Document:

EX-4.1

 

Exhibit 4.1

SECOND AMENDMENT TO CREDIT FACILITY AGREEMENT

     THIS SECOND AMENDMENT, dated as of the 14th day of June, 2006, to that certain Amended and
Restated Credit Facility Agreement dated as of July 12, 2005, as amended by a First Amendment to
Credit Facility Agreement dated as of February 24, 2006 (the “Agreement”), between BANK OF AMERICA,
N.A., a national banking association and successor by merger to Fleet National Bank, having an
office at One East Avenue, Rochester, New York 14638 (the “Bank”), and GRAHAM CORPORATION, a
corporation formed under the laws of the State of Delaware with offices at 20 Florence Avenue,
Batavia, New York 14020 (the “Borrower”).

     The parties hereby agree as follows:

     1. Agreement Ratified. Except as expressly amended hereby, the Agreement is in all
respects ratified and confirmed, and all of the terms, provisions and conditions thereof shall be
and remain in full force and effect, and this Amendment and all of its terms, provisions and
conditions shall be deemed to be a part of the Agreement. All capitalized terms used herein and
not defined shall have the meanings given them in the Agreement.

     2. Section 2.1. Section 2.1 of the Agreement shall be amended as follows:

   2.1 Revolving Line. Subject to the terms and conditions of this Agreement, the
Bank hereby establishes for the benefit of the Borrower a revolving line of credit in the
maximum principal amount of Twenty Million Dollars ($20,000,000.00) outstanding at any one
time. The proceeds of the Revolving Line shall be used to meet the Borrower’s letter of
credit and working capital requirements. Subject to the terms of this Agreement, the
Borrower may borrow, repay, and reborrow under the Revolving Line so long as the aggregate
principal amount outstanding at any time, plus (a) the undrawn amount of all Letters of
Credit and (b) the outstanding principal amount of all Term Loans, does not exceed
$20,000,000.00.

     3. Amended and Restated Revolving Line Note. The Borrower shall execute and deliver
to the Bank an Amended and Restated Revolving Line Note in the form attached hereto as Exhibit A,
to evidence the changes described in paragraph 2 above.

     4. Article 3 of the Agreement shall be amended to read as follows:

ARTICLE 3 — LETTERS OF CREDIT

   3.1 Letters of Credit. Subject to the terms and conditions of this Agreement,
the Bank will make Letters of Credit available for the account of the Borrower or, subject
to the terms described below, for the account of the Borrower’s Chinese subsidiary, Graham
Vacuum and Heat Transfer Technology (Suzhou) Co., Ltd. (“Graham China”) in an aggregate
stated face amount not exceeding the lesser of (a) Twelve Million Dollars ($12,000,000), and
(b) the availability under the Revolving Line. Letters of Credit will be made promptly
available for the Borrower’s or Graham China’s work in process (to

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support customer progress payments) or as otherwise requested by Borrower or Graham
China for general business purposes. Letters of Credit issued for the account of Graham
China may be either in US Dollars or in Chinese RMBs, as requested by Graham China at the
time the Letter of Credit is issued. The stated amount outstanding under all Letters of
Credit at all times shall reduce, dollar for dollar, the amount available for advances under
the Revolving Line. The Letters of Credit shall be in form satisfactory to the Bank and
will be for a term of up to three (3) years from the date of issuance, except that Letters
of Credit in the aggregate face amount of $8,000,000.00 may have maturities of up to five
(5) years from the date of issuance and may extend for up to five (5) years beyond the
Revolving Credit Termination Date. The total face amount of all Letters of Credit issued for
both the Borrower and Graham China may never exceed $12,000,000.00, with initial sublimits
of $11,000,000.00 for the Borrower and $1,000,000.00 for Graham China. The Bank agrees that
it will, from time to time revise this allocation on the basis of the Borrower’s and Graham
China’s respective needs, but subject always to the approval of the Bank.

   3.2 Commissions. The Borrower or Graham China, as the case may be, will pay
letter of credit commissions to the Bank on the date of issuance of the Letter of Credit and
on each anniversary date thereafter if the Letter of Credit is renewed or has a maturity in
excess of one year from the date of issuance, equal to one and one-quarter of one percent
(1.25%) of the undrawn amount thereof for standby letters of credit, and one-quarter of one
percent (0.25%) of the undrawn amount thereof for documentary letters of credit.
Commissions on letters of credit having maturities of less than one year shall be charged
ratably. In addition, the Borrower or Graham China, as the case may be, will pay to the
Bank a $150 administrative fee for each Letter of Credit issued pursuant to this Agreement.

   3.3  Reimbursement. The Borrower or Graham China, as the case may be, will
execute a Reimbursement Agreement that is satisfactory to the Bank, documenting its
Obligations with respect to each of the Letters of Credit issued for its account. In
addition, the Borrower agrees that it will co-sign each Reimbursement Agreement relating to
a Letter of Credit issued for the account of Graham China, and will be jointly and severally
liable, with Graham China, for all amounts owing to the Bank with respect to such Letters of
Credit, including without limitation reimbursement amounts, interest thereon, fees, charges
and penalties. Among other items, the Reimbursement Agreement will require immediate
reimbursement to the Bank for all amounts drawn under the Letters of Credit, and outstanding
drawn amounts not so reimbursed may, at the discretion of the Bank, be treated as advances
under the Revolving Line.

   All payments shall be made by Borrower or Graham China to Bank at the address for Bank first
shown above in this Agreement or such other place as Bank may from time to time specify in
writing in lawful currency of the United States of America in immediately available funds,
without counterclaim or setoff and free and clear of, and without deduction or withholding
for, any taxes or other payments.

     5. Section 10.7. Section 10.7 of the Agreement shall be amended to read as follows:

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   10.7 Material Changes. Permit any material change to be made in the character
of the business of the Borrower, or in its President, Chief Operating Officer or Chief
Financial Officer, other than for cause unless Borrower shall have provided for a successor
reasonably acceptable to the Bank, or in the nature of its operations as carried on at the
date hereof.

     In addition, the Borrower has informed the Bank that on or around June 30, 2006, James Lines
will replace William Johnson as its Chief Operating Officer and a member of its Board of Directors.
The Bank agrees that Mr. Lines is an acceptable successor and that this change does not constitute
a violation of Section 10.7.

