EXHIBIT 10.10
EMPLOYMENT AGREEMENT
BETWEEN
FIRST FEDERAL SAVINGS BANK,
FIRSTFED BANCORP, INC.,
AND C. XXXXX XXXXX
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Amendment and Restatement
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(as amended June 17, 1998)
WHEREAS, on December 1, 1992, FirstFed Bancorp, Inc. (the "Holding
Company") and First Federal Savings Bank (the "Savings Bank") entered into an
Employment Agreement (the "Agreement") with C. Xxxxx Xxxxx (the "Executive");
and
WHEREAS, on January 17, 1995, the Board of Directors of the Holding
Company, the Board of Directors of the Savings Bank, and the Executive
determined that it was in their respective best interests to amend the
Agreement; and
WHEREAS, the Board of Directors of the Holding Company, the Board of
Directors of the Savings Bank, and the Executive have determined that it is in
their respective best interests to amend and restate the Agreement in the manner
set forth herein;
NOW, THEREFORE, the Agreement shall be amended and restated as follows,
with such amendment and restatement to become effective as of January 1, 1996:
W I T N E S S E T H
1. The Savings Bank agrees to employ the Executive as its Executive Vice
President. The language herein referring to the Savings Bank, except otherwise
directed by the Board of Directors, includes any subsidiaries of the Savings
Bank.
2. Executive will be paid an annual salary of not less than Ninety One
Thousand, Five Hundred Dollars and no/100 ($91,500.00) per year, payable twice
monthly, effective on the above date; provided, however, that such salary shall
be reduced by any salary paid to the Executive by the Holding Company. Such
annual salary shall be reviewed at least annually; the first such review to be
made no later than December 31, 1996 to be effective January 1, 1997.
In addition, Executive may receive a discretionary cash bonus payable
annually, beginning with the year ending December 31, 1996 and continuing for
the duration of this Agreement. Said bonus, if any, shall be determined by the
Board of Directors based on the performance of the Savings Bank taking into
consideration the Savings Bank's overall achievement of its goals and
Executive's part in the Savings Bank's performance and realization of such
goals. In no
event, however, shall said bonus exceed one month of the Executive's annual base
salary. The bonus may be paid only as long as regulatory capital requirements
are met and the Savings Bank is profitable.
In addition, the Savings Bank, will provide Executive with employee benefit
plans, arrangements, insurance coverage and perquisites substantially equivalent
to those in which Executive was participating or otherwise deriving benefit from
immediately prior to the beginning of the term of this Agreement, and the
Savings Bank will not, without Executive's prior written consent, make any
changes in such plans, arrangements, insurance coverage or perquisites which
adversely affect Executive's rights or benefits thereunder. Without limiting the
generality of the foregoing provisions of this Section 2, Executive will be
entitled to participate in or receive benefits under any employee benefit plans
including, but not limited to, retirement plans, supplemental retirement plans,
pension plans, profit-sharing plans, health-and-accident plans, medical coverage
or any other employee benefit plans or arrangements made available by the
Savings Bank in the future to its senior executives and key management
employees, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements. Executive will be
entitled to incentive compensation as provided in any plan of the Savings Bank
in which Executive is eligible to participate. Nothing paid to the Executive
under any such plan or arrangement will be deemed to be in lieu of other
compensation to which the Executive is entitled under this Agreement.
3. It is the intention of the parties to this Agreement that the term of
employment of Executive as Executive Vice President of the Savings Bank under
this Agreement shall be for a period of three years from the date of this
Agreement. The renewal of this Agreement for an additional year shall be
considered by the Board of Directors on each annual anniversary from the
effective date. In determining whether to extend the contract for an additional
year, the Board of Directors shall review, among other things, the Executive's
and the Savings Bank's performance and shall include the results of such review
in the minutes of the Board's meeting. As set forth in Section 6 and other
places herein, Executive may be terminated for cause at any time with a
corresponding termination of all benefits and matters pertaining to Executive
hereunder.
4. Executive agrees that he will devote full time and efforts to the
business of the Savings Bank and to the Office of Executive Vice President
except as may be approved by the Board of Directors, will conduct himself in
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a manner that will reflect credit on the Savings Bank, and will carry out the
duties assigned to him by the Board of Directors.
5. The Savings Bank will reimburse Executive for all reasonable and
necessary expenses incurred by Executive in carrying out his duties under this
Agreement consistent with normal business practice and in accordance with the
policies of the Board of Directors. Executive shall present to the President of
the Savings Bank, from time to time, an itemized account of his expenses in such
form as may be required by the Savings Bank. The Savings Bank shall pay
professional fees and dues at appropriate clubs approved by the Board of
Directors.
