Document:

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                                                                    EXHIBIT 10.3

                          CAPSTONE TURBINE CORPORATION

                           1993 INCENTIVE STOCK PLAN

                   (AS AMENDED DECEMBER 1995 AND APRIL 1996)
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                               TABLE OF CONTENTS

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 1.  Purposes of this Plan.................................     1

 2.  Definitions...........................................     1

 3.  Stock Subject to this Plan............................     3

 4.  Administration of this Plan...........................     4
     (a)  Procedure........................................     4
     (b)  Powers of the Board..............................     5
     (c)  Board Determinations.............................     5

 5.  Eligibility...........................................     5

 6.  Term of Plan..........................................     6

 7.  Exercise Price and Consideration......................     6

 8.  Options...............................................     8
     (a)  Term of Option...................................     8
     (b)  Exercise of Option...............................     8
          (i)   Procedure for Exercise; Rights as a
                Shareholder................................     8
          (ii)  Termination of Status as an Employee or
                Consultant.................................     9
          (iii) Disability of Optionee.....................     9
          (iv)  Death of Optionee..........................     9

 9.  Stock Purchase Rights.................................    10
     (a)  Rights to Purchase...............................    10
     (b)  Issuance of Shares...............................    10
     (c)  Repurchase Option................................    10
     (d)  Other Provisions.................................    11

10.  Non-Transferability of Options and Stock Purchase
     Rights................................................    11

11.  Adjustments Upon Changes in Capitalization, Merger or
     Other Events..........................................    11

12.  Time of Grant.........................................    12

13.  Amendment and Termination.............................    12
     (a)  Amendment........................................    12
     (b)  Shareholder Approval.............................    12
     (c)  Suspension and Termination.......................    13
     (d)  Effect of Amendment; Termination or Suspension...    13

14.  Conditions Upon Issuance of Shares....................    13

15.  Reservation of Shares.................................    13
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<TABLE>
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16.  Option, Stock Purchase and Stock Bonus Agreements.....    14

17.  Shareholder Approval..................................    14

18.  Information to Optionees and Purchasers...............    14

19.  Right of Company to Terminate Employment or Consulting
     Services..............................................    14

20.  Rights of First Refusal and Repurchase................    14

21.  Withholding...........................................    15

22.  Separability..........................................    15

23.  Non-Exclusivity of this Plan..........................    16

24.  Governing Law.........................................    16

25.  Cancellation of and Substitution for Nonstatutory
     Options...............................................    16

26.  Market Standoff.......................................    16
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                          CAPSTONE TURBINE CORPORATION

                           1993 INCENTIVE STOCK PLAN,
                    as amended December 1995 and April 1996

     1.   Purposes of this Plan. The general purpose of this 1993 Incentive
Stock Plan is to promote the interests of the Company and its shareholders by
(i) providing certain Employees of and Consultants to the Company with
additional incentives to continue and increase their efforts with respect to
achieving success in the business of the Company and its Subsidiaries, and (ii)
attracting and retaining the best available personnel to participate in the
ongoing business operations of the Company and its Subsidiaries.

          Options granted under this Plan may be either Incentive Stock
Options or Nonstatutory Stock Options, as determined at the discretion of the
Board and as reflected in the terms of the written option agreements. The Board
may also grant Stock Purchase Rights hereunder.

     2.   Definitions. As used in this Plan, the following definitions shall
apply:

          (a)  "Board" shall mean the Committee, if one has been appointed, or
the Board of Directors of the Company, if no Committee is appointed.

          (b)  "Board of Directors" means the full Board of Directors of the
Company.

          (c)  "Code" shall mean the Internal Revenue  Code of 1986, as amended
from time to time, or any successor statute or statutes thereto. Reference to
any particular Code section shall include any successor section.

          (d)  "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with Section 4(a) of this Plan, if one is appointed.

          (e)  "Common Stock" shall mean the Common  Stock of the Company.

          (f)  "Company" shall mean the Capstone Turbine Corporation, a
Delaware.

          (g)  "Consultant" shall mean any person who is engaged by the Company
or by any Parent or Subsidiary to render consulting services and is compensated
for such consulting services, and any director of the Company whether
compensated for such services, or not.

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          (h)  "Continuous Status as an Employee or Consultant" shall mean the
absence of any interruption or termination of service as an Employee or
Consultant, as applicable. Continuous Status as an Employee of Consultant shall
not be considered interrupted in the case of sick leave, military leave, or any
other leave of absence approved by the Board; provided that such leave is for
a period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.

          (i)  "Disinterested Person" shall mean a member of the Board of
Directors of the Company: (i) who was not during the one year prior to service
as an administrator of this Plan granted or awarded equity securities pursuant
to this Plan, or any other plan of the Company or any of its affiliates
entitling the participants therein to acquire equity securities of the Company
or any of its affiliates except as permitted by Rule 16b-3(c)(2)(i) promulgated
under the Exchange Act ("Rule 16b-3(c)(2)(i)"); or (ii) who is otherwise
considered to be a "disinterested person" in accordance with Rule
16b-3(c)(2)(i), or any other applicable rules, regulations or interpretations
of the Securities and Exchange Commission.

          (j)  "Employee" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company
as a common-law employee. The payment of a director's fee by the Company shall
not be sufficient to constitute "employment" by the Company.

          (k)  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

          (l)  "Incentive Stock Option" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.

          (m)  "Major Event" shall be deemed to have occurred if (i) there
shall be consummated any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Company's common stock would be converted into cash, securities
or other property, other than a merger of the Company in which the holders of
the Company's common stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger; (ii) there shall be consummated any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company;
(iii) proceedings or actions for the liquidation or dissolution of the Company
are initiated by the Company; or (iv) any "person" (as defined in Sections
13(d) and 14(d) of the Exchange Act) (other than persons who beneficially own
more than 30% of the capital stock of the Company on a fully diluted and as
converted basis outstanding as of January 1, 1993) becomes the "beneficial

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owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 30% or more of the Company's outstanding capital stock on a
fully diluted and as converted basis at such time; provided, however, that a
"Major Event" shall not be deemed to have occurred solely by reason of the
consummation of a firmly underwritten public offering by the Company of common
stock registered under the Securities Act.

      (n)   "Nonstatutory Stock Option" shall mean an Option which is not
intended to qualify as an Incentive Stock Option.

      (o)   "Option" shall mean a stock option granted pursuant to this Plan.

      (p)   "Optioned Stock" shall mean the Common Stock subject to an Option.

      (q)   "Optionee" shall mean an Employee or Consultant who receives an
Option.

      (r)   "Parent" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.

      (s)   "Plan" shall mean this 1993 Incentive Stock Plan, as amended as of
December, 1995.

      (t)   "Purchaser" shall mean an Employee or Consultant who exercises a
Stock Purchase Right.

      (u)   "Securities Act" shall mean the Securities Act of 1933, as amended.

      (v)   "Share" shall mean a share of Common Stock, as adjusted in
accordance with Section 11 of this Plan.

      (w)   "Stock Purchase Right" shall mean a right to purchase Common Stock
pursuant to this Plan or the right to receive a bonus of Common Stock for past
services.

      (x)   "Subsidiary" shall mean a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

   3. Stock Subject to this Plan. Subject to the provisions of Section 11 of
this Plan, the maximum aggregate number of Shares under this Plan is 3,500,000.
The Shares may be authorized but unissued, or reacquired Common Stock, or both.

      If an Option or Stock Purchase Right should expire, terminate, be
cancelled or become unexercisable for any reason without having been exercised
in full, then the unpurchased Shares which were subject thereto shall, unless
this Plan shall have been terminated, become available for future grant or sale

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under this Plan. In addition, Shares issued under this Plan and later
repurchased or otherwise reacquired by the Company shall, unless this Plan
shall have been terminated, become available for future grant or sale under
this Plan.

      4.    Administration of this Plan.

            (a)   Procedure. This Plan shall be administered by the Board of
Directors of the Company unless and until the Board of Directors delegates
administration to a Committee, as provided in this Section 4(a).

                  (i) Subject to Section 4(a)(ii), the Board of Directors may
appoint a Committee consisting of not less than two persons (who need not be
members of the Board of Directors) to administer this Plan on behalf of the
Board of Directors, subject to such terms and conditions not inconsistent with
this Plan as the Board of Directors may prescribe. Once appointed, the Committee
shall continue to serve until otherwise directed by the Board of Directors.
Members of the Board who are either eligible for Options and/or Stock Purchase
Rights or have been granted Options and/or Stock Purchase Rights may vote on any
matters affecting the administration of this Plan or the grant of any Options
and/or Stock Purchase Rights pursuant to this Plan, except that no such member
shall act upon the granting of an option to such member, but any such member may
be counted in determining the existence of a quorum at any meeting of the Board
during which action is taken with respect to the granting of Options and/or
Stock Purchase Rights to such member.

                  (ii) Notwithstanding the foregoing Section 4(a)(i), if the
Company registers any class of any equity security pursuant to Section 12 of the
Exchange Act, from the effective date of such registration until six months
after the termination of such registration, any grants of Options and/or Stock
Purchase Rights to directors or officers who are subject to Section 16 of the
Exchange Act shall be made only by a Committee consisting of two or more
persons, each of whom shall be a Disinterested Person (if necessary to meet the
requirements of Rule 16b-3 promulgated under the Exchange Act). The Board shall
otherwise comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act, as from time to time in effect, unless the Board expressly
declares that any such requirement shall not apply.

                  (iii) Subject to the foregoing Sections 4(a)(i) and 4(a)(ii),
from time to time the Board of Directors may increase the size of the Committee
and appoint additional members thereof, remove members (with or without cause)
and appoint new members in substitution therefor, fill vacancies however
caused, or remove all members of the Committee and thereafter directly
administer this Plan. Once appointed, the Committee shall continue to serve
until otherwise directed by the Board of Directors.

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          (b)   Powers of the Board. Subject to the provisions of this Plan, the
Board shall have plenary authority, in its discretion and without limitation, to
do the following: (i) to grant Incentive Stock Options, Nonstatutory Stock
Options or Stock Purchase Rights; (ii) to determine, upon review of relevant
information and in accordance with Section 7 of this Plan, the fair market value
of the Common Stock; (iii) to determine the exercise price per share of Options
or Stock Purchase Rights to be granted, which exercise price shall be determined
in accordance with Section 7 hereof; (iv) to determine the Employees or
Consultants to whom, and the time or times at which, Options or Stock Purchase
Rights shall be granted and the number of Shares to be represented by each
Option or Stock Purchase Right; (v) to interpret this Plan; (vi) to prescribe,
amend and rescind rules and regulations relating to this Plan, and in the
exercise of this power, to correct any defect, omission or inconsistency in this
Plan or in any agreement relating to an Option or Stock Purchase Right, in a
manner and to the extent the Board shall deem necessary or expedient to make
this Plan fully effective; (vii) to determine the terms and provisions of each
Option or Stock Purchase Right granted (which need not be identical) and, with
the consent of the holder thereof, modify or amend each Option or Stock Purchase
Right; (viii) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option or Stock Purchase Right
previously granted by the Board; and (ix) to make all other determinations
deemed necessary or advisable for the administration of this Plan.

          (c)   Board Determinations. In making determinations under this Plan,
the Board may take into account the nature of the services rendered by the
respective Employees and Consultants, their present and potential contributions
to the success of the Company, or its Subsidiaries, as the case may be, and
such other factors as the Board in its discretion shall deem relevant. All
decisions, determinations and interpretations of the Board shall be final and
binding on all Optionees, Purchasers and any other holders of any Options
and/or Stock Purchase Rights granted under this Plan.

     5.   Eligibility.

          (a)   Options and Stock Purchase Rights may be granted to Employees
and Consultants, provided that Incentive Stock Options may only be granted to
Employees. An Employee or Consultant who has been granted an Option or Stock
Purchase Right may, if such Employee or Consultant is otherwise eligible, be
granted additional Option(s) or Stock Purchase Right(s).

          (b)   No Incentive Stock Option may be granted to an Employee which,
when aggregated with all other incentive stock options granted to such Employee
by the Company or by any Parent or Subsidiary, would result in Shares having an
aggregate fair market value (determined for each Share as of the date of grant

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of the Option covering such Share) in excess of $100,000 becoming first
available for purchase upon exercise of one or more incentive stock options
during any calendar year.

          (c)  Section 5(b) of this Plan shall apply only to an Incentive Stock
Option evidenced by a stock option agreement which sets forth the intention of
the Company and the Optionee that such Option shall qualify as an Incentive
Stock Option. Section 5(b) of this Plan shall not apply to any Option evidenced
by a stock option agreement which sets forth the intention of the Company and
the Optionee that such Option shall be a Nonstatutory Stock Option.

          (d)  On and after the effective date of the registration of any class
of equity security of the Company pursuant to Section 12 of the Exchange Act, a
member of the Board of Directors who is not an Employee shall not be eligible
for the benefits of this Plan unless at the time an Option or Stock Purchase
Right is granted to such member, the Board expressly declares that such
exclusion will not apply.

     6.   Term of Plan. This Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by vote of the
holders of a majority of the outstanding shares of the Company entitled to vote
on the adoption of this Plan. It shall continue in effect for a term of ten
(10) years unless sooner terminated under Section 13 of this Plan.

     7.   Exercise Price and Consideration.

          (a)  The per share exercise price for the Shares to be issued
pursuant to exercise of an Option or Stock Purchase Right shall be such price
as is determined by the Board, but shall be subject to the following provisions:

               (i)  In the case of an Incentive Stock Option:

                    (A)  granted to an Employee who, at the time of the grant
of such Incentive Stock Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per share exercise price shall be no less than 110% of the
fair market value per share on the date of grant.

                    (B)  granted to any Employee other than an Employee
described in Section 7(a)(i)(A), the per share exercise price shall be no less
than 100% of the fair market value per Share on the date of grant.

               (ii) In the case of a Nonstatutory Stock Option:

                    (A)  granted to an Employee or Consultant who, at the time
of the grant of such Options, owns stock

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representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per share exercise price
shall be no less than 110% of the fair market value per share on the date of
the grant.

                    (B)  granted to any Employee or Consultant, other than an
Employee or Consultant described in Section 7(a)(ii)(A), the per share exercise
price shall be no less than 85% of the fair market value per share on the date
of grant.

               (iii) In the case of a Stock Purchase Right granted to any
person, the per share exercise price shall be no less than 85% of the fair
market value per share on the date of grant; provided, however, that if such
person at the time of the grant of such Stock Purchase Right, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per share exercise price
shall be no less than 100% of the fair market value per share on the date of
the grant.

          (b)  Fair market value shall be determined by the Board in its
discretion; provided, however, that where there is an active public market for
the Common Stock, the fair market value per share shall be determined as
follows:

               (i)  If the Company's Common Stock is traded on an exchange or
is quoted on the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") National Market System, then the closing or last sale
price, respectively, on the date of grant, as reported in the Wall Street
Journal (or, if not so reported, as otherwise reported by the NASDAQ System).

               (ii) If the Company's Common Stock is not traded on an exchange
or on the NASDAQ National Market System but is traded in the over-the-counter
market, then the mean of the closing bid and asked prices on the date of grant
as reported in the Wall Street Journal (or, if not so reported, as otherwise
reported by the NASDAQ System).

          (c)  The consideration to be paid for the Shares to be issued upon
exercise of an Option or Stock Purchase Right, including the method of payment,
shall be determined by the Board and may consist entirely of cash, check,
promissory note or other deferred payment arrangement, other Shares of Common
Stock having a fair market value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option or Stock
Purchase Right shall be exercised, or any combination of such methods of
payment, or such other consideration and method of payment for the issuance of
Shares to the extent permitted under Sections 408 and 409 of the California
General Corporation Law. In making its determination as to the type of
consideration to accept, the Board shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company (Section 315(b)
of the California General Corporation Law).

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     8.   Options.

          (a)  Term of Option.  The term of each Option shall be ten (10) years
from the date of grant thereof or such shorter term as may be provided in the
stock option agreement relating to such Option; provided that the term of a
Nonstatutory Stock Option may, as provided in Section 8(b)(iv), be extended for
a period of up to six (6) months. However, in the case of an Option granted to
an Employee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant thereof or such shorter time as may be provided in
the stock option agreement relating to such Option.

          (b)  Exercise of Option.

               (i)  Procedure for Exercise; Rights as a Shareholder.  Any
Option granted under this Plan shall be exercisable at such times and under
such conditions as determined by the Board, such as vesting conditions and/or
performance criteria with respect to the Company and/or the Optionee, and as
shall be permissible under the terms of this Plan. The Board may, in its
discretion, waive any vesting provisions contained in a stock option agreement.
Notwithstanding anything herein to the contrary, no Option granted hereunder
shall have a vesting period in excess of five (5) years.

               An Option may, but need not, include a provision whereby at any
time prior to termination of the Optionee's Continuous Status as an Employee or
Consultant, the Optionee may elect to exercise the Option as to all or any part
of the Shares subject to the Option prior to the stated vesting date of the
Option or of any vesting installment or installments specified in the Option.
Any shares so purchased from any unvested installment or Option may be subject
to a repurchase right in favor of the Company or to any restriction the Board
determines to be appropriate.

               An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. An Option may not be exercised for a fraction of a Share. Full payment
may, as authorized by the Board, consist of any consideration and method of
payment allowable under Section 7 of this Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of

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the Option. The Company shall issue (or cause to be issued) such stock
certificate promptly upon exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date
the stock certificate is issued, except as provided in Section 11 of this Plan.

          Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of this
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

          (ii)   Termination of Status as an Employee or Consultant. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant (as the case may be), such Optionee may, but only within thirty (30)
days after the date of such termination (but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement),
exercise the Option to the extent that such Employee or Consultant was entitled
to exercise it at the date of such termination. To the extent that such
Employee or Consultant was not entitled to exercise the Option at the date of
such termination, or if such Employee or Consultant does not exercise such
Option (which such Employee or Consultant was entitled to exercise) within such
thirty (30) day time period, the Option shall terminate.

          (iii)  Disability of Optionee. Notwithstanding the provisions of
Section 8(b)(ii) above, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of such Employee's or
Consultant's disability, such Employee or Consultant may, but only within six
(6) months from the date of such termination (but in no event later than the
date of expiration of the term of such option as set forth in the Option
Agreement), exercise the Option to the extent such Employee or Consultant was
entitled to exercise it at the date of such termination; provided however, that
if the Option is an Incentive Stock Option and the disability is not a total
and permanent disability (as defined in Section 422(c)(6) of the Code), then if
the Optionee does not exercise the Option within three months after such
termination, such Option shall automatically convert into a Nonstatutory Stock
Option; and provided, further, that if the termination is as a result of a total
and permanent disability (as defined in Section 422(c)(6) of the Code), such
Employee or Consultant may within one (1) year from the date of such
termination, but in no event later than the date of expiration of the term of
such option as set forth in the Option Agreement), exercise the Option to the
extent such Employee or Consultant was entitled to exercise it at the date of
such termination. To the extent that such Employee or Consultant was not
entitled to exercise the Option at the date of termination, or if such Employee
or Consultant does not exercise such Option (which such Employee or Consultant
was entitled to

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exercise) within the time periods specified above, as the case may be, the
Option shall terminate.

                (iv)   Death of Optionee. In the event of the death of an
Optionee: (A) while the Optionee is an Employee or Consultant, (B) during the 30
(30) day period described in Section 8(b)(ii), or (C) during the one (1) year
period described in Section 8(b)(iii), the Option may be exercised, at any time
within one (1) year following the date of death (but, in the case of an
Incentive Stock Option, in no event later than the date of expiration of the
term of such Incentive Stock Option as set forth in the Option Agreement), by
the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent of the right to
exercise that had accrued at the time of death of the Optionee. To the extent
that such Employee or Consultant was not entitled to exercise the Option at the
date of death, or if such Employee, Consultant, estate or other person does not
exercise such Option (which such Employee, Consultant, estate or person was
entitled to exercise) within the one (1) year time period specified in this
Plan, the Option shall terminate.

     9.   Stock Purchase Rights.

          (a)   Rights to Purchase. After the Board determines that it will
offer an Employee or Consultant a Stock Purchase Right, it shall deliver to the
offeree a stock purchase agreement or stock bonus agreement, as the case may
be, setting forth the terms, conditions and restrictions relating to the offer,
including the number of Shares which such person shall be entitled to purchase,
and the time within which such person must accept such offer, which shall in no
event exceed six (6) months from the date upon which the Board made the
determination to grant the Stock Purchase Right. The offer shall be accepted by
execution of a stock purchase agreement or stock bonus agreement in the form
approved by the Board.

          (b)   Issuance of Shares. Forthwith after payment therefor, the
Shares purchased shall be duly issued; provided, however, that the Board may
require that the Purchaser make adequate provision for any federal and state
withholding obligations of the Company as a condition to the Purchaser
purchasing such Shares.

          (c)   Repurchase Option. The Board may require, at its option, that a
stock purchase agreement or stock bonus agreement grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the Purchaser's employment with the Company for any reason (including death or
disability). The repurchase price shall be at the higher of the original
purchase price or fair value of the Shares on the date of termination of
employment. If the Board so determines, the purchase price for shares
repurchased may be paid by cancellation of any indebtedness of the Purchaser to
the Company. The

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repurchase option must be exercised by the Company within 90 days of
termination of employment for cash or cancellation of money indebtedness for
the Shares and the right shall terminate when the Company's Common Stock
becomes publicly traded. The repurchase option shall lapse at such rate as the
Board may determine but, if the repurchase price is the original purchase price
for the Shares, the right to repurchase at the original purchase price shall
lapse at the rate of at least 20% per year over 5 years from the date the
Shares were originally purchased by the Purchaser.

          (d)   Other Provisions. The stock purchase agreement or stock bonus
agreement shall contain such other terms, provisions and conditions not
inconsistent with this Plan as may be determined by the Board, including rights
of first refusal as set forth in Section 20 hereof.

     10.  Non-Transferability of Options and Stock Purchase Rights. Options and
Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee or Purchaser, only by the Optionee or Purchaser.

