Document:

EX-10.2

 

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (hereinafter referred to as this “AGREEMENT”), entered into as of
the 19th day of September, 2006, by and among Greenville Federal Financial Corporation, a federally
chartered mid-tier savings and loan holding company (hereinafter referred to as “HOLDING COMPANY”),
Greenville Federal, a federally chartered savings bank and a wholly-owned subsidiary of HOLDING
COMPANY (hereinafter referred to as “BANK”), and Susan J. Allread, an individual (hereinafter
referred to as the “EMPLOYEE”);

WITNESSETH:

     WHEREAS, the EMPLOYEE is currently employed as the Chief Financial Officer and Secretary of
HOLDING COMPANY and BANK (hereinafter collectively referred to as the “EMPLOYERS”) and Vice
President and Compliance Officer of BANK;

     WHEREAS, as a result of the skill, knowledge and experience of the EMPLOYEE, the Boards of
Directors of the EMPLOYERS desire to retain the services of the EMPLOYEE as the Chief Financial
Officer and Secretary of BANK and of HOLDING COMPANY and as Vice President and Compliance Officer
of BANK;

     WHEREAS, the EMPLOYEE desires to continue to serve as the Chief Financial Officer and
Secretary of BANK and of HOLDING COMPANY and as Vice President and Compliance Officer of BANK; and

     WHEREAS, the EMPLOYEE and the EMPLOYERS desire to enter into this Agreement to set forth the
terms and conditions of the employment relationship between the EMPLOYERS and the EMPLOYEE;

     NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the
EMPLOYERS and the EMPLOYEE hereby agree as follows:

     Section l. Employment and Term. Upon the terms and subject to the conditions of this
AGREEMENT, the EMPLOYERS hereby employ the EMPLOYEE, and the EMPLOYEE hereby accepts employment, as
the Chief Financial Officer and Secretary of BANK and of HOLDING COMPANY and Vice President and
Compliance Officer of BANK. The term of this AGREEMENT shall commence on July 1, 2006, and shall
end on June 30, 2009 (hereinafter referred to as the
“TERM”).

 

 

     Section 2. Duties of EMPLOYEE.

     (a) General Duties and Responsibilities. As an officer of each of the EMPLOYERS, the
EMPLOYEE shall perform the duties and responsibilities customary for such offices to the best of
her ability and in accordance with the policies established by the Boards of Directors of the
EMPLOYERS and all applicable laws and regulations. The EMPLOYEE shall perform such other duties
not inconsistent with her position as may be assigned to her from time to time by the Boards of
Directors of the EMPLOYERS; provided, however, that the EMPLOYERS shall employ the EMPLOYEE during
the TERM in a senior executive capacity without diminishment of the importance or prestige of her
position.

     (b) Devotion of Entire Time to the Business of the EMPLOYERS. The EMPLOYEE shall
devote her entire productive time, ability and attention during normal business hours throughout
the TERM to the faithful performance of her duties under this AGREEMENT. The EMPLOYEE shall not
directly or indirectly render any services of a business, commercial or professional nature to any
person or organization without the prior written consent of the Boards of Directors of the
EMPLOYERS; provided, however, that the EMPLOYEE shall not be precluded from (i) vacations and other
leave time in accordance with Section 3(e) hereof; (ii) reasonable participation in community,
civic, charitable or similar organizations; or (iii) the pursuit of personal investments which do
not interfere or conflict with the performance of the EMPLOYEE’S duties to the EMPLOYERS.

     Section 3. Compensation, Benefits and Reimbursements.

     (a) Salary. The EMPLOYEE shall receive during the TERM an annual salary payable in
equal installments not less often than monthly. The amount of such annual salary shall be $67,500
until changed by the Boards of Directors of the EMPLOYERS in accordance with Section 3(b) of this
AGREEMENT or otherwise.

     (b) Annual Salary Review. Each year throughout the TERM, the annual salary and annual
bonus of the EMPLOYEE shall be reviewed by the Compensation Committee of the Board of Directors of
BANK and shall be set, effective for the next year, at a total amount of not less than $67,500,
based upon the EMPLOYEE’S individual performance and the overall profitability and financial
condition of the EMPLOYERS (hereinafter referred to as the “ANNUAL REVIEW”). The results of the
ANNUAL REVIEW shall be reflected in the minutes of the Compensation Committee.