6. It is mutually agreed by the Savings Bank and Executive that this
Agreement can be terminated under the following circumstances:
(a) The Board of Directors of the Savings Bank may terminate Executive's
employment at any time, but any termination by the Savings Bank's Board of
Directors, other than termination by "cause" as defined herein, shall not
prejudice Executive's right to compensation or other benefits under this
Agreement. Executive shall have no right to receive compensation or other
benefits for any period after termination for cause.
(b) In the event the Savings Bank terminates Executive, other than for
cause as herein defined, the Savings Bank shall pay Executive, or, in the
event of his subsequent death, his spouse, if living, as severance pay or
liquidated damages, or both, a sum equal to the base salary due for the
remaining term of this Agreement. Savings Bank shall also maintain existing
insurance for six months after termination of the Executive's employment.
At the election of the Executive, which election is to be made within
thirty (30) days of Executive's termination, such payments shall be made in
a lump sum or paid monthly during the remaining term of this Agreement. In
the event that no election is made, payment to the Executive will be made
on a monthly basis during the remaining term of this Agreement.
(c) Termination for "cause" shall include termination because of
Executive's dishonesty, gross incompetence, willful misconduct, breach of
fiduciary duty involving personal misconduct, breach of fiduciary duty
involved 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
material breach of any provision of this Agreement.
(d) If the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Savings Bank's affairs by a notice
served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1818 (e)(3) or (g)(1)), the Savings Bank's obligations under
this contract shall be suspended as of the date of service, unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the
Savings Bank may in its discretion (i) pay the Executive all or part of the
compensation withheld while the contract obligations were suspended and
(ii) reinstate (in whole or in part) any of the obligations which were
suspended.
(e) If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Savings Bank's affairs by an order
issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1818 (e)(4) or (g)(1)), all obligations of the Savings Bank
under this contract shall terminate as of the effective date of the order,
but vested rights of the contracting parties shall not be affected.
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(f) If the Savings Bank is in default (as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act), all obligations of the Savings Bank under
this contract shall terminate as of the date of default, but this paragraph
shall not affect any vested rights of the contracting parties.
(g) All obligations of the Savings Bank under this contract shall be
terminated, except to the extent determined that continuation of the
contract is necessary for the continued operation of the institution, (i)
by the Director or his designee, at the time the Federal Deposit Insurance
Corporation ("FDIC") or Resolution Trust Corporation ("RTC") enters into an
agreement to provide assistance to or on behalf of the Savings Bank under
the authority contained in Section 13(c) of the Federal Deposit Insurance
Act; or (ii) by the Director or his designee, at the time the Director or
his designee approves a supervisory merger to resolve problems related to
the operations of the Savings Bank or when the Savings 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 such
action.
(h) In the event of Executive's death, in which case the Savings Bank shall
pay to the Executive's spouse, if living, the annual base salary provided
for under Section 2 in effect at the time of Executive's death for the
remaining term of the contract, payable in a lump sum if election is made
by the spouse within thirty (30) days of Executive's death or otherwise on
a monthly basis, plus any accrued and unpaid discretionary bonus due
Executive at the time of his death, payable in a lump sum amount within
thirty (30) days of the Executive's death. In addition, the Savings Bank
shall maintain the existing medical insurance for the Executive's spouse
for six months after the Executive's death.
