Document:

Exhibit 10.20

                            BANK EMPLOYMENT AGREEMENT

            This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as
of April 22, 2002, by and between CARVER FEDERAL SAVINGS BANK, a savings bank
organized and operating under the federal laws of the United States and having
an office at 75 West 125th Street, New York, New York 10027 ("Bank") and
Catherine A. Papayiannis, an individual residing at 204 Battery Avenue, Brooklyn
New York 11209 ("Executive").

                                   WITNESSETH:

            WHEREAS, for purposes of securing the Executive's services for the
Bank, the Board of Directors of the Bank has approved and authorized the
execution of

            this Agreement with the Executive;

            WHEREAS, Executive is willing to serve the Bank on the terms and
conditions hereinafter set forth;

            NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions hereinafter set forth, the Bank and Executive hereby
agree as follows:

            Section 1. Employment.

            The Bank agrees to employ Executive and Executive hereby agrees to
such employment, during the period and upon the terms and conditions set forth
in this Agreement.

            Section 2. Employment Period.

            (a) The terms and conditions of this Agreement shall be and remain
in effect during the period of employment established under this Section 2
("Employment Period") unless otherwise specified in this Agreement. The
Employment Period shall be for an initial term of two years beginning on June 3,
2002 (the "Effective Date") and ending on the second anniversary date of this
Agreement, plus such extensions, if any, as are provided pursuant to Section
2(b). The President and Chief Executive Officer of the Bank shall review the
Executive's performance of services under this Agreement on an annual basis.

            (b) Prior to the first anniversary of the date of this Agreement and
on each anniversary date thereafter (each, an "Anniversary Date"), the President
and Chief Executive Officer shall advise the Board as to the Executive's
performance of services hereunder and the Board shall review the terms of this
Agreement and such advice and may, in the absence of objection from the
Executive, approve a one-year extension of the Employment Agreement. In such
event, the Employment Agreement shall be extended to the second anniversary of
the relevant Anniversary Date.

            (c) Nothing in this Agreement shall be deemed to prohibit the
President and Chief Executive Officer at any time from terminating Executive's
employment during the Employment Period with or without prior notice for any
reason; provided, however, that the

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relative rights and obligations of the Bank and Executive in the event of any
such termination shall be determined under this Agreement.

            Section 3. Duties.

            Executive shall serve as Executive Vice President and Chief
Operating Officer of the Bank, having such power, authority and responsibility,
and performing such duties as are reasonably prescribed by the President and
Chief Executive Officer. Executive shall devote her full business time and
attention (other than during weekends, holidays, approved vacation periods, and
periods of illness or approved leaves of absence) to the business and affairs of
the Bank and shall use her best efforts to advance the interests of the Bank.

            Section 4. Base Salary.

            In consideration for the services to be rendered by Executive
hereunder, the Bank shall pay to her a base salary at an initial annual rate of
Two Hundred and Ten Thousand Dollars ($210,000.00), payable in approximately
equal installments in accordance with the Bank's customary payroll practices for
senior officers. Increases in annual base salary will be considered and
discussed with the Executive upon annual assessment of performance.

            Section 5. Incentive Compensation.

            (a) Upon the Effective Date of this Agreement, the Executive shall
be granted incentive stock options under the Bank's 1995 Stock Option Plan to
purchase up to Five Thousand (5,000) shares of the Bank's common stock, par
value $.01 per share ("Options"), at an exercise price equal to the "Market
Value" (as such term is defined in the 1995 Stock Option Plan) of a share of
Carver Bancorp, Inc.'s common stock on the date of grant, which shall be vested
33 1/3% on the first anniversary date of this Agreement, 66 2/3% on the second
anniversary date of this Agreement and fully vested on the third anniversary
date of this Agreement, so long as the Executive is employed by the Bank on each
such anniversary on which vesting occurs. The foregoing grant of Options to the
Executive (and all rights and privileges relating to such Options) shall be
memorialized in a written stock option agreement to be entered into by and
between the Carver Bancorp, Inc. and the Executive which shall be governed by,
and incorporate by reference, the terms and provisions of the Carver Bancorp,
Inc.'s 1995 Stock Option Plan and the terms of this Agreement, as applicable.

            (b) The Executive shall also be granted annual incentive stock
options under the Bank's 1995 Stock Option Plan in the amount of (i) Ten
Thousand (10,000) shares on the Effective Date of this Agreement, which shall be
vested 33 1/3% on the first anniversary date of this Agreement, 66 2/3% on the
second anniversary date of this Agreement and fully vested on the third
anniversary date of this Agreement, so long as the Executive is employed by the
Bank on each such anniversary on which vesting occurs and (ii) Ten Thousand
(10,000) shares on the first anniversary of the Effective Date of this
Agreement, which shall be vested 33 1/3% on the second anniversary date of this
Agreement, 66 2/3% on the third anniversary date of this Agreement and fully
vested on the fourth anniversary date of this Agreement, so long as the
Executive is employed by the Bank on each such anniversary on which vesting
occurs. The foregoing grants of Options to the Executive (and all rights and
privileges relating to such Options) shall be memorialized in a written stock
option agreement to be entered into by and between the Carver Bancorp, Inc. and
the Executive which shall be governed by, and incorporate by reference, the

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terms and provisions of the Carver Bancorp, Inc.'s 1995 Stock Option Plan and
the terms of this Agreement, as applicable.