     (c) Expenses. In addition to any compensation received under Section 3(a) or (b) of
this AGREEMENT, the EMPLOYERS shall pay or reimburse the EMPLOYEE for all reasonable travel,
entertainment and miscellaneous expenses incurred in connection with the performance of her duties
under this AGREEMENT. Such reimbursement shall be made in accordance with the existing policies
and procedures of the EMPLOYERS pertaining to reimbursement of expenses to senior management
officials.

 

 

     (d) Employee Benefit Program.

     (i) During the TERM, the EMPLOYEE shall be entitled to participate in all formally
established employee benefit, bonus, pension and profit-sharing plans and similar programs
that are maintained by the EMPLOYERS from time to time, including programs in respect of
group health, disability or life insurance, reimbursement of membership fees in civic,
social and professional organizations and all employee benefit plans or programs hereafter
adopted in writing by the Boards of Directors of the EMPLOYERS, for which senior management
personnel are eligible, including any employee stock ownership plan, stock option plan or
other stock benefit plan (hereinafter collectively referred to as the “BENEFIT PLANS”).
Notwithstanding the foregoing sentence, the EMPLOYERS may discontinue or terminate at any
time any such BENEFIT PLANS, now existing or hereafter adopted, to the extent permitted by
the terms of such plans and shall not be required to compensate the EMPLOYEE for such
discontinuance or termination.

     (ii) After the expiration of the TERM or the termination of the employment of the
EMPLOYEE for any reason other than JUST CAUSE (as defined hereinafter) and other than under
the circumstances set forth in Section 4(a)(ii), the EMPLOYERS shall provide a group health
insurance program in which the EMPLOYEE and her spouse will be eligible to participate until
both the EMPLOYEE and her spouse become 65 years of age; provided, however that all premiums
for such program shall be paid by the EMPLOYEE and/or her spouse after the EMPLOYEE’S
termination of employment; provided further, however, that the EMPLOYEE and her spouse may
only participate in such program for as long as the EMPLOYERS make available an employee
group health insurance program which permits the EMPLOYERS to make coverage available for
similarly situated retirees. In addition to the foregoing provisions of this subsection
3(d)(ii), if the EMPLOYERS make available an employee group health insurance program that
would permit terminated employees and their spouses to continue to be covered past age 65,
the EMPLOYEE shall be permitted to participate in such program, with all premiums paid by
the EMPLOYEE and/or her spouse, for so long as the EMPLOYERS maintain such a program;
provided, however, that the EMPLOYERS shall not be required to provide or maintain such a
program.

     (e) Vacation and Sick Leave. The EMPLOYEE shall be entitled, without loss of pay, to
be absent voluntarily from the performance of her duties under this AGREEMENT, subject to the
following conditions:

     (i) The EMPLOYEE shall be entitled to an annual vacation in accordance with the
policies periodically established by the Boards of Directors of the EMPLOYERS for senior
management officials of the EMPLOYERS, the duration of which shall not be less than 3 weeks
each calendar year;

 

 

     (ii) Vacation time shall be scheduled by the EMPLOYEE in a reasonable manner and shall
be subject to approval by the Boards of Directors of the EMPLOYERS. The EMPLOYEE shall not
be entitled to receive any additional compensation from the EMPLOYERS in the event of her
failure to take the full allotment of vacation time in any calendar year; and

     (iii) The EMPLOYEE shall be entitled to annual sick leave as established by the Boards
of Directors of the EMPLOYERS for senior management officials of the EMPLOYERS. In the
event that any sick leave time shall not have been used during any calendar year, such leave
shall accrue to subsequent calendar years only to the extent authorized by the Boards of
Directors of the EMPLOYERS. Upon termination of employment, the EMPLOYEE shall not be
entitled to receive any additional compensation from the EMPLOYERS for unused sick leave.

     Section 4. Termination of Employment.

