
percent of their eligible annual compensation. To be eligible for participation
in this Plan, an employee must be compensated at a minimum defined annual salary
level and be eligible to participate in the Company's annual bonus program. The
Plan is a non-qualified plan and as such, participants are unsecured general
creditors of the Company. Amounts deferred under this plan may be invested at
the discretion of the participant in a variety of investment options.
Participants' contributions are fully vested at all times. A participant's
interest in any Company contributions is fully vested after three years of
completed Plan participation.

1999 Annual Senior Manager Extra Compensation Plan. This plan provides
additional compensation to executive officers based on consolidated corporate
performance for the fiscal year ended September 30, 1999. Individual objectives
also may be established. Extra compensation for the group of senior managers,
including the executive officers of the Company, may not exceed 100% of each
senior manager's October 1, 1998, base salary unless approved by the Company's
Board of Directors. The additional compensation is based upon earnings before
taxes and return on assets before any deduction for senior manager extra
compensation.

1984 Stock Option Plan. The 1984 Stock Option Plan expired by its terms on
February 11, 1994. All options outstanding at the time of termination of this
plan continue in full force and effect in accordance with and subject to their
terms. The Plan provided for the issuance of "incentive stock options," within
the meaning of Section 422 of the Internal Revenue Code, and nonqualified stock
options, for federal income tax purposes, to key employees.

1992 Stock Incentive Plan. The 1992 Stock Incentive Plan provides for the
issuance of "incentive stock options," within the meaning of Section 422 of the
Internal Revenue Code, nonqualified stock options, for federal income tax
purposes, and restricted stock to key employees. The primary features of the
plan are summarized below.

The 1992 Stock Incentive Plan is administered by the Compensation and Human
Resources Committee. Incentive stock options and nonqualified stock options may
be granted for terms of up to ten years. The option price of an incentive stock
option is not less than 100% of the fair market value of the Common Shares on
the date the option is granted. In the case of a participant owning more than
10% of the voting power of the Company's voting securities, the term of the
incentive stock option must be no more than five years and the option price must
be at least 110% of the fair market value of the Common Shares on the date the
option is granted. The option price for Common Shares under a nonqualified stock
option is determined by the Committee on the date such option is granted. The
Committee may, at its discretion, grant stock appreciation rights that give the
employee the right to be paid an amount equal to the excess of the market price
of the Common Shares at the date of the exercise of the option over the option
price. Payment of the stock appreciation right may be made in cash, Common
Shares of the Company, or a combination thereof. The 1992 Stock Incentive Plan
will expire by its terms on February 8, 2002. All options outstanding at the
time of termination of this plan will continue in full force and effect in
accordance with and subject to their terms. The 1992 Stock Investment Plan has
been amended to increase the number of shares subject to the Plan, subject to
shareholder approval.

1992 Directors' Stock Option Plan. On February 15, 1997, the Company's
Board of Directors terminated the 1992 Directors' Stock Option Plan. Prior to
its termination, each individual who qualified as a nonemployee Director at the
close of any annual meeting of the shareholders of the Company automatically was
granted an option to purchase 600 Common Shares. The option price for each
Common Share purchasable under an option was the fair market value of a Common
Share on the date such option was

8
<PAGE> 12

granted. All options currently outstanding will continue in full force and
effect in accordance with and subject to their terms. The 1992 Directors' Stock
Option Plan has been replaced by the 1997 Directors' Stock Option Plan.

1997 Director's Stock Option Plan. The 1997 Director's Stock Option Plan
provides for the issuance of stock options to nonemployee Directors. At the
close of each annual meeting of the shareholders of the Company, nonemployee
Directors are automatically granted an option to purchase 5,000 Common Shares.
The option price for each Common Share purchasable under an option is the fair
market value of a Common Share on the date such option is granted as defined by
the plan. The Board of Directors may, in its sole discretion, grant additional
options under the plan for newly-elected nonemployee Directors. The 1997
Director's Stock Option Plan will expire by its terms on February 15, 2007. All
options outstanding at the time of termination of this plan will continue in
full force and effect in accordance with and subject to their terms.

1993 Employee Stock Purchase Plan. The 1993 Employee Stock Purchase Plan
offers eligible employees of the Company the opportunity to acquire Common
Shares at a discount and without incurring any material acquisition costs.
Eligible employees can only participate in the Plan on a year-to-year basis,
must enroll prior to the commencement of each Plan year and must authorize
monthly payroll deductions. The purchase price of the Common Shares is 85
percent of the lower of the market price at the beginning or ending of the Plan
year, which is on a calendar basis. Generally, all employees of the Company are
eligible to participate in the Plan; however, temporary employees, employees who
are customarily employed for less than five months in any calendar year, and
employees who directly or indirectly own more than a 5% interest in the Company
are not eligible to participate.