     6. Representations and Warranties. The Borrower confirms the accuracy of and remakes
as of the date hereof all of its representations, warranties contained in the Agreement. The
Borrower further represents and warrants to the Bank that all necessary action on the part of the
Borrower relating to authorization of the execution and delivery of this Amendment, and the
performance of the Obligations of the Borrower thereunder has been taken. This Amendment
constitutes the legal, valid and binding obligation of the Borrower, enforceable in accordance with
its terms. The execution and delivery by the Borrower of the Amendment, and the performance by the
Borrower of the Amendment, will not violate any provision of law or the Borrower’s Certificate of
Incorporation or By-laws or organizational or other documents or agreements. The execution,
delivery and performance of the Amendment, and the consummation of the transactions contemplated
thereby will not violate, be in conflict with, result in a breach of, or constitute a default under
any agreement to which the Borrower is a party or by which any of its properties is bound, or any
order, writ, injunction, or decree of any court or governmental instrumentality, and will not
result in the creation or imposition of any lien, charge or encumbrance upon any of its properties.

     7. No Events of Default. The Borrower confirms that as of the date hereof, there
exists no condition or event that constitutes (or that would after expiration of applicable grace
or cure periods constitute) an Event of Default as described in Article 14 of the Agreement.

     8. No Offsets. As of the date hereof, the Borrower has no defenses, offsets, claims or
counterclaims with respect to its obligations arising under the Agreement or this Amendment and all
related documents and instruments.

     9. Governing Law. This Amendment, together with all of the rights and obligations of
the parties hereto, shall be construed and interpreted in accordance with the laws of the State of
New York, excluding the laws applicable to conflicts or choice of law.

     IN WITNESS WHEREOF, the parties have executed this Amendment on the date first above written.

	 	 	 	 	 	 	 
	BANK OF AMERICA, N.A.	 	GRAHAM CORPORATION
	 	 	 	 	 	 	 
	By:	 	 
	 	By:	 	 

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	 	 	Colleen O’Brien	 	 	 	Ron Hansen
	Title:	Vice President	 	Title:	Vice President
	 	 	 	 	 	 	 

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Exhibit A

AMENDED AND RESTATED REVOLVING LINE NOTE

	 	 	 	 	 
	$20,000,000.00
	 	June 14, 2006

     Unless otherwise expressly provided herein, all capitalized terms in this Revolving Line Note
shall have the meanings given to them in the Amended and Restated Credit Facility Agreement dated
as of July 12, 2005, as amended on February 24, 2006 and on the date hereof, between the
undersigned, Graham Corporation (“Borrower”) and Bank of America Company, N.A. (“Bank”), as the
same may be amended, extended, replaced, or modified from time to time (the “Credit Agreement”).

     FOR VALUE RECEIVED, GRAHAM CORPORATION hereby promises to pay to the order of BANK OF AMERICA,
N.A. at One East Avenue, Rochester, New York 14604, or at such other places as Bank may specify in
writing to Borrower, the principal sum of Twenty Million Dollars ($20,000,000.00) or, if less, the
aggregate unpaid principal amount of all Revolving Line advances made by Bank to Borrower. The
Bank shall maintain a record of amounts of principal and interest payable by Borrower from time to
time, and the records of Bank maintained in the ordinary course of business shall be prima facie
evidence of the existence and amounts of the Borrower’s obligations recorded therein. In addition,
Bank may mail or deliver periodic statements to Borrower indicating the date and amount of each
advance hereunder (but any failure to do so shall not relieve Borrower of the obligation to repay
any advance). Unless Borrower questions the accuracy of an entry on any periodic statement within
thirty business days after such mailing or delivery by Bank, Borrower shall be deemed to have
accepted and be obligated by the terms of each such periodic statement as accurately representing
the advances hereunder. In the event of transfer of this Revolving Line Note, or if the Bank shall
otherwise deem it appropriate, Borrower hereby authorizes Bank to endorse on this Revolving Line
Note the amount of advances and payments to reflect the principal balance outstanding from time to
time. Bank is hereby authorized to honor borrowing and other requests received from purported
representatives of Borrower orally, by telecopy, in writing, or otherwise. Oral requests shall be
conclusively presumed to have been made by an authorized person and Bank’s crediting of Borrower’s
account with the amount requested shall conclusively establish Borrower’s obligation to repay the
amount advanced.

     Interest. Outstanding amounts under this Revolving Line Note shall bear interest, except as
otherwise specifically provided herein, at a variable rate per annum equal to the Prime Rate in
effect from time to time minus the Applicable Prime Rate Margin. Changes in the interest rate shall
become effective automatically and without notice at the time of changes in the Prime Rate.

     The Borrower from time to time, however, may elect to have portions of the principal
outstanding under this Revolving Line Note bear interest at the fixed per annum rate equal to the
one-month, two-month, or three- month LIBOR Rate plus the Applicable LIBOR Margin for the period
applicable to that rate by giving at least two (2) business days’ prior notice in writing or by
telecopy to the Bank. The notice shall specify (i) the rate chosen, (ii) the

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outstanding principal amount to bear interest at the applicable LIBOR Rate (with any
outstanding amounts from time to time under this Revolving Line Note, in excess of such specified
amount, to bear interest at the rate based upon the Prime Rate), and (iii) the commencement date
for such rate. No LIBOR Interest Period may be elected that would extend beyond the maturity date
of this Revolving Line Note. The rate of interest so elected shall be in effect for the respective
applicable LIBOR Interest Period. The Borrower shall be responsible for all Break Costs including
without limitation those applicable if during any period in which a LIBOR based rate or rates is or
are in effect, if the principal amount outstanding under this Revolving Line Note bearing interest
at such respective rate or rates is ever less than the principal amount stated in the respective
election notice or notices for such period.

     Interest shall be calculated on the basis of a 360 day year and using the actual number of
days elapsed. Interest shall continue to accrue after maturity (including after acceleration and
judgment) at the rate required by this Revolving Line Note until this Revolving Line Note is paid
in full.

     The rate of interest on this Revolving Line Note may be increased under the circumstances
provided in the Credit Agreement. The right of Bank to receive such increased rate of interest
shall not constitute a waiver of any other right or remedy of Bank.

