[CHARLES J. KOCH]
EXHIBIT 10.25
CHARTER ONE FINANCIAL, INC.
2004 SENIOR EXECUTIVE STOCK UNIT DEFERRED COMPENSATION PLAN
AGREEMENT
CHARTER ONE FINANCIAL, INC. (the "Company") has adopted and is a party
to the Charter One Financial, Inc. 2004 Senior Executive Stock Unit Deferred
Compensation Plan (the "Plan"). The Company and the undersigned senior executive
officer of the Company (the "Participant") hereby agree that, in consideration
of the Participant agreeing to the non-competition, non-solicitation,
non-disclosure and related provisions contained in Article II below (the
"Non-Compete Agreement"), (i) the Participant shall participate in the Plan as
of the Effective Date, (ii) the Company shall allocate a deferred compensation
retention award to the Participant as provided in Article I below, and (iii) the
Company agrees in certain circumstances to pay separate and additional cash
consideration to the Participant in exchange for his Non-Compete Agreement as
provided in paragraph 8 of Article II below (the "Non-Compete Payment"). The
Participant does hereby acknowledge that he has been provided with a copy of the
Plan and he does specifically agree to the terms and conditions thereof. The
Participant understands that his entitlement (or his Beneficiary's entitlement)
to receive his Account Balance under the Plan shall be subject to all provisions
of the Plan. The Plan is part and parcel of the 2004 Senior Executive Retention
Plan of the Company which also includes an enhanced supplemental retirement
benefit for the Participant as provided in Amendment 3 to Supplemental
Retirement Agreement between the Company and the Participant dated February 1,
2004 (the "SRA Amendment"). All capitalized terms not defined herein shall have
the meaning assigned to them under the Plan.
ARTICLE I
DEFERRED COMPENSATION CONTRIBUTION AMOUNT
The Committee has awarded $3,000,000 as the Participant's Deferred
Compensation Contribution Amount under and subject to the terms of the Plan. The
Deferred Compensation Contribution Amount shall be represented by Initial Stock
Units allocated to the Participant's Account Balance under the Plan as of the
Effective Date if the Participant is then employed by the Company or any of its
affiliates.
ARTICLE II
NON-COMPETE AGREEMENT
1. The Participant hereby covenants and agrees that during his
employment with the Company or any of its subsidiaries or affiliates, he shall
not:
(a) become an officer, employee, consultant, director or
trustee of, or provide services directly or indirectly for compensation in any
capacity whatsoever to, any business enterprise other than (i) the Company or
any of its subsidiaries or affiliates or (ii) as a director or trustee of an
entity which (x) is not, or is not affiliated with, a financial institution
whose deposits are federally insured, but subject to the written approval of the
Board of Directors of the Company, which approval shall not be unreasonably
withheld or delayed, or (y) is, or is affiliated
with, a financial institution whose deposits are federally insured, but subject
to the written approval of the Board of Directors of the Company, which approval
may be withheld in its sole discretion (in the case of approval under (x) or (y)
an "Approved Organization");
(b) directly or indirectly engage in the sale or
marketing of products or services on behalf of any business enterprise (other
than on behalf of the Company, its subsidiaries and affiliates or an Approved
Organization);
(c) solicit or offer other employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of, or person or
entity (including but not limited to customers and vendors) doing business with,
the Company or any of its subsidiaries or affiliates to terminate his, her or
its employment or business relationship with the Company or any of its
subsidiaries or affiliates;
(d) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any entity or person engaged in the sale or
marketing of deposit taking activities, loans, insurance products, investment
products, investment advisory services or investment brokerage services, or any
direct or indirect subsidiary or affiliate of such entity or person, that is
intended, or that a reasonable person acting in like circumstances would expect,
to have the effect of causing any such officer or employee to terminate his or
her employment and accept employment or become affiliated with, or provide
services for compensation in any capacity whatsoever to, such other entity or
person; or
(e) be an owner of outstanding capital stock or equity
ownership interest in any Competitor (as such term is defined below), except
that nothing herein shall preclude the Participant from owning not more than 1%
of the outstanding capital stock or equity ownership interest in any entity that
is publicly traded at the time he acquires his interest therein.
2. Subject to the opt-out right of the Participant under
paragraph 3 below, the Participant hereby covenants and agrees that if he
experiences a Termination of Service for any reason other than death or a
Termination for Good Reason prior to the earlier of (i) January 1, 2009 or (ii)
the consummation of (not the date of shareholder approval of) a Change in
Control, then continuing for a period of one year after his Termination of
Service, he shall not:
(a) become an officer, employee, consultant, director or
trustee of, or provide services directly or indirectly in any capacity
whatsoever to, any financial institution whose deposit accounts are insured by
the Federal Deposit Insurance Corporation or the National Credit Union
Administration (or any affiliate thereof or successor thereto), or any holding
company, subsidiary or affiliate of any such entity (other than the Company and
its subsidiaries and affiliates) if (1) such entity or its holding company
(including their respective subsidiaries and affiliates) has consolidated assets
in excess of $10 billion and (2) such entity, its holding company or any of
their respective subsidiaries or affiliates maintains an office or facility for
the transaction of business in any state in the Continental United States (a
"Competitor");
2
(b) directly or indirectly, by disclosure of customers
names to others, engage in the sale or marketing of deposit taking activities,
loans, insurance products, investment products, investment advisory services or
investment brokerage services (other than on behalf of the Company, its
subsidiaries and affiliates) to any person or entity who is known by the
Participant to be a customer of the Company or any of its subsidiaries or
affiliates;
(c) solicit or offer employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of, or person or
entity (including but not limited to customers and vendors) doing business with,
the Company or any of its subsidiaries or affiliates to terminate his, her or
its employment or business relationship with the Company or any of its
subsidiaries or affiliates; provided this subsection shall not apply to any form
of media advertising of general circulation or distribution which is not
targeted to any officer and/or employee, or any group of officers and/or
employees, of the Company or any of its subsidiaries or affiliates;
(d) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any Competitor, or any entity or person engaged in
the sale or marketing of deposit taking activities, loans, insurance products,
investment products, investment advisory services or investment brokerage
services, or any direct or indirect subsidiary or affiliate of such entity or
person, that is intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any such officer or
employee to terminate his or her employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, such Competitor or other entity or person; or
(e) be an owner of outstanding capital stock or equity
ownership interest in any Competitor, except that nothing herein shall preclude
the Participant from owning not more than 1% of the outstanding capital stock or
equity ownership interest in any entity that is publicly traded at the time he
acquires his interest therein.
3. If the Participant is Discharged without Cause and is subject
to the provisions of paragraph 2 of this Article II during the one year period
following his Termination of Service, the Participant shall be entitled to
opt-out of the provisions of paragraph 2 of this Article II and become subject
to the provisions of paragraph 4 of this Article II, thereby waiving and
forfeiting all his rights and entitlements to his Vested Account Balance under
the Plan, to the Non-Compete Payment under paragraph 8 of this Agreement, and to
his enhanced supplemental retirement benefit under the SRA Amendment. The
Participant shall exercise his opt-out right not later than 90 days after the
date he is Discharged without Cause by executing and delivering an irrevocable
written notice (the "Opt-Out Notice") to the Committee stating that he waives
and forfeits his rights to his Vested Account Balance under the Plan, to the
Non-Compete Payment under paragraph 8 of this Agreement, and to his enhanced
supplemental retirement benefit under the SRA Amendment, and that he releases
and forever discharges the Company from any and all claims and demands that the
Participant has or might have under the Plan, this Agreement and to the enhanced
supplemental retirement benefit under the SRA Amendment. Upon receipt by the
Committee of the Opt-Out Notice within the 90 day period specified above, all
rights of the
3
Participant, and all obligations of the Company to the Participant, under the
Plan, this Agreement and relating to the enhanced supplemental retirement
benefit under the SRA Amendment shall cease and terminate, and the Participant
shall be relieved on a prospective basis (i.e., after the date of receipt of the
Opt-Out Notice by the Committee) from his obligations under paragraph 2 of this
Article II. Nothing herein is intended to relieve the Participant from
liability, or diminish the Company's right to relief, with respect to any
breaches or violations of this Article II by the Participant prior to the
receipt of the Opt-Out Notice by the Committee or alter in any respect the
continuing obligations of the Participant under paragraph 4 or 5 of this Article
II.
4. The Participant hereby further covenants and agrees that if he
experiences a Termination of Service for any reason at any time and is not
subject to the provisions of paragraph 2 of this Article II, then continuing for
a period of one year after his Termination of Service, he shall not:
(a) solicit or offer employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of the Company or
any of its subsidiaries or affiliates to terminate his or her employment
relationship with the Company or any of its subsidiaries or affiliates; provided
this subsection shall not apply to any form of media advertising of general
circulation or distribution which is not targeted to any officer and/or
employee, or any group of officers and/or employees, of the Company or any of
its subsidiaries or affiliates; or
(b) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any Competitor, or any entity or person engaged in
the sale or marketing of deposit taking activities, loans, insurance products,
investment products, investment advisory services or investment brokerage
services, or any direct or indirect subsidiary or affiliate of such entity or
person, that is intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any such officer or
employee to terminate his or her employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, such Competitor or other entity or person.
