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                                                                   EXHIBIT 10(D)
                                                                   -------------

                              EMPLOYMENT AGREEMENT
                              --------------------

         EMPLOYMENT AGREEMENT dated this 26th day of September, 1988 between
Keithley Instruments, Inc., an Ohio corporation, (hereinafter called the
"Company"), and Joseph P. Keithley (hereinafter called the "Employee").

         WHEREAS, the Company considers the establishment and maintenance of
sound and vital management to be essential to protecting and enhancing the best
interest of the Company and its shareholders; and

         WHEREAS, the Company wishes to assure itself of the Employee's
full-time employment during the period specified herein; and

         WHEREAS, the Employee is prepared to enter into an employment agreement
with the Company and to give the Company the assurances it desires;

         NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual agreements herein set forth, the parties hereto have agreed and do hereby
mutually agree as follows:

I)       TERM OF AGREEMENT
     The term of this Agreement shall commence on the date first above written,
and shall continue through and including the fifth (5th) anniversary of the date
hereof, unless sooner terminated pursuant to Section VI or XII hereinbelow.

II)      RESPONSIBILITY
     It is agreed that the Employee is hereby employed by the Company with
responsibility to perform such duties, consistent with his position, as Vice
Chairman of the Board of Directors, member of the Office of Chairman of the
Company, and Director of Marketing as shall be assigned to him by the Board of
Directors of the Company.

III)     ACCOUNTABILITY
     It is agreed that in exercising his responsibilities as a member of the
Office of Chairman and Vice Chairman of the Board of Directors, the Employee
will be accountable to the Company's Board of Directors and as Director of
Marketing, the Employee will be accountable to the President and Chief Executive
Officer of the Company. The Employee agrees to: (i) devote his business time and
efforts full-time to the affairs of the Company and its affiliates, and (ii) use
his best efforts to promote the interests of the Company and its affiliates.

IV)      REMUNERATION

      A) BASE SALARY. The Employee will be employed during the term of this
         Agreement at an annual base salary of not less than One Hundred Twenty
         Thousand Dollars ($120,000), paid on a monthly basis. This base salary
         may be increased, but not decreased, without the Employee's consent, at
         the discretion of the Compensation Committee of the Board of Directors
         of the Company.

      B) ADDITIONAL COMPENSATION. The Employee shall be eligible to participate
         in incentive, stock option, profit-sharing, annual cash bonus, deferred
         compensation, supplemental retirement and similar plans maintained by
         the Company for the benefit of its executives.

      C) PAYMENT OF COMPENSATION. The annual base salary described in Section
         IV, A hereof shall be paid throughout the term of this Agreement
         subject to the following:


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          i)   Such compensation shall terminate up the death or resignation
               without "Good Reason" as described in Section VI, A, and C
               hereof, respectively, of the Employee;

          ii)  Such compensation shall not terminate, but rather shall be
               increased by 25% upon the resignation for "Good Reason" as
               described in Section VI, D hereof, of the Employee;

          iii) Such compensation shall terminate upon the termination of the
               Employee's employment by the Company "For Cause" as described in
               Section VI, E hereof; and

          iv)  Such compensation shall not terminate, but rather shall be
               increased by 25%, upon the termination of the Employee's
               employment by the Company other than "For Cause" as described in
               Section VI, E hereof.

The Employee's right to receive the foregoing payments shall be subject to the
covenant not to compete set forth in Section VIII hereof.

V)       OTHER EMPLOYEE FRINGE BENEFITS
     The Employee shall be included to the extent eligible thereunder (at the
expense of the Company, if provided at Company expense for other executives of
the Company) under any and all existing plans or arrangements (and any plans or
arrangements which may be adopted) providing benefits for its employees,
including but not limited to group life insurance, hospitalization, medical,
pension, automobile, financial services and any and all other similar or
comparable benefits at least to the extent they may be in effect for other
executives of the Company from time to time during the term of this Agreement.
Additional or improved fringe benefits are to be calculated for and awarded to
the Employee in at least as beneficial a manner as they are calculated for and
awarded to such other executive.

     Nothing in this Agreement shall adversely affect the rights of the Employee
or his beneficiaries under the present or any future retirement, profit-sharing,
insurance, or other fringe benefit or compensation plans or arrangements which
the Company now has or may adopt for its employees, and no rights or the
Employee thereunder shall be forfeited by any action set forth in this Agreement
unless so provided in such plans or arrangements.