     Payments. Payments of all accrued interest under this Revolving Line Note shall be due on the
first day of each month.

     All remaining outstanding principal and accrued interest shall be due and payable in full upon
the earlier of (a) at the option of the Bank, upon written notice to Borrower, an Event of Default,
or (b) the Revolving Line Termination Date, provided that under certain circumstances, some or all
of the principal amounts outstanding under this Revolving Line Note may be converted to a Term Loan
in accordance with the terms of Article 4 of the Credit Agreement.

     In the event the Borrower becomes aware, or receives notice (oral or written) from the Bank,
that principal amounts outstanding under this Revolving Line Note exceed the maximum available
amount described herein at any time, Borrower promptly shall make a principal payment to the Bank
sufficient to reduce outstanding principal amounts to the maximum amount available hereunder.

     All payments shall be made by Borrower to Bank at the address for Bank first shown above in
this Revolving Line Note or such other place as Bank may from time to time specify in writing in
lawful currency of the United States of America in immediately available funds, without
counterclaim or setoff and free and clear of, and without deduction or withholding for, any taxes
or other payments. All payments shall be applied first to the payment of all fees, expenses and
other amounts due to the Bank (excluding principal and interest), then to accrued interest, and the
balance on account of outstanding principal; provided, however, that after an Event of Default or
demand for payment in full, payments will be applied to the obligations of Borrower to the Bank as
Bank determines in its sole discretion.

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     Late Charge. If the entire required amount of principal and/or interest is not paid in full
within ten (10) days after the same is due, Borrower shall pay to Bank a late fee equal to five
percent (5%) of the overdue amount. Such late charge shall be in addition to interest.

     Prepayment. This Revolving Line Note is prepayable to the extent allowed by, and on the terms
provided by the Credit Agreement.

     Maximum Rate. All agreements between Borrower and Bank are hereby expressly limited so that
in no contingency or event whatsoever, whether by reason of acceleration or maturity of the
indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to Bank for
the use or the forbearance of the indebtedness evidenced hereby exceed the maximum permissible
under applicable law. As used herein, the term “applicable law” shall mean the law in effect as of
the date hereof, provided, however that in the event there is a change in the law which results in
a higher permissible rate of interest, then this Revolving Line Note shall be governed by such new
law as of its effective date. In this regard, it is expressly agreed that it is the intent of
Borrower and Bank in the execution, delivery and acceptance of this Revolving Line Note to contract
in strict compliance with the laws of the State of New York from time to time in effect. If, under
or from any circumstances whatsoever, fulfillment of any provision hereof or of any of the
documents and agreements related hereto at the time performance of such provision shall be due,
shall involve transcending the limit of such validity prescribed by applicable law, then the
obligation to be fulfilled shall automatically be reduced to the limits of such validity, and if
under or from any circumstances whatsoever Bank should ever receive as interest an amount which
would exceed the highest lawful rate, such amount which would be excessive interest shall be
applied to the reduction of the principal balance evidenced hereby and not to the payment of
interest. This provision shall control every other provision of all agreements between Borrower and
Bank.

     Business Days. If this Revolving Line Note or any payment hereunder becomes due on a day
other than a Business Day, payment shall be extended to the next succeeding Business Day, but any
interest or fees shall be calculated based upon the actual time of payment.

     Events of Default. This Revolving Line Note shall become immediately due and payable in full,
without further presentment, protest, notice or demand, upon the happening of any Event of Default
as provided in the Credit Agreement.

     Default Rate. Upon Default or after maturity or after judgment has been rendered with respect
to the Obligations, or upon an Event of Default, the unpaid principal of all Obligations shall, at
the option of the Bank, bear interest at a rate which is four (4) percentage points per annum
greater than that which would otherwise be applicable.

     Set Off. The Borrower hereby grants to Bank a continuing lien, security interest, and right
of set off as security for the Obligations, whether now existing or hereafter arising, upon and
against all deposits, credits, collateral and property, now or hereafter in the possession,
custody, safekeeping or control of Bank or any entity under the control of Bank of America
Corporation and its successors and assigns or in transit to any of them. At any time during the
existence of a Default or Event of Default, without demand or notice (any such notice being

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expressly waived by Borrower), Bank may set off the same or any part thereof and apply the
same to any Obligation of Borrower even though unmatured and regardless of the adequacy of any
other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SET OFF WITH RESPECT TO SUCH DEPOSITS, CREDITS, OR OTHER PROPERTY OF
BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVED.

     Modification of Terms. The terms of this Revolving Line Note cannot be changed, nor may this
Revolving Line Note be discharged in whole or in part, except by a writing executed by Bank. In
the event that Bank demands or accepts partial payments of this Revolving Line Note, such demand or
acceptance shall not be deemed to constitute a waiver of the right to demand the entire unpaid
balance of this Revolving Line Note at any time in accordance with the terms hereof. Any delay or
omission by Bank in exercising any rights hereunder shall not operate as a waiver of such rights.

     Costs and Expenses. Borrower shall pay on demand all reasonable expenses of Bank in
connection with the preparation, administration, default, collection, waiver or amendment of loan
terms, or in connection with Bank’s exercise, preservation, or enforcement of any of its rights,
remedies, or options hereunder, including without limitation, fees of outside legal counsel or the
allocated costs of in-house legal counsel, accounting, consulting, brokerage or similar
professional fees or expenses, and any fees or expenses associated with travel or other costs
relating to any appraisals or examinations conducted in connection with any loan or any collateral
therefor, and the amount of all such expenses shall, until paid, bear interest at the rate
applicable to principal hereunder (including any default rate) and be an obligation secured by any
collateral.

     Assignment/Participation. All the terms and provisions of this Revolving Line Note shall
inure to the benefit of and be binding upon and be enforceable by the parties and their respective
successors and permitted assigns and shall inure to the benefit of and be enforceable by any holder
hereof.

     The Bank may at any time pledge or assign all or any portion of its rights under this
Revolving Line Note to any of the twelve (12) Federal Reserve Banks organized under Section 4 of
the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or assignment or enforcement
thereof shall release Bank from its obligations under any of this Revolving Line Note or any other
loan documents.