     11.  Adjustments Upon Changes in Capitalization, Merger or Other Events.
Subject to any required action by the shareholders of the Company, the number
of shares of Common Stock covered by each outstanding Option and Stock Purchase
Right, and the number of shares of Common Stock which have been authorized for
issuance under this Plan but as to which no Options or Stock Purchase Rights
have yet been granted or which have been returned to this Plan upon
cancellation or expiration of an Option or Stock Purchase Right, or repurchase
of Shares from a Purchaser or Optionee upon termination of employment or
otherwise, as well as the price per share of Common Stock covered by each such
outstanding Option or Stock Purchase Right, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock of the Company or the payment of a stock
dividend with respect to the Common Stock or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Rights.

                                       11
<PAGE>   15
          In the event of the dissolution or liquidation of the Company, all
Options and Stock Purchase Rights will terminate immediately prior to the
consummation of such proposed action if not previously exercised. The Board, at
its option, may provide for one or more of the following from time to time or
in any stock option agreement or stock purchase agreement that, in the event of
a Major Event, then (A) all Options and Stock Purchase Rights will be assumed
or equivalent options or stock purchase rights will be substituted by such
surviving corporation (or other entity) or a parent or subsidiary of such
surviving corporation (or other entity), (B) all Options and Stock Purchase
Rights will continue in full force and effect, or (C) all Options and Stock
Purchase Rights will terminate if not exercised prior to the consummation of
the transaction.

          The foregoing adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.

          The grant of an Option or Stock Purchase Right pursuant to this Plan
shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve, liquidate or
sell, or transfer all or any part of its business or assets.

     12.  Time of Grant. The date of grant of an Option or Stock Purchase Right
shall, for all purposes, be the date on which the Board makes the determination
granting such Option or Stock Purchase Right. Notice of the determination shall
be given to each Employee or Consultant to whom an Option or Stock Purchase
Right is so granted within a reasonable time after the date of such grant.

     13.  Amendment and Termination.

          (a)   Amendment. The Board may amend this Plan from time to time in
such respects as the Board may deem advisable; provided that the shareholders
of the Company must approve the following amendments or revisions within 12
months before or after the adoption of such revision or amendment:

                (i)   any increase in the number of Shares subject to this
Plan, other than in connection with an adjustment under Section 11 of this Plan;

                (ii)  any change in the designation of the class of persons
eligible to be granted Options (to the extent such modification requires
shareholder approval in order for the plan to satisfy the requirements of
Section 422(b) of the Code or to comply with the requirements of Rule 16b-3
promulgated under the Exchange Act); or

                                       12
<PAGE>   16

               (iii) any other revision or amendment if such revision or
amendment requires shareholder approval in order for this Plan to satisfy the
requirements of Section 422(b) of the Code or to comply with the requirements of
Rule 16b-3 promulgated under the Exchange Act.

          (b)  Shareholder Approval. If any amendment requiring shareholder
approval under Section 13(a) of this Plan is made subsequent to the first
registration of any class of equity securities by the Company under Section 12
of the Exchange Act, such shareholder approval shall be solicited as described
in Section 17 of this Plan.

          (c)  Suspension and Termination. The Board may suspend or terminate
this Plan at any time. No Options or Stock Purchase Rights may be granted while
this Plan is suspended or after it is terminated.

          (d)  Effect of Amendment; Termination or Suspension. Any such
amendment, termination or suspension of this Plan shall not affect Options or
Stock Purchase Rights already granted and such Options or Stock Purchase Rights
shall remain in full force and effect as if this Plan had not been amended,
terminated or suspended, unless mutually agreed otherwise between the Optionee
or Purchaser (as the case may be) and the Company, which agreement must be in
writing and signed by the Optionee or Purchaser (as the case may be) and the
Company.

     14.  Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery
of such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act, the Exchange Act, the
rules and regulations promulgated thereunder, and the requirements of any stock
exchange or other stock trading system upon which the Shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.

          As a condition to the exercise of an Option or Stock Purchase Right,
the Company may require the person exercising such Option or Stock Purchase
Right to make such representations and warranties at the time of any such
exercise as the Company may at that time determine, including without
limitation, representations and warranties that (i) the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares in violation of applicable federal or state securities
laws, and (ii) such person is knowledgeable and experienced in financial and
business matters and is capable of evaluating the merits and the risks
associated with purchasing the Shares.

                                       13
<PAGE>   17
     15.  Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of this Plan.

          The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares under this Plan,
shall relieve the Company of any liability in respect of the failure to issue
or sell such Shares as to which such requisite authority shall not have been
obtained.

     16.  Option, Stock Purchase and Stock Bonus Agreements. Options shall be
evidenced by written stock option agreements in such form as the Board shall
approve. Upon the exercise of Stock Purchase Rights, the Purchaser shall sign a
stock purchase agreement or stock bonus agreement in such form as the Board
shall approve.

     17.  Shareholder Approval.

          (a)  If the Company registers any class of equity securities pursuant
to Section 12 of the Exchange Act, any required approval of the shareholders of
the Company obtained after such registration shall be solicited substantially in
accordance with Section 14(a) of the Exchange Act and the rules and regulations
promulgated thereunder.

          (b)  If the Company registers any class of equity securities pursuant
to Section 12 of the Exchange Act and if prior to such time either (x) the
shareholders of the Company did not approve this Plan or (y) the Company did
not solicit shareholder approval substantially in accordance with Section 14(a)
of the Exchange Act and the rules and regulations promulgated thereunder, then
the Company shall take all necessary actions to qualify the Plan under Rule
16(b)(3) promulgated under the Exchange Act at or prior to the later of (A) the
first annual meeting of shareholders held subsequent to the first registration
of any class of equity securities of the Company under Section 12 of the
Exchange Act or (B) the granting of an Option hereunder to an officer or
director after such registration.

     18.  Information to Optionees and Purchasers. The Company shall provide
annually to each Optionee and Purchaser, during the period that such Optionee
or Purchaser has one or more options or Stock Purchase Rights outstanding,
copies of the financial statements of the Company, even if such statements are
not provided to the shareholders of the Company.

     19.  Right of Company to Terminate Employment or Consulting Services. This
Plan shall not confer upon any Optionee or holder of a Stock Purchase Right any
right with respect to continuation of employment by or the rendition of
consulting services to the

                                       14

<PAGE>   18

Company, any of its Subsidiaries or its Parent, nor shall it interfere in any
way with his or her right or the Company's, any of its Subsidiaries' or its
Parent's right to terminate his or her employment or services at any time, with
or without cause.

     20.  Rights of First Refusal and Repurchase. The written agreements
evidencing Options or Stock Purchase Rights may contain such provisions as the
Board shall determine (or pursuant to a separate agreement) to the effect that
(i) if an Optionee or Purchaser elects to sell all or any Shares that the
Optionee or Purchaser acquired upon the exercise of an Option or Stock Purchase
Right, then any proposed sale of such Shares by such Optionee or Purchaser
shall be subject to a right of first refusal in favor of the Company; and (ii)
upon the occurrence of certain specified events (including, without limitation,
termination of employment, divorce, bankruptcy or insolvency) the Company shall
have the right to repurchase from such Optionee or Purchaser all or any shares
(if less than all, with the consent of the Optionee or the Purchaser, as the
case may be) of Common Stock that such Optionee or Purchaser acquired upon the
exercise of an Option or Stock Purchase Right at the fair market value for such
shares on the date that such right of repurchase is triggered. Certificates
representing shares issued upon exercise of Options or Stock Purchase Rights
shall bear a restrictive legend to the effect that the transferability of such
shares is subject to the restrictions contained in this Plan and the applicable
written agreement between the Optionee or Purchaser and the Company.

     21.  Withholding. The Company's obligation to deliver shares of Common
Stock under this Plan shall be subject to applicable federal, state and local
tax withholding requirements. To the extent provided by the terms of the stock
option agreement relating to an Option, the Optionee may satisfy any federal,
state or local tax withholding obligation relating to the exercise of such
Option by any or a combination of the following means: (i) cash payment or wage
withholding; (ii) authorizing the Company to withhold from the Shares otherwise
issuable to the Optionee upon exercise of the Option the number of Shares
having a fair market value less than or equal to the amount of the withholding
tax obligation; or (iii) delivering to the Company unencumbered shares of
Common Stock owned by the Optionee having a fair market value less than or
equal to the amount of the withholding tax obligation; provided, however, that
with respect to clauses (ii) and (iii) above the Board in its sole discretion
may disapprove such payment and require that such taxes be paid in cash.

     22.  Separability. At a time when the Company has a class of equity
securities registered pursuant to Section 12 of the Exchange Act, if any of the
terms or provisions of this Plan conflict with the requirements of Rule 16b-3
promulgated under the Exchange Act and/or Section 422 of the Code, then such
terms or provisions shall be deemed inoperative to the extent they so

                                       15
<PAGE>   19
conflict with the requirements of Rule 16b-3 promulgated under the Exchange
Act, and/or with respect to Incentive Stock Options, Section 422 of the Code.
The foregoing sentence shall not apply with respect to the requirements of Rule
16b-3 promulgated under the Exchange Act if the Board has expressly declared
that such requirements shall not apply. With respect to Incentive Stock
Options, if this Plan does not contain any provision required to be included
herein under Section 422 of the Code, such provision shall be deemed to be
incorporated herein with the same force and effect as if such provision had
been set out at length herein. To the extent any Option that is intended to
qualify as an Incentive Stock Option cannot so qualify, such Option, to that
extent, shall be deemed to be a Nonstatutory Stock Option for all purposes of
this Plan.

     23.  Non-Exclusivity of this Plan. The adoption of this Plan by the Board
shall not be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options and the awarding of stock and
cash otherwise than under this Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.

     24.  Governing Law. This Plan shall be governed by, and construed in
accordance with the laws of the State of California.

     25.  Cancellation of and Substitution for Nonstatutory Options. The
Company shall have the right to cancel any Nonstatutory Stock Option at any
time before it otherwise would have expired by its terms and to grant to the
same Optionee in substitution therefor a new Nonstatutory Stock Option stating
an option price which is lower (but not higher) than the option price stated in
the cancelled Option. Any such substituted option shall contain all the terms
and conditions of the cancelled Option; provided, however, that such
substituted Option shall not be exercisable after the expiration of ten (10)
years and one day from the date of grant of the cancelled Option.

     26.  Market Standoff. Unless the Board determines otherwise, each Optionee
or Purchaser shall not sell or otherwise transfer any Shares or other
securities of the Company during the 180-day period following the effective
date of a registration statement of the Company filed under the Securities Act;
provided, however, that such restriction shall apply only to the first two
registration statements of the Company to become effective under the Securities
Act which includes securities to be sold on behalf of the Company to the public
in an underwritten public offering under the Securities Act. The Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such 180-day period.

                                       16<PAGE>   1

Exhibit 10.8

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT
                              --------------------

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of this 16th day of March, 2000 (but effective as of August 1, 1999), by and
between Charter One Financial, Inc. (the "Company") and Charles John Koch (the
"Employee").

         WHEREAS, the Employee serves as the President and Chief Executive
Officer and Chairman of the board of directors of the Company and of the
Company's wholly-owned subsidiary, Charter One Bank, F.S.B. (the "Bank");

         WHEREAS, the Employee has an existing employment agreement entered into
as of October 31, 1995 and amended as of July 29, 1998 (the "Prior Employment
Agreement") which he is willing to terminate in consideration of this Agreement
becoming effective;

         WHEREAS, the board of directors of the Company (the "Board of
Directors") believes it is in the best interests of the Company and its
subsidiaries for the Company to enter into this Agreement with the Employee in
order to assure continuity of management of the Company and its subsidiaries;
and

         WHEREAS, the Board of Directors has approved and authorized the
execution of this Agreement with the Employee;

         NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:

         1.  DEFINITIONS.

                  (a) The term "Change in Control" means (1) an acquisition of
securities of the Company or the Bank that is determined by the Board of
Directors to constitute an acquisition of control of the Company or the Bank
within the meaning of the Change in Bank Control Act, 12 U.S.C. Section
1817(j), and applicable regulations thereunder; (2) an event that would be
required to be reported in response to Item 1 of the current report on Form 8-K,
as in effect on the Effective Date, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); (3) any person (as the
term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) directly or
indirectly of securities of the Company or the Bank representing 25% or more of
the combined voting power of the Company's or the Bank's outstanding securities;
(4) individuals who are members of the Board of Directors on the Effective Date
(the "Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the
Effective Date whose election was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board, or whose nomination for
election by the

                                       1
<PAGE>   2

Company's stockholders was approved by the nominating committee serving under an
Incumbent Board, shall be considered a member of the Incumbent Board; or (5)
approval by the Company's stockholders of a plan of reorganization, merger or
consolidation of the Company, sale of all or substantially all of the assets of
the Company, a similar transaction in which the Company is not the resulting
entity, or a transaction at the completion of which the former stockholders of
the acquired corporation become the holders of more than 40% of the outstanding
common stock of the Company and the Company is the resulting entity of such
transaction; provided that the term "change in control" shall not include an
acquisition of securities by an employee benefit plan of the Bank or the
Company. In the application of regulations under the Change in Bank Control Act,
determinations to be made by the applicable federal banking regulator shall be
made by the Board of Directors.

                  (b) The term "Consolidated Subsidiaries" means any subsidiary
or subsidiaries of the Company (or its successors) that are part of the
consolidated group of the Company (or its successors) for federal income tax
reporting.

                  (c) The term "Date of Termination" means the date upon which
the Employee's employment with the Company or the Bank or both ceases, as
specified in a notice of termination pursuant to Section 8 of this Agreement.

                  (d)   The term "Effective Date" means August 1, 1999.

                  (e) The term "Involuntarily Termination" means the termination
of the employment of Employee (i) by either the Company or the Bank or both
without his express written consent; or (ii) by the Employee by reason of a
material diminution of or interference with his duties, responsibilities or
benefits, including (without limitation) any of the following actions unless
consented to in writing by the Employee: (1) a requirement that the Employee be
based at any place other than Cleveland, Ohio, or within 50 miles thereof,
except for reasonable travel on Company or Bank business; (2) a material
demotion of the Employee; (3) a material reduction in the number or seniority of
personnel reporting to the Employee or a material reduction in the frequency
with which, or in the nature of the matters with respect to which such personnel
are to report to the Employee, other than as part of a Bank- or Company-wide
reduction in staff; (4) a reduction in the Employee's salary or a material
adverse change in the Employee's perquisites, benefits, contingent benefits or
vacation, other than prior to a Change in Control as part of an overall program
applied uniformly and with equitable effect to all members of the senior
management of the Bank or the Company; (5) a material permanent increase in the
required hours of work or the workload of the Employee; or (6) the failure of
the Board of Directors (or a board of directors of a successor of the Company)
to elect him as Chairman, President or Chief Executive Officer of the Company
(or a successor of the Company) or any action by the Board of Directors (or a
board of directors of a successor of the Company) removing him from any of such
offices, or the failure of the board of directors of the Bank (or any successor
of the Bank) to elect him as Chairman, President or Chief Executive Officer of
the Bank (or any successor of the Bank) or any action by such board (or board of
a successor of the

                                       2
<PAGE>   3

Bank) removing him from any of such offices. The term "Involuntary Termination"
does not include Termination for Cause or termination of employment due to death
or permanent disability pursuant to Section 7(g) of this Agreement, or
suspension or temporary or permanent prohibition from participation in the
conduct of the affairs of a depository institution under Section 8 of the
Federal Deposit Insurance Act.

                  (f) The terms "Termination for Cause" and "Terminated for
Cause" mean termination of the employment of the Employee with either the
Company or the Bank, as the case may be, because of the Employee's dishonesty,
incompetence, willful misconduct, breach of a fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (excluding violations which do not have an adverse
affect on the Company or the Bank) or final cease-and-desist order, or (except
as provided below) material breach of any provision of this Agreement. No act or
failure to act by the Employee shall be considered willful unless the Employee
acted or failed to act with an absence of good faith and without a reasonable
belief that his action or failure to act was in the best interest of the
Company. The Employee shall not be deemed to have been Terminated for Cause
unless and until there shall have been delivered to the Employee a copy of a
resolution, duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board of Directors at a meeting of the Board duly
called and held for such purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with the Employee's counsel, to be heard
before the Board), stating that in the good faith opinion of the Board of
Directors the Employee has engaged in conduct described in the preceding
sentence and specifying the particulars thereof in detail.

         2. TERM; TERMINATION OF PRIOR EMPLOYMENT AGREEMENT. The term of this
Agreement shall be a period of five years commencing on the Effective Date,
subject to earlier termination as provided herein. On each anniversary of this
Agreement the term shall be extended for a period of one year in addition to the
then-remaining term, provided that the Company has not given notice to the
Employee in writing at least 90 days prior to such anniversary that the term of
this Agreement shall not be extended further, and provided further that the
Employee has not received an unsatisfactory performance review by either the
Board of Directors or the board of directors of the Bank. The Employee's Prior
Employment Agreement shall terminate immediately prior to the Effective Date
subject to reinstatement as provided in Section 16 below.

         3. EMPLOYMENT. The Employee is employed as the President and Chief
Executive Officer of the Company and as the President and Chief Executive
Officer of the Bank. As such, the Employee shall render administrative and
management services as are customarily performed by persons situated in similar
executive capacities, and shall have such other powers and duties as the Board
of Directors or the board of directors of the Bank may prescribe from time to
time. The Employee shall also render services to any subsidiary or subsidiaries
of the Company or the Bank as requested by the Company or the Bank from time to
time consistent with his executive position. The Employee shall devote his best
efforts and reasonable time and attention to the business and affairs of the
Company and the Bank to the extent necessary to discharge his

                                       3
<PAGE>   4

responsibilities hereunder. The Employee may (i) serve on corporate or
charitable boards or committees, and (ii) manage personal investments, so long
as such activities do not interfere materially with performance of his
responsibilities hereunder.

         4.  CASH COMPENSATION.

                  (a) SALARY. The Company agrees to pay the Employee during the
term of this Agreement a base salary (the "Company Salary") the annualized
amount of which shall be not less than the annualized aggregate amount of the
Employee's base salary from the Company and any Consolidated Subsidiaries in
effect at the Effective Date; provided that any amounts of salary actually paid
to the Employee by any Consolidated Subsidiaries shall reduce the amount to be
paid by the Company to the Employee. The Company Salary shall be paid no less
frequently than monthly and shall be subject to customary tax withholding. The
amount of the Employee's Company Salary shall be increased (but shall not be
decreased other than prior to a Change in Control as part of an overall program
applied uniformly and with equitable effect to all members of senior management
of the Company or the Bank) from time to time in accordance with the amounts of
salary approved by the Board of Directors or the board of directors of any of
the Consolidated Subsidiaries after the Effective Date.

                  (b) BONUSES. The Employee shall be entitled to participate in
an equitable manner with all other executive officers of the Company and the
Bank in such performance-based and discretionary bonuses, if any, as are
authorized and declared by the Board of Directors for executive officers of the
Company and by the board of directors of the Bank for executive officers of the
Bank.

                  (c) EXPENSES. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in performing
services under this Agreement in accordance with the policies and procedures
applicable to the executive officers of the Company and the Bank, provided that
the Employee accounts for such expenses as required under such policies and
procedures.

                  (d) DEFERRAL OF NON-DEDUCTIBLE COMPENSATION. In the event that
the Employee's aggregate compensation (including compensatory benefits which are
deemed remuneration for purposes of Section 162(m) of the Internal Revenue Code
of 1986 as amended (the "Code")) from the Company and the Consolidated
Subsidiaries for any calendar year exceeds the greater of (i) $1,000,000 or (ii)
the maximum amount of compensation deductible by the Company or any of the
Consolidated Subsidiaries in any calendar year under Section 162(m) of the Code
(the "maximum allowable amount"), then any such amount in excess of the maximum
allowable amount shall be mandatorily deferred with interest thereon at 8% per
annum, compounded annually, to a calendar year such that the amount to be paid
to the Employee in such calendar year, including deferred amounts and interest
thereon, does not exceed the maximum allowable amount. Subject to the foregoing,
deferred amounts including interest thereon shall be payable at the earliest
time permissible. All unpaid deferred amounts shall be paid to the Employee not

                                       4
<PAGE>   5

later than his Date of Termination unless his Date of Termination is on a
December 31st, in which case, the unpaid deferred amounts shall be paid to the
Employee on the first business day of the next succeeding calendar year. The
provisions of this subsection shall survive any termination of the Employee's
employment and any termination of this Agreement.

         5.   BENEFITS.

                  (a) PARTICIPATION IN BENEFIT PLANS. The Employee shall be
entitled to participate, to the same extent as executive officers of the Company
and the Bank generally, in all plans of the Company and the Bank relating to
pension, retirement, thrift, profit-sharing, savings, group or other life
insurance, hospitalization, medical and dental coverage, travel and accident
insurance, education, cash bonuses, and other retirement or employee benefits or
combinations thereof. In addition, the Employee shall be entitled to be
considered for benefits under all of the stock and stock option related plans in
which the Company's or the Bank's executive officers are eligible or become
eligible to participate.

                  (b) FRINGE BENEFITS. The Employee shall be eligible to
participate in, and receive benefits under, any other fringe benefit plans or
perquisites which are or may become generally available to the Company's or the
Bank's executive officers, including but not limited to supplemental retirement,
incentive compensation, supplemental medical or life insurance plans, company
cars, club dues, physical examinations, financial planning and tax preparation
services.

         6. VACATIONS; LEAVE. The Employee shall be entitled to annual paid
vacation in accordance with the policies established by the Board of Directors
and the board of directors of the Bank for executive officers, in no event less
than four weeks per year, and to voluntary leaves of absence, with or without
pay, from time to time at such times and upon such conditions as the Board of
Directors may determine in its discretion.