The following table sets forth information concerning the compensation of
the Chief Executive Officer of the Company and the four other Named Executive
Officers of the Company as of September 30, 1999, during the fiscal years ended
September 30, 1999, 1998 and 1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------- AWARDS
---------------------- ALL OTHER
RESTRICTED STOCK COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) STOCK $ OPTIONS # SATION(1)
--------------------------- ---- ---------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Keithley 1999 303,225 360,000 0 72,000 2,908
Chairman of the Board, 1998 284,500 48,500 0 63,000 2,436
President and 1997 274,353 0 147,168 60,000 2,124
Chief Executive Officer
Gabriel A. Rosica 1999 230,652 200,000 0 44,000 2,870
Senior Vice President and 1998 223,932 25,000 0 21,000 2,490
General Manager, Semiconductor 1997 216,750 136,880 0 25,000 2,197
David H. Patricy (2) 1999 168,933 115,000 0 26,500 3,007
Vice President and General 1998 157,875 24,000 0 26,500 2,493
Manager, Test and Measurement 1997
Mark J. Plush 1999 148,671 110,000 0 20,000 2,596
Vice President and 1998 127,957 13,000 0 17,000 1,919
Chief Financial Officer 1997 122,750 0 107,262 14,000 1,841
D. Sherman Willows (3) 1999 127,957 113,250 0 8,000 2,972
Vice President 1998
Worldwide Sales 1997
</TABLE>

- ---------------

(1) Consists of matching contributions under the Company's Retirement Savings
Trust and Plan.

(2) Mr. Patricy was appointed Vice President and General Manager, Test and
Measurement, effective December 10, 1997. The salary information shown for
1998 includes the full fiscal year.

9
<PAGE> 13

(3) Mr. Willows was appointed Vice President of Worldwide Sales effective
February 13, 1999. The salary information shown for 1999 includes the full
fiscal year.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
GRANTED TO PRICE APPRECIATION
OPTIONS EMPLOYEES EXERCISE FOR OPTION TERM
GRANTED IN FISCAL PRICE EXPIRATION ----------------------
NAME (#) YEAR ($/SH) DATE 5% ($) 10% ($)
- ---------------------- ------- ---------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Keithley.... 72,000 19.6% 8.2500 7/16/09 373,563 946,683
Gabriel A. Rosica..... 15,000 4.1% 7.6250 2/13/09 71,930 182,284
29,000 7.9% 8.2500 7/16/09 150,463 381,303
David H. Patricy...... 26,500 7.2% 8.2500 7/16/09 137,492 348,432
Mark J. Plush......... 20,000 5.4% 8.2500 7/16/09 103,768 262,968
D. Sherman Willows.... 8,000 2.2% 8.2500 7/16/09 41,507 105,187
</TABLE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
EXERCISED IN FISCAL
1999 VALUE OF UNEXERCISED
---------------------- NUMBER OF IN-THE-MONEY
SHARES UNEXERCISED OPTIONS AT OPTIONS AT
ACQUIRED VALUE SEPTEMBER 30, 1999 (#) SEPTEMBER 30, 1999 ($)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Keithley........ 56,000 228,150 118,250 183,750 350,313 1,106,250
Gabriel A. Rosica......... -- -- 51,200 90,000 137,866 527,484
David H. Patricy.......... 620 4,301 35,140 68,000 159,403 445,875
Mark J. Plush............. 1,438 8,089 50,162 48,000 292,676 312,875
D. Sherman Willows........ -- -- 14,124 25,250 65,922 173,078
</TABLE>

COMPENSATION AND HUMAN RESOURCES COMMITTEE REPORT

The Company's Board of Directors has delegated to the Compensation and
Human Resources Committee (the "Committee") the responsibility of evaluating and
recommending for formal board approval the amounts of compensation paid to
officers. The Committee is composed entirely of outside Directors.

The guiding philosophy of the Company's executive compensation program is
to attract, motivate and retain highly qualified senior managers to direct and
grow the Company. Information is gathered to provide guidelines on pay for
comparable positions in comparable industries. The pay of the officers is
managed to assure that, in general, it falls between the median and the
seventy-fifth percentiles of market survey averages. Beyond information that is
available to the Company, the consulting firm iQuantic is used to analyze the
competitiveness of the Company's compensation program.

The program provides for a salary that is based upon individual
performance, an annual bonus that is based upon the attainment of performance
goals, and long-term incentives in the form of stock options. These programs
were described earlier on pages 7 THROUGH 9 of this Proxy Statement.

The salary for each executive officer is set based upon data from the
company's compensation consultant, iQuantic. The information used is the range
of salaries paid to individuals who hold similar positions or have similar
responsibilities within companies or divisions of companies of similar size in
the electronics industry.

The magnitude of the annual bonus that is paid to each officer is
determined as follows. First, the targeted amount of bonus to be paid annually
is determined through the use of salary survey information based on a percentage
of annual salary. An appropriate mix of business unit and/or corporate financial
measures and

10
<PAGE> 14

individual performance measures is then determined and a payout schedule is set
based upon percentage attainment of the performance goals. The magnitude of
these performance goals is set in participation with the Board to reflect the
marketplace conditions and an expectation of continuous improvement. The bonus
payment begins at 70% attainment of financial goals and cannot exceed the
equivalent of annual salary without special Board approval.