     (a) General. The employment of the EMPLOYEE shall terminate at any time during the
TERM (i) at the option of the EMPLOYERS, upon the delivery by the EMPLOYERS of written notice of
termination to the EMPLOYEE, or (ii) at the option of the EMPLOYEE, upon delivery by the EMPLOYEE
of written notice of termination to the EMPLOYERS if the present capacity or circumstances in which
the EMPLOYEE is employed are materially adversely changed without the EMPLOYEE’s written consent,
including, but not limited to, a material reduction in responsibilities or authority, the
assignment of duties or responsibilities substantially inconsistent with those normally associated
with the EMPLOYEE’S position described in Section 2(a) of this AGREEMENT, a change of title, the
requirement that the EMPLOYEE regularly perform her principal executive functions more than
thirty-five (35) miles from her primary office as of the date of this AGREEMENT or the reduction of
the EMPLOYEE’S benefits provided under this AGREEMENT, unless the benefit reductions are part of a
company-wide reduction. The following subsections (I), (II) and (III) of this Section 4(a) shall
govern the obligations of the EMPLOYERS to the EMPLOYEE upon the occurrence of the events described
in such subparagraphs:

     (I) Termination for JUST CAUSE. In the event that the EMPLOYERS terminate the
employment of the EMPLOYEE during the TERM because of the EMPLOYEE’S personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure or refusal to perform the duties and responsibilities assigned in this
AGREEMENT, willful violation of any law, rule, regulation or final cease-and-desist order
(other than traffic violations or similar offenses), conviction of a felony or for fraud or
embezzlement, or material breach of any provision of this AGREEMENT (hereinafter
collectively referred to as “JUST CAUSE”), the EMPLOYEE shall not receive, and shall have no
right to receive, any compensation or other benefits for any period after such termination.

 

 

     (II) Termination after CHANGE OF CONTROL. In the event that, before the
expiration of the TERM and in connection with or within one year after a CHANGE OF CONTROL
(as defined hereinafter) of either one of the EMPLOYERS, the employment of the EMPLOYEE is
terminated for any reason other than JUST CAUSE or is terminated by the EMPLOYEE as provided
in Section 4(a)(ii) above, then the following shall occur:

     (A) The EMPLOYERS shall promptly pay to the EMPLOYEE or to her dependents,
beneficiaries or estate an amount equal to the sum of (l) the amount of compensation
to which the EMPLOYEE would be entitled for the remainder of the TERM under this
AGREEMENT, plus (2) the difference between (x) the product of three, multiplied by
the EMPLOYEE’S “base amount” [as defined in Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended and applicable regulations of the Internal Revenue
Service] as of the date of the CHANGE OF CONTROL, less (y) the sum of (i) $1.00 plus
(ii) the amount paid to the EMPLOYEE pursuant to clause (l) of this subparagraph
(A);

     (B) The EMPLOYEE, her dependents, beneficiaries and estate shall be covered under either
the health, life and disability plans of the EMPLOYERS or the health, life and disability plans
of the successors, survivors or assigns of the EMPLOYERS, or under substantially equivalent
coverage obtained elsewhere if coverage under the plans of the EMPLOYERS or the EMPLOYERS’
successor, survivor or assign is not available, without any material diminution in coverage or
benefit at the expense of the EMPLOYERS or the successors, survivors or assigns of the EMPLOYERS
as if the EMPLOYEE were still employed under this AGREEMENT until the earliest of the expiration
of the TERM or the date on which the EMPLOYEE is included in another employer’s benefit plans as
a full-time employee; and

     (C) The EMPLOYEE shall not be required to mitigate the amount of any payment
provided for in this AGREEMENT by seeking other employment or otherwise, nor shall
any amounts received from other employment or otherwise by the EMPLOYEE offset in
any manner the obligations of the EMPLOYERS hereunder, except as specifically stated
in subparagraph (B) above.

Provided, however, that in the event that the value of the payments pursuant to this
subsection (II), when combined with the value of other payments attributable to the same
CHANGE OF CONTROL, would result in the imposition of a penalty tax pursuant to Section
280G(b)(3) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder (hereinafter collectively referred to as “SECTION 280G”), such payments shall be
reduced to the maximum amount which may be paid under SECTION 280G without exceeding such
limits. This reduction will be applied through the following procedure:

(Y) First, at least 30 days before the payment is due under this subsection (II), the
EMPLOYER will apprise the EMPLOYEE of the value of each of the benefits payable because
of the CHANGE OF CONTROL and the maximum amount which may be paid under SECTION 280G
without exceeding such limits and afford the

 

 

EMPLOYEE an opportunity to select the benefit (or portion of the benefit) to be reduced.

(Z) Second, if, before the end of that 30 day period, the EMPLOYEE apprises the EMPLOYER
in writing of the benefit or benefits to be reduced (and the amount of each reduction),
the EMPLOYEE’S election will be implemented and, subject to the next subparagraph, the
adjusted payment made promptly.

