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10(z) Material Contracts.


                           KEITHLEY INSTRUMENTS, INC.

                        1997 DIRECTORS' STOCK OPTION PLAN

                  1. PURPOSE. The purpose of this 1997 Directors' Stock Option
Plan (the "Plan") is to enable Keithley Instruments, Inc. (the "Company") to
attract, retain and reward directors of the Company and strengthen the mutuality
of interest between such directors and the Company's shareholders by offering
such directors options ("Options") to purchase shares of the Company's no par
value Common Shares ("Common Shares"). This Plan replaces and supersedes the
Keithley Instruments, Inc. 1992 Directors' Stock Option Plan (the "1992
Directors' Option Plan"), effective as of the date this Plan is adopted by the
Board of Directors of the Company.

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

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

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

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



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                  5. CHANGE IN CONTROL.

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

                  (b) DEFINITION OF CHANGE IN CONTROL. For purposes of Section
5(a), a "Change in Control" shall be deemed to have occurred if: (i) a tender
offer shall be made and consummated for the ownership of 25% or more of the
outstanding voting securities of the Company; (ii) the Company shall be merged
or consolidated with another corporation and, as a result of such merger or
consolidation, less than 75% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by the former
shareholders of the Company as the same shall have existed immediately prior to
such merger or consolidation; (iii) the Company shall sell substantially all of
its assets to another corporation which is not a wholly owned subsidiary; or
(iv) a person, within the meaning of Section 3(a)(9) or of Section 13(d)(3) (as
in effect on the date hereof) of the Securities Exchange Act of 1934 (the
"Exchange Act"), shall acquire, other than by reason of inheritance, twenty-five
percent (25%) or more of the outstanding voting securities of the Company
(whether directly, indirectly, beneficially or of record). In making any such
determination, transfers made by a person to an affiliate of such person (as
determined by the Board of Directors of the Company), whether by gift, devise or
otherwise, shall not be taken into account. For purposes of this Plan, ownership
of voting securities shall take into account and shall include ownership as
determined by applying the provisions of Rule 13d-3(d)(1)(i) as in effect on the
date hereof pursuant to the Exchange Act.

                  6. ADJUSTMENTS. (a) If, at any time subsequent to the date of
adoption of the Plan, the number of Common Shares are increased or decreased, or
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation (whether as a result
of a stock split, stock dividend, combination or exchange of shares, exchange
for other securities, reclassification, reorganization, redesignation, merger,
consolidation, recapitalization or otherwise): (i) there shall automatically be
substituted for each Common Share subject to an unexercised Option (in whole or
in part) granted under the Plan, the number and kind of shares of stock or other
securities into which each outstanding Common Share shall be changed or for
which each such Common Share shall be exchanged; and (ii) the option price per
Common Share or unit of securities shall be increased or decreased
proportionately so that the aggregate purchase price for the securities subject
to an Option shall remain the same as immediately prior to such event.

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

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

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

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

                  10. COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODY. No
Option shall be exercisable and no Common Shares will be delivered under this
Plan except in compliance with all applicable federal and state laws and
regulations, including, without limitation, compliance with applicable
withholding tax requirements, if any, and with the rules of all domestic stock
exchanges on which the Company's stock may be listed. Any stock certificates
issued to evidence Common Shares as to which an Option is exercised may bear
such legends and statements as the Company shall deem advisable to assure
compliance with federal and state laws and 


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regulations; the Company may, if it deems appropriate, condition its grant of
any Options hereunder upon receipt of the following investment representation
from the Optionee:

         "I agree that any Common Shares of Keithley Instruments, Inc. which I
         may acquire by virtue of this Stock Option shall be acquired for
         investment purposes only and not with a view to distribution or resale,
         and may not be transferred, sold, assigned, pledged, hypothecated or
         otherwise disposed of by me unless (i) a registration statement or
         post-effective amendment to a registration statement under the
         Securities Act of 1933, as amended, with respect to said Common Shares
         has become effective so as to permit the sale or other disposition of
         said shares by me; or (ii) there is presented to Keithley Instruments,
         Inc. an opinion of counsel satisfactory to Keithley Instruments, Inc.
         to the effect that the sale or other proposed disposition of said
         Common Shares by me may lawfully be made otherwise than pursuant to an
         effective registration statement or post-effective amendment to a
         registration statement relating to the said shares under the Securities
         Act of 1933, as amended."

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

                  11. EFFECTIVE DATE. The Plan shall be effective as of February
15, 1997, subject to ratification by a majority vote of the Company's
shareholders, taken expressly for that purpose.

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














































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