Prior to 1995, Incentive Stock Options (ISOs) were used to provide
long-term incentives to officers and other key employees. The ISOs currently
outstanding for all officers have an option price equal to the market price at
the time of grant, vest in four years and expire in ten years from the date of
grant. Since 1995 Non-qualified Stock Options (NSOs) are used to provide
long-term incentives to officers and other key employees. Each year a stock
option grant is made for each officer based upon competitive market practices.
Options vest in four years and expire in ten years from the date of grant and
have an option price equal to the market price at the time of grant.

Chief Executive Officer Compensation

The Compensation and Human Resources Committee determined Mr. Keithley's
compensation for fiscal 1999 based upon a number of criteria. The major facts
that influenced the Committee's decisions were the median pay levels for CEOs in
electronics firms of similar size, the performance of the Company in sales
growth and level of profits, and the general state of the electronic test and
measurement industry.

Mr. Keithley's base pay for 1999 increased 4.5%. This increase leaves Mr.
Keithley's base salary lower than the median paid to others in comparable
positions in the electronics industry.

Compensation and Human Resources Committee
R. Elton White, Chairman
Brian R. Bachman
James B. Griswold
Leon J. Hendrix, Jr.

11
<PAGE> 15

COMPANY STOCK PERFORMANCE

The following performance graph compares the five year cumulative return
from investing $100 on September 30, 1994 in each of the Company's Common
Shares, the Standard & Poor's 500 Index, the Russell 2000 Index and the Standard
& Poor's High Technology Composite Index, with dividends assumed to be
reinvested when received. The Company has added the Russell 2000 Index this year
as a comparison due to management's belief that the companies included in the
Russell 2000 Index have characteristics more similar to Keithley Instruments,
Inc. than companies included in the S&P 500 Index. The Company intends in future
periods to provide comparisons only to the Russell 2000 Index for purposes of a
broad-based equity market comparison.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG KEITHLEY INSTRUMENTS, INC., THE S & P 500 INDEX
AND THE S & P TECHNOLOGY SECTOR INDEX

<TABLE>
<CAPTION>
KEITHLEY INSTRUMENTS,
INC. RUSSELL 2000 S&P 500 S&P TECHNOLOGY
--------------------- ------------ ------- --------------
<S> <C> <C> <C> <C>
9/94 100 100 100 100
9/95 296 123 130 158
9/96 177 140 156 194
9/97 243 186 219 315
9/98 104 154 239 356
9/99 297 177 306 623
</TABLE>

*$100 INVESTED ON 09/30/94 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.

PROPOSAL TO APPROVE AN AMENDMENT TO THE
KEITHLEY INSTRUMENTS, INC. 1992 STOCK INCENTIVE PLAN
INCREASING THE NUMBER OF COMMON SHARES AVAILABLE
FOR AWARD UNDER THE PLAN FROM 1,900,000 TO 2,700,000

On December 3, 1999, the Board of Directors approved an amendment (the
"Amendment") to the Keithley Instruments, Inc. 1992 Stock Incentive Plan (the
"1992 Plan") to increase from 1,900,000 to 2,700,000 the aggregate number of
shares with which awards may be made.

SUMMARY OF THE 1992 STOCK INCENTIVE PLAN

The 1992 Plan was approved by the Company's Board of Directors at a meeting
of the Board of Directors held on December 7, 1991, and by its stockholders at a
shareholders' meeting held on February 8, 1992. As a

12
<PAGE> 16

result of a 2-for-1 stock dividend declared on November 6, 1995, the aggregate
number of shares with which awards may be made increased from 350,000 to
700,000. The 1992 Plan was amended by the Company's Board of Directors at a
meeting of the Board of Directors held on December 9, 1995 and by its
stockholders at a shareholders' meeting held on February 10, 1996, to increase
the aggregate number of shares with which awards may be made from 700,000 to
1,900,000.

The description herein is a summary of the 1992 Plan and is subject to and
qualified by the complete text of the 1992 Plan. The complete text of the 1992
Plan is filed as an exhibit to the Company's annual report on Form 10-K for the
year ended September 30, 1999.

The purpose of the 1992 Plan is to attract and retain individuals who, by
virtue of their ability and qualifications, make important contributions to the
Company. By providing key employees with the opportunity to acquire an equity
interest in the Company over time and because benefit is only receive through
improved stock performance, the Company believes that stock options serve to
align the interests of key employees closely with other shareholders. The 1992
Plan is administered by the Company's Compensation and Human Resources Committee
(the "Committee"), which has sole authority to determine and designate persons
to whom grants are to be made under the 1992 Plan and the nature and terms of
such grants.