     The Bank shall have the unrestricted right at any time or from time to time, and without
Borrower’s consent, to assign all or any portion of its rights and obligations hereunder to one or
more banks or other financial institutions (each an “Assignee”), and Borrower agrees that it shall
execute, or cause to be executed, such documents, including without limitation, amendments to this
Revolving Line Note and to any other loan documents, as the Bank shall deem necessary to effect the
foregoing. In addition, at the request of the Bank and any such Assignee, Borrower shall issue one
or more new promissory notes, as applicable, to any such Assignee and, if Bank

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has retained any of its rights and obligations hereunder following such assignment, to Bank,
which new promissory notes shall be issued in replacement of, but not in discharge of, the
liability evidenced by the promissory note held by Bank prior to such assignment and shall reflect
the amount of the respective commitments and loans held by such Assignee and Bank after giving
effect to such assignment. Upon the execution and delivery of appropriate assignment
documentation, amendments, and any other documentation required by Bank in connection with such
assignment, and the payment by Assignee of the purchase price agreed to by Bank and such Assignee,
such Assignee shall be a party to this agreement and shall have all of the rights and obligations
of the Bank hereunder (and under any and all other loan documents) to the extent that such rights
and obligations have been assigned by the Bank pursuant to the assignment documentation between the
Bank and such Assignee, and Bank shall be released from its obligations hereunder and thereunder to
a corresponding extent.

     The Bank shall have the unrestricted right at any time and from time to time, and without the
consent of or notice to Borrower, to grant to one or more banks or other financial institutions
(each a “Participant”) participating interests in Bank’s obligation to lend hereunder and/or any or
all of the loans held by Bank hereunder. In the event of any such grant by Bank of a participating
interest to Participant, whether or not upon notice to Borrower, Bank shall remain responsible for
the performance of its obligations hereunder and Borrower shall continue to deal solely and
directly with Bank in connection with Bank’s rights and obligations hereunder.

     The Bank may furnish any information concerning Borrower in its possession from time to time
to prospective Assignees and Participants, provided that the Bank shall require any such
prospective Assignee or Participant to agree in writing to maintain the confidentiality of such
information.

     Loss or Mutilation. Upon receipt of an affidavit of an officer of Bank as to the loss, theft,
destruction, or mutilation of this Revolving Line Note, and, in the case of any such loss, theft,
destruction or mutilation, upon cancellation of this Revolving Line Note, Borrower will issue, in
lieu thereof, a replacement note or other loan document in the same principal amount thereof and
otherwise of like tenor.

     Regulation U. No portion of the proceeds of this Revolving Line Note shall be used, in whole
or in part, for the purpose of purchasing or carrying any “margin stock” as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System.

     Miscellaneous. To the fullest extent permissible by law, Borrower waives presentment, demand
for payment, protest, notice of nonpayment, and, except as otherwise provided in the Credit
Agreement, all other demands or notices otherwise required by law in connection with the delivery,
acceptance, performance, default, or enforcement of this Revolving Line Note. Borrower consents to
extensions, postponements, indulgences, substitutions or releases of collateral, and substitutions
or releases of other parties primarily or secondarily liable herefor, and agrees that none of the
same shall affect Borrower’s obligations under this Revolving Line Note which shall be
unconditional.

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     Choice of Law. This Revolving Line Note and the rights and obligations of the parties
hereunder, shall be construed, interpreted, governed and enforced in accordance with the laws of
the State of New York (excluding the laws applicable to conflicts or choice of law).

     Enforcement/Waiver of Jury Trial. BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
REVOLVING LINE NOTE OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF
NEW YORK LOCATED IN MONROE COUNTY OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT. BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT FORUM.

     BORROWER AND BANK (BY ACCEPTANCE OF THIS REVOLVING LINE NOTE) MUTUALLY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS REVOLVING LINE NOTE OR ANY OTHER LOAN
DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY, INCLUDING WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS OR ACTIONS OF BANK RELATING TO THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THIS
REVOLVING LINE NOTE OR THE LOAN DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE
ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
EXCEPT AS PROHIBITED BY LAW, BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO, ACTUAL DAMAGES. BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR
ATTORNEY OF BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT
FOR BANK TO ACCEPT THIS REVOLVING LINE NOTE AND MAKE THE LOANS CONTEMPLATED HEREUNDER.

GRAHAM CORPORATION

By: ________________________________________

Title: _______________________________________

10EX-4.1

 

Exhibit 4.1

Keithley Instruments, Inc. 2005 Employee Stock Purchase and Dividend Reinvestment Plan

(As Amended on February 11, 2006)

This is a conformed copy of the Keithley Instruments, Inc. 2005 Employee Stock Purchase and Dividend Reinvestment Plan as
adopted by the Board of Directors on December 5, 2005 (the “Plan”) which incorporates the changes to the Plan made by an
amendment to the Keithley Instruments, Inc. 2005 Employee Stock Purchase and Dividend Reinvestment Plan approved on
February 11, 2006 by the Board of Directors

KEITHLEY INSTRUMENTS, INC.

2005 EMPLOYEE STOCK PURCHASE AND DIVIDEND REINVESTMENT PLAN

Section I — Purpose

     This 2005 Employee Stock Purchase and Dividend Reinvestment Plan (the “Plan”) is adopted and
established by Keithley Instruments, Inc., an Ohio corporation (the “Company”), effective as of
June 1, 2005, subject only to appropriate approval by its shareholders, for the general benefit of
the employees of the Company and certain of the Company’s subsidiary corporations. The purpose of
the Plan is to facilitate the purchase by eligible employees of common shares, without par value,
of Keithley Instruments, Inc. (“Stock”). The Plan is intended to meet the requirements of Section
423 of the Internal Revenue Code of 1986, as amended (the “Code”).

Section II — Agent

     National City Bank, Cleveland, Ohio, is hereby appointed to act as agent of the Company and of
the participants under this Plan (the “Agent”).