            (c) The Executive shall also be eligible to receive an annual bonus
payment ("Incentive Compensation Award") in the amount of 30% of her annual base
salary for each full fiscal year while she is employed by the Bank during the
Employment Period. The Incentive Compensation Award shall be paid to the
Executive (less all applicable tax withholding) in a single sum cash payment as
soon as practicable after the last day of the fiscal year if Executive is
employed on the last day of such fiscal year. The Incentive Compensation Award
shall be based on the Executive's attainment of performance goals as determined
by the Board of Directors with the advice of the President and Chief Executive
Officer, as illustrated in Appendix A; provided, however, that the Executive
shall receive an Incentive Compensation Award of no less that 15% of her base
salary for the portion of the fiscal year beginning on the Effective Date
regardless of whether such performance goals are met for such period so long as
Executive is employed on the last day of such fiscal year, and such payment
shall be made as soon as practicable after the end of such fiscal year.

            (d) Upon the Effective Date of this Agreement, the Executive shall
also be granted a restricted stock award ("Restricted Stock Award") under the
Carver Bancorp, Inc.'s Management Recognition Plan with respect to Three
Thousand (3,000) shares of the Bank's common stock which shall be vested 33 1/3%
on the first anniversary date of this Agreement, 66 2/3% on the second
anniversary date of this Agreement and fully vested on the third anniversary
date of this Agreement, so long as the Executive is employed by the Bank on each
such anniversary on which vesting occurs. The Restricted Stock Award (and all
rights and privileges relating to such Award) shall be memorialized in a written
Restricted Stock Award Notice and Agreement to be entered into between Carver
Bancorp, Inc. and the Executive which shall be governed by, and incorporate by
reference, the terms and provisions of Carver Bancorp, Inc.'s Management
Recognition Plan and the terms of this Agreement, as applicable.

            (e) The Bank shall make a one-time payment to the Executive equal to
$50,000. Such amount shall be payable with her first paycheck. This payment is
expressly conditioned upon the Executive's agreement to repay this amount to the
Bank in the event that the Executive is terminated within twelve months of the
Executive's start date under circumstances described in section 10.

            (f) All amounts paid hereunder shall be subject to tax withholding
by the Bank as required by law.

            Section 6. Employee Benefit Plans and Programs.

            During the Employment Period, Executive shall be treated as an
employee of the Bank and shall be entitled to participate in and receive
benefits under the Carver Federal Savings Bank Employee Stock Ownership Plan and
the Bank's 401(k) Plan, any and all group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans, and any other employee benefit and compensation
plans (including, but not limited to, any incentive compensation plans or
programs, stock option and appreciation rights plans and restricted stock plans)
(collectively, "Benefit Plans") as may from time to time be maintained by, or
cover employees of, the Bank, in accordance with the terms and conditions of
such employee benefit plans and programs and compensation plans and programs and
consistent with the Bank's customary practices. The Executive shall be eligible
for 20 paid vacation days

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during each 12 month period, in accordance with the Bank's policies, and the
Bank and the Executive agree that the Executive shall use 13 of her vacation
days in July 2002.

            Section 7. Indemnification.

            (a) To the maximum extent permitted under Section 545.121 of
regulations issued by the Office of Thrift Supervision ("OTS") during the
Employment Period and for a period of six (6) years thereafter, the Bank shall
cause Executive to be covered by and named as an insured under any policy or
contract of insurance obtained by it to insure its directors and officers
against personal liability for acts or omissions in connection with service as
an officer or director of the Bank or service in other capacities at the request
of the Bank. The coverage provided to Executive pursuant to this Section 7 shall
be of the same scope and on the same terms and conditions as the coverage (if
any) provided to other officers or directors of the Bank.

            (b) To the maximum extent permitted under Section 545.121 of the
regulations issued by the OTS, during the Employment Period and for a period of
six (6) years thereafter, the Bank shall indemnify Executive against and hold
her harmless from any costs, liabilities, losses and exposures to the fullest
extent and on the most favorable terms and conditions that similar
indemnification is offered to any director or officer of the Bank or any
subsidiary or affiliate thereof.

            Section 8. Outside Activities.

            Executive may serve as a member of the boards of directors of such
business, community and charitable organizations as she may disclose to and as
may be approved by the President and Chief Executive Officer, which approval
shall not be unreasonably withheld or delayed; provided, however, that such
service shall not materially interfere with the performance of her duties under
this Agreement. Executive may also engage in personal business and investment
activities which do not materially interfere with the performance of her duties
hereunder; provided, however, that such activities are not prohibited under any
code of conduct or investment or securities trading policy established by the
Bank and generally applicable to all similarly situated executives. Executive
may also serve as an officer of Carver Bancorp, Inc., parent of the Bank, on
such terms and conditions as the Bank and Carver Bancorp, Inc. may mutually
agree upon, and such service shall not be deemed to materially interfere with
Executive's performance of her duties hereunder or otherwise result in a
material breach of this Agreement.

