3. **Term of Option, Exercise and Transferability****.**The term of each Option granted underthe Plan shall be ten years. An Optionee who has continuously served as a director of the Companyfrom the date of the grant of an Option through the date of vesting may first exercise such Optionafter the date of vesting for all or part of the number of Common Shares in accordance with thePlan. For this purpose, the “date of vesting” for any Option granted under the Plan shall be thatdate which is six months and one day after the later to occur of: (i) the effective date of thePlan; or (ii) the date such Optionee is elected as a director; or (iii) the date such Option isgranted. An Outside Director who resigns or is removed before the date of vesting forany Options held by such Director shall forfeit such Options, unless otherwise approved by theBoard of Directors.No Option shall be transferable by the Optionee other than by will or the laws of descent anddistribution. Options shall be exercisable during the Optionee’s lifetime only by an Optionee or byhis or her legal guardian or legal representative. Notwithstanding the first and second sentencesof this paragraph or the preceding paragraph, if any Optionee dies while holding unexercisedOptions, any Option held by such Optionee at the time of his or her death shall thereafter beexercised, to the extent such Option was exercisable at the time of death, by the estate of theOptionee (acting through its fiduciary), within a period of one year from the date of such deathregardless of the term of the Option remaining at the Optionee’s death.4. **Option Price and Payment****.**The option price for each Common Share purchasable underan Option shall be the fair market value of a Common Share on the date such Option is granted inaccordance with Section 2; for this purpose, “fair market value” shall be the average of thehighest and lowest price for a Common Share, as quoted on the New York Stock Exchange (or if CommonShares are not then traded on such Exchange, on any other exchange on which Common Shares are thentraded) on the date preceding the date of grant. The option price shall be payable (i) in cash;(ii) by check acceptable to the Company; (iii) by delivery of shares of the same class of stocksubject to such Option; or (iv) a combination of the above, so long as the sum of the fair marketvalue of any such cash, check or Common Shares equals the option price. The Company shall have theright to require an Optionee who is entitled to receive Common Shares pursuant to the exercise ofan Option to pay to the Company the amount of any taxes which the Company is required to withholdwith respect to such Common Shares. Such amount shall be payable (i) in cash; (ii) by checkacceptable to the Company; (iii) by delivery of shares of the same class of stock subject to theOption; or (iv) a combination of the above.5. **Change In Control****.**(a) **Impact of Event****.**In the event of a “Change in Control” as defined in Section 5(b),all Options granted under the Plan shall vest upon the later to occur of (i) such Change inControl; or (ii) six months and one day after the date of grant of such Options.
 
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(b) **Definition of Change in Control****.**For purposes of Section 5(a), a “Change in Control”shall be deemed to have occurred if: (i) a tender offer shall be made and consummated for theownership of 25% or more of the outstanding voting securities of the Company; (ii) the Companyshall be merged or consolidated with another corporation and, as a result of such merger orconsolidation, less than 75% of the outstanding voting securities of the surviving or resultingcorporation shall be owned in the aggregate by the former shareholders of the Company as the sameshall have existed immediately prior to such merger or consolidation; (iii) the Company shall sellsubstantially 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 thedate hereof) of the Securities Exchange Act of 1934 (the “Exchange Act”), shall acquire, other thanby reason of inheritance, twenty-five percent (25%) or more of the outstanding voting securities ofthe Company (whether directly, indirectly, beneficially or of record). In making any suchdetermination, transfers made by a person to an affiliate of such person (as determined by theBoard of Directors of the Company), whether by gift, devise or otherwise, shall not be taken intoaccount. For purposes of this Plan, ownership of voting securities shall take into account andshall include ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i) as ineffect on the date hereof pursuant to the Exchange Act.6. **Adjustments****. (a)**If, at any time subsequent to the date of adoption of the Plan,the number of Common Shares are increased or decreased, or changed into or exchanged for adifferent number or kind of shares of stock or other securities of the Company or of anothercorporation (whether as a result of a stock split, stock dividend, combination or exchange ofshares, exchange for other securities, reclassification, reorganization, redesignation, merger,consolidation, recapitalization or otherwise): (i) there shall automatically be substituted foreach Common Share subject to an unexercised Option (in whole or in part) granted under the Plan,the number and kind of shares of stock or other securities into which each outstanding Common Shareshall be changed or for which each such Common Share shall be exchanged; and (ii) the option priceper Common Share or unit of securities shall be increased or decreased proportionately so that theaggregate purchase price for the securities subject to an Option shall remain the same asimmediately prior to such event.(b) No adjustment pursuant to this Section 6 shall be required unless such adjustment wouldrequire an increase or decrease of at least one percent (1%) in such number or price; however, anyadjustments which by reason of this Section 6 are not required to be made shall be carried forward.Calculations under this Section 6 shall be made to the nearest cent or to the nearest full share,as the case may be. Anything in this Section 6 to the contrary notwithstanding, the Company shallbe entitled to make such reductions in the option price, in addition to those required by thisSection 6, as it, in its discretion shall determine to be advisable in order that any stockdividends, subdivisions or splits of shares, distribution of rights to purchase stock orsecurities, or a distribution of securities convertible into or exchangeable for stock hereaftermade by the Company to its shareholders shall not be taxable.7. **Other Terms****.**Each grant of Options hereunder shall be evidenced by a Shares OptionAgreement in substantially the form attached hereto as Exhibit A. When exercisable in accordancewith Section 3, Options may be exercised, in whole or in part, by giving written notice of exerciseto the Company specifying the number of Common Shares to be purchased. Such notice shall be accompanied bypayment of the option price of the Common Shares for which the Option is exercised in accordancewith Section 4.8. **Amendment****.**The Board of Directors of the Company (the “Board”) may at any timeamend, modify, suspend or terminate this Plan, except with respect to Options already granted.
 