But, if, before the end of that 30 day period, the EMPLOYEE does not apprise the EMPLOYER of
the benefit or benefits to be reduced or if the amount of the reductions the EMPLOYEE
specifies does not reduce the value of all benefits payable because of the CHANGE OF CONTROL
to the maximum amount that may be paid under SECTION 280G without exceeding such limits, the
EMPLOYER will reduce the amount payable under this agreement by an amount needed to ensure
that the limits imposed under SECTION 280G are not exceeded.

     (III) Termination Without CHANGE OF CONTROL. In the event that the employment
of the EMPLOYEE is terminated before the expiration of the TERM for any reason other than
death, JUST CAUSE or in connection with or within one year after a CHANGE OF CONTROL, the
EMPLOYERS shall be obligated to continue (A) to pay on a monthly basis to the EMPLOYEE, her
dependents, beneficiaries or estate her annual salary provided pursuant to Section 3(a) or
(b) of this AGREEMENT until the expiration of the TERM and (B) to provide to the EMPLOYEE,
her dependents, beneficiaries and estate at the EMPLOYERS’ expense, health, life, disability
and other benefits substantially equal to those being provided to the EMPLOYEE at the date
of termination of her employment until the earliest to occur of the expiration of the TERM
or the date the EMPLOYEE becomes employed full-time by another employer; provided, however,
that in the event that payments pursuant to this subsection (III) would result in the
imposition of a penalty tax pursuant to SECTION 280G, such payments shall be reduced to the
maximum amount which may be paid under SECTION 280G without exceeding those limits. The
EMPLOYEE shall not be required to mitigate the amount of any payment provided for in this
AGREEMENT by seeking other employment or otherwise, nor shall any amounts received from
other employment or otherwise by the EMPLOYEE offset in any manner the obligations of the
EMPLOYERS hereunder, except as specifically stated in subparagraph (III)(B) above.

     (b) Death of the EMPLOYEE. The TERM automatically terminates upon the death of the
EMPLOYEE, unless the employment of EMPLOYEE has been terminated prior to EMPLOYEE’s death pursuant
to Section 4(a) of this AGREEMENT. In the event of such death, the EMPLOYEE’S estate shall be
entitled to receive the compensation due the EMPLOYEE through the last day of the calendar month in
which the death occurred, except as otherwise specified herein.

     (c) “Golden Parachute” Provision. Any payments made to the EMPLOYEE pursuant to this
AGREEMENT, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
§1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.

 

 

	 	(e)	 	Definition of “CHANGE OF CONTROL”. A “CHANGE OF CONTROL” shall mean
any one of the following events: (i) the acquisition of ownership or power to vote more
than 25% of the voting stock of either of the EMPLOYERS; (ii) the acquisition of the
ability to control the election of a majority of the directors of either of the
EMPLOYERS; (iii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of HOLDING COMPANY or BANK
cease for any reason to constitute at least a majority thereof; provided, however, that
any individual whose election or nomination for election as a member of the Board of
Directors of HOLDING COMPANY or BANK was approved by a vote of at least two-thirds of
the directors then in office shall be considered to have continued to be a member of
the Board of Directors of HOLDING COMPANY or BANK; (iv) the occurrence of a reorganization,
consolidation or similar transaction as a
result of which at least 60% of the shares of the common stock of the resulting
entity are owned by persons who were not stockholders of HOLDING COMPANY or BANK
immediately prior to the consummation of the transaction; or (v) the sale or
transfer of substantially all of the assets of BANK to another person that is not
controlled by HOLDING COMPANY or BANK. For purposes of this paragraph, the term
“person” refers to an individual or corporation, partnership, trust, association, or
other organization, but does not include the EMPLOYEE and any person or persons with
whom the EMPLOYEE is “acting in concert” within the meaning of 12 C.F.R. Part 574.

     Notwithstanding the foregoing, in no event shall (I) the ownership of stock of BANK by HOLDING
COMPANY or the ownership of stock of HOLDING COMPANY by Greenville Federal MHC, or (II) the
conversion of the EMPLOYERS or Greenville Federal MHC from the mutual holding company form of
organization to the full stock form of organization, constitute a CHANGE OF CONTROL.