5. The Participant hereby further covenants and agrees at all
times to keep in strict confidence, and to not, directly or indirectly, at any
time disclose or use (except in the course of performing his duties on behalf of
the Company, its subsidiaries or affiliates) any trade secrets or confidential
business or technical information of the Company, its subsidiaries or affiliates
or their respective customers or vendors (the "Confidential Information"),
without limitation as to when or how the Participant may have acquired such
information. The Confidential Information shall include, without limitation,
business and marketing methods, policies, techniques, and strategies; research
and development relating to products and services; customer and vendor
information and contracts, methods of operation; business, financial and
strategic plans; financial information; and human resources policies, practices
and procedures. The Confidential Information shall not include information that
is or becomes publicly available other than as a result of disclosure by the
Participant. The Participant specifically acknowledges that the Confidential
Information derives independent economic value from not being readily known to
4
or ascertainable by proper means by others who can obtain economic value from
its disclosure or use, that reasonable efforts have been put forth by the
Company, its subsidiaries and affiliates to maintain the secrecy of such
information, that such information is the sole property of the Company, its
subsidiaries and affiliates and that any retention and use of such information
during or after the Participant's employment with the Company, its subsidiaries
and affiliates (except in the course of performing his duties on behalf of the
Company, its subsidiaries or affiliates) shall constitute a violation of this
paragraph 5 and a misappropriation of the Confidential Information. The
Participant further agrees that upon his Termination of Service he will return
to the Company, its subsidiaries and affiliates, in good condition, all property
of the Company, including, without limitation, the Confidential Information. In
the event that any such property is not so returned, the Company shall have the
right to charge the Participant for all reasonable damages, costs, attorney's
fees and other expenses incurred in searching for, taking, removing. and/or
recovering such property. In the event that the Participant is advised in
writing by his legal counsel that he is required by subpoena or other legal
process to disclose any of the Confidential Information, the Participant shall
promptly notify the Company of this situation and shall promptly provide the
Company with a copy of the written advice of legal counsel so that the Company
or one of its subsidiaries or affiliates may seek a protective order or other
appropriate remedy. If a protective order or other appropriate remedy is not
obtained in a reasonable period of time, the Participant may furnish only that
portion of the Confidential Information that he is advised by legal counsel is
legally required.
6. If the period of time set forth in paragraph 2 or 4, whichever
is applicable, of this Article II should be adjudged to be unreasonable by any
court of competent jurisdiction, then the court making such judgment shall have
the power to reduce the period of time by such number of months as is required
so that such restriction may be enforced for such time as is adjudged to be
reasonable. Similarly, if any other portion of paragraph 1, 2, 4 or 5 of this
Article II is adjudged to be unreasonable by any court of competent
jurisdiction, then the court making such judgment shall have the power to, and
shall, reduce such scope or restriction so that it shall extend to the maximum
extent permissible under the law and no further.
7. The Participant acknowledges that the restraints placed upon
him under paragraphs 1, 2, 4 and 5 of this Article II are fair and reasonable
under the circumstances and that if he should commit a breach of any of the
provisions thereof the Company's remedies at law would be inadequate to
compensate it for its damages. The parties agree that in the event of any breach
by the Participant of any of the provisions of paragraph 1, 2, 4 or 5 of this
Article II, then in addition to the forfeiture of the Participant's Vested
Account Balance as provided in the Plan and the forfeiture of the Participant's
enhanced supplemental retirement benefit as provided in the SRA Amendment, the
Company shall be entitled to (i) injunctive relief and (ii) such other relief as
is available at law or in equity. Any dispute or controversy arising under or in
connection with this Agreement that seeks solely monetary damages (i.e., does
not seek any form of equitable relief such as an injunction) shall be settled
exclusively by arbitration in accordance with the rules of the American
Arbitration Association as then in effect in Cleveland, Ohio. The arbitrator's
award shall be binding and conclusive upon the parties and judgment may be
entered on the arbitrator's award in any court having jurisdiction. In the event
of any judicial or arbitration proceeding between the Participant and the
Company, or any of the Company's subsidiaries or affiliates, under this
Agreement, the prevailing party in such action shall be
5
entitled to recover reasonable fees and disbursements of his or its counsel
(plus any costs) incurred by such prevailing party in connection with such
proceeding from the other party, provided the amount thereof in any and all such
proceedings shall not exceed $50,000. Moreover, if the Participant has violated
any of the provisions of paragraph 2 or 4, whichever is applicable, of this
Article II, the Company's right to injunctive relief shall include, without
limitation, the imposition of an additional period of time during which the
Participant will be required to comply with the provisions of paragraph 2 or 4
of this Article II, which period of time shall not be less than the period of
time the Participant was in violation of the provisions thereof. If the Company
or any of its subsidiaries or affiliates is required in any injunction
proceeding to post a bond, the parties agree that it shall be in a nominal
amount.
8. Except as provided below, if the provisions of paragraph 2 are
applicable to the Participant during the entire one year period next following
his Termination of Service or until his death during such one year period, then
in that event, within thirty days after the expiration of such one year period
or his death, whichever shall first occur, the Company shall pay the Participant
or his estate, whichever the case may be, a single lump sum cash Non-Compete
Payment in an amount equal to 50% of the Participant's annual base salary (from
the Company, its subsidiaries and affiliates) as in effect immediately prior to
his Termination of Service, subject to deduction for any applicable withholding
taxes. Notwithstanding the foregoing, in the event the Participant has
experienced a Termination for Cause or has committed any violation of any of the
provisions of paragraph 1 or 5 of this Article II during his employment with the
Company or its affiliates or any of the provisions of paragraph 2 or 5 of this
Article II during the one year period after his Termination of Service, then
neither the Participant nor his estate shall be entitled to the Non-Compete
Payment.
9. The parties agree that the Non-Compete Agreement set forth in
Article II of this Agreement shall supercede and replace Sections 7(e)(2) and 10
of the Participant's Employment Agreement. Accordingly, the provisions of
Sections 7(e)(2) and 10 of the Participant's Employment Agreement shall cease,
terminate and shall have no further force or effect and the provisions of
Article II of this Agreement contain the full contract between the parties
relating to the non-competition, non-solicitation and non-disclosure obligations
of the Participant.
This Agreement may be executed in counterparts, each of which shall be
deemed an original.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
CHARTER ONE FINANCIAL, INC.
/s/ Charles J. Koch By /s/ Robert J. Vana
- -------------------------------- -----------------------------
Charles J. Koch, Participant Authorized Officer
Dated: 1/14/04 Dated: 1/26/04
-------------------------- -------------------------
6
[RICHARD W. NEU]
CHARTER ONE FINANCIAL, INC.
2004 SENIOR EXECUTIVE STOCK UNIT DEFERRED COMPENSATION PLAN
AGREEMENT
CHARTER ONE FINANCIAL, INC. (the "Company") has adopted and is a party
to the Charter One Financial, Inc. 2004 Senior Executive Stock Unit Deferred
Compensation Plan (the "Plan"). The Company and the undersigned senior executive
officer of the Company (the "Participant") hereby agree that, in consideration
of the Participant agreeing to the non-competition, non-solicitation,
non-disclosure and related provisions contained in Article II below (the
"Non-Compete Agreement"), (i) the Participant shall participate in the Plan as
of the Effective Date, (ii) the Company shall allocate a deferred compensation
retention award to the Participant as provided in Article I below, and (iii) the
Company agrees in certain circumstances to pay separate and additional cash
consideration to the Participant in exchange for his Non-Compete Agreement as
provided in paragraph 8 of Article II below (the "Non-Compete Payment"). The
Participant does hereby acknowledge that he has been provided with a copy of the
Plan and he does specifically agree to the terms and conditions thereof. The
Participant understands that his entitlement (or his Beneficiary's entitlement)
to receive his Account Balance under the Plan shall be subject to all provisions
of the Plan. The Plan is part and parcel of the 2004 Senior Executive Retention
Plan of the Company which also includes an enhanced supplemental retirement
benefit for the Participant as provided in Amendment 3 to Supplemental
Retirement Agreement between the Company and the Participant dated February 1,
2004 (the "SRA Amendment"). All capitalized terms not defined herein shall have
the meaning assigned to them under the Plan.
ARTICLE I
DEFERRED COMPENSATION CONTRIBUTION AMOUNT
The Committee has awarded $3,000,000 as the Participant's Deferred
Compensation Contribution Amount under and subject to the terms of the Plan. The
Deferred Compensation Contribution Amount shall be represented by Initial Stock
Units allocated to the Participant's Account Balance under the Plan as of the
Effective Date if the Participant is then employed by the Company or any of its
affiliates.
ARTICLE II
NON-COMPETE AGREEMENT
1. The Participant hereby covenants and agrees that during his
employment with the Company or any of its subsidiaries or affiliates, he shall
not:
(a) become an officer, employee, consultant, director or
trustee of, or provide services directly or indirectly for compensation in any
capacity whatsoever to, any business enterprise other than (i) the Company or
any of its subsidiaries or affiliates or (ii) as a director or trustee of an
entity which (x) is not, or is not affiliated with, a financial institution
whose deposits are federally insured, but subject to the written approval of the
Board of Directors of the Company, which approval shall not be unreasonably
withheld or delayed, or (y) is, or is affiliated
with, a financial institution whose deposits are federally insured, but subject
to the written approval of the Board of Directors of the Company, which approval
may be withheld in its sole discretion (in the case of approval under (x) or (y)
an "Approved Organization");
(b) directly or indirectly engage in the sale or
marketing of products or services on behalf of any business enterprise (other
than on behalf of the Company, its subsidiaries and affiliates or an Approved
Organization);
(c) solicit or offer other employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of, or person or
entity (including but not limited to customers and vendors) doing business with,
the Company or any of its subsidiaries or affiliates to terminate his, her or
its employment or business relationship with the Company or any of its
subsidiaries or affiliates;
(d) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any entity or person engaged in the sale or
marketing of deposit taking activities, loans, insurance products, investment
products, investment advisory services or investment brokerage services, or any
direct or indirect subsidiary or affiliate of such entity or person, that is
intended, or that a reasonable person acting in like circumstances would expect,
to have the effect of causing any such officer or employee to terminate his or
her employment and accept employment or become affiliated with, or provide
services for compensation in any capacity whatsoever to, such other entity or
person; or
(e) be an owner of outstanding capital stock or equity
ownership interest in any Competitor (as such term is defined below), except
that nothing herein shall preclude the Participant from owning not more than 1%
of the outstanding capital stock or equity ownership interest in any entity that
is publicly traded at the time he acquires his interest therein.