Section III — Eligible Employees

     (a) In General. All employees of the Company, and all employees of those subsidiary
corporations (as defined in Section 424 of the Code) identified and listed in Attachment A hereto
(as modified by the Chief Financial Officer of the Company, no more frequently than annually), are
eligible to participate in the Plan, other than temporary employees of the Company or any
such subsidiary corporation who (i) customarily are employed for less than five (5) months in any
calendar year, or (ii) customarily work twenty (20) hours or less per week. All individuals who
satisfy the requirements set forth in the preceding sentence (individually, an “Eligible Employee,”
and collectively, “Eligible Employees”) shall be granted rights to purchase Stock hereunder, so
long as they continue to satisfy such requirements, and shall have the same rights and privileges
as every other such Eligible Employee.

     (b) Limitations on Rights. An Eligible Employee shall not be entitled to purchase
Stock under the Plan if (i) such purchase would cause such Eligible Employee to own Stock
(including any shares of Stock which would be owned if such Eligible Employee purchased all of the
Stock made available for purchase by such Eligible Employee under all options or rights then held
by such Eligible Employee, whether or not then exercisable) representing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the Company or any
subsidiary corporation; or (ii) such purchase would cause such Eligible Employee to have rights to
purchase more than $25,000 of Stock under the Plan (and under all other stock purchase plans of the
Company and its subsidiary corporations which satisfy the requirements of Section 423 of the Code)
for any calendar year in which such rights are outstanding (based on the fair market value of such
Stock, determined as of the commencement date of the Subscription Period and otherwise in
accordance with Section IV(b) hereof). For purposes of clause (i) of this subparagraph (b), the
attribution rules set forth in Section 424(d) of the Code and related regulations shall apply. For
purposes of applying the $25,000 limitation of clause (ii) of this subparagraph (b), the number of
shares of Stock eligible for purchase in one Plan Year may not be carried

 

 

over to any other Plan Year; provided, that the $25,000 limitation will be determined
on a calendar year basis and not a Plan Year basis. In applying the limitation of clause (ii) of
this subparagraph (b), in the event an option to purchase shares of Stock is outstanding in more
than one calendar year because the Subscription Period extends across two calendar years, an
Eligible Employee shall have the right to purchase up to $50,000 of Stock under the Plan for such
Subscription Period, but applying such limit first to the first calendar year in which such option
is outstanding and after taking into account all other stock purchased for such Eligible Employee
hereunder. In the event more than one Subscription Period is in affect with respect to an Eligible
Employee during the course of a given calendar year, the $25,000 limitation of clause (ii) of this
subparagraph (b) shall be applied first to that Subscription Period with the earliest commencement
date.

Section IV — Enrollment and Subscription Periods

     (a) Enrolling in the Plan. To participate in the Plan, an Eligible Employee must
enroll in the Plan. Enrollment for a given Plan Year, and for each Subscription Period commencing
during such Plan Year, will take place during the “Enrollment Period,” which shall consist of no
less than a thirty (30)-day period and no greater than a forty-five (45) day period and be held
within the ninety (90-day period immediately preceding the commencement of the Subscription Period
to which such Enrollment Period relates. The initial Enrollment Period shall commence June 1, 2005
and end June 30, 2005 (inclusive), and apply with respect to the rights granted under the Plan for
the Plan Year commencing July 1, 2005 (or if later, the effective date of the registration
statement to be filed in accordance with Section XIX(a) hereof).

     (b) The Subscription Period. Any employee who is an Eligible Employee and desires to
subscribe to purchase Stock under the Plan must make and file with the Company a subscription
agreement that complies with Section VIII hereof during the applicable Enrollment Period. Such
agreement shall be effective for the subscription period immediately following such Enrollment
Period. There shall be at least one subscription period (a “Subscription Period”) each and every
12 months during the term of this Plan. The duration of each Subscription Period shall be
established by the Board of Directors of the Company (the “Board”), or by a standing committee of
the Board as the Board’s delegee, but in any event acting in the Board’s (or such delegee’s)
discretion. If not otherwise established by the Board, the Subscription Period for a Plan Year
shall commence on the first day of July and ending on the following June 30th.

     (c) Changing Enrollment. The offering of Stock under the Plan shall occur only during
a Subscription Period, and shall be made only to those Eligible Employees properly enrolled for
that Subscription Period. Once enrolled, the Company will inform the Agent of such fact and those
Eligible Employees so enrolled will thereupon become “Participants” under the Plan. Once enrolled,
a Participant shall continue to be eligible to participate in the Plan for each succeeding
Subscription Period until he or she terminates his or her participation or ceases to be an Eligible
Employee. If a Participant desires to change his or her rate of contribution, he or she may do so
effective for the next Subscription Period by filing a new authorization for payroll deduction and
subscription agreement with the Company during the Enrollment Period immediately preceding such
Subscription Period.

Section V — Term of Plan

     This Plan shall be in effect from the date of its adoption until it is terminated by action of
the Board. The Plan shall be submitted to the shareholders of the Company for approval as soon as
practical, but in any event not later than 12 months after the date of its adoption by the Board.

Page 2

 

Section VI — Number of Shares of Stock to be Made Available

     The total number of shares of Stock made available for purchase by Eligible Employees
hereunder is Five Hundred Thousand (500,000), which may be authorized but unissued shares, treasury
shares, or shares purchased for or on behalf of the Plan in the open market. When such shares of
Stock are fully subscribed, the Plan shall either be continued through additional authorizations of
shares made by the Board, or shall be terminated in accordance with Section XVII hereof.

Section VII — Subscription Price

     (a) Presumptive Subscription Price. Unless modified by the Board in accordance with
Section VII(b), the “Subscription Price” for each share of Stock purchased for an Eligible Employee
during a Subscription Period shall be 95% of the fair market value of the Stock, determined as of
the commencement of such Subscription Period. The fair market value of the Stock will be
determined in accordance with Section VII(c) hereof.

     (b) Modification of Subscription Price. The Board, in its discretion, may modify the
Subscription Price set forth in Section VII(a) above by written action taken prior to the beginning
of the Subscription Period for which such modification is to be effective. In the event the Board
adopts a modified Subscription Price, such Subscription Price shall not be less than the lowest
fair market value of a share of such Stock within the twelve (12) month period immediately
preceding the first day of the applicable Subscription Period, and shall not be greater than the
highest fair market value of a share of such Stock within the twelve month period immediately
preceding the first day of the applicable Subscription Period. Notwithstanding the preceding
sentence to the contrary, in no event will the Subscription Price of a share of Stock be the lesser
of (i) 85% of the fair market value of a share of such Stock on the last trading day before the
first day of each Subscription Period (which for Plan purposes shall be considered the date the
right to purchase such Stock is granted to, and first exercisable by a Participant); or (ii) 85% of
the fair market value of such share of such Stock on the last trading day of such Subscription
Period (which for Plan purposes shall be considered the date each such right to purchase such Stock
is actually exercised).