Under the 1992 Plan, grants of nontransferable options to purchase Common
Shares ("Stock Options"), grants of Common Shares which may be subject to
certain vesting and transfer restrictions ("Restricted Stock"), and grants of
nontransferable options to receive payments based on the appreciation of the
Common Shares may be made to key employees of the Company or its subsidiaries.
The Stock Options provided for under the Plan may be either incentive stock
options ("Incentive Stock Options") intended to qualify for favorable tax
treatment under Section 422 of the Internal Revenue Code of 1986, as amended
("Code"), or nonqualified stock options ("Nonqualified Stock Options") which do
not qualify for preferential treatment. Common Shares not purchased under an
option which has terminated or lapsed may be used for the further grant of
options under the 1992 Plan.

Incentive Stock Options granted under the 1992 Plan may not be exercised
more than ten (10) years after the date of grant (or five (5) years in the case
of an option granted to an individual who at the time of the grant owns more
than 10% of the total combined voting power of all classes of stock of the
Company (a "10% Owner")). The aggregate fair market value (determined on the
date of grant) of Common Shares issuable upon exercise of Incentive Stock
Options exercisable for the first time by a key employee in any calendar year
may not exceed $100,000. The 1992 Plan provides that the option price shall not
be less than 100% of the fair market value of the Common Shares on the date such
option is granted, or 110% of such fair market value in the case of an Incentive
Stock Option granted to a 10% Owner. The purchase price must be paid in full by
the optionee at the time of exercise in either cash or Company Common Shares.

The 1992 Plan provides that key employees may be granted the
nontransferable right to receive a payment based on the increase in the value of
Common Shares occurring after the date of such grant ("SARs"). SARs may (but
need not) be granted to a key employee in tandem with, and be exercisable in
lieu of exercising, a grant of Stock Options. When granted in tandem with a
Stock Option, a SAR shall provide that the holder of a Stock Option shall have
the right to receive an amount equal to 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 the SAR by the Committee, over the price to be paid for the
Common Shares under the Option.

No cash consideration is received by the Company for granting options under
the 1992 Plan. Options are granted in consideration of the services rendered or
to be rendered to the Company by the employees receiving the options.

FEDERAL INCOME TAX CONSEQUENCES

With respect to nonqualified stock options, in general, for federal income
tax purposes under present law:

(i) The grant of a nonqualified stock option, by itself, will not
result in income to the optionee.

13
<PAGE> 17

(ii) Except as provided in (v) below, the exercise of a nonqualified
stock option (in whole or in part, according to its terms) will result in
ordinary income to the optionee at that time in an amount equal to the
excess (if any) of the fair market value of the shares on the date of
exercise over the option price.

(iii) Except as provided in (v) below, the tax basis of the shares
acquired upon exercise of a nonqualified stock option, which will be used
to determine the amount of any capital gain or loss on a future taxable
disposition of such shares, will be the fair market value of the shares on
the date of exercise.

(iv) No deduction will be allowable to the employer corporation upon
the grant of a nonqualified stock option but, upon the exercise of a
nonqualified stock option, a deduction will be allowable to the employer
corporation at that time in an amount equal to the amount of ordinary
income realized by the optionee exercising such option if the employer
corporation deducts and withholds appropriate federal withholding tax
provided it satisfied applicable reporting requirements.

(v) With respect to the exercise of a nonqualified stock option and
the payment of the option price by the delivery of Common Shares, to the
extent that the number of shares received does not exceed the number of
shares surrendered, no taxable income will be realized by the optionee at
that time, the tax basis of the shares received will be the same as the tax
basis of the shares surrendered, and the holding period of the optionee in
the shares received will include his holding period in the shares
surrendered. To the extent that the number of shares received exceeds the
number of shares surrendered, ordinary income will be realized by the
optionee at that time in the amount of the fair market value of such excess
shares; the tax basis of such excess shares will be equal to the fair
market value of such shares at the time of exercise; and the holding period
of the optionee in such shares will begin on the date such shares are
transferred to the optionee.

With respect to incentive stock options, in general, for federal income tax
purposes under present law:

(i) Neither the grant nor the exercise of an incentive stock option,
by itself, will result in income to the optionee; however, the excess of
the fair market value of the shares at the time of exercise over the option
price is (unless there is a disposition of the shares acquired upon
exercise of an incentive stock option in the taxable year of exercise)
includable in alternative minimum taxable income which may, under certain
circumstances, result in an alternative minimum tax liability to the
optionee.

(ii) If the shares acquired upon exercise of an incentive stock option
are disposed of in a taxable transaction after the later of two years from
the date on which the option is granted or one year from the date on which
such shares are transferred to the optionee, long-term capital gain or loss
will be realized by the optionee in an amount equal to the difference
between the amount realized by the optionee and the optionee's basis which,
except as provided in (v) below, is the option price.

(iii) Except as provided in (v) below, if the shares acquired upon the
exercise of an incentive stock option are disposed of within the two-year
period from the date of grant or the one-year period after the transfer of
the shares to the optionee (a "disqualifying disposition"):

(a) Ordinary income will be realized by the optionee at the time of
such disposition in the amount of the excess, if any, of the fair market
value of the shares at the time of such exercise over the option price,
but not in an amount exceeding the excess, if any, of the amount
realized by the optionee over the option price.