         7.  TERMINATION OF EMPLOYMENT.

                  (a) INVOLUNTARY TERMINATION. If the Employee experiences an
Involuntary Termination, such termination of employment shall be subject to the
Company's obligations under this Section 7. In the event of the Involuntary
Termination of the Employee, if the Employee has offered to continue to provide
the services contemplated by and on the terms provided in this Agreement and
such offer has been declined, subject to Section 7(b) of this Agreement, the
Company shall, during the lesser period of the remaining term of this Agreement
or three years following the Date of Termination (the "Liquidated Damage
Period"), as liquidated damages (i) pay to the Employee monthly one-twelfth of
the Company Salary at the annual rate in effect immediately prior to the Date of
Termination and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Employee, based on the average amounts of such
compensation earned by the Employee from the Company and the Bank for the two
full fiscal years preceding the Date of Termination; and (ii) maintain
substantially the same group life insurance, hospitalization, medical, dental,
prescription drug and other health

                                       5
<PAGE>   6

benefits, and long-term disability insurance (if any) for the benefit of the
Employee and his dependents and beneficiaries who would have been eligible for
such benefits if the Employee had not suffered Involuntary Termination and on
terms substantially as favorable to the Employee including amounts of coverage
and deductibles and other costs to him in effect immediately prior to such
Involuntary Termination (the "Employee's Health Coverage").

                  (b) REDUCTION OF THE COMPANY'S OBLIGATIONS UNDER SECTION 7(a).

                           (1) In the event that the Employee becomes entitled
to liquidated damages pursuant to Section 7(a), (i) the Company's obligation
thereunder with respect to cash damages shall be reduced by the amount of the
Employee's cash income, if any, earned from providing personal services during
the Liquidated Damage Period; and (ii) the Company's obligation to maintain
Health Coverage shall be reduced to the extent, if any, that the Employee
receives such benefits, on no less favorable terms, from another employer during
the Liquidated Damage Period. For purposes of this Section 7(b), the term "cash
income" shall include amounts of salary, wages, bonuses, incentive compensation
and fees paid to the Employee in cash but shall not include shares of stock,
stock options, stock appreciation rights or other earned income not paid to the
Employee in cash. To the extent the provisions of this Section 7(b)(1) are
applicable and an overpayment has been made to the Employee as of the expiration
of Liquidated Damage Period, the Employee shall reimburse the Company in an
amount equal to the after tax benefit realized by the Employee from such
overpayment (i.e. amount realized net of all federal, state, local, employment
and medicare taxes). In making the reimbursement calculation it shall be
presumed that the Employee is subject to the highest marginal federal and state
income tax rates.

                           (2) The Employee agrees that in the event he becomes
entitled to liquidated damages pursuant to Section 7(a), throughout the
Liquidated Damage Period, he shall promptly inform the Company of the nature and
amounts of cash income and the type of health benefits and coverage which he
earns or receives from providing personal services, and shall provide such
documentation of such cash income and such health benefits and coverage as the
Company may request. In the event of changes to such cash income or such health
benefits or coverage from time to time, the Employee shall inform the Company of
such changes, in each case within five days after the change occurs, and shall
provide such documentation concerning the change as the Company may request.

                  (c) CHANGE IN CONTROL; CUT BACK; AND TAX GROSS UP. In the
event that the Employee experiences an Involuntary Termination within the 12
months preceding, at the time of, or within 24 months following a Change in
Control, in addition to the Company's obligations under Section 7(a) of this
Agreement, the Company shall pay to the Employee in cash, within 30 days after
the later of the date of such Change in Control or the Date of Termination, an
amount equal to 299% of the Employee's "base amount" as determined under Section
280G of the Code, less the acceleration and lapse value of options granted to
the Employee by the Company prior to January 1, 1999 that are taken into account
in the determination of "parachute payments" under 280G(b)(2) of the Code by
virtue of vesting acceleration or deemed vesting acceleration in

                                       6
<PAGE>   7

connection with such Change in Control. Notwithstanding the foregoing, for
purposes of this paragraph the Employee shall not be deemed to have experienced
an Involuntary Termination if he is requested to continue his employment under
this Agreement for a period of up to 6 months after a Change in Control and he
elects to terminate his employment at the time of or within 6 months after a
Change in Control solely by reason of an event described in Section 1(e)(ii)(6)
of this Agreement, in which case he shall not be entitled to the Change in
Control payment set forth in this paragraph. In the event the Employee is
requested in connection with or at the time of a Change in Control to continue
employment for an interim period and he shall die while employed during such
interim period, then his estate, or such person as the Employee may have
previously designated in writing, shall be entitled to the full Change in
Control payment described in this paragraph in lieu of (and not in addition to)
the payment of the Company Salary for 180 days pursuant to Section 7(f)(i)(x)
below.

                  In the event that any payments, distributions or benefits
provided or to be provided to the Employee, whether pursuant to this Agreement
or from other plans or arrangements maintained by the Company or any of the
Consolidated Subsidiaries (excluding the Adjusted Gross Up Payment and
Additional Gross Up Payment (as such terms are hereinafter defined))
(collectively, the "Payment") would be subject to excise tax under Section 4999
of the Code (such excise tax and any penalties and interest collectively, the
"Penalty Tax"), the Company shall pay to the Employee in cash an additional
amount equal to the Adjusted Gross Up Payment. The "Adjusted Gross Up Payment"
shall be an amount such that after payment by the Employee of all federal,
state, local, employment and medicare taxes thereon (and any penalties and
interest with respect thereto), the Employee retains on an after tax basis a
portion of such amount equal to the aggregate of 80% of the Penalty Tax imposed
upon the Payment and 100% of the Penalty Tax imposed upon the Adjusted Gross Up
Payment.

                  For purposes of determining the amount of the Adjusted Gross
Up Payment, the value of any non-cash benefits and deferred payments or benefits
subject to the Penalty Tax shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G(d)(3) and (4) of the
Code. In the event that, after the Adjusted Gross Up Payment is made, the
Employee becomes entitled to receive a refund of any portion of the Penalty Tax,
the Employee shall promptly pay to the Company 80% of such Penalty Tax refund
attributable to the Payment (together with 80% of any interest paid or credited
thereon by the Internal Revenue Service) and 100% of the Penalty Tax refund
attributable to the Adjusted Gross Up Payment (together with 100% of any
interest paid or credited thereon by the Internal Revenue Service).

                  As a result of the uncertainty regarding the application of
Section 4999 of the Code, it is possible that the Internal Revenue Service may
assert that the Penalty Tax due is in excess of the amount of the anticipated
Penalty Tax used in calculating the Adjusted Gross Up Payment (such excess
amount is hereafter referred to as the "Underpayment"). In such event, the
Company shall pay to the Employee, in immediately available funds, at the time
the Underpayment is assessed or otherwise determined, an additional amount equal
to the Additional Gross Up Payment. The "Additional Gross Up Payment" shall be
an amount such that after

                                       7
<PAGE>   8

payment by the Employee of all federal, state, local, employment and medicare
taxes thereon (and any penalties and interest with respect thereto), the
Employee retains on an after tax basis a portion of such amount equal to the
aggregate of (i) 80% of the portion of the Underpayment attributable to the
Payment, (ii) 100% of the portion of the Underpayment attributable to the
Adjusted Gross Up Payment and (iii) 100% of the Penalty Tax imposed on the
Additional Gross Up Payment.

                  (d) TERMINATION FOR CAUSE. In the event of Termination for
Cause, the Company shall have no further obligation to the Employee under this
Agreement after the Date of Termination other than deferred amounts under
Section 4(d).

                  (e)  VOLUNTARY TERMINATION.

                           (1) The Employee may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement. In
the event that the Employee voluntarily terminates his employment other than by
reason of any of the actions that constitute Involuntary Termination under
Section 1(e)(ii) of this Agreement ("Voluntary Termination"), the Company shall
be obligated to the Employee for the amount of his Company Salary and benefits
only through the Date of Termination, at the time such payments are due, and the
Company shall have no further obligation to the Employee under this Agreement
except as provided in Sections 4(d) and 7(e)(2).

                           (2) The Employee hereby agrees that, in the event of
Voluntary Termination, he shall not, for a period of one year thereafter (the
"Covenant Period"), serve as a director of, or provide personal services as an
officer, employee, independent contractor or employee of an independent
contractor to, any institution insured by the Federal Deposit Insurance
Corporation or the National Credit Union Administration which has its home
office or principal corporate office in the Metropolitan Statistical Area of any
of Cleveland, Ohio, Detroit, Michigan, Rochester, New York, Albany, New York, or
Chicago, Illinois or any holding company or other affiliate of such an
institution. During the Covenant Period, the Company shall pay to the Employee
in equal monthly installments fifty percent of his Company Salary.

                  (f) DEATH. In the event of the death of the Employee while
employed under this Agreement and prior to any termination of employment, the
Company shall pay to the Employee's estate, or such person as the Employee may
have previously designated in writing, (i) the Company Salary which was not
previously paid to the Employee and, either (x) the Company Salary which he
would have earned if he had continued to be employed under this Agreement
through the 180th day after the date on which the Employee died or (y) the
Change in Control payment set forth in the first paragraph of Section 7(c),
whichever is applicable; (ii) the amounts of any benefits or awards which,
pursuant to the terms of any applicable plan or plans, were earned with respect
to the fiscal year in which the Employee died and which the Employee would have
been entitled to receive if he had continued to be employed, and the amount of
any bonus or incentive compensation for such fiscal year which the Employee
would have been

                                       8
<PAGE>   9

entitled to receive if he had continued to be employed, pro-rated in
accordance with the portion of the fiscal year prior to his death, provided that
such amounts shall be payable when and as ordinarily payable under the
applicable plans; and (iii) the unpaid deferred amounts under Section 4(d).

                  (g) PERMANENT DISABILITY. For purposes of this Agreement, the
term "permanently disabled" means that the Employee has a mental or physical
infirmity which permanently impairs his ability to perform substantially his
duties and responsibilities under this Agreement and which results in (i)
eligibility of the Employee under the long-term disability plan of the Company
or the Bank, if any; or (ii) inability of the Employee to perform substantially
his duties and responsibilities under this Agreement for a period of 180
consecutive days. Either the Company or the Bank or both may terminate the
employment of the Employee after having established that the Employee is
permanently disabled.

                  (h) REGULATORY ACTION. Notwithstanding any other provisions of
this Agreement:

                           (1) If the Employee is removed and/or permanently
prohibited from participating in the conduct of the affairs of a depository
institution by an order issued under Section 8(e)(4) or (g)(1) of the Federal
Deposit Insurance Act ("FDIA"), 12 U.S.C. Section 1818(e)(4) and (g)(1), all
obligations of the Company under this Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected;.

                           (2) If the Bank is in default (as defined in Section
3(x)(1) of the FDIA), all obligations of the Company under this Agreement shall
terminate as of the date of default, but this provision shall not affect any
vested rights of the contracting parties; and

                           (3) All obligations of the Company under this
Agreement shall be terminated, except to the extent determined that continuation
of this Agreement is necessary for the continued operation of the Bank: (i) by
the Director of the Office of Thrift Supervision (the "Director") or his or her
designee, at the time the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) of the
FDIA; or (ii) by the Director or his or her designee, at the time the Director
or his or her designee approves a supervisory merger to resolve problems related
to operation of the Bank or when the Bank is determined by the Director to be in
an unsafe or unsound condition. Any rights of the parties that have already
vested, however, shall not be affected by any such action.

         8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Employee during the term of this
Agreement, the Company or the Bank, or both, shall deliver to the Employee a
written notice of termination, stating whether such termination constitutes
Termination for Cause or Involuntary Termination, setting forth in

                                       9
<PAGE>   10

reasonable detail the facts and circumstances that are the basis for the
termination, and specifying the date upon which employment shall terminate,
which date shall be at least 30 days after the date upon which the notice is
delivered, except in the case of Termination for Cause. In the event that the
Employee determines in good faith that he has experienced an Involuntary
Termination of his employment, he shall send a written notice to the Company
stating the circumstances that constitute such Involuntary Termination and the
date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Employee desires to effect a Voluntary
Termination, he shall deliver a written notice to the Company, stating the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, unless the parties agree to a
date sooner.

         9. ATTORNEYS FEES. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by the
Employee as a result of (i) the Employee's contesting or disputing any
termination of employment, or (ii) the Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company (or its successors) or the Consolidated
Subsidiaries under which the Employee is or may be entitled to receive benefits;
provided that the Company's obligation to pay such fees and expenses is subject
to the Employee's prevailing with respect to the matters in dispute in any
action initiated by the Employee or the Employee's having been determined to
have acted reasonably and in good faith with respect to any action initiated by
the Company or the Bank.

         10.  NON-DISCLOSURE AND NON-SOLICITATION.

                  (a) NON-DISCLOSURE. The Employee acknowledges that he has
acquired, and will continue to acquire while employed by the Company and/or any
Consolidated Subsidiary, special knowledge of the business, affairs, strategies
and plans of the Company and the Consolidated Subsidiaries which has not been
disclosed to the public and which constitutes confidential and proprietary
business information owned by the Company and the Consolidated Subsidiaries,
including but not limited to, information about the customers, customer lists,
software, data, formulae, processes, inventions, trade secrets, marketing
information and plans, and business strategies of the Company and the
Consolidated Subsidiaries, and other information about the products and services
offered or developed or planned to be offered or developed by the Company and/or
the Consolidated Subsidiaries ("Confidential Information"). The Employee agrees
that, without the prior written consent of the Company, he shall not, during the
term of his employment or at any time thereafter, in any manner directly or
indirectly disclose any Confidential Information to any person or entity other
than the Company and the Consolidated Subsidiaries. Notwithstanding the
foregoing, if the Employee is requested or required (including but not limited
to by oral questions, interrogatories, requests for information or documents in
legal proceeding, subpoena, civil investigative demand or other similar process)
to disclose any Confidential Information the Employee shall provide the Company
with prompt written notice of any such request or requirement so that the
Company and/or a Consolidated

                                       10
<PAGE>   11

Subsidiary may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Section 10(a). If, in the absence of a
protective order or other remedy or the receipt of a waiver from the Company,
the Employee is nonetheless legally compelled to disclose Confidential
Information to any tribunal or else stand liable for contempt or suffer other
censure or penalty, the Employee may, without liability hereunder, disclose to
such tribunal only that portion of the Confidential Information which is legally
required to be disclosed, provided that the Employee exercise his best efforts
to preserve the confidentiality of the Confidential Information, including
without limitation by cooperating with the Company and/or a Consolidated
Subsidiary to obtain an appropriate protective order or other reliable assurance
that confidential treatment will be accorded the Confidential Information by
such tribunal. On the Date of Termination, the Employee shall promptly deliver
to the Company all copies of documents or other records (including without
limitation electronic records) containing any Confidential Information that is
in his possession or under his control, and shall retain no written or
electronic record of any Confidential Information.

                  (b) NON-SOLICITATION. During the three year period next
following the Date of Termination, the Employee shall not directly or indirectly
solicit, encourage, or induce any person while employed by the Company or any
Consolidated Subsidiary to (i) leave the Company or any Consolidated Subsidiary,
(ii) cease his or her employment with the Company or any Consolidated Subsidiary
or (iii) accept employment with another entity or person.

         The provisions of this Section 10 shall survive any termination of the
Employee's employment and any termination of this Agreement.

         11.  NO ASSIGNMENTS.

                  (a) This Agreement is personal to each of the parties hereto,
and neither party may assign or delegate any of its rights or obligations
hereunder without first obtaining the written consent of the other party;
provided, however, that the Company shall require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise) by
an assumption agreement in form and substance satisfactory to the Employee, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company to obtain such
an assumption agreement prior to the effectiveness of any such succession or
assignment shall be a breach of this Agreement and shall entitle the Employee to
compensation and benefits from the Company in the same amount and on the same
terms as provided for an Involuntary Termination under Section 7 hereof. For
purposes of implementing the provisions of this Section 11(a), the date on which
any such succession becomes effective shall be deemed the Date of Termination.

                  (b) This Agreement and all rights of the Employee hereunder
shall inure to the benefit of and be enforceable by the Employee's personal and
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

                                       11
<PAGE>   12

         12. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, to the Company at its home
office, to the attention of the Board of Directors with a copy to the Secretary
of the Company, or, if to the Employee, to such home or other address as the
Employee has most recently provided in writing to the Company.

         13. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.

         14. HEADINGS. The headings used in this Agreement are included solely
for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.

         15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

         16. REINSTATEMENT OF PRIOR AGREEMENT. Notwithstanding anything
contained in this Agreement to the contrary, the parties hereto agree that in
the event a Change in Control occurs within one year from the date of this
Agreement (not the Effective Date), then in that event the Prior Agreement shall
be reinstated and this Agreement shall become void ab initio.

         17. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.

         18. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement (other than relating to the enforcement of the
provisions of Sections 7(e)(2) and 10) shall be settled exclusively by
arbitration in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.

         19. EQUITABLE AND OTHER JUDICIAL RELIEF. In the event of an actual or
threatened breach by the Employee of any of the provisions of Section 7(e)(2) or
10, the Company shall be entitled to equitable relief in the form of an
injunction from a court of competent jurisdiction and such other equitable and
legal relief as such court deems appropriate under the circumstances. The
parties agree that the Company shall not be required to post any bond in
connection with the grant or issuance of an injunction (preliminary, temporary
and/or permanent) by a court of competent jurisdiction, and if a bond is
nevertheless required, the parties agree that it shall be in a nominal amount.
The parties further agree that in the event of a breach by the Employee of any
of the provisions of Section 7(e)(2) or 10, the Company will suffer irreparable
damage and its remedy at law against the Employee is inadequate to compensate it
for such damage.

                                       12
<PAGE>   13

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

             THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.

Attest:                    Charter One Financial, Inc.

/s/ Robert J. Vana         /s/ Richard W. Neu
---------------------      ---------------------------
Secretary                  By: Richard W. Neu
                           Its: Executive VP & CFO

                           Employee

                           /s/ Charles John Koch
                           ----------------------------
                           Charles John Koch

                                       13

<PAGE>   14

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT
                              --------------------

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of this 16th day of March, 2000 (but effective as of August 1, 1999), by and
between Charter One Financial, Inc. (the "Company") and Richard W. Neu (the
"Employee").

         WHEREAS, the Employee serves as Executive Vice President and Chief
Financial Officer of the Company and as Executive Vice President and Chief
Financial Officer of the Company's wholly-owned subsidiary, Charter One Bank,
F.S.B. (the "Bank");

         WHEREAS, the Employee has an existing employment agreement entered into
as of October 31, 1995 and amended as of July 29, 1998 (the "Prior Employment
Agreement") which he is willing to terminate in consideration of this Agreement
becoming effective;

         WHEREAS, the board of directors of the Company (the "Board of
Directors") believes it is in the best interests of the Company and its
subsidiaries for the Company to enter into this Agreement with the Employee in
order to assure continuity of management of the Company and its subsidiaries;
and

         WHEREAS, the Board of Directors has approved and authorized the
execution of this Agreement with the Employee;

         NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:

         1.  DEFINITIONS.

                  (a) The term "Change in Control" means (1) an acquisition of
securities of the Company or the Bank that is determined by the Board of
Directors to constitute an acquisition of control of the Company or the Bank
within the meaning of the Change in Bank Control Act, 12 U.S.C. Section 1817(j),
and applicable regulations thereunder; (2) an event that would be required to be
reported in response to Item 1 of the current report on Form 8-K, as in effect
on the Effective Date, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"); (3) any person (as the term is used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly
of securities of the Company or the Bank representing 25% or more of the
combined voting power of the Company's or the Bank's outstanding securities; (4)
individuals who are members of the Board of Directors on the Effective Date (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the
Effective Date whose election was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board, or whose nomination for
election by the Company's stockholders was approved by the nominating committee
serving under an Incumbent

                                       1
<PAGE>   15

Board, shall be considered a member of the Incumbent Board; or (5) approval by
the Company's stockholders of a plan of reorganization, merger or consolidation
of the Company, sale of all or substantially all of the assets of the Company, a
similar transaction in which the Company is not the resulting entity, or a
transaction at the completion of which the former stockholders of the acquired
corporation become the holders of more than 40% of the outstanding common stock
of the Company and the Company is the resulting entity of such transaction;
provided that the term "change in control" shall not include an acquisition of
securities by an employee benefit plan of the Bank or the Company. In the
application of regulations under the Change in Bank Control Act, determinations
to be made by the applicable federal banking regulator shall be made by the
Board of Directors.

                  (b) The term "Consolidated Subsidiaries" means any subsidiary
or subsidiaries of the Company (or its successors) that are part of the
consolidated group of the Company (or its successors) for federal income tax
reporting.

                  (c) The term "Date of Termination" means the date upon which
the Employee's employment with the Company or the Bank or both ceases, as
specified in a notice of termination pursuant to Section 8 of this Agreement.

                  (d)   The term "Effective Date" means August 1, 1999.

                  (e) The term "Involuntarily Termination" means the termination
of the employment of Employee (i) by either the Company or the Bank or both
without his express written consent; or (ii) by the Employee by reason of a
material diminution of or interference with his duties, responsibilities or
benefits, including (without limitation) any of the following actions unless
consented to in writing by the Employee: (1) a requirement that the Employee be
based at any place other than Detroit, Michigan or Cleveland, Ohio, or within 50
miles from either, except for reasonable travel on Company or Bank business; (2)
a material demotion of the Employee; (3) a material reduction in the number or
seniority of personnel reporting to the Employee or a material reduction in the
frequency with which, or in the nature of the matters with respect to which such
personnel are to report to the Employee, other than as part of a Bank- or
Company-wide reduction in staff; (4) a reduction in the Employee's salary or a
material adverse change in the Employee's perquisites, benefits, contingent
benefits or vacation, other than prior to a Change in Control as part of an
overall program applied uniformly and with equitable effect to all members of
the senior management of the Bank or the Company; (5) a material permanent
increase in the required hours of work or the workload of the Employee; or (6)
the failure of the Company or the Bank (or their respective successors) to
maintain the Employee's title, status, duties and functions as Executive Vice
President and Chief Financial Officer of the Company and as Executive Vice
President and Chief Financial Officer of the Bank (including their respective
successors) reporting directly and only to the Chief Executive Officer of the
Company and the Bank (or the Chief Executive Officer of their respective
successors). The term "Involuntary Termination" does not include Termination for
Cause or termination of employment due to death or permanent disability pursuant
to Section 7(g) of this Agreement, or suspension or temporary or permanent
prohibition from participation in the conduct of the affairs of a depository
institution under Section 8 of the Federal Deposit Insurance Act.