2. Subject to the opt-out right of the Participant under
paragraph 3 below, the Participant hereby covenants and agrees that if he
experiences a Termination of Service for any reason other than death or a
Termination for Good Reason prior to the earliest of (i) January 1, 2009, (ii)
the date Charles J. Koch ceases to be the Chief Executive Officer of the Company
or (iii) the consummation of (not the date of shareholder approval of) a Change
in Control, then continuing for a period of one year after his Termination of
Service, he shall not:
(a) become an officer, employee, consultant, director or
trustee of, or provide services directly or indirectly in any capacity
whatsoever to, any financial institution whose deposit accounts are insured by
the Federal Deposit Insurance Corporation or the National Credit Union
Administration (or any affiliate thereof or successor thereto), or any holding
company, subsidiary or affiliate of any such entity (other than the Company and
its subsidiaries and affiliates) if (1) such entity or its holding company
(including their respective subsidiaries and affiliates) has consolidated assets
in excess of $10 billion and (2) such entity, its holding company or any of
their respective subsidiaries or affiliates maintains an office or facility for
the transaction of business in any state in the Continental United States (a
"Competitor");
2
(b) directly or indirectly, by disclosure of customers
names to others, engage in the sale or marketing of deposit taking activities,
loans, insurance products, investment products, investment advisory services or
investment brokerage services (other than on behalf of the Company, its
subsidiaries and affiliates) to any person or entity who is known by the
Participant to be a customer of the Company or any of its subsidiaries or
affiliates;
(c) solicit or offer employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of, or person or
entity (including but not limited to customers and vendors) doing business with,
the Company or any of its subsidiaries or affiliates to terminate his, her or
its employment or business relationship with the Company or any of its
subsidiaries or affiliates; provided this subsection shall not apply to any form
of media advertising of general circulation or distribution which is not
targeted to any officer and/or employee, or any group of officers and/or
employees, of the Company or any of its subsidiaries or affiliates;
(d) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any Competitor, or any entity or person engaged in
the sale or marketing of deposit taking activities, loans, insurance products,
investment products, investment advisory services or investment brokerage
services, or any direct or indirect subsidiary or affiliate of such entity or
person, that is intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any such officer or
employee to terminate his or her employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, such Competitor or other entity or person; or
(e) be an owner of outstanding capital stock or equity
ownership interest in any Competitor, except that nothing herein shall preclude
the Participant from owning not more than 1% of the outstanding capital stock or
equity ownership interest in any entity that is publicly traded at the time he
acquires his interest therein.
3. If the Participant is Discharged without Cause and is subject
to the provisions of paragraph 2 of this Article II during the one year period
following his Termination of Service, the Participant shall be entitled to
opt-out of the provisions of paragraph 2 of this Article II and become subject
to the provisions of paragraph 4 of this Article II, thereby waiving and
forfeiting all his rights and entitlements to his Vested Account Balance under
the Plan, to the Non-Compete Payment under paragraph 8 of this Agreement, and to
his enhanced supplemental retirement benefit under the SRA Amendment. The
Participant shall exercise his opt-out right not later than 90 days after the
date he is Discharged without Cause by executing and delivering an irrevocable
written notice (the "Opt-Out Notice") to the Committee stating that he waives
and forfeits his rights to his Vested Account Balance under the Plan, to the
Non-Compete Payment under paragraph 8 of this Agreement, and to his enhanced
supplemental retirement benefit under the SRA Amendment, and that he releases
and forever discharges the Company from any and all claims and demands that the
Participant has or might have under the Plan, this Agreement and to the enhanced
supplemental retirement benefit under the SRA Amendment. Upon receipt by the
3
Committee of the Opt-Out Notice within the 90 day period specified above, all
rights of the Participant, and all obligations of the Company to the
Participant, under the Plan, this Agreement and relating to the enhanced
supplemental retirement benefit under the SRA Amendment shall cease and
terminate, and the Participant shall be relieved on a prospective basis (i.e.,
after the date of receipt of the Opt-Out Notice by the Committee) from his
obligations under paragraph 2 of this Article II. Nothing herein is intended to
relieve the Participant from liability, or diminish the Company's right to
relief, with respect to any breaches or violations of this Article II by the
Participant prior to the receipt of the Opt-Out Notice by the Committee or alter
in any respect the continuing obligations of the Participant under paragraph 4
or 5 of this Article II.
4. The Participant hereby further covenants and agrees that if he
experiences a Termination of Service for any reason at any time and is not
subject to the provisions of paragraph 2 of this Article II, then continuing for
a period of one year after his Termination of Service, he shall not:
(a) solicit or offer employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of the Company or
any of its subsidiaries or affiliates to terminate his or her employment
relationship with the Company or any of its subsidiaries or affiliates; provided
this subsection shall not apply to any form of media advertising of general
circulation or distribution which is not targeted to any officer and/or
employee, or any group of officers and/or employees, of the Company or any of
its subsidiaries or affiliates; or
(b) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any Competitor, or any entity or person engaged in
the sale or marketing of deposit taking activities, loans, insurance products,
investment products, investment advisory services or investment brokerage
services, or any direct or indirect subsidiary or affiliate of such entity or
person, that is intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any such officer or
employee to terminate his or her employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, such Competitor or other entity or person.
5. The Participant hereby further covenants and agrees at all
times to keep in strict confidence, and to not, directly or indirectly, at any
time disclose or use (except in the course of performing his duties on behalf of
the Company, its subsidiaries or affiliates) any trade secrets or confidential
business or technical information of the Company, its subsidiaries or affiliates
or their respective customers or vendors (the "Confidential Information"),
without limitation as to when or how the Participant may have acquired such
information. The Confidential Information shall include, without limitation,
business and marketing methods, policies, techniques, and strategies; research
and development relating to products and services; customer and vendor
information and contracts, methods of operation; business, financial and
strategic plans; financial information; and human resources policies, practices
and procedures. The Confidential Information shall not include information that
is or becomes publicly available other than as a result of disclosure by the
Participant. The Participant specifically acknowledges that the
4
Confidential Information derives independent economic value from not being
readily known to or ascertainable by proper means by others who can obtain
economic value from its disclosure or use, that reasonable efforts have been put
forth by the Company, its subsidiaries and affiliates to maintain the secrecy of
such information, that such information is the sole property of the Company, its
subsidiaries and affiliates and that any retention and use of such information
during or after the Participant's employment with the Company, its subsidiaries
and affiliates (except in the course of performing his duties on behalf of the
Company, its subsidiaries or affiliates) shall constitute a violation of this
paragraph 5 and a misappropriation of the Confidential Information. The
Participant further agrees that upon his Termination of Service he will return
to the Company, its subsidiaries and affiliates, in good condition, all property
of the Company, including, without limitation, the Confidential Information. In
the event that any such property is not so returned, the Company shall have the
right to charge the Participant for all reasonable damages, costs, attorney's
fees and other expenses incurred in searching for, taking, removing. and/or
recovering such property. In the event that the Participant is advised in
writing by his legal counsel that he is required by subpoena or other legal
process to disclose any of the Confidential Information, the Participant shall
promptly notify the Company of this situation and shall promptly provide the
Company with a copy of the written advice of legal counsel so that the Company
or one of its subsidiaries or affiliates may seek a protective order or other
appropriate remedy. If a protective order or other appropriate remedy is not
obtained in a reasonable period of time, the Participant may furnish only that
portion of the Confidential Information that he is advised by legal counsel is
legally required.
6. If the period of time set forth in paragraph 2 or 4, whichever
is applicable, of this Article II should be adjudged to be unreasonable by any
court of competent jurisdiction, then the court making such judgment shall have
the power to reduce the period of time by such number of months as is required
so that such restriction may be enforced for such time as is adjudged to be
reasonable. Similarly, if any other portion of paragraph 1, 2, 4 or 5 of this
Article II is adjudged to be unreasonable by any court of competent
jurisdiction, then the court making such judgment shall have the power to, and
shall, reduce such scope or restriction so that it shall extend to the maximum
extent permissible under the law and no further.
7. The Participant acknowledges that the restraints placed upon
him under paragraphs 1, 2, 4 and 5 of this Article II are fair and reasonable
under the circumstances and that if he should commit a breach of any of the
provisions thereof the Company's remedies at law would be inadequate to
compensate it for its damages. The parties agree that in the event of any breach
by the Participant of any of the provisions of paragraph 1, 2, 4 or 5 of this
Article II, then in addition to the forfeiture of the Participant's Vested
Account Balance as provided in the Plan and the forfeiture of the Participant's
enhanced supplemental retirement benefit as provided in the SRA Amendment, the
Company shall be entitled to (i) injunctive relief and (ii) such other relief as
is available at law or in equity. Any dispute or controversy arising under or in
connection with this Agreement that seeks solely monetary damages (i.e., does
not seek any form of equitable relief such as an injunction) shall be settled
exclusively by arbitration in accordance with the rules of the American
Arbitration Association as then in effect in Cleveland, Ohio. The arbitrator's
award shall be binding and conclusive upon the parties and judgment may be
entered on the arbitrator's award in any court having jurisdiction. In the event
of any judicial or arbitration proceeding between the Participant and the
Company, or any of the Company's
5
subsidiaries or affiliates, under this Agreement, the prevailing party in such
action shall be entitled to recover reasonable fees and disbursements of his or
its counsel (plus any costs) incurred by such prevailing party in connection
with such proceeding from the other party, provided the amount thereof in any
and all such proceedings shall not exceed $50,000. Moreover, if the Participant
has violated any of the provisions of paragraph 2 or 4, whichever is applicable,
of this Article II, the Company's right to injunctive relief shall include,
without limitation, the imposition of an additional period of time during which
the Participant will be required to comply with the provisions of paragraph 2 or
4 of this Article II, which period of time shall not be less than the period of
time the Participant was in violation of the provisions thereof. If the Company
or any of its subsidiaries or affiliates is required in any injunction
proceeding to post a bond, the parties agree that it shall be in a nominal
amount.