(b) Short-term or long-term capital gain will be realized by the
optionee at the time of any such taxable disposition in an amount equal
to the excess, if any, of the amount realized over the fair market value
of the shares at the time of such exercise.

(c) Short-term or long-term capital loss will be realized by the
optionee at the time of any such taxable disposition in an amount equal
to the excess, if any, of the option price over the amount realized.

(iv) No deduction will be allowed to the employer corporation with
respect to incentive stock options granted or shares transferred upon
exercise thereof, except that if a disposition is made by the

14
<PAGE> 18

optionee within the two-year period or the one-year period referred to
above, the employer corporation will be entitled to a deduction in the
taxable year in which the disposition occurred in an amount equal to the
amount of ordinary income realized by the optionee making the disposition.

(v) With respect to the exercise of an incentive stock option and the
payment of the option price by the delivery of Common Shares, to the extent
that the number of shares received does not exceed the number of shares
surrendered, no taxable income will be realized by the optionee at that
time, the tax basis of the shares received will be the same as the tax
basis of the shares surrendered, and the holding period (except for
purposes of the one-year period referred to in (iii) above) of the optionee
in shares received will include his holding period in the shares
surrendered. To the extent that the number of shares received exceeds the
number of shares surrendered, no taxable income will be realized by the
optionee at that time; such excess shares will be considered incentive
stock option stock with a zero basis; and the holding period of the
optionee in such shares will begin on the date such shares are transferred
to the optionee. If the shares surrendered were acquired as the result of
the exercise of an incentive stock option and the surrender takes place
within two years from the date the option relating to the surrendered
shares was granted or within one year from the date of such exercise, the
surrender will result in a disqualifying disposition and the optionee will
realize ordinary income at that time in the amount of the excess, if any,
of the fair market value at the time of exercise of the shares surrendered
over the basis of such shares. If any of the shares received are disposed
of in a disqualifying disposition, the optionee will be treated as first
disposing of the shares with a zero basis.

VOTE REQUIRED FOR APPROVAL

The affirmative vote of the holders of a majority of the outstanding Common
Shares and Class B Common Shares present, in person or by proxy, and entitled to
vote at the meeting is required for the approval of this proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.

APPROVAL OF SELECTION OF INDEPENDENT ACCOUNTANTS

Although the Code of Regulations of the Company does not require the
submission of the selection of independent accountants to the shareholders for
approval, the Board of Directors considers it desirable that its appointment of
independent accountants be approved by the shareholders. The firm of
PricewaterhouseCoopers LLP, formerly Price Waterhouse LLP, an international firm
of public accountants, has audited the annual financial statements of the
Company since 1958. At the Annual Meeting, the Board of Directors will ask the
shareholders to approve the selection of this firm as independent accountants
for the Company for the fiscal year ending September 30, 2000. THE BOARD OF
DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL.

A representative of PricewaterhouseCoopers LLP is expected to be present at
the Annual Meeting, and he will have an opportunity to make a statement if he so
desires. The representative will also be available to respond to appropriate
questions from shareholders.

OTHER MATTERS

Reports will be laid before the meeting, including a letter from the
Chairman of the Board, Chief Executive Officer and the President which
accompanies the financial statements of the Company, and the report of
independent accountants. The Board of Directors does not contemplate and does
not intend to present for consideration the taking of action by shareholders
with respect to any reports to be laid before the meeting or with respect to the
minutes of the Annual Meeting held on February 13, 1999, which will be read at
the meeting on February 12, 2000, unless a motion to dispense with a reading is
adopted.

The Board of Directors of the Company is not aware of any matter to come
before the meeting other than those mentioned in the accompanying Notice.
However, if other matters shall properly come before the

15
<PAGE> 19

meeting, it is the intention of the persons named in the accompanying Proxy to
vote in accordance with their best judgment on such matters.

Any shareholder proposal intended to be presented at the Annual Meeting of
Shareholders to be held in 2000 in compliance with Rule 14a-8 promulgated under
the Exchange Act must be received by the Company's Chairman and Chief Executive
Officer at its principal executive offices not later than September 1, 2000, for
inclusion in the Board of Directors' Proxy Statement and form of Proxy relating
to that meeting. Each proposal submitted should be accompanied by the name and
address of the shareholder submitting the proposal and the number of Common
Shares and/or Class B Common Shares owned. If the proponent is not a shareholder
of record, proof of beneficial ownership should be submitted. For those
shareholder proposals which are not submitted in accordance with Rule 14a-8, the
appointed proxies may exercise their discretionary voting authority for any
proposal received after November 15, 2000, without any discussion of the
proposal in the Company's proxy statement.