            Section 9. Working Facilities and Expenses.

            Executive's principal place of employment shall be at the Bank's
executive offices at the address first above written, or at such other location
as the Bank may designate. The Bank shall provide Executive at her principal
place of employment with a private office, secretarial services, reimbursement
or direct payment for business-related parking expenses, as required, in an
amount up to Two Hundred Dollars ($200.00) per month and other support services
and facilities suitable to her position with the Bank and necessary or
appropriate in connection with the performance of her assigned duties under this
Agreement. For purposes of fulfilling her duties hereunder, the Bank shall
provide the Executive with the use of a laptop computer for home use, cellular
telephone and reimbursement for telephone service, handheld internet device and
reimbursement for service and reimbursement for internet access for home use;
provided,

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however, that the Executive shall return any equipment to the Bank on
termination of her employment. The Bank shall reimburse Executive for her
ordinary and necessary business, travel and entertainment expenses incurred in
connection with the performance of her duties under this Agreement, in
accordance with its reimbursement policies.

            Section 10. Termination of Employment.

            Executive shall be entitled to the severance benefits described in
Section 11 hereof in the event that her employment with the Bank terminates
during the Employment Period under any of the following circumstances:

            (a)   the termination by the Bank of Executive's employment
                  hereunder for any reason other than Disability, as defined in
                  Section 12 hereof, Retirement, as defined in Section 13(d)
                  hereof, or Cause, as defined in Section 13(a) hereof;

            (b)   Executive's voluntary resignation from employment with the
                  Bank upon forty-five (45) days written notice given within six
                  full calendar months following one of the following events:

                        (A) the failure of the President and Chief Executive
                  Officer to recommend that the Board appoint or reappoint
                  Executive to the office of Chief Operating Officer of the Bank
                  or failure of the Board to make such appointment or
                  re-appointment;

                        (B) the Bank materially reduces the Executive's
                  functions, duties, or responsibilities prescribed in Section 3
                  of this Agreement, and the Executive gives thirty (30) days
                  written notice to the Bank specifying such material reduction,
                  unless, during such thirty (30) day period, the Bank restores
                  the functions, duties or responsibilities to the Executive; or

                        (C) the Bank materially breaches any term, condition or
                  covenant contained in this Agreement (including, without
                  limitation, any reduction of Executive's rate of base salary
                  in effect from time to time), and the Executive gives thirty
                  (30) days written notice to the Bank specifying such material
                  breach unless, during such thirty (30) day period, the Bank
                  cures such failure and, if the breach is a failure to make
                  payment, makes any payments due; or

                        (D) the relocation of Executive's principal place of
                  employment from its location as of the Effective Date such
                  that the Executive's commuting distance is more than fifty
                  (50) miles from her home at the address hereinabove written.

            Section 11. Severance Benefits.

            Upon the termination of Executive's employment with the Bank under
circumstances described in Section 10 of this Agreement, the Bank shall pay and
provide to Executive (or, in the event of her death, to her estate):

            (a) her earned but unpaid compensation (including, without
limitation, all items which constitute wages under Section 190.1 of the New York
Labor Law and the payment

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of which is not otherwise provided for under this Section 11) as of the date of
the termination of her employment with the Bank, such payment to be made at the
time and in the manner prescribed by law applicable to the payment of wages but
in no event later than thirty (30) days after termination of employment;

            (b) the benefits, if any, to which she is entitled as a former
employee under the Benefit Plans maintained for the benefit of the Bank's
officers and employees;

            (c) continued group life, health (including hospitalization, medical
and major medical), dental, accident and long term disability insurance benefits
and after taking into account the coverage provided by any subsequent employer,
if and to the extent necessary to provide coverage for Executive and her family
for a period of one year; and

            (d) within thirty (30) days following her termination of employment
with the Bank, a lump sum payment in an amount equal to one year's base salary
as in effect at that time; provided, however, that if the termination occurs
before the first anniversary of the Effective Date, such amount shall be reduced
by a portion of the $50,000 payment under section 5(e), which is $50,000
multiplied by a fraction, the numerator of which is twelve minus the number of
full months employed by the Bank and the denominator of which is 12;

            (e) if the termination occurs more than one year after the Effective
Date or occurs following a Change of Control, an amount equal to the Incentive
Compensation Award during any full fiscal years remaining in the term of the
Agreement, such payment to be made within thirty (30) days following Executive's
termination of employment;

            (f) if the termination occurs more than one year after the Effective
Date or occurs following a Change of Control, at the election of Executive made
within thirty (30) days following her termination of employment, upon the
surrender of options or appreciation rights issued to Executive under any stock
option and appreciation rights plan or program maintained by, or covering
employees of, the Bank, a lump sum payment in an amount equal to the product of:

                  (i) the excess of (A) the fair market value of a share of
            stock (as determined under the stock option plan under which it was
            granted) of the same class as the stock subject to the option or
            appreciation right on the date of termination of employment,
            determined as of the date of termination of employment, over (B) the
            exercise price per share for such option or appreciation right, as
            specified in or under the relevant plan or program; multiplied by

                  (ii) the number of shares with respect to which options or
            appreciation rights are being surrendered.