     Section 5. Special Regulatory Events. Notwithstanding Section 4 of this AGREEMENT,
the obligations of the EMPLOYERS to the EMPLOYEE shall be as follows in the event of the following
circumstances:

     (a) If the EMPLOYEE is suspended and/or temporarily prohibited from participating in the
conduct of the EMPLOYERS’ affairs by a notice served under Section 8(e)(3) or (g)(1) of the Federal
Deposit Insurance Act (hereinafter referred to as the “FDIA”), the EMPLOYERS’ obligations under
this AGREEMENT shall be suspended as of the date of service of such notice, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the EMPLOYERS may, in their
discretion, pay the EMPLOYEE all or part of the compensation withheld while the obligations in this
AGREEMENT were suspended and reinstate, in whole or in part, any of the obligations that were
suspended.

     (b) If the EMPLOYEE is removed and/or permanently prohibited from participating in the conduct
of the EMPLOYERS’ affairs by an order issued under Section 8(e)(4) or (g)(l) of the FDIA, all
obligations of the EMPLOYERS under this AGREEMENT shall terminate as of the effective date of such
order; provided, however, that vested rights of the EMPLOYEE shall not be affected by such
termination.

 

 

     (c) If the EMPLOYERS are in default, as defined in Section 3(x)(1) of the FDIA, all
obligations under this AGREEMENT shall terminate as of the date of default; provided, however, that
vested rights of the EMPLOYEE shall not be affected.

     (d) All obligations under this AGREEMENT shall be terminated, except to the extent of a
determination that the continuation of this AGREEMENT is necessary for the continued operation of
the EMPLOYERS, (i) by the Director of the Office of Thrift Supervision (hereinafter referred to as
the “OTS”), or his or her designee, at the time that the Federal Deposit Insurance Corporation
enters into an agreement to provide assistance to or on behalf of the EMPLOYERS under the authority
contained in Section 13(c) of the FDIA; or (ii) by the Director of the OTS, or his or her designee,
at any time the Director of the OTS, or his or her designee, approves a supervisory merger to
resolve problems related to the operation of the EMPLOYERS or when the EMPLOYERS are determined by
the Director of the OTS to be in an unsafe or unsound condition. No vested rights of the EMPLOYEE
shall be affected by any such action.

     Section 6. Consolidation, Merger or Sale of Assets. Nothing in this AGREEMENT shall
preclude the EMPLOYERS from consolidating with, merging into, or transferring all, or substantially
all, of their assets to another corporation that assumes all of the EMPLOYERS’ obligations and
undertakings hereunder. Upon such a consolidation, merger or transfer of assets, the term
“EMPLOYERS” as used herein shall mean such other corporation or entity and this AGREEMENT shall
continue in full force and effect; provided, however, that the assumption of the EMPLOYERS’
obligations and undertakings hereunder shall not affect the EMPLOYEE’S right to payments pursuant
to Section 4(a)(II) of this AGREEMENT in connection with such consolidation, merger or transfer of
assets.

     Section 7. Confidential Information. The EMPLOYEE acknowledges that during her
employment she will learn and have access to confidential information regarding the EMPLOYERS and
their customers and businesses. The EMPLOYEE agrees and covenants not to disclose or use for her
own benefit, or the benefit of any other person or entity, any confidential information, unless or
until the EMPLOYERS’ consent to such disclosure or use or such information becomes common knowledge
in the industry or is otherwise legally in the public domain. The EMPLOYEE shall not knowingly
disclose or reveal to any unauthorized person any confidential information relating to the
EMPLOYERS, their subsidiaries or affiliates, or to any of the businesses operated by them, and the
EMPLOYEE confirms that such information constitutes the exclusive property of the EMPLOYERS. The
EMPLOYEE shall not otherwise knowingly act or conduct herself (a) to the material detriment of the
EMPLOYERS, their subsidiaries, or affiliates, or (b) in a manner which is inimical or contrary to
the interests of the EMPLOYERS.

     Section 8. Nonassignability. Neither this AGREEMENT nor any right or interest
hereunder shall be assignable by the EMPLOYEE, her beneficiaries, or legal representatives without
the EMPLOYERS’ prior written consent; provided, however, that nothing in this Section 8 shall
preclude (a) the EMPLOYEE from designating a beneficiary to receive any benefits payable hereunder
upon her death, or (b) the executors, administrators, or other legal representatives of the
EMPLOYEE or her estate from assigning any rights hereunder to the person or persons entitled
thereto.