                                       2
<PAGE>   16

                  (f) The terms "Termination for Cause" and "Terminated for
Cause" mean termination of the employment of the Employee with either the
Company or the Bank, as the case may be, because of the Employee's dishonesty,
incompetence, willful misconduct, breach of a fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (excluding violations which do not have an adverse
affect on the Company or the Bank) or final cease-and-desist order, or (except
as provided below) material breach of any provision of this Agreement. No act or
failure to act by the Employee shall be considered willful unless the Employee
acted or failed to act with an absence of good faith and without a reasonable
belief that his action or failure to act was in the best interest of the
Company. The Employee shall not be deemed to have been Terminated for Cause
unless and until there shall have been delivered to the Employee a copy of a
resolution, duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board of Directors at a meeting of the Board duly
called and held for such purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with the Employee's counsel, to be heard
before the Board), stating that in the good faith opinion of the Board of
Directors the Employee has engaged in conduct described in the preceding
sentence and specifying the particulars thereof in detail.

         2. TERM; TERMINATION OF PRIOR EMPLOYMENT AGREEMENT. The term of this
Agreement shall be a period of five years commencing on the Effective Date,
subject to earlier termination as provided herein. On each anniversary of this
Agreement the term shall be extended for a period of one year in addition to the
then-remaining term, provided that the Company has not given notice to the
Employee in writing at least 90 days prior to such anniversary that the term of
this Agreement shall not be extended further, and provided further that the
Employee has not received an unsatisfactory performance review by either the
Board of Directors or the board of directors of the Bank. The Employee's Prior
Employment Agreement shall terminate immediately prior to the Effective Date
subject to reinstatement as provided in Section 16 below.

         3. EMPLOYMENT. The Employee is employed as Executive Vice President and
Chief Financial Officer of the Company and as Executive Vice President and Chief
Financial Officer of the Bank. As such, the Employee shall render administrative
and management services as are customarily performed by persons situated in
similar executive capacities, and shall have such other powers and duties as the
Board of Directors or the board of directors of the Bank may prescribe from time
to time. The Employee shall also render services to any subsidiary or
subsidiaries of the Company or the Bank as requested by the Company or the Bank
from time to time consistent with his executive position. The Employee shall
devote his best efforts and reasonable time and attention to the business and
affairs of the Company and the Bank to the extent necessary to discharge his
responsibilities hereunder. The Employee may (i) serve on corporate or
charitable boards or committees, and (ii) manage personal investments, so long
as such activities do not interfere materially with performance of his
responsibilities hereunder.

         4.  CASH COMPENSATION.

                  (a) SALARY. The Company agrees to pay the Employee during the
term of this Agreement a base salary (the "Company Salary") the annualized
amount of which shall be not

                                       3
<PAGE>   17

less than the annualized aggregate amount of the Employee's base salary from the
Company and any Consolidated Subsidiaries in effect at the Effective Date;
provided that any amounts of salary actually paid to the Employee by any
Consolidated Subsidiaries shall reduce the amount to be paid by the Company to
the Employee. The Company Salary shall be paid no less frequently than monthly
and shall be subject to customary tax withholding. The amount of the Employee's
Company Salary shall be increased (but shall not be decreased other than prior
to a Change in Control as part of an overall program applied uniformly and with
equitable effect to all members of senior management of the Company or the Bank)
from time to time in accordance with the amounts of salary approved by the Board
of Directors or the board of directors of any of the Consolidated Subsidiaries
after the Effective Date.

                  (b) BONUSES. The Employee shall be entitled to participate in
an equitable manner with all other executive officers of the Company and the
Bank in such performance-based and discretionary bonuses, if any, as are
authorized and declared by the Board of Directors for executive officers of the
Company and by the board of directors of the Bank for executive officers of the
Bank.

                  (c) EXPENSES. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in performing
services under this Agreement in accordance with the policies and procedures
applicable to the executive officers of the Company and the Bank, provided that
the Employee accounts for such expenses as required under such policies and
procedures.

                  (d) DEFERRAL OF NON-DEDUCTIBLE COMPENSATION. In the event that
the Employee's aggregate compensation (including compensatory benefits which are
deemed remuneration for purposes of Section 162(m) of the Internal Revenue Code
of 1986 as amended (the "Code")) from the Company and the Consolidated
Subsidiaries for any calendar year exceeds the greater of (i) $1,000,000 or (ii)
the maximum amount of compensation deductible by the Company or any of the
Consolidated Subsidiaries in any calendar year under Section 162(m) of the Code
(the "maximum allowable amount"), then any such amount in excess of the maximum
allowable amount shall be mandatorily deferred with interest thereon at 8% per
annum, compounded annually, to a calendar year such that the amount to be paid
to the Employee in such calendar year, including deferred amounts and interest
thereon, does not exceed the maximum allowable amount. Subject to the foregoing,
deferred amounts including interest thereon shall be payable at the earliest
time permissible. All unpaid deferred amounts shall be paid to the Employee not
later than his Date of Termination unless his Date of Termination is on a
December 31st, in which case, the unpaid deferred amounts shall be paid to the
Employee on the first business day of the next succeeding calendar year. The
provisions of this subsection shall survive any termination of the Employee's
employment and any termination of this Agreement.

         5.   BENEFITS.

                  (a) PARTICIPATION IN BENEFIT PLANS. The Employee shall be
entitled to participate, to the same extent as executive officers of the Company
and the Bank generally, in all plans of the Company and the Bank relating to
pension, retirement, thrift, profit-sharing, savings, group

                                       4
<PAGE>   18

or other life insurance, hospitalization, medical and dental coverage, travel
and accident insurance, education, cash bonuses, and other retirement or
employee benefits or combinations thereof. In addition, the Employee shall be
entitled to be considered for benefits under all of the stock and stock option
related plans in which the Company's or the Bank's executive officers are
eligible or become eligible to participate.

                  (b) FRINGE BENEFITS. The Employee shall be eligible to
participate in, and receive benefits under, any other fringe benefit plans or
perquisites which are or may become generally available to the Company's or the
Bank's executive officers, including but not limited to supplemental retirement,
incentive compensation, supplemental medical or life insurance plans, company
cars, club dues, physical examinations, financial planning and tax preparation
services.

         6. VACATIONS; LEAVE. The Employee shall be entitled to annual paid
vacation in accordance with the policies established by the Board of Directors
and the board of directors of the Bank for executive officers, in no event less
than four weeks per year, and to voluntary leaves of absence, with or without
pay, from time to time at such times and upon such conditions as the Board of
Directors may determine in its discretion.

         7.  TERMINATION OF EMPLOYMENT.

                  (a) INVOLUNTARY TERMINATION. If the Employee experiences an
Involuntary Termination, such termination of employment shall be subject to the
Company's obligations under this Section 7. In the event of the Involuntary
Termination of the Employee, if the Employee has offered to continue to provide
the services contemplated by and on the terms provided in this Agreement and
such offer has been declined, subject to Section 7(b) of this Agreement, the
Company shall, during the lesser period of the remaining term of this Agreement
or three years following the Date of Termination (the "Liquidated Damage
Period"), as liquidated damages (i) pay to the Employee monthly one-twelfth of
the Company Salary at the annual rate in effect immediately prior to the Date of
Termination and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Employee, based on the average amounts of such
compensation earned by the Employee from the Company and the Bank for the two
full fiscal years preceding the Date of Termination; and (ii) maintain
substantially the same group life insurance, hospitalization, medical, dental,
prescription drug and other health benefits, and long-term disability insurance
(if any) for the benefit of the Employee and his dependents and beneficiaries
who would have been eligible for such benefits if the Employee had not suffered
Involuntary Termination and on terms substantially as favorable to the Employee
including amounts of coverage and deductibles and other costs to him in effect
immediately prior to such Involuntary Termination (the "Employee's Health
Coverage").

                  (b) REDUCTION OF THE COMPANY'S OBLIGATIONS UNDER SECTION 7(a).

                           (1) In the event that the Employee becomes entitled
to liquidated damages pursuant to Section 7(a), (i) the Company's obligation
thereunder with respect to cash damages shall be reduced by the amount of the
Employee's cash income, if any, earned from providing personal services during
the Liquidated Damage Period; and (ii) the Company's obligation to

                                       5
<PAGE>   19

maintain Health Coverage shall be reduced to the extent, if any, that the
Employee receives such benefits, on no less favorable terms, from another
employer during the Liquidated Damage Period. For purposes of this Section 7(b),
the term "cash income" shall include amounts of salary, wages, bonuses,
incentive compensation and fees paid to the Employee in cash but shall not
include shares of stock, stock options, stock appreciation rights or other
earned income not paid to the Employee in cash. To the extent the provisions of
this Section 7(b)(1) are applicable and an overpayment has been made to the
Employee as of the expiration of Liquidated Damage Period, the Employee shall
reimburse the Company in an amount equal to the after tax benefit realized by
the Employee from such overpayment (i.e. amount realized net of all federal,
state, local, employment and medicare taxes). In making the reimbursement
calculation it shall be presumed that the Employee is subject to the highest
marginal federal and state income tax rates.

                           (2) The Employee agrees that in the event he becomes
entitled to liquidated damages pursuant to Section 7(a), throughout the
Liquidated Damage Period, he shall promptly inform the Company of the nature and
amounts of cash income and the type of health benefits and coverage which he
earns or receives from providing personal services, and shall provide such
documentation of such cash income and such health benefits and coverage as the
Company may request. In the event of changes to such cash income or such health
benefits or coverage from time to time, the Employee shall inform the Company of
such changes, in each case within five days after the change occurs, and shall
provide such documentation concerning the change as the Company may request.

                  (c) CHANGE IN CONTROL; CUT BACK; AND TAX GROSS UP. In the
event that the Employee experiences an Involuntary Termination within the 12
months preceding, at the time of, or within 24 months following a Change in
Control, in addition to the Company's obligations under Section 7(a) of this
Agreement, the Company shall pay to the Employee in cash, within 30 days after
the later of the date of such Change in Control or the Date of Termination, an
amount equal to 299% of the Employee's "base amount" as determined under Section
280G of the Code, less the acceleration and lapse value of options granted to
the Employee by the Company prior to January 1, 1999 that are taken into account
in the determination of "parachute payments" under 280G(b)(2) of the Code by
virtue of vesting acceleration or deemed vesting acceleration in connection with
such Change in Control. Notwithstanding the foregoing, for purposes of this
paragraph the Employee shall not be deemed to have experienced an Involuntary
Termination if he is requested to continue his employment under this Agreement
for a period of up to 6 months after a Change in Control and he elects to
terminate his employment at the time of or within 6 months after a Change in
Control solely by reason of an event described in Section 1(e)(ii)(6) of this
Agreement, in which case he shall not be entitled to the Change in Control
payment set forth in this paragraph. In the event the Employee is requested in
connection with or at the time of a Change in Control to continue employment for
an interim period and he shall die while employed during such interim period,
then his estate, or such person as the Employee may have previously designated
in writing, shall be entitled to the full Change in Control payment described in
this paragraph in lieu of (and not in addition to) the payment of the Company
Salary for 180 days pursuant to Section 7(f)(i)(x) below.

                  In the event that any payments, distributions or benefits
provided or to be provided to the Employee, whether pursuant to this Agreement
or from other plans or

                                       6
<PAGE>   20

arrangements maintained by the Company or any of the Consolidated Subsidiaries
(excluding the Adjusted Gross Up Payment and Additional Gross Up Payment (as
such terms are hereinafter defined)) (collectively, the "Payment") would be
subject to excise tax under Section 4999 of the Code (such excise tax and any
penalties and interest collectively, the "Penalty Tax"), the Company shall pay
to the Employee in cash an additional amount equal to the Adjusted Gross Up
Payment. The "Adjusted Gross Up Payment" shall be an amount such that after
payment by the Employee of all federal, state, local, employment and medicare
taxes thereon (and any penalties and interest with respect thereto), the
Employee retains on an after tax basis a portion of such amount equal to the
aggregate of 80% of the Penalty Tax imposed upon the Payment and 100% of the
Penalty Tax imposed upon the Adjusted Gross Up Payment.

                  For purposes of determining the amount of the Adjusted Gross
Up Payment, the value of any non-cash benefits and deferred payments or benefits
subject to the Penalty Tax shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G(d)(3) and (4) of the
Code. In the event that, after the Adjusted Gross Up Payment is made, the
Employee becomes entitled to receive a refund of any portion of the Penalty Tax,
the Employee shall promptly pay to the Company 80% of such Penalty Tax refund
attributable to the Payment (together with 80% of any interest paid or credited
thereon by the Internal Revenue Service) and 100% of the Penalty Tax refund
attributable to the Adjusted Gross Up Payment (together with 100% of any
interest paid or credited thereon by the Internal Revenue Service).

                  As a result of the uncertainty regarding the application of
Section 4999 of the Code, it is possible that the Internal Revenue Service may
assert that the Penalty Tax due is in excess of the amount of the anticipated
Penalty Tax used in calculating the Adjusted Gross Up Payment (such excess
amount is hereafter referred to as the "Underpayment"). In such event, the
Company shall pay to the Employee, in immediately available funds, at the time
the Underpayment is assessed or otherwise determined, an additional amount equal
to the Additional Gross Up Payment. The "Additional Gross Up Payment" shall be
an amount such that after payment by the Employee of all federal, state, local,
employment and medicare taxes thereon (and any penalties and interest with
respect thereto), the Employee retains on an after tax basis a portion of such
amount equal to the aggregate of (i) 80% of the portion of the Underpayment
attributable to the Payment, (ii) 100% of the portion of the Underpayment
attributable to the Adjusted Gross Up Payment and (iii) 100% of the Penalty Tax
imposed on the Additional Gross Up Payment.

                  (d) TERMINATION FOR CAUSE. In the event of Termination for
Cause, the Company shall have no further obligation to the Employee under this
Agreement after the Date of Termination other than deferred amounts under
Section 4(d).

                  (e) VOLUNTARY TERMINATION. The Employee may terminate his
employment voluntarily at any time by a notice pursuant to Section 8 of this
Agreement. In the event that the Employee voluntarily terminates his employment
other than by reason of any of the actions that constitute Involuntary
Termination under Section 1(e)(ii) of this Agreement ("Voluntary Termination"),
the Company shall be obligated to the Employee for the amount of his Company
Salary and benefits only through the Date of Termination, at the time such
payments are due, and

                                       7
<PAGE>   21

the Company shall have no further obligation to the Employee under this
Agreement except as provided in Sections 4(d).

                  (f) DEATH. In the event of the death of the Employee while
employed under this Agreement and prior to any termination of employment, the
Company shall pay to the Employee's estate, or such person as the Employee may
have previously designated in writing, (i) the Company Salary which was not
previously paid to the Employee and, either (x) the Company Salary which he
would have earned if he had continued to be employed under this Agreement
through the 180th day after the date on which the Employee died or (y) the
Change in Control payment set forth in the first paragraph of Section 7(c),
whichever is applicable; (ii) the amounts of any benefits or awards which,
pursuant to the terms of any applicable plan or plans, were earned with respect
to the fiscal year in which the Employee died and which the Employee would have
been entitled to receive if he had continued to be employed, and the amount of
any bonus or incentive compensation for such fiscal year which the Employee
would have been entitled to receive if he had continued to be employed,
pro-rated in accordance with the portion of the fiscal year prior to his death,
provided that such amounts shall be payable when and as ordinarily payable under
the applicable plans; and (iii) the unpaid deferred amounts under Section 4(d).

                  (g) PERMANENT DISABILITY. For purposes of this Agreement, the
term "permanently disabled" means that the Employee has a mental or physical
infirmity which permanently impairs his ability to perform substantially his
duties and responsibilities under this Agreement and which results in (i)
eligibility of the Employee under the long-term disability plan of the Company
or the Bank, if any; or (ii) inability of the Employee to perform substantially
his duties and responsibilities under this Agreement for a period of 180
consecutive days. Either the Company or the Bank or both may terminate the
employment of the Employee after having established that the Employee is
permanently disabled.

                  (h) REGULATORY ACTION. Notwithstanding any other provisions
of this Agreement:

                           (1) If the Employee is removed and/or permanently
prohibited from participating in the conduct of the affairs of a depository
institution by an order issued under Section 8(e)(4) or (g)(1) of the Federal
Deposit Insurance Act ("FDIA"), 12 U.S.C. Section 1818(e)(4) and (g)(1), all
obligations of the Company under this Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected;.

                           (2) If the Bank is in default (as defined in Section
3(x)(1) of the FDIA), all obligations of the Company under this Agreement shall
terminate as of the date of default, but this provision shall not affect any
vested rights of the contracting parties; and

                           (3) All obligations of the Company under this
Agreement shall be terminated, except to the extent determined that continuation
of this Agreement is necessary for the continued operation of the Bank: (i) by
the Director of the Office of Thrift Supervision (the "Director") or his or her
designee, at the time the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation enters into an agreement to provide assistance to
or on behalf of

                                       8
<PAGE>   22

the Bank under the authority contained in Section 13(c) of the FDIA; or (ii) by
the Director or his or her designee, at the time the Director or his or her
designee approves a supervisory merger to resolve problems related to operation
of the Bank or when the Bank is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by any such action.

         8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Employee during the term of this
Agreement, the Company or the Bank, or both, shall deliver to the Employee a
written notice of termination, stating whether such termination constitutes
Termination for Cause or Involuntary Termination, setting forth in reasonable
detail the facts and circumstances that are the basis for the termination, and
specifying the date upon which employment shall terminate, which date shall be
at least 30 days after the date upon which the notice is delivered, except in
the case of Termination for Cause. In the event that the Employee determines in
good faith that he has experienced an Involuntary Termination of his employment,
he shall send a written notice to the Company stating the circumstances that
constitute such Involuntary Termination and the date upon which his employment
shall have ceased due to such Involuntary Termination. In the event that the
Employee desires to effect a Voluntary Termination, he shall deliver a written
notice to the Company, stating the date upon which employment shall terminate,
which date shall be at least 30 days after the date upon which the notice is
delivered, unless the parties agree to a date sooner.

         9. ATTORNEYS FEES. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by the
Employee as a result of (i) the Employee's contesting or disputing any
termination of employment, or (ii) the Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company (or its successors) or the Consolidated
Subsidiaries under which the Employee is or may be entitled to receive benefits;
provided that the Company's obligation to pay such fees and expenses is subject
to the Employee's prevailing with respect to the matters in dispute in any
action initiated by the Employee or the Employee's having been determined to
have acted reasonably and in good faith with respect to any action initiated by
the Company or the Bank.

         10.  NON-DISCLOSURE AND NON-SOLICITATION.

                  (a) NON-DISCLOSURE. The Employee acknowledges that he has
acquired, and will continue to acquire while employed by the Company and/or any
Consolidated Subsidiary, special knowledge of the business, affairs, strategies
and plans of the Company and the Consolidated Subsidiaries which has not been
disclosed to the public and which constitutes confidential and proprietary
business information owned by the Company and the Consolidated Subsidiaries,
including but not limited to, information about the customers, customer lists,
software, data, formulae, processes, inventions, trade secrets, marketing
information and plans, and business strategies of the Company and the
Consolidated Subsidiaries, and other information about the products and services
offered or developed or planned to be offered or developed by the Company and/or
the Consolidated Subsidiaries ("Confidential Information"). The Employee agrees
that, without the prior written consent of the Company, he shall not, during

                                       9
<PAGE>   23

the term of his employment or at any time thereafter, in any manner directly or
indirectly disclose any Confidential Information to any person or entity other
than the Company and the Consolidated Subsidiaries. Notwithstanding the
foregoing, if the Employee is requested or required (including but not limited
to by oral questions, interrogatories, requests for information or documents in
legal proceeding, subpoena, civil investigative demand or other similar process)
to disclose any Confidential Information the Employee shall provide the Company
with prompt written notice of any such request or requirement so that the
Company and/or a Consolidated Subsidiary may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions of this Section
10(a). If, in the absence of a protective order or other remedy or the receipt
of a waiver from the Company, the Employee is nonetheless legally compelled to
disclose Confidential Information to any tribunal or else stand liable for
contempt or suffer other censure or penalty, the Employee may, without liability
hereunder, disclose to such tribunal only that portion of the Confidential
Information which the Employee is legally required to be disclosed, provided
that the Employee exercise his best efforts to preserve the confidentiality of
the Confidential Information, including without limitation by cooperating with
the Company and/or a Consolidated Subsidiary to obtain an appropriate protective
order or other reliable assurance that confidential treatment will be accorded
the Confidential Information by such tribunal. On the Date of Termination, the
Employee shall promptly deliver to the Company all copies of documents or other
records (including without limitation electronic records) containing any
Confidential Information that is in his possession or under his control, and
shall retain no written or electronic record of any Confidential Information.

                  (b) NON-SOLICITATION. During the three year period next
following the Date of Termination, the Employee shall not directly or indirectly
solicit, encourage, or induce any person while employed by the Company or any
Consolidated Subsidiary to (i) leave the Company or any Consolidated Subsidiary,
(ii) cease his or her employment with the Company or any Consolidated Subsidiary
or (iii) accept employment with another entity or person.

         The provisions of this Section 10 shall survive any termination of the
Employee's employment and any termination of this Agreement.