     (c) Determining The Price of Stock. For purposes of this Section, the fair market
value of a share shall be the last reported sale price on the New York Stock Exchange or such other
stock exchange on which a share of Stock is listed on the day in question (or if there is no
reported sale on that day, on the most recent previous business day within a period of not more
than five business days).

Section VIII — Amount of Contribution; Method of Payment

     (a) Payroll Withholding. Except as otherwise specifically provided herein, the
Subscription Price will be payable by each Participant by means of payroll withholding. However,
for any Participant not maintained on the Company’s payroll, such Participant shall be entitled to
satisfy the Subscription Price by tendering to the Company (or its delegee) an amount, by money
order or check drawn against an account with sufficient funds, that satisfies such Participant’s
Subscription Price. The minimum withholding shall be equal to twenty dollars ($20.00) per month
from a Participant’s Base Pay; the maximum withholding shall be an amount equal to one hundred
percent (100%) of a Participant’s Base Pay (rounded to the nearest dollar), subject to any
applicable tax or other withholding limitations. In any event, the total withholding permitted to
be made by any Participant for a Subscription Period or Subscription Periods shall not exceed
$25,000 for each calendar year as prescribed by Section 423(b)(8)

Page 3

 

of the Code. The actual percentage of Base Pay to be deducted shall be specified by a
Participant in his or her authorization for payroll withholding.

     (b) Base Pay. For purposes of paragraph (a), above, “Base Pay” means the regular
compensation which a Participant is entitled to receive on a pay day. Base Pay shall not include
overtime, bonuses, or other items which are not considered to be regular earnings.

     (c) Application of Withholding Rules. Payroll withholding will commence with the
first paycheck issued during the Subscription Period and will continue with each paycheck
throughout the entire Subscription Period, except for pay periods for which a Participant receives
no compensation (i.e., uncompensated personal leave, leave of absence, etc.). Any pay
period which overlaps two Subscription Periods will be credited in its entirety to the Subscription
Period in which it is paid. Payroll withholding shall be retained by the employer or other party
responsible for making payment to the Participant, until applied to the purchase of shares as
described in Section IX and the satisfaction of any related federal, state or local withholding
obligations (including any employment tax obligations), or until returned to such Participant in
connection with a withdrawal from the Plan or a revocation of authorization described in Section
XIII. Any amounts held by an employer or other party in connection with or as a result of payroll
withholding made pursuant to the Plan and pending the purchase of shares hereunder shall be
considered non-interest bearing, unsecured indebtedness extended to such employer or other party by
such Participant.

Section IX — Purchasing, Transferring Stock

     (a) Maintenance of Plan Account. The Company shall maintain a “Plan Account” in the
name of each Participant. At the close of each pay period, the amount deducted and retained by the
employer or other party from a Participant’s Base Pay will, for bookkeeping purposes only, be
credited by the Company to such Participant’s Plan Account. As of the last day of each
Subscription Period (unless a Participant has given written notice to the Company of his or her
withdrawal or revocation of authorization), such Participant’s right to purchase Stock will be
exercised automatically for him or her; upon such automatic exercise, the amount then credited to
such Participant’s Plan Account for the purpose of purchasing shares will be divided by the
Subscription Price for such Subscription Period (using the applicable discount determined pursuant
to Section VII(a) hereof), and there shall be transferred to such Participant’s Plan Account by the
Agent the number of shares of Stock which results. Participants shall not receive any interest on
amounts held by an employer, the Company, or any other party (including the Agent) and credited to
Plan Accounts established and maintained under this Plan.

     (b) Insufficient Number of Available Shares. In the event the number of shares of
Stock subscribed for any Subscription Period exceeds the number of shares of Stock available for
sale under the Plan for such Period, the number of shares of Stock actually available for sale
hereunder shall be allocated by the Agent among the Participants in proportion to that portion of
their Plan Account balances committed to the purchase of Stock for such Subscription Period.

     (c) Handling Excess Shares. In the event that the number of shares of Stock which
would be credited to any Participant’s Plan Account in any Subscription Period exceeds the limit
specified in Section III(b) hereof, such Participant’s Account shall be credited with the maximum
number of shares permissible, and all remaining amounts will be refunded in cash.

     (d) Status Reports. As soon as practical following the close of each Subscription
Period but in no event more than thirty (30) days following the close of such Subscription Period,
the Agent shall report to each Participant the number of shares of Stock purchased on his or her
behalf for such Subscription Period, and the total shares held on behalf of such Participant in his
or her Plan

Page 4

 

Account. The Agent shall hold in its name or in the name of its nominee all shares so
purchased and allocated. No certificate will be issued to a Participant for shares held in his or
her Plan Account unless he or she so requests in writing, or unless such Participant’s active
participation in the Plan is terminated due to death, separation from service or retirement.

     (e) In Service Stock Withdrawals. A Participant may request that a certificate for
all or part of the full shares of Stock held in his or her Plan Account be sent to him or her after
the relevant shares of Stock have been purchased and allocated. All such requests must be
submitted in writing to the Agent. No certificate for a fractional share will be issued. The fair
market value of any fractional shares, as determined pursuant to Section VII on the date of
withdrawal of all shares credited to a Participant’s Plan Account, shall be paid in cash to such
Participant. Any Participant requesting issuance of a Stock certificate prior to the date active
participation ceases shall be solely responsible for paying and discharging all applicable fees and
other associated with such issuance prior to the date any distribution of a certificate evidencing
ownership of such shares occurs.