 

 

     Section 9. No Attachment. Except as required by law, no right to receive payment
under this AGREEMENT shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy, or
similar process of assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void and of no effect.

     Section 10. Binding Agreement. This AGREEMENT shall be binding upon, and inure to the
benefit of, the EMPLOYEE and the EMPLOYERS and their respective permitted successors and assigns.

     Section 11. Amendment of AGREEMENT. This AGREEMENT may not be modified or amended,
except (a) by an instrument in writing signed by the parties hereto, or (b) by the EMPLOYERS
without any additional consideration to the EMPLOYEE, to the extent deemed necessary by the
EMPLOYERS upon the advice of legal counsel to avoid penalties arising under Section 409A of the
Internal Revenue Code of 1986, as amended, and regulations thereunder, even if those amendments
reduce, restrict or eliminate rights granted under this AGREEMENT.

     Section 12. Waiver. No term or condition of this AGREEMENT shall be deemed to have
been waived, nor shall there be an estoppel against the enforcement of any provision of this
AGREEMENT, except by written instrument of the party charged with such waiver or estoppel. No such
written waiver shall be deemed a continuing waiver, unless specifically stated therein, and each
waiver shall operate only as to the specific term or condition waived and shall not constitute a
waiver of such term or condition for the future or as to any act other than the act specifically
waived.

     Section 13. Severability. If, for any reason, any provision of this AGREEMENT is held
invalid, such invalidity shall not affect the other provisions of this AGREEMENT not held so
invalid, and each such other provision shall, to the full extent consistent with applicable law,
continue in full force and effect. If this AGREEMENT is held invalid or cannot be enforced, then
any prior AGREEMENT between the EMPLOYERS (or any predecessor thereof) and the EMPLOYEE shall be
deemed reinstated to the full extent permitted by law, as if this AGREEMENT had not been executed.

     Section 14. Headings. The headings of the paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of any of the
provisions of this AGREEMENT.

     Section 15. Governing Law. This AGREEMENT has been executed and delivered in the
State of Ohio and its validity, interpretation, performance, and enforcement shall be governed by
the laws of this State of Ohio, except to the extent that federal law is governing.

     Section 16. Effect of Prior Agreements. This AGREEMENT contains the entire
understanding between the parties hereto and supersedes any prior employment agreement between the
EMPLOYERS and the EMPLOYEE, each of which is hereby terminated and is of no further force or
effect.

 

 

     Section 17. Notices. Any notice or other communication required or permitted pursuant
to this AGREEMENT shall be deemed delivered if such notice or communication is in writing and is
delivered personally or by facsimile transmission or is deposited in the United States mail,
postage prepaid, addressed as follows:

     If to HOLDING COMPANY and/or BANK:

Greenville Federal

690 Wagner Avenue

Greenville, OH 45331

Attention: President

     With copies to:

Vorys, Sater, Seymour and Pease LLP

Suite 2000, Atrium Two

221 East Fourth Street

Cincinnati, Ohio 45202

Attention: Cynthia A. Shafer

     If to the EMPLOYEE to:

Ms. Susan J. Allread

430 Circle Drive

Greenville, OH 45331

 

 

IN WITNESS WHEREOF, the EMPLOYERS have caused this AGREEMENT to be executed by their duly
authorized officers, and the EMPLOYEE has signed this AGREEMENT, each as of the day and year first
above written.

	 	 	 	 	 	 	 	 	 
	Attest:	 	 	 	GREENVILLE FEDERAL FINANCIAL	 	 
	 	 	 	 	CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ David Feltman

	 	 	 	By
	 	/s/ James W. Ward	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	James W. Ward	 	 
	 

	 	 	 	 	 	its Chairman	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:	 	 	 	GREENVILLE FEDERAL	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ David Feltman

	 	 	 	By
	 	/s/ James W. Ward	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	James W. Ward	 	 
	 

	 	 	 	 	 	its Chairman	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ David Feltman	 	 	 	/s/ Susan J. Allread	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Susan J. Allreadexv4w1

 

Exhibit 4.1

THIRD AMENDMENT TO CREDIT FACILITY AGREEMENT

     THIS THIRD AMENDMENT, dated as of the 20th day of September, 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 and a Second Amendment to Credit Facility
Agreement dated as of June 14, 2006 (as so amended, 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. Definition Added. The following new definition shall be added to the
Agreement:

     “Bank Guarantee” shall mean a Bank Guarantee issued by the Bank’s Shanghai, China
branch as described in Article 3 of this Agreement.

     3. 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 availability under the Revolving Line shall be used to meet the Borrower’s letter
of credit and working capital requirements, and the bank guarantee requirements of the
Borrower’s Chinese subsidiary, Graham Vacuum and Heat Transfer Technology (Suzhou) Co., Ltd.
(“Graham China”). 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, (b) the outstanding
amounts of all Bank Guarantees, and (c) the outstanding principal amount of all Term Loans,
does not exceed $20,000,000.00.

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

ARTICLE 3 — LETTERS OF CREDIT AND BANK GUARANTEES

     3.1 Letters of Credit and Bank Guarantees. Subject to the terms and
conditions of this Agreement, the Bank agrees that it will make Letters of Credit available
for the account of the Borrower and will cause its Shanghai, China branch to make Bank
Guarantees available for the account of Graham China in an aggregate amount not

1

 

exceeding the lesser of (a) Twelve Million, Five Hundred Thousand Dollars
($12,500,000), and (b) the availability under the Revolving Line. The Borrower agrees that
it will guarantee to the Bank all obligations of Graham China pursuant to the Bank
Guarantees. Letters of Credit and Bank Guarantees will be made promptly available for the
Borrower’s or Graham China’s work in process (to support customer progress payments) or as
otherwise requested by Borrower or Graham China for general business purposes. The undrawn
amount/amount outstanding under all Letters of Credit and Bank Guarantees shall reduce the
amount available for advances under the Revolving Line at 100% of the undrawn amount of each
Letter of Credit and 105% of the outstanding amount of each Bank Guarantee. Bank Guarantees
will be issued in RMB and, for purposes of the preceding sentence, the Bank will revalue the
outstanding amount of Bank Guarantees from time to time at its discretion. If as a result
of currency fluctuations the value in US Dollars of outstanding Bank Guarantees has
increased by more than 5%, the amount available under the Revolving Credit shall be
correspondingly reduced by the amount of the excess. The Letters of Credit and Bank
Guarantees 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 and Bank Guarantees in
the aggregate face amount of up to $7,500,000.00 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 undrawn/outstanding amount of all Letters of Credit and
Bank Guarantees issued for both the Borrower and Graham China may never exceed
$12,500,000.00, with initial sublimits of $11,000,000.00 in Letters of Credit for the
Borrower and $1,500,000.00 in Bank Guarantees 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
commissions to the Bank on the date of issuance of each Letter of Credit and Bank Guarantee
and on each anniversary date thereafter if the Letter of Credit or Bank Guarantee is renewed
or has a maturity in excess of one year from the date of issuance, at the per annum rate of
one and one-quarter of one percent (1.25%) of the undrawn amount thereof for Standby Letters
of Credit and for Bank Guarantees, and one-quarter of one percent (0.25%) of the undrawn
amount thereof for Documentary Letters of Credit. Commissions on Letters of Credit and Bank
Guarantees having maturities of less than one year remaining 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 and Bank Guarantee 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 and Bank Guarantees issued for its
account. Among other items, the Reimbursement Agreement will require immediate
reimbursement to the Bank for all amounts drawn under the Letters of Credit and Bank
Guarantees, 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

2

 

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. The Borrower agrees that it will be
responsible for any foreign exchange or conversion costs related to converting RMB to United
States Dollars for any drawings under Bank Guarantees, and such costs shall be added to
amounts outstanding under the Revolving Line.

     5. Section 10.3. Section 10.3 of the Agreement shall be amended to read as follows:

     10.3 Contingent Liabilities. (i) assume, guarantee, endorse, contingently agree
to purchase, or otherwise become liable in any manner upon obligations in the aggregate
exceeding $150,000 at any time during the term of this Agreement, contingent or otherwise,
whether funded or current except for endorsement of negotiable instruments for deposit,
collection, or similar transactions in the ordinary course of business and except for
guarantees in favor of the Bank, (ii) guarantee the dividends of any Person, or (iii) become
the general partner in any partnership.

     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.

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

	 	/s/ Collen O’Brien
	 	 	 	By:
	 	/s/Ron Hansen
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	Colleen O’Brien

Vice President
	 	 	 	Title:
	 	Ron Hansen

Vice President
	 

	 	 
	 	 	 	 	 	 

4

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