VI)      TERMINATION OF EMPLOYMENT
     A)   DEATH. If the Employee shall die during the term of this Agreement,
          the duties of the Company and the Employee, one to the other, under
          this Agreement shall terminate as of the date of the Employee's death.
          Notwithstanding the sentence immediately preceding, the death of the
          Employee shall not adversely affect the rights of this beneficiaries
          to any benefits under the Company's employee benefit plans or
          arrangements in which he may be a participant, in accordance with the
          terms thereof, including but not limited to those referred to in
          Section VI, G hereof.
     B)   DISABILITY. During the term hereof, compensation hereunder shall
          continue during any period of disability irrespective of the nature
          and extent of such disability; the Employee shall render services as
          he is able to render consistent with any such disability. During the
          term hereof, the Company hereby acknowledges its agreement to continue
          the Employee's status as an employee during any period of disability
          and to continue the Employee's salary and benefits during such period,
          less any payments or benefits under any disability program or plan
          maintained by the Company.
     C)   RESIGNATION WITHOUT GOOD REASON. If the Employee voluntarily leaves
          the employ of the Company during the term of this Agreement without
          "Good Reason", as described below, the duties of the Company and the
          Employee, one to the other, under this Agreement


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          shall terminate as of the date of the Employee's termination of
          employment. Notwithstanding the sentence immediately preceding, such
          voluntary termination of employment by the Employee shall not
          adversely affect his rights to any benefits under the Company's
          employee benefit plans or arrangements in which he may be a
          participant, in accordance with the provisions thereof, including but
          not limited to those referred to in Section VI, G hereof.

     D)   RESIGNATION FOR GOOD REASON. The Employee may terminate his employment
          at any time for Good Reason which maybe any of the following:
          i)   the assignment tot he Employee, without his consent, of any
               substantial duties inconsistent with his positions, duties,
               responsibilities and status with the Company;
          ii)  a reduction by the Company without the Employee's consent in his
               base salary as in effect on the date hereof or as the same may be
               increased from time to time;
          iii) a failure by the Company to continue the Employee as a
               participant in the Company's bonus plan, as the same may be
               modified from time to time but substantially in the form
               currently in effect, on at least as favorable of a basis as the
               present basis without otherwise compensating the Employee for the
               amounts which he would otherwise have been entitled to receive
               based on the Company's performance in accordance with such plan;
          iv)  the Company's requiring the Employee, without his consent, to be
               permanently based anywhere other than the Company's principal
               executive offices, or in the event he consents to any such
               relation, the failure by the Company to pay (or reimburse the
               Employee for) all reasonable moving expenses actually incurred by
               the Employee or to indemnify the Employee against any loss
               realized in the sale of his principal residence in connection
               with any such relocation. Travel required with respect to the
               Company's business to an extent substantially consistent with the
               Employee's present business travel obligations or consistent with
               his duties or position with the Company shall not be deemed a
               relocation;
          v)   the failure by the Company to continue the Employee as
               participant in or to designate the Employee as a participant in
               any benefit plan or arrangement, including any retirement plan,
               compensation plan, savings and profit sharing plan, stock
               ownership plan, stock purchase plan, stock option plan, life
               insurance plan, health-and-accident plan, dental plan or
               disability plan in which he is currently participating or in any
               similar plan or arrangement adopted or maintained by the Company
               for its executives without otherwise compensating him for such
               loss in benefits.

     In no event shall the discontinuance of any compensation or other fringe
benefit plan or arrangement or the restructuring of the Company's compensation
or fringe benefit plans or arrangements constitute Good Reason unless the
Employee is not otherwise compensated and the net result is a substantial
economic loss for the Employee and unless the Employee notifies the Company in
writing of the existence and extent of such loss and grants the Company thirty
(30) days to cure the loss.

          E)   TERMINATION BY COMPANY. The Company may terminate the Employee's
               employment at any time, without cause, subject to providing the
               benefits hereinafter specified in accordance with the terms
               hereof. The Company may terminate the Employee's employment at
               any time "For Cause". In the event the Company shall terminate
               the Employee's employment "For Cause," the duties of the Company
               and the Employee, one to the other, under this Agreement shall
               terminate as of the date of the Employee's termination of
               employment. Notwithstanding the sentence immediately preceding,
               such


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          termination of employment of the Employee by the Company For Cause
          shall not adversely affect his rights to any benefits under the
          Company's employee benefit plans or arrangements in which he may be a
          participant, in accordance with the provisions thereof, including but
          not limited to those referred to in Section VI, G hereof.