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9. **Termination of Plan****.**The Plan shall be terminated and no further Options shall begranted hereunder as of the tenth (10th) anniversary of the date this Plan is adopted by the Board.Options granted prior to such tenth anniversary may extend beyond that date.10. **Compliance with Law and Approval of Regulatory Body****.**No Option shall beexercisable and no Common Shares will be delivered under this Plan except in compliance with allapplicable federal and state laws and regulations, including, without limitation, compliance withapplicable withholding tax requirements, if any, and with the rules of all domestic stock exchangeson which the Company’s stock may be listed. Any stock certificates issued to evidence Common Sharesas to which an Option is exercised may bear such legends and statements as the Company shall deemadvisable to assure compliance with federal and state laws and regulations; the Company may, if itdeems appropriate, condition its grant of any Options hereunder upon receipt of the followinginvestment representation from the Optionee:“I agree that any Common Shares of Keithley Instruments, Inc. which I may acquire by virtueof this Stock Option shall be acquired for investment purposes only and not with a view todistribution or resale, and may not be transferred, sold, assigned, pledged, hypothecated orotherwise disposed of by me unless (i) a registration statement or post-effective amendmentto a registration statement under the Securities Act of 1933, as amended, with respect tosaid Common Shares has become effective so as to permit the sale or other disposition ofsaid shares by me; or (ii) there is presented to Keithley Instruments, Inc. an opinion ofcounsel satisfactory to Keithley Instruments, Inc. to the effect that the sale or otherproposed disposition of said Common Shares by me may lawfully be made otherwise thanpursuant to an effective registration statement or post-effective amendment to aregistration statement relating to the said shares under the Securities Act of 1933, asamended.”No Option shall be exercisable, and no stock will be delivered under this Plan, until the Companyhas obtained such consent or approval from the regulatory body, federal or state, havingjurisdiction over such matters as the Company may deem advisable. In the case of the exercise of anOption by a person or estate acquiring the right to exercise such Option by bequest or inheritance,the Company may require reasonable evidence as to the ownership of such Option and may require suchconsents and releases of taxing authorities as the Committee may deem advisable.11. **Effective Date****.**The original effective date of the Plan is February 15, 1997. Theeffective date for this amended and restated plan document is January 1, 2005.12. **Governing Law****.**The Plan, all options and actions taken thereunder and anyagreements relating thereto shall be governed by and controlled in accordance with Ohio law.13. **Code Section 409A Compliance****.**This Plan is intended to be operated in compliancewith the provisions of Code Section 409A (including any applicable rulings or regulationspromulgated thereunder). In the event that any provisions of this Plan fails to satisfy theprovisions of Code Section 409A, then such provision shall be reformed so as to comply with CodeSection 409A and to preserve as closely as possible the intention of the Company in maintaining thePlan.
 
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**IN WITNESS WHEREOF**, the Board of Directors of the Company has caused this instrument to beexecuted by its duly authorized designee this 31st day of December, 2008.      KEITHLEY INSTRUMENTS, INC.