Upon the receipt of a written request from any shareholder entitled to vote
at the forthcoming Annual Meeting, the Company will mail, at no charge to the
shareholder, a copy of the Company's Annual Report on Form 10-K, including the
financial statements and schedules required to be filed with the Securities and
Exchange Commission pursuant to Rule 13a-1 under the Securities Exchange Act of
1934, as amended, for the Company's most recent fiscal year. Requests from
beneficial owners of the Company's voting securities must set forth a good faith
representation that as of the record date for the Annual Meeting, the person
making the request was the beneficial owner of securities entitled to vote at
such Annual Meeting. Written requests for such report should be directed to:

Mark J. Plush
Vice President and Chief Financial Officer
Keithley Instruments, Inc.
28775 Aurora Road
Solon, Ohio 44139

You are urged to sign and return your Proxy promptly in order to make
certain your shares will be voted at the Annual Meeting. For your convenience, a
return envelope is enclosed requiring no additional postage if mailed in the
United States.

By Order of the Board of Directors,

/s/ John M. Gherlein
JOHN M. GHERLEIN
Secretary

December 30, 1999

16
<PAGE> 20

KEITHLEY INSTRUMENTS, INC.

COMMON SHARES
P PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R OF THE COMPANY FOR THE ANNUAL MEETING OF SHAREHOLDERS
O TO BE HELD ON SATURDAY, FEBRUARY 12, 2000
X The undersigned hereby appoints JOSEPH P. KEITHLEY and MARK J.
Y PLUSH and each of them, as Proxy holders and attorneys, with full
power of substitution, to appear and vote all the Common Shares of
Keithley Instruments, Inc. which the undersigned shall be entitled
to vote at the Annual Meeting of Shareholders of the Company to be
held February 12, 2000, and at any postponements or adjournments
thereof, and directs said proxies to vote as specified herein on
the matters set forth in the notice of the meeting, and to transact
such other business as may properly come before the Annual Meeting
or any adjournment thereof, hereby revoking any and all proxies
heretofore given.

ELECTION OF DIRECTORS, Nominees:
Joseph P. Keithley; Brian R. Bachman; James T. Bartlett*;
Dr. Arden L. Bement, Jr.; James B. Griswold; Leon J.
Hendrix, Jr.*; William J. Hudson, Jr.; and R. Elton White
*Elected by holders of Common Shares only.
</TABLE>

YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
THE PROXIES NAMED ABOVE CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND
RETURN THIS CARD.

- --------------------------------------------------------------------------------

O FOLD AND DETACH HERE O

GRAPHIC
<PAGE> 21
9625
<TABLE>
<C> <S>
X PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.

</TABLE>

This Proxy when properly executed will be voted in the
manner directed herein by the shareholder. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR ITEM 1, ITEM 2 AND
ITEM 3.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1, ITEM 2 AND ITEM 3.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

Item 1. Election FOR WITHHELD Item 2. Proposal FOR AGAINST ABSTAIN
of [ ] [ ] to amend [ ] [ ] [ ]
Directors the
(see Keithley
reverse) Instruments,
Inc.
To withhold authority to vote for any 1992
individual nominee(s), write the name of Stock
the nominee(s) in the space provided below. Incentive
Plan.
- -------------------------

Item 3. Proposal [ ] [ ] [ ]
to approve
the Board of
Directors'
selection of
PricewaterhouseCoopers
LLP as independent
accountants of the
Company.

In their discretion, the proxies are
authorized to vote upon such other business
as may properly come before the meeting.

The signer hereby revokes all proxies
heretofore given by the signer to vote at
said meeting or any adjournments thereof.
NOTE: Please sign name(s) exactly as printed
hereon. Joint owners should each sign.
Persons signing as executors,
administrators, trustees or in similar
capacities should so indicate.

--------------------------------

SIGNATURE(S) DATE

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE
</TABLE>
- --------------------------------------------------------------------------------

O FOLD AND DETACH HERE O

KEITHLEY LOGO

ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 12, 2000
12:00 NOON
KEITHLEY INSTRUMENTS, INC.
CORPORATE HEADQUARTERS
28775 AURORA ROAD
SOLON, OHIO

COMMON SHARES
<PAGE> 22

KEITHLEY INSTRUMENTS, INC.

CLASS B COMMON SHARES
P PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R OF THE COMPANY FOR THE ANNUAL MEETING OF SHAREHOLDERS
O TO BE HELD ON SATURDAY, FEBRUARY 12, 2000
X The undersigned hereby appoints JOSEPH P. KEITHLEY and MARK J.
Y PLUSH and each of them, as Proxy holders and attorneys, with full
power of substitution, to appear and vote all the Class B Common
Shares of Keithley Instruments, Inc. which the undersigned shall be
entitled to vote at the Annual Meeting of Shareholders of the
Company to be held February 12, 2000, and at any postponements or
adjournments thereof, and directs said proxies to vote as specified
herein on the matters set forth in the notice of the meeting, and
to transact such other business as may properly come before the
Annual Meeting or any adjournment thereof, hereby revoking any and
all proxies heretofore given.

ELECTION OF DIRECTORS, Nominees:
Joseph P. Keithley; Brian R. Bachman; Dr. Arden L. Bement,
Jr.; James B. Griswold; William J. Hudson, Jr.; and R. Elton
White
</TABLE>

- --------------------------------------------------------------------------------

O FOLD AND DETACH HERE O

GRAPHIC
<PAGE> 23

9658
<TABLE>
<C> <S>
X PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.