     As used herein the words "For Cause" shall be deemed to mean and include
(i) the Employee's conviction of either a felony involving moral turpitude or
any crime in connection with his employment by the Company which causes the
Company or any affiliated company a substantial detriment; or (ii) the
Employee's refusal to submit to a medical examination if directed to do so by
the Board to determine whether the Employee is disabled under subsection VI(B)
hereof; or (iii) the Employee's willful failure to take actions permitted by law
and necessary to implement policies of the Board which the Board has
communicated to him in writing, provided that minutes of a Board meeting
attended in its entirety by the Employee shall be deemed communicated to the
Employee; or (iv) the Employee's continued failure to perform his duties as an
executive officer of the Company (provided that the Employee shall not be deemed
to have continued to fail to perform his duties unless such a continued failure
shall have been attested to in writing by a majority of the Board of Directors
of the Company who are neither employees of the Company nor members of the
Keithley family not attorneys at law representing either the Company or members
of the Keithley family); or (v) any condition which either resulted from the
Employee's habitual drunkenness or addiction to narcotics, or resulted from any
intentionally self-inflicted injury; or (vi) acting in breach or contravention
of any material obligation, covenant or agreement of the Employee contained in
this Agreement, expressly including without limitation, the non-competition and
non-solicitation covenants set forth in Section VIII hereof or the provision of
the "Employee Agreement" or any similar agreement regarding confidentiality.

     F)   NOTICE OF TERMINATION. Any termination of the Employee's employment by
          the Company or by the Employee shall be communicated by written Notice
          of Termination to the other party hereto which notice shall set forth
          the effective date of such termination which shall not be earlier than
          the date of mailing, or delivery by other means, of the notice.
     G)   CONTINUATION OF EMPLOYEE BENEFITS. The death, disability or
          termination of employment of the Employee, whether or not voluntary
          and whether or not For Cause or for a Good Reason shall not result in
          the loss by the Employee or his beneficiaries of any benefits under
          any life insurance, death benefit, pension, profit sharing, stock
          option, medical, deferred compensation, supplemental executive
          retirement plan or other employee benefit plan or arrangement except
          as provided for in such plan or arrangement.

VII) COMPENSATION UPON INVOLUNTARY TERMINATION FOR A GOOD REASON OR INVOLUNTARY
     TERMINATION OTHER THAN FOR CAUSE
     If the Employee's employment with the Company shall be terminated, during
     the term of this Agreement, by the Employee for Good Reason or by the
     Company other than For Cause, then the Employee shall be entitled to the
     benefits provided below:

     i)   the Company shall pay the Employee, on a monthly basis, the amount
          described in Section IV, C, ii or iv hereof, whichever shall be
          applicable, which amount is one hundred twenty-five percent (125%) of
          his full monthly base salary, determined as of the date of his
          termination of employment, through the fifth (5th) anniversary of the
          date hereof;
     ii)  full participation in the annual Extra Compensation Plan if his
          termination of employment is on or subsequent to June 30 of the
          respective fiscal year;


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     iii) full participation in any performance award if the performance
          measuring period ends within six months follow his termination of
          employment;
     iv)  the choice of exercising all vested stock options up to thirty days
          after his termination of employment, provided this provision shall not
          extend the term of his options beyond their terms as initially
          granted, and the Company agrees to request the Compensation Committee
          of its Board of Directors to permit such exercise pursuant to Section
          6(g) of the Keithley Instruments, Inc. 1984 Stock Option Plan or the
          comparable provision of any future plan;
     v)   the Employee shall be deemed to have vested in his stock, if any,
          required under the Company's restricted stock plan at a rate of 20%
          per year of service subsequent to the date of sale of such stock to
          the Employee;
     vi)  the Company shall maintain in full force and effect, following the
          cessation of the Employee's active employment by the Company, for the
          Employee's continued benefit through the fifth (5th) anniversary of
          the date hereof, all employee fringe benefit plans and arrangement in
          which he was entitled to participate immediately prior to the date of
          the Notice of Termination, provided that if such continued coverage
          would jeopardize the tax qualified status of such plan or arrangement
          with respect to any other employee or the Company, the Company may
          elect to provide the said benefit on an individual basis or provide
          cash compensation equivalent to the benefit which otherwise would have
          been provided so that the Employee shall suffer no financial loss
          whatsoever due to such substitution;
     vii) in addition to the retirement benefits to which the Employee is
          entitled under the Company's Employees' Pension Plan, as amended from
          time to time (the "Pension Plan"), the Employee shall be eligible to
          participate in the Company's supplemental retirement program ; and
     viii) reimbursement of fees for outplacement services actually used up to
          $10,000.