         11.  NO ASSIGNMENTS.

                  (a) This Agreement is personal to each of the parties hereto,
and neither party may assign or delegate any of its rights or obligations
hereunder without first obtaining the written consent of the other party;
provided, however, that the Company shall require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise) by
an assumption agreement in form and substance satisfactory to the Employee, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company to obtain such
an assumption agreement prior to the effectiveness of any such succession or
assignment shall be a breach of this Agreement and shall entitle the Employee to
compensation and benefits from the Company in the same amount and on the same
terms as provided for an Involuntary Termination under Section 7 hereof. For
purposes of implementing the provisions of this Section 11(a), the date on which
any such succession becomes effective shall be deemed the Date of Termination.

                                       10
<PAGE>   24

                  (b) This Agreement and all rights of the Employee hereunder
shall inure to the benefit of and be enforceable by the Employee's personal and
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

         12. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, to the Company at its home
office, to the attention of the Board of Directors with a copy to the Secretary
of the Company, or, if to the Employee, to such home or other address as the
Employee has most recently provided in writing to the Company.

         13. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.

         14. HEADINGS. The headings used in this Agreement are included solely
for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.

         15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

         16. REINSTATEMENT OF PRIOR AGREEMENT. Notwithstanding anything
contained in this Agreement to the contrary, the parties hereto agree that in
the event a Change in Control occurs within one year from the date of this
Agreement (not the Effective Date), then in that event, the Prior Agreement
shall be reinstated and this Agreement shall become void ab initio.

         17. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.

         18. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement (other than relating to the enforcement of the
provisions of Section 10) shall be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.

         19. EQUITABLE AND OTHER JUDICIAL RELIEF. In the event of an actual or
threatened breach by the Employee of any of the provisions of Section 10, the
Company shall be entitled to equitable relief in the form of an injunction from
a court of competent jurisdiction and such other equitable and legal relief as
such court deems appropriate under the circumstances. The parties agree that the
Company shall not be required to post any bond in connection with the grant or
issuance of an injunction (preliminary, temporary and/or permanent) by a court
of competent jurisdiction, and if a bond is nevertheless required, the parties
agree that it shall be in a nominal amount. The parties further agree that in
the event of a breach by the Employee of any of the provisions of Section 10,
the Company will suffer irreparable damage and its remedy at law against the
Employee is inadequate to compensate it for such damage.

                                       11
<PAGE>   25

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

             THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.

Attest:                    Charter One Financial, Inc.

/s/ Robert J. Vana         /s/ Charles John Koch
---------------------      ---------------------------
Secretary                  By: Charles John Koch
                           Its: President & CEO

                           Employee

                           /s/ Richard W. Neu
                           ----------------------------
                           Richard W. Neu

                                       12
<PAGE>   26

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT
                              --------------------

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of this 16th day of March, 2000 (but effective as of August 1, 1999), by and
between Charter One Financial, Inc. (the "Company") and John D. Koch (the
"Employee").

         WHEREAS, the Employee serves as Executive Vice President of the Company
and as Executive Vice President and Chief Lending and Credit Officer, and
Executive Vice President of Non-Insured Deposit Products of the Company's
wholly-owned subsidiary, Charter One Bank, F.S.B. (the "Bank");

         WHEREAS, the Employee has an existing employment agreement entered into
as of October 31, 1995 and amended as of July 29, 1998 (the "Prior Employment
Agreement") which he is willing to terminate in consideration of this Agreement
becoming effective;

         WHEREAS, the board of directors of the Company (the "Board of
Directors") believes it is in the best interests of the Company and its
subsidiaries for the Company to enter into this Agreement with the Employee in
order to assure continuity of management of the Company and its subsidiaries;
and

         WHEREAS, the Board of Directors has approved and authorized the
execution of this Agreement with the Employee;

         NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:

         1.  DEFINITIONS.

                  (a) The term "Change in Control" means (1) an acquisition of
securities of the Company or the Bank that is determined by the Board of
Directors to constitute an acquisition of control of the Company or the Bank
within the meaning of the Change in Bank Control Act, 12 U.S.C. Section 1817(j),
and applicable regulations thereunder; (2) an event that would be required to be
reported in response to Item 1 of the current report on Form 8-K, as in effect
on the Effective Date, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"); (3) any person (as the term is used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly
of securities of the Company or the Bank representing 25% or more of the
combined voting power of the Company's or the Bank's outstanding securities; (4)
individuals who are members of the Board of Directors on the Effective Date (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the
Effective Date whose election was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board, or whose nomination for
election by the

                                       1
<PAGE>   27

Company's stockholders was approved by the nominating committee serving under an
Incumbent Board, shall be considered a member of the Incumbent Board; or (5)
approval by the Company's stockholders of a plan of reorganization, merger or
consolidation of the Company, sale of all or substantially all of the assets of
the Company, a similar transaction in which the Company is not the resulting
entity, or a transaction at the completion of which the former stockholders of
the acquired corporation become the holders of more than 40% of the outstanding
common stock of the Company and the Company is the resulting entity of such
transaction; provided that the term "change in control" shall not include an
acquisition of securities by an employee benefit plan of the Bank or the
Company. In the application of regulations under the Change in Bank Control Act,
determinations to be made by the applicable federal banking regulator shall be
made by the Board of Directors.

                  (b) The term "Consolidated Subsidiaries" means any subsidiary
or subsidiaries of the Company (or its successors) that are part of the
consolidated group of the Company (or its successors) for federal income tax
reporting.

                  (c) The term "Date of Termination" means the date upon which
the Employee's employment with the Company or the Bank or both ceases, as
specified in a notice of termination pursuant to Section 8 of this Agreement.

                  (d)   The term "Effective Date" means August 1, 1999.

                  (e) The term "Involuntarily Termination" means the termination
of the employment of Employee (i) by either the Company or the Bank or both
without his express written consent; or (ii) by the Employee by reason of a
material diminution of or interference with his duties, responsibilities or
benefits, including (without limitation) any of the following actions unless
consented to in writing by the Employee: (1) a requirement that the Employee be
based at any place other than Cleveland, Ohio, or within 50 miles thereof,
except for reasonable travel on Company or Bank business; (2) a material
demotion of the Employee; (3) a material reduction in the number or seniority of
personnel reporting to the Employee or a material reduction in the frequency
with which, or in the nature of the matters with respect to which such personnel
are to report to the Employee, other than as part of a Bank- or Company-wide
reduction in staff; (4) a reduction in the Employee's salary or a material
adverse change in the Employee's perquisites, benefits, contingent benefits or
vacation, other than prior to a Change in Control as part of an overall program
applied uniformly and with equitable effect to all members of the senior
management of the Bank or the Company; (5) a material permanent increase in the
required hours of work or the workload of the Employee; or (6) the failure of
the Company or the Bank (or their respective successors) to maintain the
Employee's title, status, duties and functions as Executive Vice President of
the Company and as Executive Vice President and Chief Lending and Credit
Officer, and Executive Vice President of Non-Insured Deposit Products of the
Bank (including their respective successors) reporting directly and only to the
Chief Executive Officer of the Company and the Bank (or the Chief Executive
Officer of their respective successors). The term "Involuntary Termination" does
not include Termination for Cause or termination of employment due to death or
permanent disability pursuant to Section 7(g) of this Agreement, or suspension
or temporary or permanent prohibition from participation

                                       2
<PAGE>   28

in the conduct of the affairs of a depository institution under Section 8 of the
Federal Deposit Insurance Act.

                  (f) The terms "Termination for Cause" and "Terminated for
Cause" mean termination of the employment of the Employee with either the
Company or the Bank, as the case may be, because of the Employee's dishonesty,
incompetence, willful misconduct, breach of a fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (excluding violations which do not have an adverse
affect on the Company or the Bank) or final cease-and-desist order, or (except
as provided below) material breach of any provision of this Agreement. No act or
failure to act by the Employee shall be considered willful unless the Employee
acted or failed to act with an absence of good faith and without a reasonable
belief that his action or failure to act was in the best interest of the
Company. The Employee shall not be deemed to have been Terminated for Cause
unless and until there shall have been delivered to the Employee a copy of a
resolution, duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board of Directors at a meeting of the Board duly
called and held for such purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with the Employee's counsel, to be heard
before the Board), stating that in the good faith opinion of the Board of
Directors the Employee has engaged in conduct described in the preceding
sentence and specifying the particulars thereof in detail.

         2. TERM; TERMINATION OF PRIOR EMPLOYMENT AGREEMENT. The term of this
Agreement shall be a period of five years commencing on the Effective Date,
subject to earlier termination as provided herein. On each anniversary of this
Agreement the term shall be extended for a period of one year in addition to the
then-remaining term, provided that the Company has not given notice to the
Employee in writing at least 90 days prior to such anniversary that the term of
this Agreement shall not be extended further, and provided further that the
Employee has not received an unsatisfactory performance review by either the
Board of Directors or the board of directors of the Bank. The Employee's Prior
Employment Agreement shall terminate immediately prior to the Effective Date
subject to reinstatement as provided in Section 16 below.

         3. EMPLOYMENT. The Employee is employed as Executive Vice President of
the Company and as Executive Vice President and Chief Lending and Credit
Officer, and Executive Vice President of Non-Insured Deposit Products of the
Bank. As such, the Employee shall render administrative and management services
as are customarily performed by persons situated in similar executive
capacities, and shall have such other powers and duties as the Board of
Directors or the board of directors of the Bank may prescribe from time to time.
The Employee shall also render services to any subsidiary or subsidiaries of the
Company or the Bank as requested by the Company or the Bank from time to time
consistent with his executive position. The Employee shall devote his best
efforts and reasonable time and attention to the business and affairs of the
Company and the Bank to the extent necessary to discharge his responsibilities
hereunder. The Employee may (i) serve on corporate or charitable boards or
committees, and (ii) manage personal investments, so long as such activities do
not interfere materially with performance of his responsibilities hereunder.

                                       3
<PAGE>   29

         4.  CASH COMPENSATION.

                  (a) SALARY. The Company agrees to pay the Employee during the
term of this Agreement a base salary (the "Company Salary") the annualized
amount of which shall be not less than the annualized aggregate amount of the
Employee's base salary from the Company and any Consolidated Subsidiaries in
effect at the Effective Date; provided that any amounts of salary actually paid
to the Employee by any Consolidated Subsidiaries shall reduce the amount to be
paid by the Company to the Employee. The Company Salary shall be paid no less
frequently than monthly and shall be subject to customary tax withholding. The
amount of the Employee's Company Salary shall be increased (but shall not be
decreased other than prior to a Change in Control as part of an overall program
applied uniformly and with equitable effect to all members of senior management
of the Company or the Bank) from time to time in accordance with the amounts of
salary approved by the Board of Directors or the board of directors of any of
the Consolidated Subsidiaries after the Effective Date.

                  (b) BONUSES. The Employee shall be entitled to participate in
an equitable manner with all other executive officers of the Company and the
Bank in such performance-based and discretionary bonuses, if any, as are
authorized and declared by the Board of Directors for executive officers of the
Company and by the board of directors of the Bank for executive officers of the
Bank.

                  (c) EXPENSES. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in performing
services under this Agreement in accordance with the policies and procedures
applicable to the executive officers of the Company and the Bank, provided that
the Employee accounts for such expenses as required under such policies and
procedures.

                  (d) DEFERRAL OF NON-DEDUCTIBLE COMPENSATION. In the event that
the Employee's aggregate compensation (including compensatory benefits which are
deemed remuneration for purposes of Section 162(m) of the Internal Revenue Code
of 1986 as amended (the "Code")) from the Company and the Consolidated
Subsidiaries for any calendar year exceeds the greater of (i) $1,000,000 or (ii)
the maximum amount of compensation deductible by the Company or any of the
Consolidated Subsidiaries in any calendar year under Section 162(m) of the Code
(the "maximum allowable amount"), then any such amount in excess of the maximum
allowable amount shall be mandatorily deferred with interest thereon at 8% per
annum, compounded annually, to a calendar year such that the amount to be paid
to the Employee in such calendar year, including deferred amounts and interest
thereon, does not exceed the maximum allowable amount. Subject to the foregoing,
deferred amounts including interest thereon shall be payable at the earliest
time permissible. All unpaid deferred amounts shall be paid to the Employee not
later than his Date of Termination unless his Date of Termination is on a
December 31st, in which case, the unpaid deferred amounts shall be paid to the
Employee on the first business day of the next succeeding calendar year. The
provisions of this subsection shall survive any termination of the Employee's
employment and any termination of this Agreement.

                                       4
<PAGE>   30

         5.   BENEFITS.

                  (a) PARTICIPATION IN BENEFIT PLANS. The Employee shall be
entitled to participate, to the same extent as executive officers of the Company
and the Bank generally, in all plans of the Company and the Bank relating to
pension, retirement, thrift, profit-sharing, savings, group or other life
insurance, hospitalization, medical and dental coverage, travel and accident
insurance, education, cash bonuses, and other retirement or employee benefits or
combinations thereof. In addition, the Employee shall be entitled to be
considered for benefits under all of the stock and stock option related plans in
which the Company's or the Bank's executive officers are eligible or become
eligible to participate.

                  (b) FRINGE BENEFITS. The Employee shall be eligible to
participate in, and receive benefits under, any other fringe benefit plans or
perquisites which are or may become generally available to the Company's or the
Bank's executive officers, including but not limited to supplemental retirement,
incentive compensation, supplemental medical or life insurance plans, company
cars, club dues, physical examinations, financial planning and tax preparation
services.

         6. VACATIONS; LEAVE. The Employee shall be entitled to annual paid
vacation in accordance with the policies established by the Board of Directors
and the board of directors of the Bank for executive officers, in no event less
than four weeks per year, and to voluntary leaves of absence, with or without
pay, from time to time at such times and upon such conditions as the Board of
Directors may determine in its discretion.

         7.  TERMINATION OF EMPLOYMENT.

                  (a) INVOLUNTARY TERMINATION. If the Employee experiences an
Involuntary Termination, such termination of employment shall be subject to the
Company's obligations under this Section 7. In the event of the Involuntary
Termination of the Employee, if the Employee has offered to continue to provide
the services contemplated by and on the terms provided in this Agreement and
such offer has been declined, subject to Section 7(b) of this Agreement, the
Company shall, during the lesser period of the remaining term of this Agreement
or three years following the Date of Termination (the "Liquidated Damage
Period"), as liquidated damages (i) pay to the Employee monthly one-twelfth of
the Company Salary at the annual rate in effect immediately prior to the Date of
Termination and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Employee, based on the average amounts of such
compensation earned by the Employee from the Company and the Bank for the two
full fiscal years preceding the Date of Termination; and (ii) maintain
substantially the same group life insurance, hospitalization, medical, dental,
prescription drug and other health benefits, and long-term disability insurance
(if any) for the benefit of the Employee and his dependents and beneficiaries
who would have been eligible for such benefits if the Employee had not suffered
Involuntary Termination and on terms substantially as favorable to the Employee
including amounts of coverage and deductibles and other costs to him in effect
immediately prior to such Involuntary Termination (the "Employee's Health
Coverage").

                                       5
<PAGE>   31

                  (b) REDUCTION OF THE COMPANY'S OBLIGATIONS UNDER SECTION 7(a).

                           (1) In the event that the Employee becomes entitled
to liquidated damages pursuant to Section 7(a), (i) the Company's obligation
thereunder with respect to cash damages shall be reduced by the amount of the
Employee's cash income, if any, earned from providing personal services during
the Liquidated Damage Period; and (ii) the Company's obligation to maintain
Health Coverage shall be reduced to the extent, if any, that the Employee
receives such benefits, on no less favorable terms, from another employer during
the Liquidated Damage Period. For purposes of this Section 7(b), the term "cash
income" shall include amounts of salary, wages, bonuses, incentive compensation
and fees paid to the Employee in cash but shall not include shares of stock,
stock options, stock appreciation rights or other earned income not paid to the
Employee in cash. To the extent the provisions of this Section 7(b)(1) are
applicable and an overpayment has been made to the Employee as of the expiration
of Liquidated Damage Period, the Employee shall reimburse the Company in an
amount equal to the after tax benefit realized by the Employee from such
overpayment (i.e. amount realized net of all federal, state, local, employment
and medicare taxes). In making the reimbursement calculation it shall be
presumed that the Employee is subject to the highest marginal federal and state
income tax rates.

                           (2) The Employee agrees that in the event he becomes
entitled to liquidated damages pursuant to Section 7(a), throughout the
Liquidated Damage Period, he shall promptly inform the Company of the nature and
amounts of cash income and the type of health benefits and coverage which he
earns or receives from providing personal services, and shall provide such
documentation of such cash income and such health benefits and coverage as the
Company may request. In the event of changes to such cash income or such health
benefits or coverage from time to time, the Employee shall inform the Company of
such changes, in each case within five days after the change occurs, and shall
provide such documentation concerning the change as the Company may request.

                  (c) CHANGE IN CONTROL; CUT BACK; AND TAX GROSS UP. In the
event that the Employee experiences an Involuntary Termination within the 12
months preceding, at the time of, or within 24 months following a Change in
Control, in addition to the Company's obligations under Section 7(a) of this
Agreement, the Company shall pay to the Employee in cash, within 30 days after
the later of the date of such Change in Control or the Date of Termination, an
amount equal to 299% of the Employee's "base amount" as determined under Section
280G of the Code, less the acceleration and lapse value of options granted to
the Employee by the Company prior to January 1, 1999 that are taken into account
in the determination of "parachute payments" under 280G(b)(2) of the Code by
virtue of vesting acceleration or deemed vesting acceleration in connection with
such Change in Control. Notwithstanding the foregoing, for purposes of this
paragraph the Employee shall not be deemed to have experienced an Involuntary
Termination if he is requested to continue his employment under this Agreement
for a period of up to 6 months after a Change in Control and he elects to
terminate his employment at the time of or within 6 months after a Change in
Control solely by reason of an event described in Section 1(e)(ii)(6) of this
Agreement, in which case he shall not be entitled to the Change in Control
payment set forth in this paragraph. In the event the Employee is requested in
connection with or at the time of a Change in Control to continue employment for
an interim period and he shall die while

                                       6
<PAGE>   32

employed during such interim period, then his estate, or such person as the
Employee may have previously designated in writing, shall be entitled to the
full Change in Control payment described in this paragraph in lieu of (and not
in addition to) the payment of the Company Salary for 180 days pursuant to
Section 7(f)(i)(x) below.

                  In the event that any payments, distributions or benefits
provided or to be provided to the Employee, whether pursuant to this Agreement
or from other plans or arrangements maintained by the Company or any of the
Consolidated Subsidiaries (excluding the Adjusted Gross Up Payment and
Additional Gross Up Payment (as such terms are hereinafter defined))
(collectively, the "Payment") would be subject to excise tax under Section 4999
of the Code (such excise tax and any penalties and interest collectively, the
"Penalty Tax"), the Company shall pay to the Employee in cash an additional
amount equal to the Adjusted Gross Up Payment. The "Adjusted Gross Up Payment"
shall be an amount such that after payment by the Employee of all federal,
state, local, employment and medicare taxes thereon (and any penalties and
interest with respect thereto), the Employee retains on an after tax basis a
portion of such amount equal to the aggregate of 80% of the Penalty Tax imposed
upon the Payment and 100% of the Penalty Tax imposed upon the Adjusted Gross Up
Payment.

                  For purposes of determining the amount of the Adjusted Gross
Up Payment, the value of any non-cash benefits and deferred payments or benefits
subject to the Penalty Tax shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G(d)(3) and (4) of the
Code. In the event that, after the Adjusted Gross Up Payment is made, the
Employee becomes entitled to receive a refund of any portion of the Penalty Tax,
the Employee shall promptly pay to the Company 80% of such Penalty Tax refund
attributable to the Payment (together with 80% of any interest paid or credited
thereon by the Internal Revenue Service) and 100% of the Penalty Tax refund
attributable to the Adjusted Gross Up Payment (together with 100% of any
interest paid or credited thereon by the Internal Revenue Service).

                  As a result of the uncertainty regarding the application of
Section 4999 of the Code, it is possible that the Internal Revenue Service may
assert that the Penalty Tax due is in excess of the amount of the anticipated
Penalty Tax used in calculating the Adjusted Gross Up Payment (such excess
amount is hereafter referred to as the "Underpayment"). In such event, the
Company shall pay to the Employee, in immediately available funds, at the time
the Underpayment is assessed or otherwise determined, an additional amount equal
to the Additional Gross Up Payment. The "Additional Gross Up Payment" shall be
an amount such that after payment by the Employee of all federal, state, local,
employment and medicare taxes thereon (and any penalties and interest with
respect thereto), the Employee retains on an after tax basis a portion of such
amount equal to the aggregate of (i) 80% of the portion of the Underpayment
attributable to the Payment, (ii) 100% of the portion of the Underpayment
attributable to the Adjusted Gross Up Payment and (iii) 100% of the Penalty Tax
imposed on the Additional Gross Up Payment.

                  (d) TERMINATION FOR CAUSE. In the event of Termination for
Cause, the Company shall have no further obligation to the Employee under this
Agreement after the Date of Termination other than deferred amounts under
Section 4(d).

                                       7
<PAGE>   33

                  (e) VOLUNTARY TERMINATION. The Employee may terminate his
employment voluntarily at any time by a notice pursuant to Section 8 of this
Agreement. In the event that the Employee voluntarily terminates his employment
other than by reason of any of the actions that constitute Involuntary
Termination under Section 1(e)(ii) of this Agreement ("Voluntary Termination"),
the Company shall be obligated to the Employee for the amount of his Company
Salary and benefits only through the Date of Termination, at the time such
payments are due, and the Company shall have no further obligation to the
Employee under this Agreement except as provided in Section 4(d).