</TABLE>

This Proxy when properly executed will be voted in the
manner directed herein by the shareholder. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR ITEM 1, ITEM 2 AND
ITEM 3.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1, ITEM 2 AND ITEM 3.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

Item 3. Proposal [ ] [ ] [ ]
to approve
the Board of
Directors'
selection of
PricewaterhouseCoopers
LLP as independent
accountants of the
Company.

In their discretion, the proxies are
authorized to vote upon such other business
as may properly come before the meeting.

--------------------------------

SIGNATURE(S) DATE

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE
</TABLE>
- --------------------------------------------------------------------------------

O FOLD AND DETACH HERE O

KEITHLEY LOGO

CLASS B COMMON SHARES

<PAGE> 24
Appendix A to Schedule 14A as filed with the Commission
(not part of the proxy statement mailed to shareholders)

KEITHLEY INSTRUMENTS, INC.
1992 STOCK INCENTIVE PLAN

1. General. This Stock Incentive Plan (the "Plan") provides eligible
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 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"; 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 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 and Human Resources Committee of the Board of Directors of the
Company, however described, or by any other committee selected by such Board of
Directors by majority vote and composed of no fewer than two (2) members of such
Board of Directors (the "Committee"). No person shall be appointed to the
Committee who, during the one-year period immediately preceding such person's
appointment to the Committee, has received any Grants under the Plan or any
similar stock option or stock incentive plan, other than a formula-based plan,
maintained by the Company or any subsidiary corporation. A member of the
Committee shall not be eligible to participate in this Plan while serving on the
Committee.

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.
<PAGE> 25
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;

(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.

5. 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 in its sole and exclusive discretion. Key employees
may include, but shall not necessarily be limited to, members of the Board of
Directors (excluding members of the Committee), and officers, of the Company and
any subsidiary corporation; however, 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 reoffering
under the Plan to any eligible employee.

Subject to the provisions of the next succeeding paragraph of this
Section 6 and the provisions of Section 7(h), the aggregate number of Common
Shares that can be actually issued under the Plan (exclusive of Restricted Stock
forfeited under the Plan before the holder thereof received any

Page 2
<PAGE> 26
benefits of ownership, such as dividends) shall be three hundred fifty thousand
(350,000) Common Shares.

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 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.

Page 3
<PAGE> 27
(d) Limitation on Exercise and Transfer of Stock Options. Only the key
employee to whom a Stock Option is granted may exercise such Option, except
where a guardian or other legal representative has been duly appointed for such
employee, and except as otherwise provided in the case of such employee's death.
No Stock Option granted hereunder shall be transferable by an optionee other
than by will or the laws of descent and distribution. No Stock Option granted
hereunder may 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 granted hereunder 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 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 in cash or by check,
or, with the consent of the Committee, in whole or in part 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 an option not to be a fully paid and
non-assessable Common Share.

(g) Certain Reissuances of Stock Options. 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), the Committee may in its sole discretion grant
new Stock Options to such optionee (to the extent Common Shares remain available
for Grants), subject to 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

Page 4
<PAGE> 28
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, and/or any Common Shares subject to any
Stock Option that has lapsed, been forfeited, or been cancelled and extinguished
in connection with the exercise of an SAR, 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.

(i) 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 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 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 specified by the Committee.

(ii) Grants of Restricted Stock shall only be accepted by executing a
Restricted Stock agreement and paying, in cash or by check, whatever
price (if any) is required under Section 8(b)(i).

(iii) Each key employee granted Restricted Stock shall 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.

Page 5
<PAGE> 29
(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
acknowledgement that such Stock remains subject to a substantial risk
of forfeiture in the event of termination of employment under certain
circumstances, and that the certificates representing ownership of such
Stock will be surrendered to the Company immediately upon any such
termination of employment.

(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.

(viii) In the event Restricted Stock is forfeited by a key employee,
the Company will refund to such key employee any payment(s) made by
such key employee to purchase such Stock, promptly upon such forfeiture
(and any corresponding surrender of stock certificates).

(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.

Page 6
<PAGE> 30
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:

(a) cash (or check);

(b) fully paid Common Shares having a fair market value equal to
such amount; or

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, his Grants shall,
unless extended by the Committee on or before his date of termination of
employment, terminate on the effective date of such 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.

Page 7
<PAGE> 31
If termination of employment is due to death or permanent and total
disability, then 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 the person designated by
such key employee by will, or as otherwise designated 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 or early retirement under the Keithley Instruments, Inc., Employees'
Pension Plan (or any successor pension plan), or (in the case of Restricted
Stock) permanent and total disability, (a) any then-outstanding Stock Options
and/or SARs held by such key employee shall lapse at the earlier of the end of
the term of such Stock Option or SAR, or three (3) months after such retirement
or permanent and total disability; 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 one year 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).