8. Except as provided below, if the provisions of paragraph 2 are
applicable to the Participant during the entire one year period next following
his Termination of Service or until his death during such one year period, then
in that event, within thirty days after the expiration of such one year period
or his death, whichever shall first occur, the Company shall pay the Participant
or his estate, whichever the case may be, a single lump sum cash Non-Compete
Payment in an amount equal to 50% of the Participant's annual base salary (from
the Company, its subsidiaries and affiliates) as in effect immediately prior to
his Termination of Service, subject to deduction for any applicable withholding
taxes. Notwithstanding the foregoing, in the event the Participant has
experienced a Termination for Cause or has committed any violation of any of the
provisions of paragraph 1 or 5 of this Article II during his employment with the
Company or its affiliates or any of the provisions of paragraph 2 or 5 of this
Article II during the one year period after his Termination of Service, then
neither the Participant nor his estate shall be entitled to the Non-Compete
Payment.
9. The parties agree that the Non-Compete Agreement set forth in
Article II of this Agreement shall supercede and replace Section 10 of the
Participant's Employment Agreement. Accordingly, the provisions of Section 10 of
the Participant's Employment Agreement shall cease, terminate and have no
further force or effect and the provisions of Article II of this Agreement
contain the full contract between the parties relating to the non-competition,
non-solicitation and non-disclosure obligations of the Participant.
This Agreement may be executed in counterparts, each of which shall be
deemed an original.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
CHARTER ONE FINANCIAL, INC.
/s/ Richard W. Neu By: /s/ Charles J. Koch
- ------------------------------- ---------------------------------
Richard W. Neu, Participant Charles J. Koch
Dated: 1/14/04 President and Chief Executive Officer
------------------------ Dated: 1/14/04
------------------------------
6
[JOHN D. KOCH]
CHARTER ONE FINANCIAL, INC.
2004 SENIOR EXECUTIVE STOCK UNIT DEFERRED COMPENSATION PLAN
AGREEMENT
CHARTER ONE FINANCIAL, INC. (the "Company") has adopted and is a party
to the Charter One Financial, Inc. 2004 Senior Executive Stock Unit Deferred
Compensation Plan (the "Plan"). The Company and the undersigned senior executive
officer of the Company (the "Participant") hereby agree that, in consideration
of the Participant agreeing to the non-competition, non-solicitation,
non-disclosure and related provisions contained in Article II below (the
"Non-Compete Agreement"), (i) the Participant shall participate in the Plan as
of the Effective Date, (ii) the Company shall allocate a deferred compensation
retention award to the Participant as provided in Article I below, and (iii) the
Company agrees in certain circumstances to pay separate and additional cash
consideration to the Participant in exchange for his Non-Compete Agreement as
provided in paragraph 8 of Article II below (the "Non-Compete Payment"). The
Participant does hereby acknowledge that he has been provided with a copy of the
Plan and he does specifically agree to the terms and conditions thereof. The
Participant understands that his entitlement (or his Beneficiary's entitlement)
to receive his Account Balance under the Plan shall be subject to all provisions
of the Plan. The Plan is part and parcel of the 2004 Senior Executive Retention
Plan of the Company which also includes an enhanced supplemental retirement
benefit for the Participant as provided in Amendment 3 to Supplemental
Retirement Agreement between the Company and the Participant dated February 1,
2004 (the "SRA Amendment"). All capitalized terms not defined herein shall have
the meaning assigned to them under the Plan.
ARTICLE I
DEFERRED COMPENSATION CONTRIBUTION AMOUNT
The Committee has awarded $3,000,000 as the Participant's Deferred
Compensation Contribution Amount under and subject to the terms of the Plan. The
Deferred Compensation Contribution Amount shall be represented by Initial Stock
Units allocated to the Participant's Account Balance under the Plan as of the
Effective Date if the Participant is then employed by the Company or any of its
affiliates.
ARTICLE II
NON-COMPETE AGREEMENT
1. The Participant hereby covenants and agrees that during his
employment with the Company or any of its subsidiaries or affiliates, he shall
not:
(a) become an officer, employee, consultant, director or
trustee of, or provide services directly or indirectly for compensation in any
capacity whatsoever to, any business enterprise other than (i) the Company or
any of its subsidiaries or affiliates or (ii) as a director or trustee of an
entity which (x) is not, or is not affiliated with, a financial institution
whose deposits are federally insured, but subject to the written approval of the
Board of Directors of the Company, which approval shall not be unreasonably
withheld or delayed, or (y) is, or is affiliated
with, a financial institution whose deposits are federally insured, but subject
to the written approval of the Board of Directors of the Company, which approval
may be withheld in its sole discretion (in the case of approval under (x) or (y)
an "Approved Organization");
(b) directly or indirectly engage in the sale or
marketing of products or services on behalf of any business enterprise (other
than on behalf of the Company, its subsidiaries and affiliates or an Approved
Organization);
(c) solicit or offer other employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of, or person or
entity (including but not limited to customers and vendors) doing business with,
the Company or any of its subsidiaries or affiliates to terminate his, her or
its employment or business relationship with the Company or any of its
subsidiaries or affiliates;
(d) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any entity or person engaged in the sale or
marketing of deposit taking activities, loans, insurance products, investment
products, investment advisory services or investment brokerage services, or any
direct or indirect subsidiary or affiliate of such entity or person, that is
intended, or that a reasonable person acting in like circumstances would expect,
to have the effect of causing any such officer or employee to terminate his or
her employment and accept employment or become affiliated with, or provide
services for compensation in any capacity whatsoever to, such other entity or
person; or
(e) be an owner of outstanding capital stock or equity
ownership interest in any Competitor (as such term is defined below), except
that nothing herein shall preclude the Participant from owning not more than 1%
of the outstanding capital stock or equity ownership interest in any entity that
is publicly traded at the time he acquires his interest therein.
2. Subject to the opt-out right of the Participant under
paragraph 3 below, the Participant hereby covenants and agrees that if he
experiences a Termination of Service for any reason other than death or a
Termination for Good Reason prior to the earliest of (i) January 1, 2009, (ii)
the date Charles J. Koch ceases to be the Chief Executive Officer of the Company
or (iii) the consummation of (not the date of shareholder approval of) a Change
in Control, then continuing for a period of one year after his Termination of
Service, he shall not:
(a) become an officer, employee, consultant, director or
trustee of, or provide services directly or indirectly in any capacity
whatsoever to, any financial institution whose deposit accounts are insured by
the Federal Deposit Insurance Corporation or the National Credit Union
Administration (or any affiliate thereof or successor thereto), or any holding
company, subsidiary or affiliate of any such entity (other than the Company and
its subsidiaries and affiliates) if (1) such entity or its holding company
(including their respective subsidiaries and affiliates) has consolidated assets
in excess of $10 billion and (2) such entity, its holding company or any of
their respective subsidiaries or affiliates maintains an office or facility for
the transaction of business in any state in the Continental United States (a
"Competitor");
2
(b) directly or indirectly, by disclosure of customers
names to others, engage in the sale or marketing of deposit taking activities,
loans, insurance products, investment products, investment advisory services or
investment brokerage services (other than on behalf of the Company, its
subsidiaries and affiliates) to any person or entity who is known by the
Participant to be a customer of the Company or any of its subsidiaries or
affiliates;
(c) solicit or offer employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of, or person or
entity (including but not limited to customers and vendors) doing business with,
the Company or any of its subsidiaries or affiliates to terminate his, her or
its employment or business relationship with the Company or any of its
subsidiaries or affiliates; provided this subsection shall not apply to any form
of media advertising of general circulation or distribution which is not
targeted to any officer and/or employee, or any group of officers and/or
employees, of the Company or any of its subsidiaries or affiliates;
(d) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any Competitor, or any entity or person engaged in
the sale or marketing of deposit taking activities, loans, insurance products,
investment products, investment advisory services or investment brokerage
services, or any direct or indirect subsidiary or affiliate of such entity or
person, that is intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any such officer or
employee to terminate his or her employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, such Competitor or other entity or person; or
(e) be an owner of outstanding capital stock or equity
ownership interest in any Competitor, except that nothing herein shall preclude
the Participant from owning not more than 1% of the outstanding capital stock or
equity ownership interest in any entity that is publicly traded at the time he
acquires his interest therein.
3. If the Participant is Discharged without Cause and is subject
to the provisions of paragraph 2 of this Article II during the one year period
following his Termination of Service, the Participant shall be entitled to
opt-out of the provisions of paragraph 2 of this Article II and become subject
to the provisions of paragraph 4 of this Article II, thereby waiving and
forfeiting all his rights and entitlements to his Vested Account Balance under
the Plan, to the Non-Compete Payment under paragraph 8 of this Agreement, and to
his enhanced supplemental retirement benefit under the SRA Amendment. The
Participant shall exercise his opt-out right not later than 90 days after the
date he is Discharged without Cause by executing and delivering an irrevocable
written notice (the "Opt-Out Notice") to the Committee stating that he waives
and forfeits his rights to his Vested Account Balance under the Plan, to the
Non-Compete Payment under paragraph 8 of this Agreement, and to his enhanced
supplemental retirement benefit under the SRA Amendment, and that he releases
and forever discharges the Company from any and all claims and demands that the
Participant has or might have under the Plan, this Agreement and to the enhanced
supplemental retirement benefit under the SRA Amendment. Upon receipt by the
3
Committee of the Opt-Out Notice within the 90 day period specified above, all
rights of the Participant, and all obligations of the Company to the
Participant, under the Plan, this Agreement and relating to the enhanced
supplemental retirement benefit under the SRA Amendment shall cease and
terminate, and the Participant shall be relieved on a prospective basis (i.e.,
after the date of receipt of the Opt-Out Notice by the Committee) from his
obligations under paragraph 2 of this Article II. Nothing herein is intended to
relieve the Participant from liability, or diminish the Company's right to
relief, with respect to any breaches or violations of this Article II by the
Participant prior to the receipt of the Opt-Out Notice by the Committee or alter
in any respect the continuing obligations of the Participant under paragraph 4
or 5 of this Article II.