                  (f) DEATH. In the event of the death of the Employee while
employed under this Agreement and prior to any termination of employment, the
Company shall pay to the Employee's estate, or such person as the Employee may
have previously designated in writing, (i) the Company Salary which was not
previously paid to the Employee and, either (x) the Company Salary which he
would have earned if he had continued to be employed under this Agreement
through the 180th day after the date on which the Employee died or (y) the
Change in Control payment set forth in the first paragraph of Section 7(c),
whichever is applicable; (ii) the amounts of any benefits or awards which,
pursuant to the terms of any applicable plan or plans, were earned with respect
to the fiscal year in which the Employee died and which the Employee would have
been entitled to receive if he had continued to be employed, and the amount of
any bonus or incentive compensation for such fiscal year which the Employee
would have been entitled to receive if he had continued to be employed,
pro-rated in accordance with the portion of the fiscal year prior to his death,
provided that such amounts shall be payable when and as ordinarily payable under
the applicable plans; and (iii) the unpaid deferred amounts under Section 4(d).

                  (g) PERMANENT DISABILITY. For purposes of this Agreement, the
term "permanently disabled" means that the Employee has a mental or physical
infirmity which permanently impairs his ability to perform substantially his
duties and responsibilities under this Agreement and which results in (i)
eligibility of the Employee under the long-term disability plan of the Company
or the Bank, if any; or (ii) inability of the Employee to perform substantially
his duties and responsibilities under this Agreement for a period of 180
consecutive days. Either the Company or the Bank or both may terminate the
employment of the Employee after having established that the Employee is
permanently disabled.

                  (h) REGULATORY ACTION. Notwithstanding any other provisions of
this Agreement:

                           (1) If the Employee is removed and/or permanently
prohibited from participating in the conduct of the affairs of a depository
institution by an order issued under Section 8(e)(4) or (g)(1) of the Federal
Deposit Insurance Act ("FDIA"), 12 U.S.C. Section 1818(e)(4) and (g)(1), all
obligations of the Company under this Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.

                                       8
<PAGE>   34

                           (2) If the Bank is in default (as defined in Section
3(x)(1) of the FDIA), all obligations of the Company under this Agreement shall
terminate as of the date of default, but this provision shall not affect any
vested rights of the contracting parties; and

                           (3) All obligations of the Company under this
Agreement shall be terminated, except to the extent determined that continuation
of this Agreement is necessary for the continued operation of the Bank: (i) by
the Director of the Office of Thrift Supervision (the "Director") or his or her
designee, at the time the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) of the
FDIA; or (ii) by the Director or his or her designee, at the time the Director
or his or her designee approves a supervisory merger to resolve problems related
to operation of the Bank or when the Bank is determined by the Director to be in
an unsafe or unsound condition. Any rights of the parties that have already
vested, however, shall not be affected by any such action.

         8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Employee during the term of this
Agreement, the Company or the Bank, or both, shall deliver to the Employee a
written notice of termination, stating whether such termination constitutes
Termination for Cause or Involuntary Termination, setting forth in reasonable
detail the facts and circumstances that are the basis for the termination, and
specifying the date upon which employment shall terminate, which date shall be
at least 30 days after the date upon which the notice is delivered, except in
the case of Termination for Cause. In the event that the Employee determines in
good faith that he has experienced an Involuntary Termination of his employment,
he shall send a written notice to the Company stating the circumstances that
constitute such Involuntary Termination and the date upon which his employment
shall have ceased due to such Involuntary Termination. In the event that the
Employee desires to effect a Voluntary Termination, he shall deliver a written
notice to the Company, stating the date upon which employment shall terminate,
which date shall be at least 30 days after the date upon which the notice is
delivered, unless the parties agree to a date sooner.

         9. ATTORNEYS FEES. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by the
Employee as a result of (i) the Employee's contesting or disputing any
termination of employment, or (ii) the Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company (or its successors) or the Consolidated
Subsidiaries under which the Employee is or may be entitled to receive benefits;
provided that the Company's obligation to pay such fees and expenses is subject
to the Employee's prevailing with respect to the matters in dispute in any
action initiated by the Employee or the Employee's having been determined to
have acted reasonably and in good faith with respect to any action initiated by
the Company or the Bank.

                                       9
<PAGE>   35

         10.  NON-DISCLOSURE AND NON-SOLICITATION.

                  (a) NON-DISCLOSURE. The Employee acknowledges that he has
acquired, and will continue to acquire while employed by the Company and/or any
Consolidated Subsidiary, special knowledge of the business, affairs, strategies
and plans of the Company and the Consolidated Subsidiaries which has not been
disclosed to the public and which constitutes confidential and proprietary
business information owned by the Company and the Consolidated Subsidiaries,
including but not limited to, information about the customers, customer lists,
software, data, formulae, processes, inventions, trade secrets, marketing
information and plans, and business strategies of the Company and the
Consolidated Subsidiaries, and other information about the products and services
offered or developed or planned to be offered or developed by the Company and/or
the Consolidated Subsidiaries ("Confidential Information"). The Employee agrees
that, without the prior written consent of the Company, he shall not, during the
term of his employment or at any time thereafter, in any manner directly or
indirectly disclose any Confidential Information to any person or entity other
than the Company and the Consolidated Subsidiaries. Notwithstanding the
foregoing, if the Employee is requested or required (including but not limited
to by oral questions, interrogatories, requests for information or documents in
legal proceeding, subpoena, civil investigative demand or other similar process)
to disclose any Confidential Information the Employee shall provide the Company
with prompt written notice of any such request or requirement so that the
Company and/or a Consolidated Subsidiary may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions of this Section
10(a). If, in the absence of a protective order or other remedy or the receipt
of a waiver from the Company, the Employee is nonetheless legally compelled to
disclose Confidential Information to any tribunal or else stand liable for
contempt or suffer other censure or penalty, the Employee may, without liability
hereunder, disclose to such tribunal only that portion of the Confidential
Information which the Employee is legally required to be disclosed, provided
that the Employee exercise his best efforts to preserve the confidentiality of
the Confidential Information, including without limitation by cooperating with
the Company and/or a Consolidated Subsidiary to obtain an appropriate protective
order or other reliable assurance that confidential treatment will be accorded
the Confidential Information by such tribunal. On the Date of Termination, the
Employee shall promptly deliver to the Company all copies of documents or other
records (including without limitation electronic records) containing any
Confidential Information that is in his possession or under his control, and
shall retain no written or electronic record of any Confidential Information.

                  (b) NON-SOLICITATION. During the three year period next
following the Date of Termination, the Employee shall not directly or indirectly
solicit, encourage, or induce any person while employed by the Company or any
Consolidated Subsidiary to (i) leave the Company or any Consolidated Subsidiary,
(ii) cease his or her employment with the Company or any Consolidated Subsidiary
or (iii) accept employment with another entity or person.

         The provisions of this Section 10 shall survive any termination of the
Employee's employment and any termination of this Agreement.

                                       10
<PAGE>   36

         11.  NO ASSIGNMENTS.

                  (a) This Agreement is personal to each of the parties hereto,
and neither party may assign or delegate any of its rights or obligations
hereunder without first obtaining the written consent of the other party;
provided, however, that the Company shall require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise) by
an assumption agreement in form and substance satisfactory to the Employee, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company to obtain such
an assumption agreement prior to the effectiveness of any such succession or
assignment shall be a breach of this Agreement and shall entitle the Employee to
compensation and benefits from the Company in the same amount and on the same
terms as provided for an Involuntary Termination under Section 7 hereof. For
purposes of implementing the provisions of this Section 11(a), the date on which
any such succession becomes effective shall be deemed the Date of Termination.

                  (b) This Agreement and all rights of the Employee hereunder
shall inure to the benefit of and be enforceable by the Employee's personal and
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

         12. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, to the Company at its home
office, to the attention of the Board of Directors with a copy to the Secretary
of the Company, or, if to the Employee, to such home or other address as the
Employee has most recently provided in writing to the Company.

         13. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.

         14. HEADINGS. The headings used in this Agreement are included solely
for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.

         15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

         16. REINSTATEMENT OF PRIOR AGREEMENT. Notwithstanding anything
contained in this Agreement to the contrary, the parties hereto agree that in
the event a Change in Control occurs within one year from the date of this
Agreement (not the Effective Date), then in that event, the Prior Agreement
shall be reinstated and this Agreement shall become void ab initio.

         17. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.

                                       11
<PAGE>   37

         18. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement (other than relating to the enforcement of the
provisions of Section 10) shall be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.

         19. EQUITABLE AND OTHER JUDICIAL RELIEF. In the event of an actual or
threatened breach by the Employee of any of the provisions of Section 10, the
Company shall be entitled to equitable relief in the form of an injunction from
a court of competent jurisdiction and such other equitable and legal relief as
such court deems appropriate under the circumstances. The parties agree that the
Company shall not be required to post any bond in connection with the grant or
issuance of an injunction (preliminary, temporary and/or permanent) by a court
of competent jurisdiction, and if a bond is nevertheless required, the parties
agree that it shall be in a nominal amount. The parties further agree that in
the event of a breach by the Employee of any of the provisions of Section 10,
the Company will suffer irreparable damage and its remedy at law against the
Employee is inadequate to compensate it for such damage.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

             THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.

Attest:                    Charter One Financial, Inc.

/s/ Robert J. Vana         /s/ Charles John Koch
---------------------      ---------------------------
Secretary                  By: Charles John Koch
                           Its: President & CEO

                           Employee

                           /s/ John D. Koch
                           ----------------------------
                           John D. Koch

                                       12

<PAGE>   38

                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT
                              --------------------

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of this 16th day of March, 2000 (but effective as of August 1, 1999), by and
between Charter One Financial, Inc. (the "Company") and Mark D. Grossi (the
"Employee").

         WHEREAS, the Employee serves as Executive Vice President of the Company
and as Executive Vice President - Retail Banking of the Company's wholly-owned
subsidiary, Charter One Bank, F.S.B. (the "Bank");

         WHEREAS, the Employee has an existing employment agreement entered into
as of October 31, 1995 and amended as of July 29, 1998 (the "Prior Employment
Agreement") which he is willing to terminate in consideration of this Agreement
becoming effective;

         WHEREAS, the board of directors of the Company (the "Board of
Directors") believes it is in the best interests of the Company and its
subsidiaries for the Company to enter into this Agreement with the Employee in
order to assure continuity of management of the Company and its subsidiaries;
and

         WHEREAS, the Board of Directors has approved and authorized the
execution of this Agreement with the Employee;

         NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:

         1.  DEFINITIONS.

                  (a) The term "Change in Control" means (1) an acquisition of
securities of the Company or the Bank that is determined by the Board of
Directors to constitute an acquisition of control of the Company or the Bank
within the meaning of the Change in Bank Control Act, 12 U.S.C. Section 1817(j),
and applicable regulations thereunder; (2) an event that would be required to be
reported in response to Item 1 of the current report on Form 8-K, as in effect
on the Effective Date, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"); (3) any person (as the term is used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly
of securities of the Company or the Bank representing 25% or more of the
combined voting power of the Company's or the Bank's outstanding securities; (4)
individuals who are members of the Board of Directors on the Effective Date (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the
Effective Date whose election was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board, or whose nomination for
election by the Company's stockholders was approved by the nominating committee
serving under an Incumbent

                                       1
<PAGE>   39

Board, shall be considered a member of the Incumbent Board; or (5) approval by
the Company's stockholders of a plan of reorganization, merger or consolidation
of the Company, sale of all or substantially all of the assets of the Company, a
similar transaction in which the Company is not the resulting entity, or a
transaction at the completion of which the former stockholders of the acquired
corporation become the holders of more than 40% of the outstanding common stock
of the Company and the Company is the resulting entity of such transaction;
provided that the term "change in control" shall not include an acquisition of
securities by an employee benefit plan of the Bank or the Company. In the
application of regulations under the Change in Bank Control Act, determinations
to be made by the applicable federal banking regulator shall be made by the
Board of Directors.

                  (b) The term "Consolidated Subsidiaries" means any subsidiary
or subsidiaries of the Company (or its successors) that are part of the
consolidated group of the Company (or its successors) for federal income tax
reporting.

                  (c) The term "Date of Termination" means the date upon which
the Employee's employment with the Company or the Bank or both ceases, as
specified in a notice of termination pursuant to Section 8 of this Agreement.

                  (d)   The term "Effective Date" means August 1, 1999.

                  (e) The term "Involuntarily Termination" means the termination
of the employment of Employee (i) by either the Company or the Bank or both
without his express written consent; or (ii) by the Employee by reason of a
material diminution of or interference with his duties, responsibilities or
benefits, including (without limitation) any of the following actions unless
consented to in writing by the Employee: (1) a requirement that the Employee be
based at any place other than Cleveland, Ohio, or within 50 miles thereof,
except for reasonable travel on Company or Bank business; (2) a material
demotion of the Employee; (3) a material reduction in the number or seniority of
personnel reporting to the Employee or a material reduction in the frequency
with which, or in the nature of the matters with respect to which such personnel
are to report to the Employee, other than as part of a Bank- or Company-wide
reduction in staff; (4) a reduction in the Employee's salary or a material
adverse change in the Employee's perquisites, benefits, contingent benefits or
vacation, other than prior to a Change in Control as part of an overall program
applied uniformly and with equitable effect to all members of the senior
management of the Bank or the Company; (5) a material permanent increase in the
required hours of work or the workload of the Employee; or (6) the failure of
the Company or the Bank (or their respective successors) to maintain the
Employee's title, status, duties and functions as Executive Vice President of
the Company and Executive Vice President - Retail Banking of the Bank (including
their respective successors) reporting directly and only to the Chief Executive
Officer of the Company and the Bank (or the Chief Executive Officer of their
respective successors). The term "Involuntary Termination" does not include
Termination for Cause or termination of employment due to death or permanent
disability pursuant to Section 7(g) of this Agreement, or suspension or
temporary or permanent prohibition from participation in the conduct of the
affairs of a depository institution under Section 8 of the Federal Deposit
Insurance Act.

                                       2
<PAGE>   40

                  (f) The terms "Termination for Cause" and "Terminated for
Cause" mean termination of the employment of the Employee with either the
Company or the Bank, as the case may be, because of the Employee's dishonesty,
incompetence, willful misconduct, breach of a fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (excluding violations which do not have an adverse
affect on the Company or the Bank) or final cease-and-desist order, or (except
as provided below) material breach of any provision of this Agreement. No act or
failure to act by the Employee shall be considered willful unless the Employee
acted or failed to act with an absence of good faith and without a reasonable
belief that his action or failure to act was in the best interest of the
Company. The Employee shall not be deemed to have been Terminated for Cause
unless and until there shall have been delivered to the Employee a copy of a
resolution, duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board of Directors at a meeting of the Board duly
called and held for such purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with the Employee's counsel, to be heard
before the Board), stating that in the good faith opinion of the Board of
Directors the Employee has engaged in conduct described in the preceding
sentence and specifying the particulars thereof in detail.

         2. TERM; TERMINATION OF PRIOR EMPLOYMENT AGREEMENT. The term of this
Agreement shall be a period of five years commencing on the Effective Date,
subject to earlier termination as provided herein. On each anniversary of this
Agreement the term shall be extended for a period of one year in addition to the
then-remaining term, provided that the Company has not given notice to the
Employee in writing at least 90 days prior to such anniversary that the term of
this Agreement shall not be extended further, and provided further that the
Employee has not received an unsatisfactory performance review by either the
Board of Directors or the board of directors of the Bank. The Employee's Prior
Employment Agreement shall terminate immediately prior to the Effective Date
subject to reinstatement as provided in Section 16 below.

         3. EMPLOYMENT. The Employee is employed as Executive Vice President of
the Company and as Executive Vice President - Retail Banking of the Bank. As
such, the Employee shall render administrative and management services as are
customarily performed by persons situated in similar executive capacities, and
shall have such other powers and duties as the Board of Directors or the board
of directors of the Bank may prescribe from time to time. The Employee shall
also render services to any subsidiary or subsidiaries of the Company or the
Bank as requested by the Company or the Bank from time to time consistent with
his executive position. The Employee shall devote his best efforts and
reasonable time and attention to the business and affairs of the Company and the
Bank to the extent necessary to discharge his responsibilities hereunder. The
Employee may (i) serve on corporate or charitable boards or committees, and (ii)
manage personal investments, so long as such activities do not interfere
materially with performance of his responsibilities hereunder.

                                       3
<PAGE>   41

         4.  CASH COMPENSATION.

                  (a) SALARY. The Company agrees to pay the Employee during the
term of this Agreement a base salary (the "Company Salary") the annualized
amount of which shall be not less than the annualized aggregate amount of the
Employee's base salary from the Company and any Consolidated Subsidiaries in
effect at the Effective Date; provided that any amounts of salary actually paid
to the Employee by any Consolidated Subsidiaries shall reduce the amount to be
paid by the Company to the Employee. The Company Salary shall be paid no less
frequently than monthly and shall be subject to customary tax withholding. The
amount of the Employee's Company Salary shall be increased (but shall not be
decreased other than prior to a Change in Control as part of an overall program
applied uniformly and with equitable effect to all members of senior management
of the Company or the Bank) from time to time in accordance with the amounts of
salary approved by the Board of Directors or the board of directors of any of
the Consolidated Subsidiaries after the Effective Date.

                  (b) BONUSES. The Employee shall be entitled to participate in
an equitable manner with all other executive officers of the Company and the
Bank in such performance-based and discretionary bonuses, if any, as are
authorized and declared by the Board of Directors for executive officers of the
Company and by the board of directors of the Bank for executive officers of the
Bank.

                  (c) EXPENSES. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in performing
services under this Agreement in accordance with the policies and procedures
applicable to the executive officers of the Company and the Bank, provided that
the Employee accounts for such expenses as required under such policies and
procedures.

                  (d) DEFERRAL OF NON-DEDUCTIBLE COMPENSATION. In the event that
the Employee's aggregate compensation (including compensatory benefits which are
deemed remuneration for purposes of Section 162(m) of the Internal Revenue Code
of 1986 as amended (the "Code")) from the Company and the Consolidated
Subsidiaries for any calendar year exceeds the greater of (i) $1,000,000 or (ii)
the maximum amount of compensation deductible by the Company or any of the
Consolidated Subsidiaries in any calendar year under Section 162(m) of the Code
(the "maximum allowable amount"), then any such amount in excess of the maximum
allowable amount shall be mandatorily deferred with interest thereon at 8% per
annum, compounded annually, to a calendar year such that the amount to be paid
to the Employee in such calendar year, including deferred amounts and interest
thereon, does not exceed the maximum allowable amount. Subject to the foregoing,
deferred amounts including interest thereon shall be payable at the earliest
time permissible. All unpaid deferred amounts shall be paid to the Employee not
later than his Date of Termination unless his Date of Termination is on a
December 31st, in which case, the unpaid deferred amounts shall be paid to the
Employee on the first business day of the next succeeding calendar year. The
provisions of this subsection shall survive any termination of the Employee's
employment and any termination of this Agreement.

                                       4
<PAGE>   42

         5.   BENEFITS.

                  (a) PARTICIPATION IN BENEFIT PLANS. The Employee shall be
entitled to participate, to the same extent as executive officers of the Company
and the Bank generally, in all plans of the Company and the Bank relating to
pension, retirement, thrift, profit-sharing, savings, group or other life
insurance, hospitalization, medical and dental coverage, travel and accident
insurance, education, cash bonuses, and other retirement or employee benefits or
combinations thereof. In addition, the Employee shall be entitled to be
considered for benefits under all of the stock and stock option related plans in
which the Company's or the Bank's executive officers are eligible or become
eligible to participate.

                  (b) FRINGE BENEFITS. The Employee shall be eligible to
participate in, and receive benefits under, any other fringe benefit plans or
perquisites which are or may become generally available to the Company's or the
Bank's executive officers, including but not limited to supplemental retirement,
incentive compensation, supplemental medical or life insurance plans, company
cars, club dues, physical examinations, financial planning and tax preparation
services.

         6. VACATIONS; LEAVE. The Employee shall be entitled to annual paid
vacation in accordance with the policies established by the Board of Directors
and the board of directors of the Bank for executive officers, in no event less
than four weeks per year, and to voluntary leaves of absence, with or without
pay, from time to time at such times and upon such conditions as the Board of
Directors may determine in its discretion.

         7.  TERMINATION OF EMPLOYMENT.

                  (a) INVOLUNTARY TERMINATION. If the Employee experiences an
Involuntary Termination, such termination of employment shall be subject to the
Company's obligations under this Section 7. In the event of the Involuntary
Termination of the Employee, if the Employee has offered to continue to provide
the services contemplated by and on the terms provided in this Agreement and
such offer has been declined, subject to Section 7(b) of this Agreement, the
Company shall, during the lesser period of the remaining term of this Agreement
or three years following the Date of Termination (the "Liquidated Damage
Period"), as liquidated damages (i) pay to the Employee monthly one-twelfth of
the Company Salary at the annual rate in effect immediately prior to the Date of
Termination and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Employee, based on the average amounts of such
compensation earned by the Employee from the Company and the Bank for the two
full fiscal years preceding the Date of Termination; and (ii) maintain
substantially the same group life insurance, hospitalization, medical, dental,
prescription drug and other health benefits, and long-term disability insurance
(if any) for the benefit of the Employee and his dependents and beneficiaries
who would have been eligible for such benefits if the Employee had not suffered
Involuntary Termination and on terms substantially as favorable to the Employee
including amounts of coverage and deductibles and other costs to him in effect
immediately prior to such Involuntary Termination (the "Employee's Health
Coverage").

                                       5
<PAGE>   43

                  (b) REDUCTION OF THE COMPANY'S OBLIGATIONS UNDER SECTION 7(a).

                           (1) In the event that the Employee becomes entitled
to liquidated damages pursuant to Section 7(a), (i) the Company's obligation
thereunder with respect to cash damages shall be reduced by the amount of the
Employee's cash income, if any, earned from providing personal services during
the Liquidated Damage Period; and (ii) the Company's obligation to maintain
Health Coverage shall be reduced to the extent, if any, that the Employee
receives such benefits, on no less favorable terms, from another employer during
the Liquidated Damage Period. For purposes of this Section 7(b), the term "cash
income" shall include amounts of salary, wages, bonuses, incentive compensation
and fees paid to the Employee in cash but shall not include shares of stock,
stock options, stock appreciation rights or other earned income not paid to the
Employee in cash. To the extent the provisions of this Section 7(b)(1) are
applicable and an overpayment has been made to the Employee as of the expiration
of Liquidated Damage Period, the Employee shall reimburse the Company in an
amount equal to the after tax benefit realized by the Employee from such
overpayment (i.e. amount realized net of all federal, state, local, employment
and medicare taxes). In making the reimbursement calculation it shall be
presumed that the Employee is subject to the highest marginal federal and state
income tax rates.