For purposes of section 11(f)(i), the term "exercise price" means the average of
the highest and lowest selling price per share on the date on which such options
or appreciation rights were granted (or, if none, the mean between the bid and
the ask price on such date). For purposes of this Section 11(f) and for purposes
of determining Executive's right following her termination of employment with
the Bank to exercise any options or appreciation rights not surrendered pursuant
hereto, Executive shall be deemed fully vested in all options and appreciation
rights under any stock option or appreciation rights plan or program maintained
by, or covering employees of, the Bank, even if Executive is not vested under
such plan or program; and

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            (g) if the termination occurs more than one year after the Effective
Date or occurs following a Change of Control, at the election of the Executive
made within thirty (30) days following Executive's termination of employment,
upon the surrender of any shares awarded to Executive under any restricted stock
plan maintained by, or covering employees of, the Bank or the Bank, a lump sum
payment in an amount equal to the product of:

                  (i) the fair market value of a share of stock (as determined
            under the plan under which it was granted) of the same class of
            stock granted under such plan on the date of termination of
            employment, determined as of the date of Executive's termination of
            employment; multiplied by

                  (ii) the number of shares which are being surrendered.

For purposes of this Section 11(g) and for purposes of determining Executive's
right following her termination of employment with the Bank to any stock not
surrendered pursuant hereto, Executive shall be deemed fully vested in all
shares awarded under any restricted stock plan maintained by, or covering
employees of, the Bank, even if she is not vested under such plan.

            (h) The Bank and Executive hereby stipulate that the damages which
may be incurred by Executive following any such termination of employment under
the circumstances described in Section 10 of this Agreement are not capable of
accurate measurement as of the date first above written and that the payments
and benefits contemplated by this Section 11 constitute reasonable damages under
the circumstances and shall be payable without any requirement of proof of
actual damage and without regard to Executive's efforts, if any, to mitigate
damages. The Bank and the Executive further agree that payment hereunder shall
be reduced to the extent necessary so that no such payment or any other payment
to the Executive is subject to the excise tax under Section 4999 of the Code.

            Section 12. Termination for Disability.

            (a) If, as a result of Executive's incapacity due to physical or
mental illness, she shall have been substantially absent from her duties with
the Bank for six (6) of any 12 consecutive month period, the Bank may terminate
Executive's employment for "Disability" and Executive shall be entitled to the
payments and benefits, if any, provided under any disability plan for which he
is eligible on the effective date of this Agreement. "Disability" shall mean a
condition of total incapacity, mental or physical, for the performance of
Executive's stated duties hereunder, which incapacity, is likely to be
permanent.

            Section 13. Termination without Additional Bank Liability.

            In the event that Executive's employment with the Bank shall
terminate during the Employment Period on account of:

            (a) the discharge of Executive for "Cause," which, for purposes of
this Agreement shall mean personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or regulation (other
than traffic violations or similar offenses), or final cease and desist order,
or any material breach of this Agreement; or

            (b) Executive's voluntary resignation from employment with the Bank
for reasons other than those specified in Section 10; or

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            (c) Executive's death; or

            (d) Executive's "Retirement," which, for purposes of this Agreement
shall mean her voluntary termination at a time when she is eligible for a normal
retirement benefit under the qualified defined benefit pension plan or plans of
the Bank, or if no such plan is currently maintained, Executive's voluntary
termination at or after the attainment of age 65; then the Bank shall have no
further obligations under this Agreement, other than the payment to Executive
(or, in the event of her death, to her estate) of her earned but unpaid salary
and, in the event of the Executive's death or Retirement, her earned but unpaid
Incentive Compensation Award, if any, as of the date of the termination of her
employment, and the provision of such other benefits, if any, to which she is
entitled as a former employee under the employee benefit plans and programs and
compensation plans and programs maintained by, or covering employees of, the
Bank.

            Section 14. Termination of Employment after Termination of Agreement

            In the event that the Bank does not approve an extension to the
Agreement under section 2(b) and the Executive's employment terminates after the
end of the term of the Agreement for the reasons specified in section 10, the
Bank shall pay to the Executive the amounts listed in section 11(a), (b), (c)
and (d) as soon as practicable after her termination of employment.

            Section 15. Change in Control.