4. The Participant hereby further covenants and agrees that if he
experiences a Termination of Service for any reason at any time and is not
subject to the provisions of paragraph 2 of this Article II, then continuing for
a period of one year after his Termination of Service, he shall not:
(a) solicit or offer employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of the Company or
any of its subsidiaries or affiliates to terminate his or her employment
relationship with the Company or any of its subsidiaries or affiliates; provided
this subsection shall not apply to any form of media advertising of general
circulation or distribution which is not targeted to any officer and/or
employee, or any group of officers and/or employees, of the Company or any of
its subsidiaries or affiliates; or
(b) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any Competitor, or any entity or person engaged in
the sale or marketing of deposit taking activities, loans, insurance products,
investment products, investment advisory services or investment brokerage
services, or any direct or indirect subsidiary or affiliate of such entity or
person, that is intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any such officer or
employee to terminate his or her employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, such Competitor or other entity or person.
5. The Participant hereby further covenants and agrees at all
times to keep in strict confidence, and to not, directly or indirectly, at any
time disclose or use (except in the course of performing his duties on behalf of
the Company, its subsidiaries or affiliates) any trade secrets or confidential
business or technical information of the Company, its subsidiaries or affiliates
or their respective customers or vendors (the "Confidential Information"),
without limitation as to when or how the Participant may have acquired such
information. The Confidential Information shall include, without limitation,
business and marketing methods, policies, techniques, and strategies; research
and development relating to products and services; customer and vendor
information and contracts, methods of operation; business, financial and
strategic plans; financial information; and human resources policies, practices
and procedures. The Confidential Information shall not include information that
is or becomes publicly available other than as a result of disclosure by the
Participant. The Participant specifically acknowledges that the
4
Confidential Information derives independent economic value from not being
readily known to or ascertainable by proper means by others who can obtain
economic value from its disclosure or use, that reasonable efforts have been put
forth by the Company, its subsidiaries and affiliates to maintain the secrecy of
such information, that such information is the sole property of the Company, its
subsidiaries and affiliates and that any retention and use of such information
during or after the Participant's employment with the Company, its subsidiaries
and affiliates (except in the course of performing his duties on behalf of the
Company, its subsidiaries or affiliates) shall constitute a violation of this
paragraph 5 and a misappropriation of the Confidential Information. The
Participant further agrees that upon his Termination of Service he will return
to the Company, its subsidiaries and affiliates, in good condition, all property
of the Company, including, without limitation, the Confidential Information. In
the event that any such property is not so returned, the Company shall have the
right to charge the Participant for all reasonable damages, costs, attorney's
fees and other expenses incurred in searching for, taking, removing. and/or
recovering such property. In the event that the Participant is advised in
writing by his legal counsel that he is required by subpoena or other legal
process to disclose any of the Confidential Information, the Participant shall
promptly notify the Company of this situation and shall promptly provide the
Company with a copy of the written advice of legal counsel so that the Company
or one of its subsidiaries or affiliates may seek a protective order or other
appropriate remedy. If a protective order or other appropriate remedy is not
obtained in a reasonable period of time, the Participant may furnish only that
portion of the Confidential Information that he is advised by legal counsel is
legally required.
6. If the period of time set forth in paragraph 2 or 4, whichever
is applicable, of this Article II should be adjudged to be unreasonable by any
court of competent jurisdiction, then the court making such judgment shall have
the power to reduce the period of time by such number of months as is required
so that such restriction may be enforced for such time as is adjudged to be
reasonable. Similarly, if any other portion of paragraph 1, 2, 4 or 5 of this
Article II is adjudged to be unreasonable by any court of competent
jurisdiction, then the court making such judgment shall have the power to, and
shall, reduce such scope or restriction so that it shall extend to the maximum
extent permissible under the law and no further.
7. The Participant acknowledges that the restraints placed upon
him under paragraphs 1, 2, 4 and 5 of this Article II are fair and reasonable
under the circumstances and that if he should commit a breach of any of the
provisions thereof the Company's remedies at law would be inadequate to
compensate it for its damages. The parties agree that in the event of any breach
by the Participant of any of the provisions of paragraph 1, 2, 4 or 5 of this
Article II, then in addition to the forfeiture of the Participant's Vested
Account Balance as provided in the Plan and the forfeiture of the Participant's
enhanced supplemental retirement benefit as provided in the SRA Amendment, the
Company shall be entitled to (i) injunctive relief and (ii) such other relief as
is available at law or in equity. Any dispute or controversy arising under or in
connection with this Agreement that seeks solely monetary damages (i.e., does
not seek any form of equitable relief such as an injunction) shall be settled
exclusively by arbitration in accordance with the rules of the American
Arbitration Association as then in effect in Cleveland, Ohio. The arbitrator's
award shall be binding and conclusive upon the parties and judgment may be
entered on the arbitrator's award in any court having jurisdiction. In the event
of any judicial or arbitration proceeding between the Participant and the
Company, or any of the Company's
5
subsidiaries or affiliates, under this Agreement, the prevailing party in such
action shall be entitled to recover reasonable fees and disbursements of his or
its counsel (plus any costs) incurred by such prevailing party in connection
with such proceeding from the other party, provided the amount thereof in any
and all such proceedings shall not exceed $50,000. Moreover, if the Participant
has violated any of the provisions of paragraph 2 or 4, whichever is applicable,
of this Article II, the Company's right to injunctive relief shall include,
without limitation, the imposition of an additional period of time during which
the Participant will be required to comply with the provisions of paragraph 2 or
4 of this Article II, which period of time shall not be less than the period of
time the Participant was in violation of the provisions thereof. If the Company
or any of its subsidiaries or affiliates is required in any injunction
proceeding to post a bond, the parties agree that it shall be in a nominal
amount.
8. Except as provided below, if the provisions of paragraph 2 are
applicable to the Participant during the entire one year period next following
his Termination of Service or until his death during such one year period, then
in that event, within thirty days after the expiration of such one year period
or his death, whichever shall first occur, the Company shall pay the Participant
or his estate, whichever the case may be, a single lump sum cash Non-Compete
Payment in an amount equal to 50% of the Participant's annual base salary (from
the Company, its subsidiaries and affiliates) as in effect immediately prior to
his Termination of Service, subject to deduction for any applicable withholding
taxes. Notwithstanding the foregoing, in the event the Participant has
experienced a Termination for Cause or has committed any violation of any of the
provisions of paragraph 1 or 5 of this Article II during his employment with the
Company or its affiliates or any of the provisions of paragraph 2 or 5 of this
Article II during the one year period after his Termination of Service, then
neither the Participant nor his estate shall be entitled to the Non-Compete
Payment.
9. The parties agree that the Non-Compete Agreement set forth in
Article II of this Agreement shall supercede and replace Section 10 of the
Participant's Employment Agreement. Accordingly, the provisions of Section 10 of
the Participant's Employment Agreement shall cease, terminate and have no
further force or effect and the provisions of Article II of this Agreement
contain the full contract between the parties relating to the non-competition,
non-solicitation and non-disclosure obligations of the Participant.
This Agreement may be executed in counterparts, each of which shall be
deemed an original.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
CHARTER ONE FINANCIAL, INC.
/s/ John D. Koch By /s/ Charles J. Koch
- ------------------------------- ----------------------------------
John D. Koch, Participant Charles J. Koch
Dated: 1/14/04 President and Chief Executive Officer
------------------------ Dated: 1/14/04
------------------------------
6
[MARK D. GROSSI]
CHARTER ONE FINANCIAL, INC.
2004 SENIOR EXECUTIVE STOCK UNIT DEFERRED COMPENSATION PLAN
AGREEMENT
CHARTER ONE FINANCIAL, INC. (the "Company") has adopted and is a party
to the Charter One Financial, Inc. 2004 Senior Executive Stock Unit Deferred
Compensation Plan (the "Plan"). The Company and the undersigned senior executive
officer of the Company (the "Participant") hereby agree that, in consideration
of the Participant agreeing to the non-competition, non-solicitation,
non-disclosure and related provisions contained in Article II below (the
"Non-Compete Agreement"), (i) the Participant shall participate in the Plan as
of the Effective Date, (ii) the Company shall allocate a deferred compensation
retention award to the Participant as provided in Article I below, and (iii) the
Company agrees in certain circumstances to pay separate and additional cash
consideration to the Participant in exchange for his Non-Compete Agreement as
provided in paragraph 8 of Article II below (the "Non-Compete Payment"). The
Participant does hereby acknowledge that he has been provided with a copy of the
Plan and he does specifically agree to the terms and conditions thereof. The
Participant understands that his entitlement (or his Beneficiary's entitlement)
to receive his Account Balance under the Plan shall be subject to all provisions
of the Plan. The Plan is part and parcel of the 2004 Senior Executive Retention
Plan of the Company which also includes an enhanced supplemental retirement
benefit for the Participant as provided in Amendment 3 to Supplemental
Retirement Agreement between the Company and the Participant dated February 1,
2004 (the "SRA Amendment"). All capitalized terms not defined herein shall have
the meaning assigned to them under the Plan.
ARTICLE I
DEFERRED COMPENSATION CONTRIBUTION AMOUNT
The Committee has awarded $3,000,000 as the Participant's Deferred
Compensation Contribution Amount under and subject to the terms of the Plan. The
Deferred Compensation Contribution Amount shall be represented by Initial Stock
Units allocated to the Participant's Account Balance under the Plan as of the
Effective Date if the Participant is then employed by the Company or any of its
affiliates.
ARTICLE II
NON-COMPETE AGREEMENT
1. The Participant hereby covenants and agrees that during his
employment with the Company or any of its subsidiaries or affiliates, he shall
not:
(a) become an officer, employee, consultant, director or
trustee of, or provide services directly or indirectly for compensation in any
capacity whatsoever to, any business enterprise other than (i) the Company or
any of its subsidiaries or affiliates or (ii) as a director or trustee of an
entity which (x) is not, or is not affiliated with, a financial institution
whose deposits are federally insured, but subject to the written approval of the
Board of Directors of the Company, which approval shall not be unreasonably
withheld or delayed, or (y) is, or is affiliated
with, a financial institution whose deposits are federally insured, but subject
to the written approval of the Board of Directors of the Company, which approval
may be withheld in its sole discretion (in the case of approval under (x) or (y)
an "Approved Organization");
(b) directly or indirectly engage in the sale or
marketing of products or services on behalf of any business enterprise (other
than on behalf of the Company, its subsidiaries and affiliates or an Approved
Organization);
(c) solicit or offer other employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of, or person or
entity (including but not limited to customers and vendors) doing business with,
the Company or any of its subsidiaries or affiliates to terminate his, her or
its employment or business relationship with the Company or any of its
subsidiaries or affiliates;
(d) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any entity or person engaged in the sale or
marketing of deposit taking activities, loans, insurance products, investment
products, investment advisory services or investment brokerage services, or any
direct or indirect subsidiary or affiliate of such entity or person, that is
intended, or that a reasonable person acting in like circumstances would expect,
to have the effect of causing any such officer or employee to terminate his or
her employment and accept employment or become affiliated with, or provide
services for compensation in any capacity whatsoever to, such other entity or
person; or
(e) be an owner of outstanding capital stock or equity
ownership interest in any Competitor (as such term is defined below), except
that nothing herein shall preclude the Participant from owning not more than 1%
of the outstanding capital stock or equity ownership interest in any entity that
is publicly traded at the time he acquires his interest therein.
2. Subject to the opt-out right of the Participant under
paragraph 3 below, the Participant hereby covenants and agrees that if he
experiences a Termination of Service for any reason other than death or a
Termination for Good Reason prior to the earliest of (i) January 1, 2009, (ii)
the date Charles J. Koch ceases to be the Chief Executive Officer of the Company
or (iii) the consummation of (not the date of shareholder approval of) a Change
in Control, then continuing for a period of one year after his Termination of
Service, he shall not:
(a) become an officer, employee, consultant, director or
trustee of, or provide services directly or indirectly in any capacity
whatsoever to, any financial institution whose deposit accounts are insured by
the Federal Deposit Insurance Corporation or the National Credit Union
Administration (or any affiliate thereof or successor thereto), or any holding
company, subsidiary or affiliate of any such entity (other than the Company and
its subsidiaries and affiliates) if (1) such entity or its holding company
(including their respective subsidiaries and affiliates) has consolidated assets
in excess of $10 billion and (2) such entity, its holding company or any of
their respective subsidiaries or affiliates maintains an office or facility for
the transaction of business in any state in the Continental United States (a
"Competitor");
2
(b) directly or indirectly, by disclosure of customers
names to others, engage in the sale or marketing of deposit taking activities,
loans, insurance products, investment products, investment advisory services or
investment brokerage services (other than on behalf of the Company, its
subsidiaries and affiliates) to any person or entity who is known by the
Participant to be a customer of the Company or any of its subsidiaries or
affiliates;
(c) solicit or offer employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of, or person or
entity (including but not limited to customers and vendors) doing business with,
the Company or any of its subsidiaries or affiliates to terminate his, her or
its employment or business relationship with the Company or any of its
subsidiaries or affiliates; provided this subsection shall not apply to any form
of media advertising of general circulation or distribution which is not
targeted to any officer and/or employee, or any group of officers and/or
employees, of the Company or any of its subsidiaries or affiliates;
(d) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any Competitor, or any entity or person engaged in
the sale or marketing of deposit taking activities, loans, insurance products,
investment products, investment advisory services or investment brokerage
services, or any direct or indirect subsidiary or affiliate of such entity or
person, that is intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any such officer or
employee to terminate his or her employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, such Competitor or other entity or person; or
(e) be an owner of outstanding capital stock or equity
ownership interest in any Competitor, except that nothing herein shall preclude
the Participant from owning not more than 1% of the outstanding capital stock or
equity ownership interest in any entity that is publicly traded at the time he
acquires his interest therein.
3. If the Participant is Discharged without Cause and is subject
to the provisions of paragraph 2 of this Article II during the one year period
following his Termination of Service, the Participant shall be entitled to
opt-out of the provisions of paragraph 2 of this Article II and become subject
to the provisions of paragraph 4 of this Article II, thereby waiving and
forfeiting all his rights and entitlements to his Vested Account Balance under
the Plan, to the Non-Compete Payment under paragraph 8 of this Agreement, and to
his enhanced supplemental retirement benefit under the SRA Amendment. The
Participant shall exercise his opt-out right not later than 90 days after the
date he is Discharged without Cause by executing and delivering an irrevocable
written notice (the "Opt-Out Notice") to the Committee stating that he waives
and forfeits his rights to his Vested Account Balance under the Plan, to the
Non-Compete Payment under paragraph 8 of this Agreement, and to his enhanced
supplemental retirement benefit under the SRA Amendment, and that he releases
and forever discharges the Company from any and all claims and demands that the
Participant has or might have under the Plan, this Agreement and to the enhanced
supplemental retirement benefit under the SRA Amendment. Upon receipt by the
3
Committee of the Opt-Out Notice within the 90 day period specified above, all
rights of the Participant, and all obligations of the Company to the
Participant, under the Plan, this Agreement and relating to the enhanced
supplemental retirement benefit under the SRA Amendment shall cease and
terminate, and the Participant shall be relieved on a prospective basis (i.e.,
after the date of receipt of the Opt-Out Notice by the Committee) from his
obligations under paragraph 2 of this Article II. Nothing herein is intended to
relieve the Participant from liability, or diminish the Company's right to
relief, with respect to any breaches or violations of this Article II by the
Participant prior to the receipt of the Opt-Out Notice by the Committee or alter
in any respect the continuing obligations of the Participant under paragraph 4
or 5 of this Article II.
4. The Participant hereby further covenants and agrees that if he
experiences a Termination of Service for any reason at any time and is not
subject to the provisions of paragraph 2 of this Article II, then continuing for
a period of one year after his Termination of Service, he shall not:
(a) solicit or offer employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of the Company or
any of its subsidiaries or affiliates to terminate his or her employment
relationship with the Company or any of its subsidiaries or affiliates; provided
this subsection shall not apply to any form of media advertising of general
circulation or distribution which is not targeted to any officer and/or
employee, or any group of officers and/or employees, of the Company or any of
its subsidiaries or affiliates; or
(b) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any Competitor, or any entity or person engaged in
the sale or marketing of deposit taking activities, loans, insurance products,
investment products, investment advisory services or investment brokerage
services, or any direct or indirect subsidiary or affiliate of such entity or
person, that is intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any such officer or
employee to terminate his or her employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, such Competitor or other entity or person.
5. The Participant hereby further covenants and agrees at all
times to keep in strict confidence, and to not, directly or indirectly, at any
time disclose or use (except in the course of performing his duties on behalf of
the Company, its subsidiaries or affiliates) any trade secrets or confidential
business or technical information of the Company, its subsidiaries or affiliates
or their respective customers or vendors (the "Confidential Information"),
without limitation as to when or how the Participant may have acquired such
information. The Confidential Information shall include, without limitation,
business and marketing methods, policies, techniques, and strategies; research
and development relating to products and services; customer and vendor
information and contracts, methods of operation; business, financial and
strategic plans; financial information; and human resources policies, practices
and procedures. The Confidential Information shall not include information that
is or becomes publicly available other than as a result of disclosure by the
Participant. The Participant specifically acknowledges that the
4
Confidential Information derives independent economic value from not being
readily known to or ascertainable by proper means by others who can obtain
economic value from its disclosure or use, that reasonable efforts have been put
forth by the Company, its subsidiaries and affiliates to maintain the secrecy of
such information, that such information is the sole property of the Company, its
subsidiaries and affiliates and that any retention and use of such information
during or after the Participant's employment with the Company, its subsidiaries
and affiliates (except in the course of performing his duties on behalf of the
Company, its subsidiaries or affiliates) shall constitute a violation of this
paragraph 5 and a misappropriation of the Confidential Information. The
Participant further agrees that upon his Termination of Service he will return
to the Company, its subsidiaries and affiliates, in good condition, all property
of the Company, including, without limitation, the Confidential Information. In
the event that any such property is not so returned, the Company shall have the
right to charge the Participant for all reasonable damages, costs, attorney's
fees and other expenses incurred in searching for, taking, removing. and/or
recovering such property. In the event that the Participant is advised in
writing by his legal counsel that he is required by subpoena or other legal
process to disclose any of the Confidential Information, the Participant shall
promptly notify the Company of this situation and shall promptly provide the
Company with a copy of the written advice of legal counsel so that the Company
or one of its subsidiaries or affiliates may seek a protective order or other
appropriate remedy. If a protective order or other appropriate remedy is not
obtained in a reasonable period of time, the Participant may furnish only that
portion of the Confidential Information that he is advised by legal counsel is
legally required.
6. If the period of time set forth in paragraph 2 or 4, whichever
is applicable, of this Article II should be adjudged to be unreasonable by any
court of competent jurisdiction, then the court making such judgment shall have
the power to reduce the period of time by such number of months as is required
so that such restriction may be enforced for such time as is adjudged to be
reasonable. Similarly, if any other portion of paragraph 1, 2, 4 or 5 of this
Article II is adjudged to be unreasonable by any court of competent
jurisdiction, then the court making such judgment shall have the power to, and
shall, reduce such scope or restriction so that it shall extend to the maximum
extent permissible under the law and no further.
7. The Participant acknowledges that the restraints placed upon
him under paragraphs 1, 2, 4 and 5 of this Article II are fair and reasonable
under the circumstances and that if he should commit a breach of any of the
provisions thereof the Company's remedies at law would be inadequate to
compensate it for its damages. The parties agree that in the event of any breach
by the Participant of any of the provisions of paragraph 1, 2, 4 or 5 of this
Article II, then in addition to the forfeiture of the Participant's Vested
Account Balance as provided in the Plan and the forfeiture of the Participant's
enhanced supplemental retirement benefit as provided in the SRA Amendment, the
Company shall be entitled to (i) injunctive relief and (ii) such other relief as
is available at law or in equity. Any dispute or controversy arising under or in
connection with this Agreement that seeks solely monetary damages (i.e., does
not seek any form of equitable relief such as an injunction) shall be settled
exclusively by arbitration in accordance with the rules of the American
Arbitration Association as then in effect in Cleveland, Ohio. The arbitrator's
award shall be binding and conclusive upon the parties and judgment may be
entered on the arbitrator's award in any court having jurisdiction. In the event
of any judicial or arbitration proceeding between the Participant and the
Company, or any of the Company's
5
subsidiaries or affiliates, under this Agreement, the prevailing party in such
action shall be entitled to recover reasonable fees and disbursements of his or
its counsel (plus any costs) incurred by such prevailing party in connection
with such proceeding from the other party, provided the amount thereof in any
and all such proceedings shall not exceed $50,000. Moreover, if the Participant
has violated any of the provisions of paragraph 2 or 4, whichever is applicable,
of this Article II, the Company's right to injunctive relief shall include,
without limitation, the imposition of an additional period of time during which
the Participant will be required to comply with the provisions of paragraph 2 or
4 of this Article II, which period of time shall not be less than the period of
time the Participant was in violation of the provisions thereof. If the Company
or any of its subsidiaries or affiliates is required in any injunction
proceeding to post a bond, the parties agree that it shall be in a nominal
amount.
8. Except as provided below, if the provisions of paragraph 2 are
applicable to the Participant during the entire one year period next following
his Termination of Service or until his death during such one year period, then
in that event, within thirty days after the expiration of such one year period
or his death, whichever shall first occur, the Company shall pay the Participant
or his estate, whichever the case may be, a single lump sum cash Non-Compete
Payment in an amount equal to 50% of the Participant's annual base salary (from
the Company, its subsidiaries and affiliates) as in effect immediately prior to
his Termination of Service, subject to deduction for any applicable withholding
taxes. Notwithstanding the foregoing, in the event the Participant has
experienced a Termination for Cause or has committed any violation of any of the
provisions of paragraph 1 or 5 of this Article II during his employment with the
Company or its affiliates or any of the provisions of paragraph 2 or 5 of this
Article II during the one year period after his Termination of Service, then
neither the Participant nor his estate shall be entitled to the Non-Compete
Payment.
9. The parties agree that the Non-Compete Agreement set forth in
Article II of this Agreement shall supercede and replace Section 10 of the
Participant's Employment Agreement. Accordingly, the provisions of Section 10 of
the Participant's Employment Agreement shall cease, terminate and have no
further force or effect and the provisions of Article II of this Agreement
contain the full contract between the parties relating to the non-competition,
non-solicitation and non-disclosure obligations of the Participant.
This Agreement may be executed in counterparts, each of which shall be
deemed an original.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
CHARTER ONE FINANCIAL, INC.
/s/ Mark D. Grossi By /s/ Charles J. Koch
- ------------------------------- ----------------------------------
Mark D. Grossi, Participant Charles J. Koch
Dated: 1/14/04 President and Chief Executive Officer
------------------------ Dated: 1/14/04
------------------------------
6
[ROBERT J. VANA]
CHARTER ONE FINANCIAL, INC.
2004 SENIOR EXECUTIVE STOCK UNIT DEFERRED COMPENSATION PLAN
AGREEMENT
CHARTER ONE FINANCIAL, INC. (the "Company") has adopted and is a party
to the Charter One Financial, Inc. 2004 Senior Executive Stock Unit Deferred
Compensation Plan (the "Plan"). The Company and the undersigned senior executive
officer of the Company (the "Participant") hereby agree that, in consideration
of the Participant agreeing to the non-competition, non-solicitation,
non-disclosure and related provisions contained in Article II below (the
"Non-Compete Agreement"), (i) the Participant shall participate in the Plan as
of the Effective Date, (ii) the Company shall allocate a deferred compensation
retention award to the Participant as provided in Article I below, and (iii) the
Company agrees in certain circumstances to pay separate and additional cash
consideration to the Participant in exchange for his Non-Compete Agreement as
provided in paragraph 8 of Article II below (the "Non-Compete Payment"). The
Participant does hereby acknowledge that he has been provided with a copy of the
Plan and he does specifically agree to the terms and conditions thereof. The
Participant understands that his entitlement (or his Beneficiary's entitlement)
to receive his Account Balance under the Plan shall be subject to all provisions
of the Plan. The Plan is part and parcel of the 2004 Senior Executive Retention
Plan of the Company which also includes an enhanced supplemental retirement
benefit for the Participant as provided in Amendment 3 to Supplemental
Retirement Agreement between the Company and the Participant dated February 1,
2004 (the "SRA Amendment"). All capitalized terms not defined herein shall have
the meaning assigned to them under the Plan.
ARTICLE I
DEFERRED COMPENSATION CONTRIBUTION AMOUNT
The Committee has awarded $1,125,000 as the Participant's Deferred
Compensation Contribution Amount under and subject to the terms of the Plan. The
Deferred Compensation Contribution Amount shall be represented by Initial Stock
Units allocated to the Participant's Account Balance under the Plan as of the
Effective Date if the Participant is then employed by the Company or any of its
affiliates.
ARTICLE II
NON-COMPETE AGREEMENT
1. The Participant hereby covenants and agrees that during his
employment with the Company or any of its subsidiaries or affiliates, he shall
not:
(a) become an officer, employee, consultant, director or
trustee of, or provide services directly or indirectly for compensation in any
capacity whatsoever to, any business enterprise other than (i) the Company or
any of its subsidiaries or affiliates or (ii) as a director or trustee of an
entity which (x) is not, or is not affiliated with, a financial institution
whose deposits are federally insured, but subject to the written approval of the
Board of Directors of the Company, which approval shall not be unreasonably
withheld or delayed, or (y) is, or is affiliated
with, a financial institution whose deposits are federally insured, but subject
to the written approval of the Board of Directors of the Company, which approval
may be withheld in its sole discretion (in the case of approval under (x) or (y)
an "Approved Organization");
(b) directly or indirectly engage in the sale or
marketing of products or services on behalf of any business enterprise (other
than on behalf of the Company, its subsidiaries and affiliates or an Approved
Organization);
(c) solicit or offer other employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of, or person or
entity (including but not limited to customers and vendors) doing business with,
the Company or any of its subsidiaries or affiliates to terminate his, her or
its employment or business relationship with the Company or any of its
subsidiaries or affiliates;
(d) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any entity or person engaged in the sale or
marketing of deposit taking activities, loans, insurance products, investment
products, investment advisory services or investment brokerage services, or any
direct or indirect subsidiary or affiliate of such entity or person, that is
intended, or that a reasonable person acting in like circumstances would expect,
to have the effect of causing any such officer or employee to terminate his or
her employment and accept employment or become affiliated with, or provide
services for compensation in any capacity whatsoever to, such other entity or
person; or
(e) be an owner of outstanding capital stock or equity
ownership interest in any Competitor (as such term is defined below), except
that nothing herein shall preclude the Participant from owning not more than 1%
of the outstanding capital stock or equity ownership interest in any entity that
is publicly traded at the time he acquires his interest therein.
2. Subject to the opt-out right of the Participant under
paragraph 3 below, the Participant hereby covenants and agrees that if he
experiences a Termination of Service for any reason other than death or a
Termination for Good Reason prior to the earliest of (i) January 1, 2009, (ii)
the date Charles J. Koch ceases to be the Chief Executive Officer of the Company
or (iii) the consummation of (not the date of shareholder approval of) a Change
in Control, then continuing for a period of one year after his Termination of
Service, he shall not:
(a) become an officer, employee, consultant, director or
trustee of, or provide services directly or indirectly in any capacity
whatsoever to, any financial institution whose deposit accounts are insured by
the Federal Deposit Insurance Corporation or the National Credit Union
Administration (or any affiliate thereof or successor thereto), or any holding
company, subsidiary or affiliate of any such entity (other than the Company and
its subsidiaries and affiliates) if (1) such entity or its holding company
(including their respective subsidiaries and affiliates) has consolidated assets
in excess of $10 billion and (2) such entity, its holding company or any of
their respective subsidiaries or affiliates maintains an office or facility for
the transaction of business in any state in the Continental United States (a
"Competitor");
2
(b) directly or indirectly, by disclosure of customers
names to others, engage in the sale or marketing of deposit taking activities,
loans, insurance products, investment products, investment advisory services or
investment brokerage services (other than on behalf of the Company, its
subsidiaries and affiliates) to any person or entity who is known by the
Participant to be a customer of the Company or any of its subsidiaries or
affiliates;
(c) solicit or offer employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of, or person or
entity (including but not limited to customers and vendors) doing business with,
the Company or any of its subsidiaries or affiliates to terminate his, her or
its employment or business relationship with the Company or any of its
subsidiaries or affiliates; provided this subsection shall not apply to any form
of media advertising of general circulation or distribution which is not
targeted to any officer and/or employee, or any group of officers and/or
employees, of the Company or any of its subsidiaries or affiliates;
(d) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any Competitor, or any entity or person engaged in
the sale or marketing of deposit taking activities, loans, insurance products,
investment products, investment advisory services or investment brokerage
services, or any direct or indirect subsidiary or affiliate of such entity or
person, that is intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any such officer or
employee to terminate his or her employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, such Competitor or other entity or person; or
(e) be an owner of outstanding capital stock or equity
ownership interest in any Competitor, except that nothing herein shall preclude
the Participant from owning not more than 1% of the outstanding capital stock or
equity ownership interest in any entity that is publicly traded at the time he
acquires his interest therein.
3. If the Participant is Discharged without Cause and is subject
to the provisions of paragraph 2 of this Article II during the one year period
following his Termination of Service, the Participant shall be entitled to
opt-out of the provisions of paragraph 2 of this Article II and become subject
to the provisions of paragraph 4 of this Article II, thereby waiving and
forfeiting all his rights and entitlements to his Vested Account Balance under
the Plan, to the Non-Compete Payment under paragraph 8 of this Agreement, and to
his enhanced supplemental retirement benefit under the SRA Amendment. The
Participant shall exercise his opt-out right not later than 90 days after the
date he is Discharged without Cause by executing and delivering an irrevocable
written notice (the "Opt-Out Notice") to the Committee stating that he waives
and forfeits his rights to his Vested Account Balance under the Plan, to the
Non-Compete Payment under paragraph 8 of this Agreement, and to his enhanced
supplemental retirement benefit under the SRA Amendment, and that he releases
and forever discharges the Company from any and all claims and demands that the
Participant has or might have under the Plan, this Agreement and to the enhanced
supplemental retirement benefit under the SRA Amendment. Upon receipt by the
3
Committee of the Opt-Out Notice within the 90 day period specified above, all
rights of the Participant, and all obligations of the Company to the
Participant, under the Plan, this Agreement and relating to the enhanced
supplemental retirement benefit under the SRA Amendment shall cease and
terminate, and the Participant shall be relieved on a prospective basis (i.e.,
after the date of receipt of the Opt-Out Notice by the Committee) from his
obligations under paragraph 2 of this Article II. Nothing herein is intended to
relieve the Participant from liability, or diminish the Company's right to
relief, with respect to any breaches or violations of this Article II by the
Participant prior to the receipt of the Opt-Out Notice by the Committee or alter
in any respect the continuing obligations of the Participant under paragraph 4
or 5 of this Article II.
4. The Participant hereby further covenants and agrees that if he
experiences a Termination of Service for any reason at any time and is not
subject to the provisions of paragraph 2 of this Article II, then continuing for
a period of one year after his Termination of Service, he shall not:
(a) solicit or offer employment to any officer or
employee of the Company or any of its subsidiaries or affiliates, or take any
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of the Company or
any of its subsidiaries or affiliates to terminate his or her employment
relationship with the Company or any of its subsidiaries or affiliates; provided
this subsection shall not apply to any form of media advertising of general
circulation or distribution which is not targeted to any officer and/or
employee, or any group of officers and/or employees, of the Company or any of
its subsidiaries or affiliates; or
(b) provide any information, advice or recommendation
with respect to any officer or employee of the Company or any of its
subsidiaries or affiliates to any Competitor, or any entity or person engaged in
the sale or marketing of deposit taking activities, loans, insurance products,
investment products, investment advisory services or investment brokerage
services, or any direct or indirect subsidiary or affiliate of such entity or
person, that is intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any such officer or
employee to terminate his or her employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, such Competitor or other entity or person.
5. The Participant hereby further covenants and agrees at all
times to keep in strict confidence, and to not, directly or indirectly, at any
time disclose or use (except in the course of performing his duties on behalf of
the Company, its subsidiaries or affiliates) any trade secrets or confidential
business or technical information of the Company, its subsidiaries or affiliates
or their respective customers or vendors (the "Confidential Information"),
without limitation as to when or how the Participant may have acquired such
information. The Confidential Information shall include, without limitation,
business and marketing methods, policies, techniques, and strategies; research
and development relating to products and services; customer and vendor
information and contracts, methods of operation; business, financial and
strategic plans; financial information; and human resources policies, practices
and procedures. The Confidential Information shall not include information that
is or becomes publicly available other than as a result of disclosure by the
Participant. The Participant specifically acknowledges that the
4
Confidential Information derives independent economic value from not being
readily known to or ascertainable by proper means by others who can obtain
economic value from its disclosure or use, that reasonable efforts have been put
forth by the Company, its subsidiaries and affiliates to maintain the secrecy of
such information, that such information is the sole property of the Company, its
subsidiaries and affiliates and that any retention and use of such information
during or after the Participant's employment with the Company, its subsidiaries
and affiliates (except in the course of performing his duties on behalf of the
Company, its subsidiaries or affiliates) shall constitute a violation of this
paragraph 5 and a misappropriation of the Confidential Information. The
Participant further agrees that upon his Termination of Service he will return
to the Company, its subsidiaries and affiliates, in good condition, all property
of the Company, including, without limitation, the Confidential Information. In
the event that any such property is not so returned, the Company shall have the
right to charge the Participant for all reasonable damages, costs, attorney's
fees and other expenses incurred in searching for, taking, removing. and/or
recovering such property. In the event that the Participant is advised in
writing by his legal counsel that he is required by subpoena or other legal
process to disclose any of the Confidential Information, the Participant shall
promptly notify the Company of this situation and shall promptly provide the
Company with a copy of the written advice of legal counsel so that the Company
or one of its subsidiaries or affiliates may seek a protective order or other
appropriate remedy. If a protective order or other appropriate remedy is not
obtained in a reasonable period of time, the Participant may furnish only that
portion of the Confidential Information that he is advised by legal counsel is
legally required.
6. If the period of time set forth in paragraph 2 or 4, whichever
is applicable, of this Article II should be adjudged to be unreasonable by any
court of competent jurisdiction, then the court making such judgment shall have
the power to reduce the period of time by such number of months as is required
so that such restriction may be enforced for such time as is adjudged to be
reasonable. Similarly, if any other portion of paragraph 1, 2, 4 or 5 of this
Article II is adjudged to be unreasonable by any court of competent
jurisdiction, then the court making such judgment shall have the power to, and
shall, reduce such scope or restriction so that it shall extend to the maximum
extent permissible under the law and no further.
7. The Participant acknowledges that the restraints placed upon
him under paragraphs 1, 2, 4 and 5 of this Article II are fair and reasonable
under the circumstances and that if he should commit a breach of any of the
provisions thereof the Company's remedies at law would be inadequate to
compensate it for its damages. The parties agree that in the event of any breach
by the Participant of any of the provisions of paragraph 1, 2, 4 or 5 of this
Article II, then in addition to the forfeiture of the Participant's Vested
Account Balance as provided in the Plan and the forfeiture of the Participant's
enhanced supplemental retirement benefit as provided in the SRA Amendment, the
Company shall be entitled to (i) injunctive relief and (ii) such other relief as
is available at law or in equity. Any dispute or controversy arising under or in
connection with this Agreement that seeks solely monetary damages (i.e., does
not seek any form of equitable relief such as an injunction) shall be settled
exclusively by arbitration in accordance with the rules of the American
Arbitration Association as then in effect in Cleveland, Ohio. The arbitrator's
award shall be binding and conclusive upon the parties and judgment may be
entered on the arbitrator's award in any court having jurisdiction. In the event
of any judicial or arbitration proceeding between the Participant and the
Company, or any of the Company's
5
subsidiaries or affiliates, under this Agreement, the prevailing party in such
action shall be entitled to recover reasonable fees and disbursements of his or
its counsel (plus any costs) incurred by such prevailing party in connection
with such proceeding from the other party, provided the amount thereof in any
and all such proceedings shall not exceed $50,000. Moreover, if the Participant
has violated any of the provisions of paragraph 2 or 4, whichever is applicable,
of this Article II, the Company's right to injunctive relief shall include,
without limitation, the imposition of an additional period of time during which
the Participant will be required to comply with the provisions of paragraph 2 or
4 of this Article II, which period of time shall not be less than the period of
time the Participant was in violation of the provisions thereof. If the Company
or any of its subsidiaries or affiliates is required in any injunction
proceeding to post a bond, the parties agree that it shall be in a nominal
amount.
8. Except as provided below, if the provisions of paragraph 2 are
applicable to the Participant during the entire one year period next following
his Termination of Service or until his death during such one year period, then
in that event, within thirty days after the expiration of such one year period
or his death, whichever shall first occur, the Company shall pay the Participant
or his estate, whichever the case may be, a single lump sum cash Non-Compete
Payment in an amount equal to 50% of the Participant's annual base salary (from
the Company, its subsidiaries and affiliates) as in effect immediately prior to
his Termination of Service, subject to deduction for any applicable withholding
taxes. Notwithstanding the foregoing, in the event the Participant has
experienced a Termination for Cause or has committed any violation of any of the
provisions of paragraph 1 or 5 of this Article II during his employment with the
Company or its affiliates or any of the provisions of paragraph 2 or 5 of this
Article II during the one year period after his Termination of Service, then
neither the Participant nor his estate shall be entitled to the Non-Compete
Payment.
9. The parties agree that the Non-Compete Agreement set forth in
Article II of this Agreement shall supercede and replace Section 10 of the
Participant's Employment Agreement. Accordingly, the provisions of Section 10 of
the Participant's Employment Agreement shall cease, terminate and have no
further force or effect and the provisions of Article II of this Agreement
contain the full contract between the parties relating to the non-competition,
non-solicitation and non-disclosure obligations of the Participant.
This Agreement may be executed in counterparts, each of which shall be
deemed an original.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
CHARTER ONE FINANCIAL, INC.
/s/ Robert J. Vana By /s/ Charles J. Koch
- ------------------------------- -----------------------------------
Robert J. Vana, Participant Charles J. Koch
Dated: 1/14/04 President and Chief Executive Officer
------------------------ Dated: 1/14/04
------------------------------
6