Section X — Dividends and Other Distributions

     (a) Reinvestment of Dividends. Cash dividends and other cash distributions received
by the Agent on shares held in its custody hereunder will be credited to the Plan Accounts of
individual Participants in accordance with their interests in the shares of Stock with respect to
which such dividends or distributions are paid or made, less any applicable withholding, and will
be applied, as soon as practical after the receipt thereof by the Agent, to the purchase in the
open market at prevailing market prices (without any adjustment or discount otherwise provided for
under Section VII hereof) of the number of whole shares of Stock capable of being purchased with
such funds, after deduction of any bank service fees, brokerage charges and transfer taxes payable
in connection with the purchase of such shares that are not otherwise paid by the Company.

     (b) Stock to Be Held in Agent’s Name. All purchases of shares of Stock made pursuant
to this Section will be made in the name of the Agent or its nominee, shall be held as provided in
Section IX hereof, and shall be transferred and credited (to the nearest one one-thousandth of a
share) to the Plan Accounts of the individual Participant(s) to which such dividends or other
distributions were credited. Dividends paid in the form of Stock will be allocated by the Agent,
as and when received, with respect to shares held in its custody hereunder to the Plan Accounts of
individual Participants (to the nearest one one-thousandth of a share) in accordance with such
Participants’ interests in such shares with respect to which such dividends were paid. Property,
other than shares of Stock or cash, received by the Agent as a distribution on shares held in its
custody hereunder, shall be sold by the Agent for the accounts of those Participants to whom such
property is attributable or allocable, and the Agent shall treat the proceeds of such sale in the
same manner as cash dividends received by the Agent on shares held in its custody hereunder.

     (c) Tax Responsibilities. It is understood that the automatic reinvestment of
dividends under the Plan will not relieve a Participant or other employee of any federal, state,
local, or foreign income or other tax which may be due on or with respect to such dividends. The
Agent shall report to each Participant the amount of dividends credited to his or her Plan Account.

     (d) Withholding on Payments Made to Non-Resident Aliens. The Agent shall be
authorized and empowered to comply with any and all federal withholding laws relating to the
payment of income items to non-resident aliens.

Page 5

 

Section XI — Voting of Stock

     Shares of Stock held for a Participant in his or her Plan Account will be voted in accordance
with such Participant’s express written directions. In the absence of any such directions, such
Stock will not be voted.

Section XII — Sale of Stock

     Subject to the provisions of Section XIX, a Participant may direct the Agent to sell all or
part of the shares held on behalf of such Participant at any time, without having to first withdraw
any shares of Stock from the Plan, by giving written notice to the Agent. Upon receipt of such a
notice, the Agent shall, as soon as practical thereafter, sell such shares in the open market at
the prevailing market price and transmit the net proceeds of such sale (less any bank service fees,
brokerage charges and transfer taxes) to such Participant, but only so long as such Participant’s
signature is guaranteed by a bank or trust company.

Section XIII — Withdrawals from the Plan

     (a) General Rule. By giving written notice to the Company, a Participant may at any
time withdraw from the Plan or, without withdrawing from the Plan but by giving written notice to
the Company, revoke his or her authorization for payroll deduction for the Subscription Period in
which such revocation is made. In the event a Participant withdraws from the Plan or revokes such
authorization, such Participant may withdraw the amount credited to such Participant’s Plan Account
which has not previously been used to purchase shares of Stock.

     (b) Refund of Amounts Not Used to Purchase Shares. At the time of any withdrawal or
revocation under this Section, the amount credited to a Participant’s Plan Account which has not
previously been used to purchase shares of Stock will be refunded in cash.

     (c) Withdrawal of Shares. Upon any withdrawal under this Section, a Participant, in
his or her notice of withdrawal election, may elect to receive either shares of Stock or cash for
the full number of shares of Stock then being held in his or her Plan Account. If a Participant
elects cash, the Agent shall sell such shares (whether in the open market, or otherwise) and send
the net proceeds (less any bank service fees, brokerage charges and transfer taxes) to such
Participant, but only if such Participant’s signature on such election has been guaranteed by a
bank or trust company. If no election is made in a notice of withdrawal, a certificate shall be
issued for all full shares of Stock held in such Participant’s Account. In every case of
withdrawal from the Plan, fractional shares allocated to a Participant’s Plan Account will be paid
in cash at the market value of such Stock on the date such withdrawal becomes effective, as
determined pursuant to Section VII.

Section XIV — Separation from Employment

     Separation from employment for any reason, including death, disability, a termination of
employment (regardless of the reason(s) therefore) shall be treated as a withdrawal from the Plan
as described in Section XIII. For purposes of this Section XIV, an Eligible Employee will not be
deemed to have terminated employment or failed to remain in the continuous employ of the Company,
or to have ceased to qualify as an Eligible Employee, in the event such employee is absent from
active employment due to sick leave, military leave of absence, a leave of absence required to be
provided pursuant to the Family and medical Leave Act of 1993 or any other leave of absence
approved by the Committee or

Page 6

 

required by applicable federal, state, or local law; provided, that such leave is for a period of
not more than ninety (90) days or such Employee holds reemployment rights with the Company that are
protected by state or federal statute. A service fee will not be charged for any withdrawal
attributable to a separation from employment.

Section XV — Assignment

     No Eligible Employee, Participant, or other person, may assign, alienate, or otherwise
transfer his or her right or rights to purchase Stock under this Plan to any other person or party;
any attempt to so assign, alienate or transfer shall be void. A Participant’s right to purchase
Stock under this Plan may be exercisable during such Participant’s lifetime only by that
Participant.

Section XVI — Adjustment of and Changes in Stock

     In the event that the shares of Stock are changed or converted into, or exchanged for, a
different number or kind of shares of stock or other securities of the Company or of another
corporation (whether by reason of merger, consolidation, recapitalization, split-up, combination of
shares, or otherwise), or the number of shares of Stock are changed through a stock split or the
payment of a stock dividend, there shall be substituted for or added to each share of Stock
theretofore reserved for sale and/or issuance under the Plan, the number and kind of shares of
stock or other securities into which each outstanding share of Stock shall be so changed or
converted, or for which each such share shall be exchanged, or to which each such share shall be
entitled, as the case may be.