                           (2) The Employee agrees that in the event he becomes
entitled to liquidated damages pursuant to Section 7(a), throughout the
Liquidated Damage Period, he shall promptly inform the Company of the nature and
amounts of cash income and the type of health benefits and coverage which he
earns or receives from providing personal services, and shall provide such
documentation of such cash income and such health benefits and coverage as the
Company may request. In the event of changes to such cash income or such health
benefits or coverage from time to time, the Employee shall inform the Company of
such changes, in each case within five days after the change occurs, and shall
provide such documentation concerning the change as the Company may request.

                  (c) CHANGE IN CONTROL; CUT BACK; AND TAX GROSS UP. In the
event that the Employee experiences an Involuntary Termination within the 12
months preceding, at the time of, or within 24 months following a Change in
Control, in addition to the Company's obligations under Section 7(a) of this
Agreement, the Company shall pay to the Employee in cash, within 30 days after
the later of the date of such Change in Control or the Date of Termination, an
amount equal to 299% of the Employee's "base amount" as determined under Section
280G of the Code, less the acceleration and lapse value of options granted to
the Employee by the Company prior to January 1, 1999 that are taken into account
in the determination of "parachute payments" under 280G(b)(2) of the Code by
virtue of vesting acceleration or deemed vesting acceleration in connection with
such Change in Control. Notwithstanding the foregoing, for purposes of this
paragraph the Employee shall not be deemed to have experienced an Involuntary
Termination if he is requested to continue his employment under this Agreement
for a period of up to 6 months after a Change in Control and he elects to
terminate his employment at the time of or within 6 months after a Change in
Control solely by reason of an event described in Section 1(e)(ii)(6) of this
Agreement, in which case he shall not be entitled to the Change in Control
payment set forth in this paragraph. In the event the Employee is requested in
connection with or at the time of a Change in Control to continue employment for
an interim period and he shall die while employed during such interim period,
then his estate, or such person as the Employee may have

                                       6
<PAGE>   44

previously designated in writing, shall be entitled to the full Change in
Control payment described in this paragraph in lieu of (and not in addition to)
the payment of the Company Salary for 180 days pursuant to Section 7(f)(i)(x)
below.

                  In the event that any payments, distributions or benefits
provided or to be provided to the Employee, whether pursuant to this Agreement
or from other plans or arrangements maintained by the Company or any of the
Consolidated Subsidiaries (excluding the Adjusted Gross Up Payment and
Additional Gross Up Payment (as such terms are hereinafter defined))
(collectively, the "Payment") would be subject to excise tax under Section 4999
of the Code (such excise tax and any penalties and interest collectively, the
"Penalty Tax"), the Company shall pay to the Employee in cash an additional
amount equal to the Adjusted Gross Up Payment. The "Adjusted Gross Up Payment"
shall be an amount such that after payment by the Employee of all federal,
state, local, employment and medicare taxes thereon (and any penalties and
interest with respect thereto), the Employee retains on an after tax basis a
portion of such amount equal to the aggregate of 80% of the Penalty Tax imposed
upon the Payment and 100% of the Penalty Tax imposed upon the Adjusted Gross Up
Payment.

                  For purposes of determining the amount of the Adjusted Gross
Up Payment, the value of any non-cash benefits and deferred payments or benefits
subject to the Penalty Tax shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G(d)(3) and (4) of the
Code. In the event that, after the Adjusted Gross Up Payment is made, the
Employee becomes entitled to receive a refund of any portion of the Penalty Tax,
the Employee shall promptly pay to the Company 80% of such Penalty Tax refund
attributable to the Payment (together with 80% of any interest paid or credited
thereon by the Internal Revenue Service) and 100% of the Penalty Tax refund
attributable to the Adjusted Gross Up Payment (together with 100% of any
interest paid or credited thereon by the Internal Revenue Service).

                  As a result of the uncertainty regarding the application of
Section 4999 of the Code, it is possible that the Internal Revenue Service may
assert that the Penalty Tax due is in excess of the amount of the anticipated
Penalty Tax used in calculating the Adjusted Gross Up Payment (such excess
amount is hereafter referred to as the "Underpayment"). In such event, the
Company shall pay to the Employee, in immediately available funds, at the time
the Underpayment is assessed or otherwise determined, an additional amount equal
to the Additional Gross Up Payment. The "Additional Gross Up Payment" shall be
an amount such that after payment by the Employee of all federal, state, local,
employment and medicare taxes thereon (and any penalties and interest with
respect thereto), the Employee retains on an after tax basis a portion of such
amount equal to the aggregate of (i) 80% of the portion of the Underpayment
attributable to the Payment, (ii) 100% of the portion of the Underpayment
attributable to the Adjusted Gross Up Payment and (iii) 100% of the Penalty Tax
imposed on the Additional Gross Up Payment.

                  (d) TERMINATION FOR CAUSE. In the event of Termination for
Cause, the Company shall have no further obligation to the Employee under this
Agreement after the Date of Termination other than deferred amounts under
Section 4(d).

                                       7
<PAGE>   45

                  (e) VOLUNTARY TERMINATION. The Employee may terminate his
employment voluntarily at any time by a notice pursuant to Section 8 of this
Agreement. In the event that the Employee voluntarily terminates his employment
other than by reason of any of the actions that constitute Involuntary
Termination under Section 1(e)(ii) of this Agreement ("Voluntary Termination"),
the Company shall be obligated to the Employee for the amount of his Company
Salary and benefits only through the Date of Termination, at the time such
payments are due, and the Company shall have no further obligation to the
Employee under this Agreement except as provided in Section 4(d).

                  (f) DEATH. In the event of the death of the Employee while
employed under this Agreement and prior to any termination of employment, the
Company shall pay to the Employee's estate, or such person as the Employee may
have previously designated in writing, (i) the Company Salary which was not
previously paid to the Employee and, either (x) the Company Salary which he
would have earned if he had continued to be employed under this Agreement
through the 180th day after the date on which the Employee died or (y) the
Change in Control payment set forth in the first paragraph of Section 7(c),
whichever is applicable; (ii) the amounts of any benefits or awards which,
pursuant to the terms of any applicable plan or plans, were earned with respect
to the fiscal year in which the Employee died and which the Employee would have
been entitled to receive if he had continued to be employed, and the amount of
any bonus or incentive compensation for such fiscal year which the Employee
would have been entitled to receive if he had continued to be employed,
pro-rated in accordance with the portion of the fiscal year prior to his death,
provided that such amounts shall be payable when and as ordinarily payable under
the applicable plans; and (iii) the unpaid deferred amounts under Section 4(d).

                  (g) PERMANENT DISABILITY. For purposes of this Agreement, the
term "permanently disabled" means that the Employee has a mental or physical
infirmity which permanently impairs his ability to perform substantially his
duties and responsibilities under this Agreement and which results in (i)
eligibility of the Employee under the long-term disability plan of the Company
or the Bank, if any; or (ii) inability of the Employee to perform substantially
his duties and responsibilities under this Agreement for a period of 180
consecutive days. Either the Company or the Bank or both may terminate the
employment of the Employee after having established that the Employee is
permanently disabled.

                  (h) REGULATORY ACTION. Notwithstanding any other provisions of
this Agreement:

                           (1) If the Employee is removed and/or permanently
prohibited from participating in the conduct of the affairs of a depository
institution by an order issued under Section 8(e)(4) or (g)(1) of the Federal
Deposit Insurance Act ("FDIA"), 12 U.S.C. Section 1818(e)(4) and (g)(1), all
obligations of the Company under this Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected;.

                           (2) If the Bank is in default (as defined in Section
3(x)(1) of the FDIA), all obligations of the Company under this Agreement shall
terminate as of the date of default, but this provision shall not affect any
vested rights of the contracting parties; and

                                       8
<PAGE>   46

                           (3) All obligations of the Company under this
Agreement shall be terminated, except to the extent determined that continuation
of this Agreement is necessary for the continued operation of the Bank: (i) by
the Director of the Office of Thrift Supervision (the "Director") or his or her
designee, at the time the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) of the
FDIA; or (ii) by the Director or his or her designee, at the time the Director
or his or her designee approves a supervisory merger to resolve problems related
to operation of the Bank or when the Bank is determined by the Director to be in
an unsafe or unsound condition. Any rights of the parties that have already
vested, however, shall not be affected by any such action.

         8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Employee during the term of this
Agreement, the Company or the Bank, or both, shall deliver to the Employee a
written notice of termination, stating whether such termination constitutes
Termination for Cause or Involuntary Termination, setting forth in reasonable
detail the facts and circumstances that are the basis for the termination, and
specifying the date upon which employment shall terminate, which date shall be
at least 30 days after the date upon which the notice is delivered, except in
the case of Termination for Cause. In the event that the Employee determines in
good faith that he has experienced an Involuntary Termination of his employment,
he shall send a written notice to the Company stating the circumstances that
constitute such Involuntary Termination and the date upon which his employment
shall have ceased due to such Involuntary Termination. In the event that the
Employee desires to effect a Voluntary Termination, he shall deliver a written
notice to the Company, stating the date upon which employment shall terminate,
which date shall be at least 30 days after the date upon which the notice is
delivered, unless the parties agree to a date sooner.

         9. ATTORNEYS FEES. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by the
Employee as a result of (i) the Employee's contesting or disputing any
termination of employment, or (ii) the Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company (or its successors) or the Consolidated
Subsidiaries under which the Employee is or may be entitled to receive benefits;
provided that the Company's obligation to pay such fees and expenses is subject
to the Employee's prevailing with respect to the matters in dispute in any
action initiated by the Employee or the Employee's having been determined to
have acted reasonably and in good faith with respect to any action initiated by
the Company or the Bank.

         10.  NON-DISCLOSURE AND NON-SOLICITATION.

                  (a) NON-DISCLOSURE. The Employee acknowledges that he has
acquired, and will continue to acquire while employed by the Company and/or any
Consolidated Subsidiary, special knowledge of the business, affairs, strategies
and plans of the Company and the Consolidated Subsidiaries which has not been
disclosed to the public and which constitutes

                                       9
<PAGE>   47

confidential and proprietary business information owned by the Company and the
Consolidated Subsidiaries, including but not limited to, information about the
customers, customer lists, software, data, formulae, processes, inventions,
trade secrets, marketing information and plans, and business strategies of the
Company and the Consolidated Subsidiaries, and other information about the
products and services offered or developed or planned to be offered or developed
by the Company and/or the Consolidated Subsidiaries ("Confidential
Information"). The Employee agrees that, without the prior written consent of
the Company, he shall not, during the term of his employment or at any time
thereafter, in any manner directly or indirectly disclose any Confidential
Information to any person or entity other than the Company and the Consolidated
Subsidiaries. Notwithstanding the foregoing, if the Employee is requested or
required (including but not limited to by oral questions, interrogatories,
requests for information or documents in legal proceeding, subpoena, civil
investigative demand or other similar process) to disclose any Confidential
Information the Employee shall provide the Company with prompt written notice of
any such request or requirement so that the Company and/or a Consolidated
Subsidary may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Section 10(a). If, in the absence of a
protective order or other remedy or the receipt of a waiver from the Company,
the Employee is nonetheless legally compelled to disclose Confidential
Information to any tribunal or else stand liable for contempt or suffer other
censure or penalty, the Employee may, without liability hereunder, disclose to
such tribunal only that portion of the Confidential Information which the
Employee is legally required to be disclosed, provided that the Employee
exercise his best efforts to preserve the confidentiality of the Confidential
Information, including without limitation by cooperating with the Company and/or
a Consolidated Subsidiary to obtain an appropriate protective order or other
reliable assurance that confidential treatment will be accorded the Confidential
Information by such tribunal. On the Date of Termination, the Employee shall
promptly deliver to the Company all copies of documents or other records
(including without limitation electronic records) containing any Confidential
Information that is in his possession or under his control, and shall retain no
written or electronic record of any Confidential Information.

                  (b) NON-SOLICITATION. During the three year period next
following the Date of Termination, the Employee shall not directly or indirectly
solicit, encourage, or induce any person while employed by the Company or any
Consolidated Subsidiary to (i) leave the Company or any Consolidated Subsidiary,
(ii) cease his or her employment with the Company or any Consolidated Subsidiary
or (iii) accept employment with another entity or person.

         The provisions of this Section 10 shall survive any termination of the
Employee's employment and any termination of this Agreement.

         11.  NO ASSIGNMENTS.

                  (a) This Agreement is personal to each of the parties hereto,
and neither party may assign or delegate any of its rights or obligations
hereunder without first obtaining the written consent of the other party;
provided, however, that the Company shall require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise) by
an assumption agreement in form and substance satisfactory to the Employee, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the

                                       10
<PAGE>   48

Company would be required to perform it if no such succession or assignment had
taken place. Failure of the Company to obtain such an assumption agreement prior
to the effectiveness of any such succession or assignment shall be a breach of
this Agreement and shall entitle the Employee to compensation and benefits from
the Company in the same amount and on the same terms as provided for an
Involuntary Termination under Section 7 hereof. For purposes of implementing the
provisions of this Section 11(a), the date on which any such succession becomes
effective shall be deemed the Date of Termination.

                  (b) This Agreement and all rights of the Employee hereunder
shall inure to the benefit of and be enforceable by the Employee's personal and
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

         12. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, to the Company at its home
office, to the attention of the Board of Directors with a copy to the Secretary
of the Company, or, if to the Employee, to such home or other address as the
Employee has most recently provided in writing to the Company.

         13. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.

         14. HEADINGS. The headings used in this Agreement are included solely
for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.

         15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

         16. REINSTATEMENT OF PRIOR AGREEMENT. Notwithstanding anything
contained in this Agreement to the contrary, the parties hereto agree that in
the event a Change in Control occurs within one year from the date of this
Agreement (not the Effective Date), then in that event, the Prior Agreement
shall be reinstated and this Agreement shall become void ab initio.

         17. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.

         18. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement (other than relating to the enforcement of the
provisions of Section 10) shall be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.

         19. EQUITABLE AND OTHER JUDICIAL RELIEF. In the event of an actual or
threatened breach by the Employee of any of the provisions of Section 10, the
Company shall be entitled to equitable relief in the form of an injunction from
a court of competent jurisdiction and such other equitable and legal relief as
such court deems appropriate under the circumstances. The parties

                                       11
<PAGE>   49

agree that the Company shall not be required to post any bond in connection with
the grant or issuance of an injunction (preliminary, temporary and/or permanent)
by a court of competent jurisdiction, and if a bond is nevertheless required,
the parties agree that it shall be in a nominal amount. The parties further
agree that in the event of a breach by the Employee of any of the provisions of
Section 10, the Company will suffer irreparable damage and its remedy at law
against the Employee is inadequate to compensate it for such damage.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

             THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.

Attest:                    Charter One Financial, Inc.

/s/ Robert J. Vana         /s/ Charles John Koch
---------------------      ---------------------------
Secretary                  By: Charles John Koch
                           Its: President & CEO

                           Employee

                           /s/ Mark D. Grossi
                           ----------------------------
                           Mark D. Grossi

                                       12
<PAGE>   50
                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT
                              --------------------

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of this 16th day of March, 2000 (but effective as of August 1, 1999), by and
between Charter One Financial, Inc. (the "Company") and Robert J. Vana (the
"Employee").

         WHEREAS, the Employee serves as Senior Vice President, Chief Corporate
Counsel and Corporate Secretary of the Company and as Senior Vice President,
Chief Corporate Counsel and Corporate Secretary of the Company's wholly-owned
subsidiary, Charter One Bank, F.S.B. (the "Bank");

         WHEREAS, the Employee has an existing employment agreement entered into
as of October 31, 1995 and amended as of July 29, 1998 (the "Prior Employment
Agreement") which he is willing to terminate in consideration of this Agreement
becoming effective;

         WHEREAS, the board of directors of the Company (the "Board of
Directors") believes it is in the best interests of the Company and its
subsidiaries for the Company to enter into this Agreement with the Employee in
order to assure continuity of management of the Company and its subsidiaries;
and

         WHEREAS, the Board of Directors has approved and authorized the
execution of this Agreement with the Employee;

         NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:

         1.  DEFINITIONS.

                  (a) The term "Change in Control" means (1) an acquisition of
securities of the Company or the Bank that is determined by the Board of
Directors to constitute an acquisition of control of the Company or the Bank
within the meaning of the Change in Bank Control Act, 12 U.S.C. Section 1817(j),
and applicable regulations thereunder; (2) an event that would be required to be
reported in response to Item 1 of the current report on Form 8-K, as in effect
on the Effective Date, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"); (3) any person (as the term is used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly
of securities of the Company or the Bank representing 25% or more of the
combined voting power of the Company's or the Bank's outstanding securities; (4)
individuals who are members of the Board of Directors on the Effective Date (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the
Effective Date whose election was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board, or whose nomination for
election by the Company's stockholders was approved by the nominating committee
serving under an Incumbent

                                       1
<PAGE>   51

Board, shall be considered a member of the Incumbent Board; or (5)approval by
the Company's stockholders of a plan of reorganization, merger or consolidation
of the Company, sale of all or substantially all of the assets of the Company, a
similar transaction in which the Company is not the resulting entity, or a
transaction at the completion of which the former stockholders of the acquired
corporation become the holders of more than 40% of the outstanding common stock
of the Company and the Company is the resulting entity of such transaction;
provided that the term "change in control" shall not include an acquisition of
securities by an employee benefit plan of the Bank or the Company. In the
application of regulations under the Change in Bank Control Act, determinations
to be made by the applicable federal banking regulator shall be made by the
Board of Directors.

                  (b) The term "Consolidated Subsidiaries" means any subsidiary
or subsidiaries of the Company (or its successors) that are part of the
consolidated group of the Company (or its successors) for federal income tax
reporting.

                  (c) The term "Date of Termination" means the date upon which
the Employee's employment with the Company or the Bank or both ceases, as
specified in a notice of termination pursuant to Section 8 of this Agreement.

                  (d) The term "Effective Date" means August 1, 1999.

                  (e) The term "Involuntarily Termination" means the termination
of the employment of Employee (i) by either the Company or the Bank or both
without his express written consent; or (ii) by the Employee by reason of a
material diminution of or interference with his duties, responsibilities or
benefits, including (without limitation) any of the following actions unless
consented to in writing by the Employee: (1) a requirement that the Employee be
based at any place other than Cleveland, Ohio, or within 50 miles thereof,
except for reasonable travel on Company or Bank business; (2) a material
demotion of the Employee; (3) a material reduction in the number or seniority of
personnel reporting to the Employee or a material reduction in the frequency
with which, or in the nature of the matters with respect to which such personnel
are to report to the Employee, other than as part of a Bank- or Company-wide
reduction in staff; (4) a reduction in the Employee's salary or a material
adverse change in the Employee's perquisites, benefits, contingent benefits or
vacation, other than prior to a Change in Control as part of an overall program
applied uniformly and with equitable effect to all members of the senior
management of the Bank or the Company; (5) a material permanent increase in the
required hours of work or the workload of the Employee; or (6) the failure of
the Company or the Bank (or their respective successors) to maintain the
Employee's title, status, duties and functions as Senior Vice President, Chief
Corporate Counsel and Corporate Secretary of the Company and Senior Vice
President, Chief Corporate Counsel and Corporate Secretary of the Bank
(including their respective successors) reporting directly and only to the Chief
Executive Officer of the Company and the Bank (or the Chief Executive Officer of
their respective successors). The term "Involuntary Termination" does not
include Termination for Cause or termination of employment due to death or
permanent disability pursuant to Section 7(g) of this Agreement, or suspension
or temporary or permanent prohibition from participation in the

                                       2
<PAGE>   52

conduct of the affairs of a depository institution under Section 8 of the
Federal Deposit Insurance Act.

                  (f) The terms "Termination for Cause" and "Terminated for
Cause" mean termination of the employment of the Employee with either the
Company or the Bank, as the case may be, because of the Employee's dishonesty,
incompetence, willful misconduct, breach of a fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (excluding violations which do not have an adverse
affect on the Company or the Bank) or final cease-and-desist order, or (except
as provided below) material breach of any provision of this Agreement. No act or
failure to act by the Employee shall be considered willful unless the Employee
acted or failed to act with an absence of good faith and without a reasonable
belief that his action or failure to act was in the best interest of the
Company. The Employee shall not be deemed to have been Terminated for Cause
unless and until there shall have been delivered to the Employee a copy of a
resolution, duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board of Directors at a meeting of the Board duly
called and held for such purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with the Employee's counsel, to be heard
before the Board), stating that in the good faith opinion of the Board of
Directors the Employee has engaged in conduct described in the preceding
sentence and specifying the particulars thereof in detail.

         2. TERM; TERMINATION OF PRIOR EMPLOYMENT AGREEMENT. The term of this
Agreement shall be a period of five years commencing on the Effective Date,
subject to earlier termination as provided herein. On each anniversary of this
Agreement the term shall be extended for a period of one year in addition to the
then-remaining term, provided that the Company has not given notice to the
Employee in writing at least 90 days prior to such anniversary that the term of
this Agreement shall not be extended further, and provided further that the
Employee has not received an unsatisfactory performance review by either the
Board of Directors or the board of directors of the Bank. The Employee's Prior
Employment Agreement shall terminate immediately prior to the Effective Date
subject to reinstatement as provided in Section 16 below.