7. In the event that there is a change in control of the Savings Bank or
the Holding Company within the meaning of the Home Owners' Loan Act and the
Rules and Regulations promulgated by the Office of Thrift Supervision (or its
predecessor agency) (specifically, 12 C.F.R. Part 574) as in effect on the date
hereof or hereafter, which results in the Executive's termination under any of
the following conditions: (i) dismissal of Executive other than for cause, (ii)
the Executive voluntarily terminates employment for any reason within the 30-day
period beginning on the date of any change in control, or (iii) Executive's
resignation from the Savings Bank's employ, upon any (A) failure to elect or
reelect or to appoint or reappoint Executive as a senior office, (B) material
change in Executive's functions, duties, or responsibilities, which change would
cause Executive's position to become one of lesser responsibility, importance,
or scope from the position and attributes thereof described in Section 1 above
(and any such material change shall be deemed a continuing breach of this
Agreement), (C) a relocation of Executive's principal place of employment to a
location outside Jefferson County, Alabama or any county contiguous thereto, (D)
a material reduction in the benefits and perquisites to the Executive from those
being provided as of the effective date of this Agreement, (E) liquidation or
dissolution of the Savings Bank, or (F) a breach of this Agreement by the
Savings Bank (or Holding Company), in each case for reasons other than for
cause, Executive shall be entitled to received as severance pay or liquidated
damages, or both, a sum equal to the difference between (I) the product of 2.99
times his "base amount" as defined in
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Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code")
and regulations promulgated thereunder (the "Maximum Amount") and (II) the sum
of any other parachute payments (as defined under Section 280G(b)(2) of the
Code) that the Executive receives on account of the change in control. In the
event that the Executive and the Savings Bank jointly determine and agree that
the total parachute payments receivable under clauses (I) and (II) above exceed
the Maximum Amount, notwithstanding the payment procedure set forth above, the
Executive shall determine which and how much, if any, of the parachute payments
to which he is entitled shall be eliminated or reduced so that the total
parachute payments to be received by the Executive do not exceed the Maximum
Amount. If the Executive does not make his determination within ten (10)
business days after receiving a written request from the Savings Bank, the
Savings Bank may make such determination and shall notify the Executive promptly
thereof. Within five (5) business days of the earlier of the Savings Bank's
receipt of the Executive's determination pursuant to this paragraph or the
Savings Bank's determination in lieu of a determination by the Executive, the
Savings Bank shall pay to or distribute to or for the benefit of the Executive
such amounts as are then due the Executive under this Agreement.
As a result of uncertainty in application of Section 280G of the Code
at the time of payment hereunder, it is possible that such payments will have
been made by the Savings Bank which should not have been made ("Overpayment") or
that additional payments will not have been made by the Savings Bank which
should have been made ("Underpayment"), in each case, consistent with the
calculations required to be made hereunder. In the event that the Executive,
based upon the assertion by the Internal Revenue Service against the Executive
of a deficiency which the Executive believes has a high probability of success,
determines that an Overpayment has been made, any such Overpayment paid or
distributed by the Savings Bank to or for the benefit of Executive shall be
treated for all purposes as a loan ab initio which the Executive shall repay to
the Savings Bank together with interest at the applicable federal rate provided
for in Section 7872(f)(2)(B) of the Code; provided, however, that no such loan
shall be deemed to have been made and no amount shall be payable by the
Executive to the Savings Bank if and to the extent such deemed loan and payment
would not either reduce the amount on which the Executive is subject to tax
under Section 1 and Section 4999 of the Code or generate a refund of such taxes.
In the event that the Executive and the Savings Bank determine, based upon
controlling precedent or other substantial authority, that an Underpayment has
occurred, any such
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Underpayment shall be promptly paid by the Savings Bank to or for the benefit of
the Executive together with interest at the applicable federal rate provided for
in Section 7872(f)(2)(B) of the Code.
In the event of Executive's subsequent death, Executive's spouse, if
living, shall receive the base salary due for the remaining term of the
contract. Savings Bank shall also maintain existing insurance for six months
after Savings Bank termination of the Executive's employment, or if Executive
dies within such six months, the Savings Bank shall maintain health insurance
for the Executive's spouse, if living, for the remainder of the six month
period. Any severance benefits that become payable under this Section 7 shall be
paid in the manner selected by the Executive in a duly executed election in the
form attached hereto as Exhibit "A" (the "Election Form"); provided that such an
election will be honored and given effect only if it is properly made and
delivered to the Savings Bank more than 90 days before said closing date. The
Executive may specify on the attached Election Form the manner of payment to his
beneficiary, and may at any time or from time to time change the identify or
manner of payment to his beneficiary. Present value determinations and interest
accruals on present value sums that are paid in installments over a fixed period
of years shall be calculated at a rate equal to 120% of the applicable federal
rate, compounded semiannually, as determined under Section 1274(d) of the Code,
and the regulations thereunder. In the event that no election is made, payment
to the Executive will be made on a monthly basis during the remaining term of
this Agreement. Upon the occurrence of any event described in (A), (B), (C),
(D), (E) or (F) of (ii) above, Executive shall have the right to elect to
terminate her employment under this Agreement by resignation upon not less than
sixty (60) days prior written notice given to the Savings Bank within a
reasonable period of time not to exceed three (3) calendar months after the
event giving rise to said right to elect.
Notwithstanding the foregoing, but only to the extent required under
federal banking law, the amount payable hereunder shall be reduced to the extent
that on the date of the Executive's termination of employment, the amount
payable hereunder exceeds the limitation on severance benefits that is set forth
in Regulatory Bulletin 27a of the OTS, as in effect on the effective date.
Not later than three business days after a change in control as defined in
Section 7 of this Agreement, the Holding Company shall (i) deposit in the
FirstFed Bancorp, