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Exhibit 10.20
EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT (this "Agreement") is entered into this 30th
day of November, 1998, by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (the "Employee") and
Charter One Financial, Inc. (the "Company").
WHEREAS, the Company has entered into an Agreement and Plan of Merger
dated as of June 15, 1998 (the "Acquisition Agreement"), under which ALBANK
Financial Corporation ("AFC") shall be acquired by the Company by merger of AFC
into the Company's wholly owned subsidiary, Charter-Michigan Bancorp, Inc.
("Charter-Michigan"), and AFC's wholly-owned subsidiary, ALBANK, F.S.B.("ALBANK
FSB"), shall be merged into Charter-Michigan's wholly-owned subsidiary, Charter
One Bank, F.S.B. (the "Bank"),
WHEREAS, to maximize the value to be received by the Company in the
transactions contemplated by the Acquisition Agreement, the Company believes it
is essential to retain the services of the Employee on a long-term basis in
order to integrate operations, assure customer retention and customer
development, facilitate long term strategic planning in the State of New York
and otherwise to enhance the acquired franchise,
WHEREAS, from and after the Effective Date, the Company desires to
employ the Employee, and the Employee is willing to be employed, on the terms
set forth below, and
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") has approved the execution of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
I. DEFINITIONS.
A. BOARD OF DIRECTORS. "Board of Directors" means the Board of
Directors of the Company.
B. CHANGE IN CONTROL PAYMENT. "Change in Control Payment" means the
payment to the Employee required under Paragraph (a) of Section (2) of the
Letter Agreement.
C. DISABILITY. "Disability" means a mental or physical infirmity of the
Employee which impairs his ability to perform substantially his duties and
responsibilities under this Agreement and which results in (i) eligibility of
the Employee under the long-term disability plan of the Company or the Bank, if
any; or (ii) inability of the Employee to perform substantially his duties and
responsibilities under this Agreement for a period of 365 consecutive days.
D. EFFECTIVE DATE. "Effective Date" means the date of the consummation
of the merger of AFC into Charter-Michigan pursuant to the Acquisition
Agreement.
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E. INVOLUNTARY TERMINATION. The term "Involuntarily Termination" means
the termination of the employment of Employee by the Company without his express
written consent. The term "Involuntary Termination" does not include Termination
for Cause or termination of employment due to death or Disability or suspension
or temporary or permanent prohibition from participation in the conduct of the
affairs of the Bank or another depository institution under Section 8 of the
Federal Deposit Insurance Act.
F. LETTER AGREEMENT. "Letter Agreement" means the letter agreement
dated June 15, 1998, by and among AFC, the Company, Charter-Michigan and the
Bank.
G. NON-COMPETE PERIOD. "Non-Compete Period" (i) means the period of six
months following the later of (a) cessation of services as a director of the
Company and (b) termination of the employment of the Employee for any reason
including but not limited to expiration of the Term but excluding Termination
for Cause, Voluntary Termination when the Employee is in breach of this
Agreement and Involuntary Termination; (ii) in the case of Termination for
Cause, Voluntary Termination when the Employee is in breach of this Agreement
and Involuntary Termination, means the earlier to expire of (a) the period of
eighteen months following the termination of the Employee's employment and (b)
the period of six months after the expiration of the Term.
H. TERM. "Term" means the period commencing on the Effective Date and
concluding on September 30, 2003.
I. TERMINATION FOR CAUSE AND TERMINATED FOR CAUSE. "Termination for
Cause" and "Terminated For Cause" mean termination of the employment of the
Employee by the Company because of the Employee's personal dishonesty, willful
misconduct, breach of a fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule, or
regulation (other than traffic violations or similar offenses) which results in
material loss to the Company or final cease-and-desist order, or material breach
of any provision of this Agreement. No act or failure to act by the Employee
shall be considered willful unless the Employee acted or failed to act with an
absence of good faith and without a reasonable belief that his action or failure
to act was in the best interest of the Company. The Employee shall not be deemed
to have been Terminated for Cause unless and until there shall have been
delivered to the Employee a copy of a resolution, duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board of Directors at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Employee and an opportunity for the
Employee, together with the Employee's counsel, to be heard before the Board),
stating that in the good faith opinion of the Board of Directors the Employee
has engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
J. VOLUNTARY TERMINATION. "Voluntary Termination" means the voluntary
termination of employment under this Agreement by the Employee.
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II. EMPLOYMENT.
A. SERVICES. In addition to serving as a Vice Chairman of the Company
in accordance with the Letter Agreement, the Employee shall be employed by the
Company under this Agreement until the expiration of the Term, unless his
employment is terminated sooner by Voluntary Termination, Involuntary
Termination or Termination for Cause or due to Disability or death. As an
employee, he shall report to the Chief Executive Officer of the Company and
shall have such duties and authority as are specified by the Chief Executive
Officer or the Board of Directors from time to time, and that are consistent
with the Employee's status as a Vice Chairman of the Company and the former
Chairman of the Board and Chief Executive Officer of AFC and ALBANK FSB,
including but not limited to advising the Company and its affiliates concerning:
1. integration of the operations of ALBANK FSB into the
operations of the Bank,
2. integration of the operations of subsidiaries of AFC into
the operations of subsidiaries of the Company,
3. the market areas of and communities served by ALBANK FSB
and other subsidiaries of AFC prior to the Effective Date,
4. the customers and potential customers of AFC, subsidiaries
of AFC, the Company and subsidiaries of the Company,
5. long term strategic planning for the Company and its
affiliates generally, and
6. such other matters as may be reasonably requested from time
to time by the Chief Executive Officer of the Company.
B. EMPLOYEE'S LOCATION. The Employee shall provide the services
contemplated hereunder principally from the Albany, New York, location of AFC,
provided that the Employee shall be available, to the extent requested by the
Company, to provide services under this Agreement at such times and such other
places reasonably designated by the Company. The Employee shall be provided with
an office and other facilities and services that are consistent with his status
as a Vice Chairman of the Company and his duties hereunder.
III. COMPENSATION AND BENEFITS.
A. SALARY. The Company shall pay the Employee in cash an annual salary
at the rate of four hundred forty-two thousand one hundred dollars ($442,100)
per year, pro rata for any partial year, in regular increments consistent with
the Company's salary payments to its executive officers.
B. HEALTH INSURANCE; WELFARE PROGRAMS. The Employee shall be entitled
to continue to participate in the ALBANK Group Health Plan through the later of
the Effective Date or
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December 31, 1998 and thereafter he shall be entitled to participate in the COFI
Group Health Plan. The Employee shall be entitled to participate in all other
welfare plans and programs of the Company or the Bank available to similarly
situated executives of the Company and the Bank.
C. LIFE INSURANCE. The Company shall continue to maintain in effect for
the benefit of the Employee the current term life insurance policy on his life
with a death benefit of two million, five hundred thousand dollars ($2,500,000),
payable to such beneficiaries as he may designate in writing.
D. CLUB DUES. The Company shall pay the Employee's fees and charges
associated with membership in ▇▇▇▇▇▇▇'▇ Roost Country Club and Fort Orange Club
consistent with past practices of AFC and ALBANK FSB.
E. TAX GROSS UP PAYMENTS. The Company shall gross up the Employee with
respect to the tax payable with respect to the benefits payable to the Employee
under Paragraphs C. and D. of this Section III., in a manner consistent with the
past practice of ALBANK FSB.
F. VACATION. The Employee shall be entitled to paid vacation in
accordance with the Company's policies applicable to similarly situated
executives.
G. STOCK OPTIONS. The Company shall grant to the Employee annually
options to purchase shares of common stock of the Company at an exercise price
per share equal to the fair market value of such shares on the date of the
grant, and otherwise on the same basis as, and subject to written agreements
evidencing such grants on the same terms as, options awarded to similarly
situated executives of the Company except that (i) the agreements evidencing
such grants shall provide for three year cliff vesting, (ii) the first such
grant shall be for approximately 86,000 shares, consistent with the Company's
practice in making grants to similarly situated executives and (iii) with
respect to grants of options, other than such first grant, which by their terms
would vest after the Employee's retirement, the agreements evidencing such
options shall provide that at such retirement a fraction of such options shall
vest, which fraction shall have a numerator equal to the number of calendar days
during the "vesting period" (as defined below) that have elapsed as of such
retirement and a denominator equal to the number of calendar days in the vesting
period. For purposes of this Section III.G., the term "vesting period" shall
mean the period commencing on the date of grant of an option and concluding on
the date on which such option would vest under the terms of the grant but for
the provision in the preceding sentence concerning vesting at the Employee's
retirement.
H. EXPENSES. The Company shall promptly reimburse the Employee for
reasonable, ordinary and necessary expenses incurred by him in the performance
of his duties under this Agreement, consistent with Company policies for
similarly situated executives then in effect.
I. NO OTHER BENEFITS. The Employee shall not be entitled to any
benefits or to participate in any welfare or pension plans or programs of the
Company or its affiliates except as expressly set forth in this Agreement and
the Letter Agreement.
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IV. TERMINATION OF EMPLOYMENT.
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A. INVOLUNTARY TERMINATION. In the event of Involuntary Termination
prior to the expiration of the Term, the Company shall, subject to Paragraph C.
of this Section IV., (i) pay to the Employee in a cash lump sum the amount of
salary that would be payable to the Employee under Paragraph A. of Section III.
of this Agreement during the remaining portion of the Term if he remained
employed until the expiration of the Term and (ii) provide to the Employee
during the remaining portion of the Term the other benefits provided for in
Paragraphs B. through E. of Section III. of this Agreement on the same terms as
if he had remained employed until the expiration of the Term. Following
Involuntary Termination, options granted previously to the Employee shall be
treated in accordance with the written agreements evidencing the grants of such
options, and no other options shall be granted.
B. DISABILITY. In the event of the Disability of the Employee during
the Term as reasonably determined by the Company, the Company shall be entitled
to terminate his employment under this Agreement, and shall, subject to
Paragraph C. of this Section IV., (i) pay to him or his legal representatives
75% of the cash lump sum salary payment that would have been payable under
Paragraph A. of this Section IV. as if Involuntary Termination had occurred on
the date as of which the Company terminates his employment due to Disability and
(ii) provide to the Employee during the remaining portion of the Term the other
benefits provided for in Paragraphs B. through E. of Section III. of this
Agreement on the same terms as if he had remained employed until the expiration
of the Term. Following such termination of employment due to Disability, options
previously granted to the Employee shall be treated in accordance with the
written agreements evidencing the grants of such options and no other options
shall be granted.
C. MITIGATION. In the event that following an Involuntary Termination
or termination of employment due to Disability, the Employee earns cash income
from providing services other than to the Company or any of it subsidiaries
prior to the expiration of the Term, he shall reimburse the amount of such
income to the Company up to the amount of the lump sum payment of salary made
pursuant to Paragraph A. or B. of this Section IV. In the event that following
an Involuntary Termination or termination of employment due to Disability, the
Employee becomes entitled, prior to the expiration of the Term in connection
with employment other than by the Company or any of its subsidiaries, to
benefits similar to those provided to him under Paragraphs B. through E. of
Section III. of this Agreement, the Company's obligation to provide such
benefits shall be reduced to the extent, if any, that the Employee receives
substantially similar benefits, on substantially as favorable terms, from
another employer during such period.
D. DEATH. In the event of the death of the Employee while employed
under this Agreement, the Company shall pay to his beneficiaries 25% of the cash
lump sum salary payment that would have been payable under Paragraph A. of this
Section IV. if Involuntary Termination had occurred on the date of his death and
options granted to the Employee pursuant to Paragraph G. of Section III. of this
Agreement shall be treated in accordance with the written agreements evidencing
the grant of such options and no other options shall be granted.
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E. TERMINATION FOR CAUSE AND VOLUNTARY TERMINATION. In the event of
Termination for Cause or Voluntary Termination, the Company shall pay salary and
provide benefits to the Employee through the date of termination of his
employment and shall have no further obligation to the Employee thereafter
pursuant to Section III. or Section IV. of this Agreement.
V. COVENANT NOT TO COMPETE.
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WHILE employed by or serving as a director of the Company and during
the Non-Compete Period, the Employee shall not be employed by or render any
services to any depository institution or holding company thereof which
depository institution or an affiliate of such institution has an office or
accepts deposits in the Albany, New York metropolitan area.
VI. NON-SOLICITATION.
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While employed by or serving as a director of the Company or any of its
affiliates and during the Non-Compete Period, the Employee shall not, directly
or indirectly, individually or on behalf of another person or entity, solicit,
aid or induce (i) then employees of the Company or any of its affiliates to
leave their employment in order to accept employment with or render services to
or with a depository institution that is not an affiliate of the Company, or an
affiliate of such an institution, or (ii) then customers of the Company or its
affiliates to purchase products or services then sold by the Company or its
affiliates from any other person or entity.
VII. NON-DISCLOSURE.
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The Employee agrees that all information pertaining to the prior,
current or contemplated business of the Company and its affiliates (including,
for purposes of this Section VII., AFC and its subsidiaries), exclusive of (i)
publicly available information in substantially the form in which it is publicly
available and (ii) information of a general nature not pertaining exclusively to
the Company or its affiliates which would be generally acquired in positions
similar to those in which the Employee has been employed, constitutes valuable
and confidential assets of the Company and its affiliates. Such information
includes, without limitation, information related to trade secrets, supplier
lists, customer lists, financing techniques, financing sources and financial
information of the Company and its affiliates. The Employee shall hold all such
information in trust and confidence for the Company and its affiliates and shall
not use or disclose any such information other than for the business of the
Company and its affiliates, and shall be liable for damages incurred by the
Company and its affiliates as a result of disclosure other than for the business
of the Company and its affiliates either while he is employed by the Company or
after termination of his employment for any reason.
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VIII. ACKNOWLEDGMENTS RESPECTING RESTRICTIVE COVENANTS.
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WITH respect to the restrictive covenants set forth in Sections V., VI.
and VII. of this Agreement, the Employee agrees and acknowledges as follows:
1. Such restrictive covenants shall be in addition to any
rights the Company may have in law or at equity.
2. It is impossible to measure in money the damages which will
accrue to the Company and its affiliates in the event that the
Employee breaches any such covenant. Therefore, if the Company
initiates any action or proceeding to enforce a restrictive
covenant, the Employee hereby waives the claim or defense that
the Company has an adequate remedy at law. The foregoing shall
not prejudice the Company's right to require the Employee to
account for and pay over to the Company, and the Employee
hereby agrees to account for and pay over, the compensation,
profits, monies, accruals or other benefits derived from or
received by him as a result of any transaction constituting a
breach of such restrictive covenants.
IX. INDEMNIFICATION AND DIRECTORS' AND OFFICERS' INSURANCE.
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A. INDEMNIFICATION. To the fullest extent permitted by law and not in
violation of 12 U.S.C. Section 1828(k) or any regulations promulgated
thereunder, the Company shall indemnify the Employee (and his legal
representatives and successors) against all liabilities, costs, charges and
expenses whatsoever incurred or sustained by him (or his legal representatives
or other successors) in connection with any action, suit or proceeding to which
the Employee (or his legal representatives or other successors) may be made a
party by reason of the Employee's being or having been a director, officer or
employee of the Company or of its subsidiaries and affiliates (including AFC and
it subsidiaries prior to the Effective Date).
B. DIRECTORS' AND OFFICERS' INSURANCE. The Employee shall be entitled
to the protection of any insurance policies that the Company may elect to
maintain generally for the benefit of its directors and officers respecting
costs, charges and expenses whatsoever incurred or sustained by the Employee (or
his legal representatives or other successors) in connection with any action,
suit or proceeding to which the Employee (or his legal representatives or other
successors) may be made a party by reason of the Employee's being or having been
a director, officer or employee of the Company or of its subsidiaries and
affiliates (including AFC and its subsidiaries prior to the Effective Date).
X. CHANGE IN CONTROL PAYMENT.
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On the Effective Date, the Company shall pay to the Employee in cash
the Change in Control Payment and the Employee shall acknowledge receipt thereof
in writing. The Employee agrees that
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the amount of the Change in Control Payment shall be subject to adjustment after
the Effective Date as provided in Paragraph (a) of Section (2) of the Letter
Agreement.
XI. REIMBURSEMENT OF LEGAL FEES RELATING TO GOLDEN PARACHUTE TAX.
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A. REIMBURSEMENT OF LEGAL FEES RELATING TO INVOLUNTARY TERMINATION. In
the event that the Employee suffers Involuntary Termination of his employment
during the Term of this Agreement, the Company (or its successors) shall pay to
the Employee all legal fees and expenses (including legal fees and expenses
incurred in connection with an arbitration proceeding engaged in pursuant to
Section XV. of this Agreement) incurred by the Employee as a result of such
termination of employment (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination or in seeking to obtain
or enforce any right or benefit provided to the Employee by this Agreement or
under any other plan, program or arrangement of the Bank or the Company or
agreement with the Bank or the Company), as and when such fees and expenses
become due.
B. LEGAL FEES RELATING TO GOLDEN PARACHUTE TAX. To the extent, if any,
that the Employee incurs reasonable fees and expenses for legal services in
connection with a determination concerning the application of Section 4999 of
the Internal Revenue Code of 1986, as amended, to any payments or benefits under
Section (2) of the Letter Agreement, the Company shall reimburse the Employee
for such reasonable fees and expenses.
XII. REGULATORY PROVISIONS. Notwithstanding any other provisions of this
Agreement:
1. If the Employee is removed and/or permanently prohibited from
participating in the conduct of the affairs of the Bank or ALBANK
Commercial (or a successor to either) by an order issued under Section
8(e)(4) or (g)(1) of the Federal Deposit Insurance Act ("FDIA"), 12
U.S.C. ss. 1818(e)(4) and (g)(1), all obligations of the Company under
this Agreement shall terminate as of the effective date of the order,
but vested rights of the contracting parties shall not be affected.
2. If the Bank or ALBANK Commercial (or a successor to either) is in
default (as defined in Section 3(x)(1) of the FDIA), all obligations of
the Company under this Agreement shall terminate as of the date of
default, but this provision shall not affect any vested rights of the
contracting parties.
3. Except to the extent determined that continuation of this Agreement
is necessary for the continued operation of the Bank (or a successor)
by the Director of the Office of Thrift Supervision (the "Director") or
his or her designee, all obligations of the Company under this
Agreement shall be terminated (a) if, and at the time that, the Federal
Deposit Insurance Corporation enters into an agreement to provide
assistance to or on behalf of the Bank (or a successor) under the
authority contained in Section 13(c) of the FDIA; or (b) if, and at the
time that, the Director or his or her designee approves a supervisory
merger to resolve problems related to operation of the Bank (or a
successor) or when the Bank (or a successor)
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is determined by the Director to be in an unsafe or unsound condition.
Any rights of the parties that have already vested, however, shall not
be affected by any such action.
4. Any payments to the Employee pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12
U.S.C. ss. 1828(k) and any rules and regulations promulgated
thereunder.
XIII. ASSIGNMENT; SUCCESSORS.
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This Agreement may not be assigned by either party, whether by
agreement, operation of law or otherwise, without the consent of the other,
except that the Company may assign this Agreement to a successor by operation of
law. This Agreement shall be binding upon and inure to the benefit of the
Employee and the Company and their respective permitted successors, heirs,
executors, legal representatives and assigns.
XIV. RELEASE; PRIOR AGREEMENTS; AMENDMENTS; SEVERABILITY; WAIVER; HEADINGS.
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The Employee hereby releases AFC and ALBANK FSB and their respective
successors from any and all claims, demands or liabilities under the employment
agreement between the Employee and AFC, dated April 1, 1992 and the employment
agreement between the Employee and ALBANK FSB, dated April 1, 1992, provided,
however, that this release shall not affect the obligations of the Company under
the Letter Agreement, Sections 6.12, 6.13 (only to the extent that Section 6.13
applies to the welfare plans and programs of the Company and the Bank in which
the Employee is entitled to participate hereunder) and 6.15 of the Acquisition
Agreement or any benefits or compensation to which the Employee is entitled
thereunder. This Agreement contains the entire agreement between the parties
with respect to employment of the Employee and supersedes any prior oral or
written agreements or understandings between them with respect to such
employment and services, other than the Letter Agreement and the Acquisition
Agreement. For purposes of those benefit plans which the Company has agreed in
the Letter Agreement specifically to continue through December 31, 1998, the
Employee shall be deemed to continue to be employed by AFC and ALBANK FSB
through such date. This Agreement may be modified or amended only by an
instrument in writing executed by both parties. If any provision of this
Agreement is determined to be invalid, such invalidity shall not affect any
other provisions, and such other provisions shall continue in full force and
effect to the full extent consistent with applicable law. No term or condition
of this Agreement shall be deemed to have been waived, nor shall there be any
estoppel against enforcement of any provision of this Agreement, except by a
writing signed by the party charged with waiver or estoppel. No 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. The
headings used in this Agreement are included solely for convenience and shall
not affect, or be used in connection with, the interpretation of this Agreement.
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XV. ARBITRATION.
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Except in the event that the Company alleges a breach or threatened
breach of Sections V., VI. or VII. of this Agreement or in the event of a
dispute concerning adjustment to the amount of the Change in Control Payment,
any dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Except as otherwise
provided in Paragraphs A. and B. of Section XI. of this Agreement, in any such
arbitration, the arbitrator(s) shall in the award allocate the reasonable
attorneys fees and expenses of the parties in such proportions as the
arbitrator(s) deem just.
XVI. NOTICES.
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For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or sent by certified mail, return
receipt requested, postage prepaid, to the Company at its home office, to the
attention of the Board of Directors with a copy to the Secretary of the Company,
or, if to the Employee, to such home or other address as the Employee has most
recently provided in writing to the Company.
XVII. GOVERNING LAW.
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This Agreement shall be governed by the laws of the State of Ohio to
the extent not preempted by federal law.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above.
Charter One Financial, Inc.
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By:
Its:
Employee
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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