            A Change in Control of the Bank ("Change in Control") shall be
deemed to have occurred upon the happening of any of the following events:

            (a) approval by the stockholders of the Bank of a transaction that
would result in the reorganization, merger or consolidation of the Bank,
respectively, with one or more other persons, other than a transaction following
which:

                  (i) at least fifty-one percent (51%) of the equity ownership
interests of the entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) in
substantially the same relative proportions by persons who, immediately prior to
such transaction, beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) at least fifty-one percent (51%) of the
outstanding equity ownership interests in the Bank; and

                  (ii) at least fifty-one percent (51%) of the securities
entitled to vote generally in the election of directors of the entity resulting
from such transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction, beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) at
least fifty-one percent (51%) of the securities entitled to vote generally in
the election of directors of the Bank;

            (b) the acquisition of all or substantially all of the assets of the
Bank or beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of twenty percent (20%) or more of the outstanding securities
of the Bank entitled to vote generally in the election of directors by any
person or by any persons acting in concert, or

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approval by the stockholders of the Bank of any transaction which would result
in such an acquisition;

            (c) a complete liquidation or dissolution of the Bank, or approval
by the stockholders of the Bank of a plan for such liquidation or dissolution;

            (d) the occurrence of any event if, immediately following such
event, at least fifty percent (50%) of the members of the Board do not belong to
any of the following groups:

                  (i) individuals who were members of the Board on the date of
this Agreement; or

                  (ii) individuals who first became members of the Board after
the date of this Agreement either:

                        (A) upon election to serve as a member of the Board by
      affirmative vote of three-quarters of the members of such Board, or of a
      nominating committee thereof, in office at the time of such first
      election; or

                        (B) upon election by the stockholders of the Bank to
      serve as a member of the Board, but only if nominated for election by
      affirmative vote of three-quarters of the members of the Board, or of a
      nominating committee thereof, in office at the time of such first
      nomination;

provided, however, that such individual's election or nomination did not result
from an actual or threatened election contest (within the meaning of Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents (within the meaning of Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) other than by or on
behalf of the Board; or

            (e) any event which would be described in Section 14(a), (b), (c) or
(d) if the term "Carver Bancorp, Inc." were substituted for the term "Bank"
therein.

In no event, however, shall a Change in Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Bank, Carver Bancorp,
Inc., or a subsidiary of either of them, by the Bank, Carver Bancorp, Inc., or a
subsidiary of either of them, or by any employee benefit plan maintained by any
of them. For purposes of this Section 15, the term "person" shall have the
meaning assigned to it under Section 13(d)(3) or 14(d)(2) of the Exchange Act.

            Section 16. Covenant Not To Compete.

            Executive hereby covenants and agrees that, in the event of her
termination of employment with the Bank prior to the expiration of the
Employment Period for any reason other than the circumstances provided under
Section 10 hereof, for a period of six months following the date of her
termination of employment with the Bank (or, if less, for the remaining term of
the Agreement), she shall not, without the written consent of the Bank which
shall not be unreasonably withheld if it will not materially injure the Bank,
become an officer, employee, consultant, director or trustee of any entity or
any direct or indirect subsidiary or affiliate of any such entity, that directly
competes with the Bank or any of its subsidiaries or affiliates (as reasonably
determined by

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the Bank) at the time of such termination of employment with the business of the
Bank in any city, town or county in which the Bank has an office or has filed an
application for regulatory approval to establish an office as of the date of
Executive's termination of employment; provided, however, that if Executive's
employment shall be terminated on account of Disability as provided in Section
12 of this Agreement, this Section 16 shall not prevent Executive from accepting
any position or performing any services if (a) she first offers, by written
notice, to accept a similar position with, or perform similar services for, the
Bank on substantially the same terms and conditions and (b) the Bank declines to
accept such offer within ten (10) days after such notice is given.

            Section 17. Confidentiality.

            Unless she obtains the prior written consent of the Bank, during the
term of this Agreement and thereafter, Executive shall keep confidential and
shall refrain from using for the benefit of herself, or any person or entity
other than the Bank or any entity which is a subsidiary of the Bank or of which
the Bank is a subsidiary, any material document or information (including, but
not limited to, plans, customer lists and business proposals) obtained from the
Bank, or from its parent or subsidiaries, in the course of her employment with
any of them concerning their properties, operations, business or proposed
business plans (unless such document or information is readily ascertainable
from public or published information or trade sources or has otherwise been made
available to the public through no fault of her own) until the same ceases to be
material (or becomes so ascertainable or available); provided, however, that
nothing in this Section 17 shall prevent Executive, with or without the Bank's
consent, from participating in or disclosing documents or information in
connection with any judicial or administrative investigation, examination,
inquiry or proceeding to the extent that such participation or disclosure is
required under applicable law.

            Section 18. No Effect on Employee Benefit Plans or Programs.

            The termination of Executive's employment during the term of this
Agreement or thereafter, whether by the Bank or by Executive, shall have no
effect on the rights and obligations of the parties hereto under the Bank's
qualified or non-qualified retirement, pension, savings, thrift, profit-sharing
or stock bonus plans, group life, health (including hospitalization, medical and
major medical), dental, accident and long term disability insurance plans or
such other employee benefit plans or programs, or compensation plans or
programs, as may be maintained by, or cover employees of, the Bank from time to
time, except that in the event of Executive's termination for Cause, Executive's
rights under any such plans shall be subject to Section 563.39 of regulations
issued by the OTS.

                        Section 19. Successors and Assigns.

            This Agreement will inure to the benefit of and be binding upon
Executive, her legal representatives and testate or intestate distributees, and
the Bank and its successors and assigns, including any successor by merger or
consolidation or a statutory receiver or any other person or firm or corporation
to which all or substantially all of the assets and business of the Bank may be
sold or otherwise transferred. Failure of the Bank to obtain from any successor
its express written assumption of the Bank's obligations hereunder at least
sixty (60) days in advance of the scheduled effective date of any such
succession shall be deemed a material breach of this Agreement.

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            Section 20. Notices.

            Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:

                  If to Executive:

                              Catherine A. Papayiannis
                              204 Battery Avenue
                              Brooklyn, New York  11209

                  If to the Bank:

                              Carver Federal Savings Bank
                              75 West 125th Street
                              New York, New York 10027

                              Attention: President and Chief Executive Officer

                  with a copy to:

                              Thacher Proffitt & Wood
                              11 West 42nd Street
                              New York, New York 10036
                              Attention:  Kofi Appenteng, Esq.

            Section 21. Severability.

            A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.

            Section 22. Waiver.

            Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.

            Section 23. Counterparts.

            This Agreement may be executed in two (2) or more counterparts, each
of which shall be deemed an original, and all of which shall constitute one and
the same Agreement.

                                 Page 11 of 15
<PAGE>

            Section 24. Governing Law.

            This Agreement shall be governed by and construed and enforced in
accordance with the federal laws of the United States and, to the extent that
federal law is inapplicable, in accordance with the laws of the State of New
York applicable to contracts entered into and to be performed entirely within
the State of New York.

            Section 25. Headings and Construction.

            The headings of Sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any Section. Any
reference to a Section number shall refer to a Section of this Agreement, unless
otherwise stated.

            Section 26. Entire Agreement, Modifications.

            This instrument contains the entire agreement of the parties
relating to the subject matter hereof, and supersedes in its entirety any and
all prior agreements, understandings or representations relating to the subject
matter hereof. No modifications of this Agreement shall be valid unless made in
writing and signed by the parties hereto.

            Section 27. Required Regulatory Provisions.

            The following provisions are included for the purpose of complying
with various laws, rules and regulations applicable to the Bank:

            (a) Notwithstanding anything herein contained to the contrary, in no
event shall the aggregate amount of compensation payable to the Executive under
Section 11 hereof exceed three times the Executive's average annual total
compensation for the last five consecutive calendar years to end prior to her
termination of employment with the Bank (or for her entire period of employment
with the Bank if less than five calendar years) as determined in accordance with
OTS RB27a, as such may be amended from time to time.

            (b) Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Bank, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with Section
18(k) of the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C. ss.1828(k),
and any regulations promulgated thereunder.

            (c) Notwithstanding anything herein contained to the contrary, if
the Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to a notice
served under Section 8(e)(3) or 8(g)(1) of the FDI Act, 12 U.S.C. ss.1818(e)(3)
or 1818(g)(1), the Bank's obligations under this Agreement shall be suspended as
of the date of service of such notice, unless stayed by appropriate proceedings.
If the charges in such notice are dismissed, the Bank, in its discretion, may
(i) pay to the Executive all or part of the compensation withheld while the
Bank's obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.

            (d) Notwithstanding anything herein contained to the contrary, if
the Executive is removed and/or permanently prohibited from participating in the
conduct of the Bank's affairs by an order issued under Section 8(e)(4) or
8(g)(1) of the FDI Act, 12 U.S.C. ss.1818(e)(4) or (g)(1), all prospective
obligations of the Bank under this Agreement shall

                                 Page 12 of 15
<PAGE>

terminate as of the effective date of the order, but vested rights and
obligations of the Bank and the Executive shall not be affected.

            (e) Notwithstanding anything herein contained to the contrary, if
the Bank is in default (within the meaning of Section 3(x)(1) of the FDI Act, 12
U.S.C. ss.1813(x)(1), all prospective obligations of the Bank under this
Agreement shall terminate as of the date of default, but vested rights and
obligations of the Bank and the Executive shall not be affected.

            (f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated, except to the
extent that a continuation of this Agreement is necessary for the continued
operation of the Bank: (i) by the Director of the Office of Thrift Supervision
("OTS") or the Director's designee or the Federal Deposit Insurance Corporation
("FDIC"), at the time the FDIC enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) of the
FDI Act, 12 U.S.C. ss.1823(c); (ii) by the Director of the OTS or the Director's
designee at the time such Director or designee approves a supervisory merger to
resolve problems related to the operation of the Bank or when the Bank is
determined by such Director to be in an unsafe or unsound condition. The vested
rights and obligations of the parties shall not be affected.

            Section 28. Non-duplication.

            In the event that Executive shall perform services for Carver
Bancorp, Inc. or any other direct or indirect subsidiary of the Bank or Carver
Bancorp, Inc., any compensation or benefits provided to Executive by such other
employer for services rendered to it shall be applied to offset the obligations
of the Bank hereunder, it being intended that this Agreement set forth the
aggregate compensation and benefits payable to Executive for all services to the
Bank and all of its direct or indirect affiliates. The Executive shall provide
to the Bank a reasonable accounting of her services provided to Carver Bancorp,
Inc. The expenses for such services shall be charged to Carver Bancorp, Inc.,
and the Bank shall be reimbursed by Carver Bancorp, Inc. for any payment it may
make for such services.

            Section 29. No Legal Restrictions.

            The Executive is not a party to any contract or subject to any other
legal restriction that would prevent or restrict the Executive's employment by
the Bank or Carver Bancorp, Inc. or prevent or restrict fulfillment of the terms
and conditions of this Agreement.

                                 Page 13 of 15
<PAGE>

            IN WITNESS WHEREOF, the Bank has caused this Agreement to be
executed and Executive has hereunto set her hand, all as of the day and year
first above written.

                                            /s/ Catherine A. Papayiannis
                                            -----------------------------
                                            CATHERINE A. PAPAYIANNIS

ATTEST:                                     CARVER FEDERAL SAVINGS BANK

By /s/ Linda J. Dunn                        By Deborah C. Wright
  ---------------------------                 --------------------------------
       Secretary                            Name: Deborah C. Wright
                                            Title: President & CEO

[Seal]

                                 Page 14 of 15
<PAGE>

STATE OF NEW YORK       )

                        :ss.:

COUNTY OF NEW YORK      )

            On this 24th day of April, 2002, before me personally came Catherine
A. Papayiannis, to me known, and known to me to be the individual described in
the foregoing instrument, who, being by me duly sworn, did depose and say that
she resides at the address set forth in said instrument, and that she signed her
name to the foregoing instrument.

                                                /s/ Robert Paul Rich
                                                --------------------------------
                                                         Notary Public

                                               Robert Paul Rich
                                               Notary Public State of New York
                                               No. 02RI4746994
                                               Qualified in Kings County
                                               Commission Expires April 30, 2003

                                                                          [SEAL]

STATE OF NEW YORK       )

                        :ss.:

COUNTY OF NEW YORK      )

            On this 29th day of April, 2002, before me personally came Deborah
C. Wright, to me known, who, being by me duly sworn, did depose and say that she
resides at 31 East 12th Street, Apt. 6A, New York, NY 10003, that she is
President and Chief Executive Officer of CARVER FEDERAL SAVINGS BANK, the
savings bank described in and which executed the foregoing instrument; that she
knows the seal of said corporation; that the seal affixed to said instrument is
such seal; that it was so affixed by order of the Board of Directors of said
savings bank; and that she signed her name thereto by like order.

                                         /s/ Margaret D. Peterson
                                         ----------------------------------
                                                  Notary Public

                                         Margaret D. Peterson
                                         Notary Public, State of New York
                                         Registration #01PE6044210
                                         Qualified in Kings County
                                         Commission Expires July 3, 2002

                                 Page 15 of 15EXHIBIT 10.3

                             STOCK OPTION AGREEMENT

                 GRANTED UNDER GEOWORKS' 1994 STOCK OPTION PLAN

      Unless otherwise defined herein, the terms defined in the 1994 Stock
Option Plan (the "Plan") shall have the same defined meanings in this Option
Agreement.

I. NOTICE OF STOCK OPTION GRANT

OPTIONEE NAME ("Optionee")

      You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

      Grant Number                                  000000

      Date of Grant                                 0/0/00

      Vesting Commencement Date                     0/0/00

      Exercise Price per Share                      $0.000

      Total Number of Shares Granted                0

      Total Exercise Price                          $000.000

      Type of Option:                               Non-Qualified Stock Option

      Term/Expiration Date:                         0/0/10

      Vesting Schedule:

      This Option may be exercised, in whole or in part, in accordance with the
following schedule:

         1/48TH of the Shares subject to the Option shall vest on each monthly
anniversary beginning with the month following the Vesting Commencement Date
over a period of forty-eight (48) months.

<PAGE>

      Termination Period:

      This Option may be exercised for 90 days after termination of the
Optionee's employment or consulting relationship with the Company. Upon the
death or disability (as defined in Section 22(a)(3) of the Code) of the
Optionee, this Option may be exercised for such longer period as provided in the
Plan. In the event of the Optionee's change in status from Employee to
Consultant or Consultant to Employee, this Option Agreement shall remain in
effect. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.

II. AGREEMENT

      1. Grant of Option. The Administrator hereby grants to the Optionee named
in the Notice of Grant attached as Part I of this Agreement (the "Optionee"), an
option (the "Option") to purchase the number of Shares, as set forth in the
Notice of Grant, at the exercise price per share set forth in the Notice of
Grant (the "Exercise Price"), subject to the terms and conditions of the Plan,
which is incorporated herein by reference. Subject to Section 15 of the Plan, in
the event of a conflict between the terms and conditions of the Plan the terms
and conditions of this Option Agreement, the terms and conditions of the Plan
shall prevail.

            If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) such excess shall be treated as if it were a Nonstatutory Stock Option
("NSO").

      2. Exercise of Option

            (a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, disability or other termination of Optionee's employment or
consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.

            (b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form approved by the Company (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment of
the aggregate Exercise Price as to all Exercised Shares. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.

                                       2
<PAGE>

            No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange or quotation service upon which the
Shares are then listed. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.

      3. Method of Payment. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:

            (a) cash;

            (b) check; or

            (c) delivery of a properly executed Exercise Notice together with
such other documentation as the Administrator and the Optionee's broker (if
applicable) may require in order for the Exercise Price to be paid through
proceeds from the sale of a portion of the shares issued upon such exercise (or
through a loan in anticipation of the receipt of such proceeds).

      4. Non-Transferability of the Option. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of the Optionee only by the Optionee.
The terms of the Plan and this Option Agreement shall be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee.

      5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.

      6. Tax Consequences. Some of the federal and California state tax
consequences relating to this Option, as of the date of this Option, are set
forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

            (a) Exercising the Option.

                  (i) Nonstatutory Stock Option. The Optionee may incur regular
federal income tax and California state income tax liability upon exercise of an
NSO. The Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the Fair
Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price. If the Optionee is an Employee or a former Employee,
the Company will be required to withhold from his or her compensation or collect
from Optionee and pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time of exercise, and
may refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.

                                       3
<PAGE>

                  (ii) Incentive Stock Option. If this Option qualifies as an
ISO, the Optionee will have no regular federal income tax or California state
income tax liability upon its exercise, although the excess, if any, of the Fair
Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price will be treated as an adjustment to alternative minimum
taxable income for federal income tax purposes and may subject the Optionee to
alternative minimum tax in the year of exercise. In the event that the Optionee
undergoes a change of status from Employee to Consultant, any Incentive Stock
Option of the Optionee that remains unexercised shall cease to qualify as an
Incentive Stock Option and will be treated for tax purposes as a Nonstatutory
Stock Option on the ninety-first (91st) day following such change in status.

            (b) Disposition of Shares.

                  (i) NSO. If the Optionee holds NSO Shares for at least one
year, any gain realized on disposition of the Shares over Fair Market Value of
the Exercised Shares at time of exercise will be treated as long-term capital
gain for federal income tax purposes.

                  (ii) ISO. If the Optionee holds ISO Shares for at least one
year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (a) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price.

            (c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.

      7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by California law except for that body of
law pertaining to conflict of laws.

      By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this

                                       4
<PAGE>

Option Agreement in their entirety, has had an opportunity to obtain the advice
of counsel prior to executing this Option Agreement and fully understands all
provisions of the Plan and Option Agreement. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions relating to the Plan and Option Agreement.
Optionee further agrees to notify the Company upon any change in the residence
indicated below.

OPTIONEE                                GEOWORKS

____________________________            _____________________________
Signature                               Signature
                                        [Name]
____________________________            Chief Executive Officer
Type or Print Name

____________________________            [Street Adress]
Residence Address                       [City, State Zip]
____________________________

____________________________

                                       5
<PAGE>

                                CONSENT OF SPOUSE

The undersigned souse of Optionee has read and hereby approves the terms and
conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.

________________________________
Signature of Spouse of Optionee

________________________________
Type or Print Name

________________________________
Date

                                       6
<PAGE>

                                    EXHIBIT A

                                 1994 STOCK PLAN

                                 EXERCISE NOTICE

Geoworks
960 Atlantic Avenue
Alameda, CA 94501

Attention: Corporate Secretary

      1. Exercise of Option. Effective as of today ______________, 19___, the
undersigned ("Purchaser") hereby elects to purchase ____________ shares (the
"Shares") of the Common Stock of Geoworks (the "Company") under and pursuant to
the 1994 Stock Plan (the "Plan") and the Stock Option Agreement dated
_____________, 19___, with Grant Number _____________ (the "Option Agreement").
The purchase price for the Shares shall be $______________, as required by the
Option Agreement.

      2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares in the form of:

            |_| Cash;
            |_| Check; or
            |_| Proceeds from the sale of a portion of the Shares (or a loan in
anticipation of the receipt of such proceeds), subject to such further
documentation and conditions as the Administrator and the Purchaser's broker (if
applicable) may require.

      3. Representations of Purchaser. Purchaser acknowledges that Purchaser has
received, read and understood the Plan and the Option Agreement and agrees to
abide by any be bound by their terms and conditions.

      4. Rights as Shareholder. 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 the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustments
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 12 of
the Plan.

      5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

                                       7
<PAGE>

      6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan, and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by California law except for that body of law pertaining to conflict of
laws.

Submitted by:                           Accepted by:
PURCHASER                               GEOWORKS

________________________________        _____________________________________
Signature                               Signature

________________________________        _____________________________________
Type or Print Name                      Type or Print Name

________________________________        _____________________________________
Residence Address                       Title:  _____________________________
________________________________        [Street Adress]
                                        [City, State Zip]

                                       8

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