     Nothing in this Agreement shall be construed as amending any compensation
     or fringe benefit plan or arrangement of the Company. All rights of the
     Employee under any such plan or arrangement upon his termination of
     employment must be determined under the terms of such plans or arrangements
     at the time of the Employee's termination of employment.

VIII) COVENANT NOT TO COMPETE
     The Employee agrees that during his employment with the Company, and after
     his termination of employment for as long as payments hereunder are made by
     the Company, the Employee shall remain in full compliance with the
     following conditions:
     i)   He must not accept employment either directly or indirectly, with any
          competitor of the Company.
     ii)  He must not allow the use of his name by or in any competitive
          business.
     iii) He must not employ for himself the services of any other employee of
          the Company without the written permission of the Company.
     iv)  He must keep himself at all times reasonably available for
          consultation (by telephone only after termination of employment) by
          the officers and directors of the Company; provided that no such
          consultation shall be required after the Employee attains age
          sixty-five (65). In the event he is called upon to render any such
          substantial consulting services (consistent with his other
          activities),


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          he shall receive additional compensation in a reasonable amount, and
          any travel or other expenses which may be required in connection with
          such services shall be paid by the Company.

     The Company shall make payments under this Agreement only so long as the
     Employee complies with the above conditions except to the extent expressly
     waived in writing by the Board of Directors. In the event that the Employee
     shall be determined to be guilty of violation of any of the foregoing
     conditions by agreement or by the reasonable determination of the Board of
     Directors and the Employee does not correct such violation within a
     reasonable time, as determined by the Board after notice to him in writing,
     the Company may thereafter suspend or terminate in whole or in part any
     further payments under this Agreement.

     This Agreement shall not be deemed to modify in any way any agreement
     between the Company and the Employee concerning the protection of Company
     secrets.

IX)  DISSOLUTION, MERGER OR CONSOLIDATION
     If the Company shall at any time be merged or consolidated into or with any
     other corporation or corporations or if substantially all the assets of the
     Company are sold or otherwise transferred to another corporation or party,
     the provisions of this Agreement shall be binding upon and inure to the
     benefit of the corporation surviving or resulting from such merger or
     consolidation or to which such assets shall be sold or transferred, and
     this provision shall apply in the event of any subsequent sale, merger,
     consolidation or transfer.

X)   NON-ASSIGNABILITY
     This Agreement shall be binding upon and inure to the benefit of the
     Parties hereto and to their successors. The Employee may not assign, pledge
     or otherwise encumber any rights or interest hereunder without the written
     consent of the Company. The Company may not assign this Agreement other
     than as set forth in IX above.

IX)  ENTIRE AGREEMENT OF THE PARTIES
     This Agreement expresses the entire agreement of the parties, and all
     promises, representations, understandings, arrangement and prior agreements
     are merged herein and superseded hereby.

X)   AMENDMENTS, TERMINATION
     Except as herein provided, this Agreement cannot be terminated by
     unilateral action of either party. However, this Agreement can be changed,
     modified or terminated by mutual written agreement. No person, other than
     pursuant to a resolution of the Board of Directors of the Company, shall
     have any authority on behalf of the Company to agree to modify, change or
     terminate this Agreement or anything in reference thereto, and any such
     modification, change or termination must be in writing and signed by both
     parties.

XI)  LAWS GOVERNING
     This Agreement has been entered into in the State of Ohio, and shall be
     construed, interpreted and governed in accordance with the laws of the
     State of Ohio.


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XII) TERMINATION OF PRIOR AGREEMENT

     By execution of this Agreement, the parties hereto agree that any prior
     agreement or understanding with respect to the Employee's employment by the
     Company is terminated as of the date hereof and this Agreement shall be
     effective, as of the date hereof, in lieu of any such prior agreement or
     understanding.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
officers thereunto duly authorized, and the Employee has hereunto set his hand,
as of the day and year first above written.

                                               KEITHLEY INSTRUMENTS, INC.
                                               ("Company")


                                               By /s/ Joseph F. Keithley
                                                  ------------------------------
                                               (Chairman, Board of Directors)

                                               And /s/ Mark J. Plush
                                                   -----------------------------
                                               (Corporate Secretary - Assistant)

                                               JOSEPH P. KEITHLEY

                                                       ("Employee")

                                               /s/ Joseph P. Keithley
                                               ---------------------------------