In the event 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 enter military service or because of sickness, his employment
with the Company or such subsidiary corporation shall not be considered
terminated, and he shall be deemed an employee of the Company or such subsidiary
corporation during such leave of absence or any extension thereof 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). 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.

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<PAGE> 32
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
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; or

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 Committee 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 Committee shall, in its sole discretion, determine to be necessary or
advisable or the determination by the Committee, 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 Committee, 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

Page 9
<PAGE> 33
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.

15. Termination of This Plan. This Plan shall terminate on February 8,
2002, and 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.

Page 10
<PAGE> 34

KEITHLEY INSTRUMENTS, INC.
Amendment To The 1992 Stock Incentive Plan
To Increase Number of Shares Available for Grant

In accordance with action duly taken by the Board of Directors
of Keithley Instruments, Inc. (the "Company"), Section 6 of the Keithley
Instruments, Inc. 1992 Stock Incentive Plan (the "1992 Plan") is hereby amended
to increase the number of common shares subject to issuance under the 1992 Plan
to a total of 1,900,000 common shares (after taking into account the effects of
the 2-for-1 stock split), subject to approval by an affirmative vote by a
majority of the Company's shareholders.
Accordingly, the second paragraph in Section 6 of the 1992
Plan is hereby amended, effective December 9, 1995, so as to provide in its
entirety as follows:

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 one
million nine hundred thousand (1,900,000) Common Shares. Such
aggregate number 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.

The Plan in all other respects remains unchanged.

KEITHLEY INSTRUMENTS, INC.

By /s/ Joseph P. Keithley
----------------------
Its Chairman
---------------------
<PAGE> 35
KEITHLEY INSTRUMENTS, INC.
1992 STOCK INCENTIVE PLAN

1997 AMENDMENT

In accordance with Section 12 of the Keithley Instruments, Inc. 1992
Stock Incentive Plan (the "Plan"), Compensation Committee of the Board of
Directors of Keithley Instruments, Inc., an Ohio corporation (the "Committee")
hereby amends the Plan, effective February 15, 1997, in the following respects:

1. Section 4 of the Plan is amended so as to provide in its entirety as
follows:

"4. Administration of the Plan. The Plan shall be administered
by the Compensation Committee of the Board of Directors of the Company,
however described, or by any other committee selected by such Board of
Directors by majority vote and composed of no fewer than two (2)
members of such Board of Directors who are "non-employee directors" as
defined under Rule 16b-3(b)(3) of the Securities Exchange Act of 1934
(the "Committee"). A member of the Committee shall not be eligible to
participate in this Plan while serving on the Committee.

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;
<PAGE> 36
(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."

2. Section 5 of the Plan is amended so as to provide in its entirety as
follows:

"5. 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 in its sole and
exclusive discretion (or by its delegee(s) in accordance with Section
4(i) hereof). Key employees may include, but shall not necessarily be
limited to, members of the Board of Directors (excluding members of the
Committee), and officers, of the Company and any subsidiary
corporation; however, 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."

The Plan otherwise remains unchanged.

<PAGE> 37
KEITHLEY INSTRUMENTS, INC.
1992 STOCK INCENTIVE PLAN
1999 AMENDMENT

In accordance with Section 12 of the Keithley Instruments, Inc. 1992
Stock Incentive Plan (the "Plan"), the Compensation Committee of the Board of
Directors of Keithley Instruments, Inc., an Ohio corporation (the "Committee")
hereby amends the Plan, effective September 30, 1999, in the following respects:

Section 10 of the Plan is amended so as to provide in its entirety as
follows:

"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,
his Grants shall, unless extended by the Committee on or before his
date of termination of employment, terminate on the effective date of
such 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.

If termination of employment is due to death or permanent and
total disability, then 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 the person designated by such key employee by
will, or as otherwise designated 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 retirement or permanent and total disability (subject only
to the three (3) month exercise limitation
<PAGE> 38
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).

In the event 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 enter military service or because of
sickness, his employment with the Company or such subsidiary
corporation shall not be considered terminated, and he shall be deemed
an employee of the Company or such subsidiary corporation during such
leave of absence or any extension thereof granted by the Company or
such subsidiary corporation."

The Plan otherwise remains unchanged.

IN WITNESS WHEREOF, the undersigned members of the Committee
have set their hand this 10th day of September, 1999.

/s/ James B. Griswold
------------------------
James B. Griswold

/s/ James T. Bartlett
------------------------
James T. Bartlett

/s/ R. Elton White
------------------------
R. Elton White

/s/ Arden L. Bement, Jr.
------------------------
Arden L. Bement, Jr.
<PAGE> 39
KEITHLEY INSTRUMENTS, INC.
Amendment To The 1992 Stock Incentive Plan
To Increase Number of Shares Available for Grant

Accordingly, the second paragraph in Section 6 of the 1992 Plan is
hereby amended, effective December 3, 1999, so as to provide in its entirety as
follows:

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 two million seven hundred
thousand (2,700,000) Common Shares. Such aggregate number 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.

The Plan in all other respects remains unchanged.