Section XVII — Amendment or Termination of the Plan

     The Board shall have the right to amend, modify or terminate the Plan at any time without
notice; however, no Participant’s existing rights shall be adversely affected by any such
amendment, modification or termination. In any event, any such amendment or modification that
materially increases the benefits accruing to Participants under the Plan; or increases in any
respect the number of shares of Stock permitted to be issued under the Plan; or materially modifies
the eligibility requirements for Plan participation; or changes the designation of those
corporations whose employees are eligible to participate in the Plan (other than another parent or
subsidiary of the Company); shall not take affect, or otherwise become effective, until after such
amendment or modification has received the approval of the holders of a majority of the voting
power of the shares of Stock.

Section XVIII — Administration

     (a) Committee To Administer. The Plan shall be administered by a Committee, which
shall be appointed by the Company’s president and consist of at least two employees of the Company
or of a subsidiary corporation. The Committee shall be responsible for the administration of all
matters under the Plan which have not been delegated to the Agent.

     (b) Specific Responsibilities. The Committee’s responsibilities shall include, but
shall not be limited to,

     (i) interpreting the Plan (including issues relating to the definition and
application of “Base Pay”);

     (ii) identifying and compiling a list of persons who are Eligible Employees for a
Plan Year;

Page 7

 

(iii) identifying those Eligible Employees not entitled to be granted options or
other rights for a Plan Year on account of the limitations described in Section
III(b) hereof; and

(iv) providing prompt notice to the Agent of the enrollment of Eligible Employees,
the amounts to be credited to Participants’ Plan Accounts, and any written notices
of withdrawal or revocation of any authorization filed with the Committee by
individual Participants.

The Committee may from time to time adopt rules and regulations for carrying out the Plan.
Interpretation or construction of any provision of the Plan by the Committee shall be final,
conclusive and binding on all persons, absent specific and contrary action taken by the Board. Any
interpretation or construction of any provision of the Plan by the Board or a committee thereof
shall be final, conclusive and binding.

Section XIX — Securities Law Restrictions

     Notwithstanding any provision of the Plan to the contrary:

     (a) Need For Registration Statement. No shares of Stock shall be purchased or issued
under the Plan until a registration statement has been filed and become effective with respect to
the issuance of the Stock covered by the Plan under the Securities Act of 1933, as amended (the
“Act”). Prior to the effectiveness of such registration statement, Stock subject to purchase under
the Plan may be offered to Eligible Employees only pursuant to an exemption from the registration
requirements of the Act.

     (b) Compliance With Blue Sky Laws. No payroll deduction shall take place and no
shares of Stock shall be purchased or issued under the Plan with respect to Eligible Employees
resident in any state unless such shares of Stock are exempt from registration under the securities
laws of such state, or such purchase or issuance constitutes an exempt transaction under the
securities laws of such state or comprises part of a purchase or issuance that has been registered
by description, qualification, coordination or otherwise under the securities laws of such state.

Section XX — No Independent Employment Rights

     Nothing in the Plan shall be construed to form, or to constitute evidence of, a contract of
employment between the Company and any employee, or any group or category of employees (whether for
a definite or specific duration or otherwise), or to prevent the Company, its parent or any
subsidiary from terminating any employee’s employment at any time, without notice or recompense.
No employee shall have any rights as a shareholder until the right to purchase Stock has been
exercised as of the last trading day of a Subscription Period.

Section XXI — Agent Powers and Duties

     (a) Acceptance. The Agent accepts the agency created under this Plan and agrees to
perform the obligations imposed hereunder.

     (b) Receipt of Shares and Dividends. The Agent shall be accountable to each
Participant for shares of Stock held in such Participant’s Plan Account, and for dividends received
with respect thereto.

Page 8

 

     (c) Records and Statements. The records of the Agent pertaining to the Plan shall be
open to the inspection of the Company at all reasonable times and may be audited from time to time
by any person or parties specified by the Company in writing. The Agent shall furnish the Company
with whatever information relating to the Plan Accounts the Company considers necessary, including,
without limitation, any information required to be furnished to Participants each January 31
pursuant to Section 6039(a)(2) of the Code and related regulations.

     (d) Fees and Expenses. The Agent shall receive from the Company reasonable annual
compensation as may be agreed upon from time to time between the Company and the Agent.

     (e) Resignation. The Agent may resign at any time as Agent of the Plan by giving
sixty (60) days written notice in advance to the Company.

     (f) Removal. The Company, by giving sixty (60) days written notice in advance to the
Agent, may remove the Agent. In the event of the resignation or removal of an Agent, the Company
shall promptly appoint a successor Agent, so long as it intends to continue the Plan.

     (g) Interim Duties and Successor Agent. Each successor Agent shall succeed to the
title of the Agent vested in its predecessor by accepting in writing its appointment as successor
Agent and filing the acceptance with the former Agent and the Company without the signing or filing
of any further statement. The resigning or removed Agent, upon receipt of acceptance in writing of
the agency by the successor Agent, shall execute all documents and do all acts necessary to vest
the title in any successor Agent. Each successor Agent shall have and enjoy all of the powers
conferred under this Plan upon its predecessor. No successor Agent shall be personably liable for
any act or failure to act of any predecessor Agent. With the approval of the Company, a successor
Agent, with respect to the Plan, may accept the account rendered and the property delivered to it
by a predecessor Agent without incurring any liability or responsibility for so doing.

     (h) Limitation of Liability to Participants. The Agent shall not be liable hereunder
for any act or failure to act, including without limitation, any claim of liability (i) arising out
of a failure to terminate a Participant’s Plan Account upon such Participant’s death or
adjudication of incompetency, prior to the receipt by the Agent of notice in writing of such death
or incompetency; or (ii) with respect to the price(s) at which shares of Stock are purchased or
sold for a Participant’s Plan Account, or the timing of any such purchase(s) or sale(s).

Section XXII — Applicable Law

     The Plan shall be construed, administered and governed in all respects under the laws of the
State of Ohio.

Page 9

 

Attachment A

to

KEITHLEY INSTRUMENTS, INC.

1993 EMPLOYEE STOCK PURCHASE AND DIVIDEND REINVESTMENT PLAN

 List of Participating Subsidiary Corporations

Keithley Instruments, GMBH

Keithley Instruments, Ltd.

Keithley Instruments, SARL

Keithley Instruments, BV

Keithley Instruments, Srl

Keithley Instruments, KK

Keithley Instruments, SA

Keithley Instruments International Corporation

Keithley Instruments Sdn Bhd

Page 10

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