         3. EMPLOYMENT. The Employee is employed as Senior Vice President, Chief
Corporate Counsel and Corporate Secretary of the Company and as Senior Vice
President, Chief Corporate Counsel and Corporate Secretary of the Bank. As such,
the Employee shall render administrative and management services as are
customarily performed by persons situated in similar executive capacities, and
shall have such other powers and duties as the Board of Directors or the board
of directors of the Bank may prescribe from time to time. The Employee shall
also render services to any subsidiary or subsidiaries of the Company or the
Bank as requested by the Company or the Bank from time to time consistent with
his executive position. The Employee shall devote his best efforts and
reasonable time and attention to the business and affairs of the Company and the
Bank to the extent necessary to discharge his responsibilities hereunder. The
Employee may (i) serve on corporate or charitable boards or committees, and (ii)
manage personal investments, so long as such activities do not interfere
materially with performance of his responsibilities hereunder.

                                       3
<PAGE>   53

         4.  CASH COMPENSATION.

                  (a) SALARY. The Company agrees to pay the Employee during the
term of this Agreement a base salary (the "Company Salary") the annualized
amount of which shall be not less than the annualized aggregate amount of the
Employee's base salary from the Company and any Consolidated Subsidiaries in
effect at the Effective Date; provided that any amounts of salary actually paid
to the Employee by any Consolidated Subsidiaries shall reduce the amount to be
paid by the Company to the Employee. The Company Salary shall be paid no less
frequently than monthly and shall be subject to customary tax withholding. The
amount of the Employee's Company Salary shall be increased (but shall not be
decreased other than prior to a Change in Control as part of an overall program
applied uniformly and with equitable effect to all members of senior management
of the Company or the Bank) from time to time in accordance with the amounts of
salary approved by the Board of Directors or the board of directors of any of
the Consolidated Subsidiaries after the Effective Date.

                  (b) BONUSES. The Employee shall be entitled to participate in
an equitable manner with all other executive officers of the Company and the
Bank in such performance-based and discretionary bonuses, if any, as are
authorized and declared by the Board of Directors for executive officers of the
Company and by the board of directors of the Bank for executive officers of the
Bank.

                  (c) EXPENSES. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in performing
services under this Agreement in accordance with the policies and procedures
applicable to the executive officers of the Company and the Bank, provided that
the Employee accounts for such expenses as required under such policies and
procedures.

                  (d) DEFERRAL OF NON-DEDUCTIBLE COMPENSATION. In the event that
the Employee's aggregate compensation (including compensatory benefits which are
deemed remuneration for purposes of Section 162(m) of the Internal Revenue Code
of 1986 as amended (the "Code")) from the Company and the Consolidated
Subsidiaries for any calendar year exceeds the greater of (i) $1,000,000 or (ii)
the maximum amount of compensation deductible by the Company or any of the
Consolidated Subsidiaries in any calendar year under Section 162(m) of the Code
(the "maximum allowable amount"), then any such amount in excess of the maximum
allowable amount shall be mandatorily deferred with interest thereon at 8% per
annum, compounded annually, to a calendar year such that the amount to be paid
to the Employee in such calendar year, including deferred amounts and interest
thereon, does not exceed the maximum allowable amount. Subject to the foregoing,
deferred amounts including interest thereon shall be payable at the earliest
time permissible. All unpaid deferred amounts shall be paid to the Employee not
later than his Date of Termination unless his Date of Termination is on a
December 31st, in which case, the unpaid deferred amounts shall be paid to the
Employee on the first business day of the next succeeding calendar year. The
provisions of this subsection shall survive any termination of the Employee's
employment and any termination of this Agreement.

                                       4
<PAGE>   54

         5. BENEFITS.

                  (a) PARTICIPATION IN BENEFIT PLANS. The Employee shall be
entitled to participate, to the same extent as executive officers of the Company
and the Bank generally, in all plans of the Company and the Bank relating to
pension, retirement, thrift, profit-sharing, savings, group or other life
insurance, hospitalization, medical and dental coverage, travel and accident
insurance, education, cash bonuses, and other retirement or employee benefits or
combinations thereof. In addition, the Employee shall be entitled to be
considered for benefits under all of the stock and stock option related plans in
which the Company's or the Bank's executive officers are eligible or become
eligible to participate.

                  (b) FRINGE BENEFITS. The Employee shall be eligible to
participate in, and receive benefits under, any other fringe benefit plans or
perquisites which are or may become generally available to the Company's or the
Bank's executive officers, including but not limited to supplemental retirement,
incentive compensation, supplemental medical or life insurance plans, company
cars, club dues, physical examinations, financial planning and tax preparation
services.

         6. VACATIONS; LEAVE. The Employee shall be entitled to annual paid
vacation in accordance with the policies established by the Board of Directors
and the board of directors of the Bank for executive officers, in no event less
than four weeks per year, and to voluntary leaves of absence, with or without
pay, from time to time at such times and upon such conditions as the Board of
Directors may determine in its discretion.

         7.  TERMINATION OF EMPLOYMENT.

                  (a) INVOLUNTARY TERMINATION. If the Employee experiences an
Involuntary Termination, such termination of employment shall be subject to the
Company's obligations under this Section 7. In the event of the Involuntary
Termination of the Employee, if the Employee has offered to continue to provide
the services contemplated by and on the terms provided in this Agreement and
such offer has been declined, subject to Section 7(b) of this Agreement, the
Company shall, during the lesser period of the remaining term of this Agreement
or three years following the Date of Termination (the "Liquidated Damage
Period"), as liquidated damages (i) pay to the Employee monthly one-twelfth of
the Company Salary at the annual rate in effect immediately prior to the Date of
Termination and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Employee, based on the average amounts of such
compensation earned by the Employee from the Company and the Bank for the two
full fiscal years preceding the Date of Termination; and (ii) maintain
substantially the same group life insurance, hospitalization, medical, dental,
prescription drug and other health benefits, and long-term disability insurance
(if any) for the benefit of the Employee and his dependents and beneficiaries
who would have been eligible for such benefits if the Employee had not suffered
Involuntary Termination and on terms substantially as favorable to the Employee
including amounts of coverage and deductibles and other costs to him in effect
immediately prior to such Involuntary Termination (the "Employee's Health
Coverage").

                                       5
<PAGE>   55

                  (b) REDUCTION OF THE COMPANY'S OBLIGATIONS UNDER SECTION 7(a).

                           (1) In the event that the Employee becomes entitled
to liquidated damages pursuant to Section 7(a), (i) the Company's obligation
thereunder with respect to cash damages shall be reduced by the amount of the
Employee's cash income, if any, earned from providing personal services during
the Liquidated Damage Period; and (ii) the Company's obligation to maintain
Health Coverage shall be reduced to the extent, if any, that the Employee
receives such benefits, on no less favorable terms, from another employer during
the Liquidated Damage Period. For purposes of this Section 7(b), the term "cash
income" shall include amounts of salary, wages, bonuses, incentive compensation
and fees paid to the Employee in cash but shall not include shares of stock,
stock options, stock appreciation rights or other earned income not paid to the
Employee in cash. To the extent the provisions of this Section 7(b)(1) are
applicable and an overpayment has been made to the Employee as of the expiration
of Liquidated Damage Period, the Employee shall reimburse the Company in an
amount equal to the after tax benefit realized by the Employee from such
overpayment (i.e. amount realized net of all federal, state, local, employment
and medicare taxes). In making the reimbursement calculation it shall be
presumed that the Employee is subject to the highest marginal federal and state
income tax rates.

                           (2) The Employee agrees that in the event he becomes
entitled to liquidated damages pursuant to Section 7(a), throughout the
Liquidated Damage Period, he shall promptly inform the Company of the nature and
amounts of cash income and the type of health benefits and coverage which he
earns or receives from providing personal services, and shall provide such
documentation of such cash income and such health benefits and coverage as the
Company may request. In the event of changes to such cash income or such health
benefits or coverage from time to time, the Employee shall inform the Company of
such changes, in each case within five days after the change occurs, and shall
provide such documentation concerning the change as the Company may request.

                  (c) CHANGE IN CONTROL; CUT BACK; AND TAX GROSS UP. In the
event that the Employee experiences an Involuntary Termination within the 12
months preceding, at the time of, or within 24 months following a Change in
Control, in addition to the Company's obligations under Section 7(a) of this
Agreement, the Company shall pay to the Employee in cash, within 30 days after
the later of the date of such Change in Control or the Date of Termination, an
amount equal to 299% of the Employee's "base amount" as determined under Section
280G of the Code, less the acceleration and lapse value of options granted to
the Employee by the Company prior to January 1, 1999 that are taken into account
in the determination of "parachute payments" under 280G(b)(2) of the Code by
virtue of vesting acceleration or deemed vesting acceleration in connection with
such Change in Control. Notwithstanding the foregoing, for purposes of this
paragraph the Employee shall not be deemed to have experienced an Involuntary
Termination if he is requested to continue his employment under this Agreement
for a period of up to 6 months after a Change in Control and he elects to
terminate his employment at the time of or within 6 months after a Change in
Control solely by reason of an event described in Section 1(e)(ii)(6) of this
Agreement, in which case he shall not be entitled to the Change in Control
payment set forth in this paragraph. In the event the Employee is requested in
connection with or at the time of a Change in Control to continue employment for
an interim period and he shall die while employed during such interim period,
then his estate, or such person as the Employee may have

                                       6
<PAGE>   56

previously designated in writing, shall be entitled to the full Change in
Control payment described in this paragraph in lieu of (and not in addition to)
the payment of the Company Salary for 180 days pursuant to Section 7(f)(i)(x)
below.

                  In the event that any payments, distributions or benefits
provided or to be provided to the Employee, whether pursuant to this Agreement
or from other plans or arrangements maintained by the Company or any of the
Consolidated Subsidiaries (excluding the Adjusted Gross Up Payment and
Additional Gross Up Payment (as such terms are hereinafter defined))
(collectively, the "Payment") would be subject to excise tax under Section 4999
of the Code (such excise tax and any penalties and interest collectively, the
"Penalty Tax"), the Company shall pay to the Employee in cash an additional
amount equal to the Adjusted Gross Up Payment. The "Adjusted Gross Up Payment"
shall be an amount such that after payment by the Employee of all federal,
state, local, employment and medicare taxes thereon (and any penalties and
interest with respect thereto), the Employee retains on an after tax basis a
portion of such amount equal to the aggregate of 80% of the Penalty Tax imposed
upon the Payment and 100% of the Penalty Tax imposed upon the Adjusted Gross Up
Payment.

                  For purposes of determining the amount of the Adjusted Gross
Up Payment, the value of any non-cash benefits and deferred payments or benefits
subject to the Penalty Tax shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G(d)(3) and (4) of the
Code. In the event that, after the Adjusted Gross Up Payment is made, the
Employee becomes entitled to receive a refund of any portion of the Penalty Tax,
the Employee shall promptly pay to the Company 80% of such Penalty Tax refund
attributable to the Payment (together with 80% of any interest paid or credited
thereon by the Internal Revenue Service) and 100% of the Penalty Tax refund
attributable to the Adjusted Gross Up Payment (together with 100% of any
interest paid or credited thereon by the Internal Revenue Service).

                  As a result of the uncertainty regarding the application of
Section 4999 of the Code, it is possible that the Internal Revenue Service may
assert that the Penalty Tax due is in excess of the amount of the anticipated
Penalty Tax used in calculating the Adjusted Gross Up Payment (such excess
amount is hereafter referred to as the "Underpayment"). In such event, the
Company shall pay to the Employee, in immediately available funds, at the time
the Underpayment is assessed or otherwise determined, an additional amount equal
to the Additional Gross Up Payment. The "Additional Gross Up Payment" shall be
an amount such that after payment by the Employee of all federal, state, local,
employment and medicare taxes thereon (and any penalties and interest with
respect thereto), the Employee retains on an after tax basis a portion of such
amount equal to the aggregate of (i) 80% of the portion of the Underpayment
attributable to the Payment, (ii) 100% of the portion of the Underpayment
attributable to the Adjusted Gross Up Payment and (iii) 100% of the Penalty Tax
imposed on the Additional Gross Up Payment.

                  (d) TERMINATION FOR CAUSE. In the event of Termination for
Cause, the Company shall have no further obligation to the Employee under this
Agreement after the Date of Termination other than deferred amounts under
Section 4(d).

                                       7
<PAGE>   57

                  (e) VOLUNTARY TERMINATION. The Employee may terminate his
employment voluntarily at any time by a notice pursuant to Section 8 of this
Agreement. In the event that the Employee voluntarily terminates his employment
other than by reason of any of the actions that constitute Involuntary
Termination under Section 1(e)(ii) of this Agreement ("Voluntary Termination"),
the Company shall be obligated to the Employee for the amount of his Company
Salary and benefits only through the Date of Termination, at the time such
payments are due, and the Company shall have no further obligation to the
Employee under this Agreement except as provided in Section 4(d).

                  (f) DEATH. In the event of the death of the Employee while
employed under this Agreement and prior to any termination of employment, the
Company shall pay to the Employee's estate, or such person as the Employee may
have previously designated in writing, (i) the Company Salary which was not
previously paid to the Employee and, either (x) the Company Salary which he
would have earned if he had continued to be employed under this Agreement
through the 180th day after the date on which the Employee died or (y) the
Change in Control payment set forth in the first paragraph of Section 7(c),
whichever is applicable; (ii) the amounts of any benefits or awards which,
pursuant to the terms of any applicable plan or plans, were earned with respect
to the fiscal year in which the Employee died and which the Employee would have
been entitled to receive if he had continued to be employed, and the amount of
any bonus or incentive compensation for such fiscal year which the Employee
would have been entitled to receive if he had continued to be employed,
pro-rated in accordance with the portion of the fiscal year prior to his death,
provided that such amounts shall be payable when and as ordinarily payable under
the applicable plans; and (iii) the unpaid deferred amounts under Section 4(d).

                  (g) PERMANENT DISABILITY. For purposes of this Agreement, the
term "permanently disabled" means that the Employee has a mental or physical
infirmity which permanently impairs his ability to perform substantially his
duties and responsibilities under this Agreement and which results in (i)
eligibility of the Employee under the long-term disability plan of the Company
or the Bank, if any; or (ii) inability of the Employee to perform substantially
his duties and responsibilities under this Agreement for a period of 180
consecutive days. Either the Company or the Bank or both may terminate the
employment of the Employee after having established that the Employee is
permanently disabled.

                  (h) REGULATORY ACTION. Notwithstanding any other provisions of
this Agreement:

                           (1) If the Employee is removed and/or permanently
prohibited from participating in the conduct of the affairs of a depository
institution by an order issued under Section 8(e)(4) or (g)(1) of the Federal
Deposit Insurance Act ("FDIA"), 12 U.S.C. Section 1818(e)(4) and (g)(1), all
obligations of the Company under this Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected;.

                           (2) If the Bank is in default (as defined in Section
3(x)(1) of the FDIA), all obligations of the Company under this Agreement shall
terminate as of the date of default, but this provision shall not affect any
vested rights of the contracting parties; and

                                       8
<PAGE>   58

                           (3) All obligations of the Company under this
Agreement shall be terminated, except to the extent determined that continuation
of this Agreement is necessary for the continued operation of the Bank: (i)by
the Director of the Office of Thrift Supervision (the "Director") or his or her
designee, at the time the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) of the
FDIA; or (ii)by the Director or his or her designee, at the time the Director or
his or her designee approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by the Director to be in an
unsafe or unsound condition. Any rights of the parties that have already vested,
however, shall not be affected by any such action.

         8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Employee during the term of this
Agreement, the Company or the Bank, or both, shall deliver to the Employee a
written notice of termination, stating whether such termination constitutes
Termination for Cause or Involuntary Termination, setting forth in reasonable
detail the facts and circumstances that are the basis for the termination, and
specifying the date upon which employment shall terminate, which date shall be
at least 30 days after the date upon which the notice is delivered, except in
the case of Termination for Cause. In the event that the Employee determines in
good faith that he has experienced an Involuntary Termination of his employment,
he shall send a written notice to the Company stating the circumstances that
constitute such Involuntary Termination and the date upon which his employment
shall have ceased due to such Involuntary Termination. In the event that the
Employee desires to effect a Voluntary Termination, he shall deliver a written
notice to the Company, stating the date upon which employment shall terminate,
which date shall be at least 30 days after the date upon which the notice is
delivered, unless the parties agree to a date sooner.

         9. ATTORNEYS FEES. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by the
Employee as a result of (i) the Employee's contesting or disputing any
termination of employment, or (ii) the Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company (or its successors) or the Consolidated
Subsidiaries under which the Employee is or may be entitled to receive benefits;
provided that the Company's obligation to pay such fees and expenses is subject
to the Employee's prevailing with respect to the matters in dispute in any
action initiated by the Employee or the Employee's having been determined to
have acted reasonably and in good faith with respect to any action initiated by
the Company or the Bank.

         10.  NON-DISCLOSURE AND NON-SOLICITATION.

                  (a) NON-DISCLOSURE. The Employee acknowledges that he has
acquired, and will continue to acquire while employed by the Company and/or any
Consolidated Subsidiary, special knowledge of the business, affairs, strategies
and plans of the Company and the Consolidated Subsidiaries which has not been
disclosed to the public and which constitutes

                                       9
<PAGE>   59

confidential and proprietary business information owned by the Company and the
Consolidated Subsidiaries, including but not limited to, information about the
customers, customer lists, software, data, formulae, processes, inventions,
trade secrets, marketing information and plans, and business strategies of the
Company and the Consolidated Subsidiaries, and other information about the
products and services offered or developed or planned to be offered or developed
by the Company and/or the Consolidated Subsidiaries ("Confidential
Information"). The Employee agrees that, without the prior written consent of
the Company, he shall not, during the term of his employment or at any time
thereafter, in any manner directly or indirectly disclose any Confidential
Information to any person or entity other than the Company and the Consolidated
Subsidiaries. Notwithstanding the foregoing, if the Employee is requested or
required (including but not limited to by oral questions, interrogatories,
requests for information or documents in legal proceeding, subpoena, civil
investigative demand or other similar process) to disclose any Confidential
Information the Employee shall provide the Company with prompt written notice of
any such request or requirement so that the Company and/or a Consolidated
Subsidiary may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Section 10(a). If, in the absence of a
protective order or other remedy or the receipt of a waiver from the Company,
the Employee is nonetheless legally compelled to disclose Confidential
Information to any tribunal or else stand liable for contempt or suffer other
censure or penalty, the Employee may, without liability hereunder, disclose to
such tribunal only that portion of the Confidential Information which the
Employee is legally required to be disclosed, provided that the Employee
exercise his best efforts to preserve the confidentiality of the Confidential
Information, including without limitation by cooperating with the Company and/or
a Consolidated Subsidiary to obtain an appropriate protective order or other
reliable assurance that confidential treatment will be accorded the Confidential
Information by such tribunal. On the Date of Termination, the Employee shall
promptly deliver to the Company all copies of documents or other records
(including without limitation electronic records) containing any Confidential
Information that is in his possession or under his control, and shall retain no
written or electronic record of any Confidential Information.

                  (b) NON-SOLICITATION. During the three year period next
following the Date of Termination, the Employee shall not directly or indirectly
solicit, encourage, or induce any person while employed by the Company or any
Consolidated Subsidiary to (i) leave the Company or any Consolidated Subsidiary,
(ii) cease his or her employment with the Company or any Consolidated Subsidiary
or (iii) accept employment with another entity or person.

         The provisions of this Section 10 shall survive any termination of the
Employee's employment and any termination of this Agreement.

         11.  NO ASSIGNMENTS.

                  (a) This Agreement is personal to each of the parties hereto,
and neither party may assign or delegate any of its rights or obligations
hereunder without first obtaining the written consent of the other party;
provided, however, that the Company shall require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise) by
an assumption agreement in form and substance satisfactory to the Employee, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the

                                       10
<PAGE>   60

Company would be required to perform it if no such succession or assignment had
taken place. Failure of the Company to obtain such an assumption agreement prior
to the effectiveness of any such succession or assignment shall be a breach of
this Agreement and shall entitle the Employee to compensation and benefits from
the Company in the same amount and on the same terms as provided for an
Involuntary Termination under Section 7 hereof. For purposes of implementing the
provisions of this Section 11(a), the date on which any such succession becomes
effective shall be deemed the Date of Termination.

                  (b) This Agreement and all rights of the Employee hereunder
shall inure to the benefit of and be enforceable by the Employee's personal and
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

         12. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, to the Company at its home
office, to the attention of the Board of Directors with a copy to the Secretary
of the Company, or, if to the Employee, to such home or other address as the
Employee has most recently provided in writing to the Company.

         13. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.

         14. HEADINGS. The headings used in this Agreement are included solely
for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.

         15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

         16. REINSTATEMENT OF PRIOR AGREEMENT. Notwithstanding anything
contained in this Agreement to the contrary, the parties hereto agree that in
the event a Change in Control occurs within one year from the date of this
Agreement (not the Effective Date), then in that event, the Prior Agreement
shall be reinstated and this Agreement shall become VOID AB INITIO.

         17. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.

         18. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement (other than relating to the enforcement of the
provisions of Section 10) shall be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.

         19. EQUITABLE AND OTHER JUDICIAL RELIEF. In the event of an actual or
threatened breach by the Employee of any of the provisions of Section 10, the
Company shall be entitled to equitable relief in the form of an injunction from
a court of competent jurisdiction and such other equitable and legal relief as
such court deems appropriate under the circumstances. The parties

                                       11
<PAGE>   61

agree that the Company shall not be required to post any bond in connection with
the grant or issuance of an injunction (preliminary, temporary and/or permanent)
by a court of competent jurisdiction, and if a bond is nevertheless required,
the parties agree that it shall be in a nominal amount. The parties further
agree that in the event of a breach by the Employee of any of the provisions of
Section 10, the Company will suffer irreparable damage and its remedy at law
against the Employee is inadequate to compensate it for such damage.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

         THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.

Attest:                    Charter One Financial, Inc.

/s/ Richard W. Neu         /s/ Charles John Koch
---------------------      ---------------------------
Executive Vice President   By: Charles John Koch
                           Its: President & CEO

                           Employee

                           /s/ Robert J. Vana
                           ----------------------------
                           Robert J. Vana

                                       12

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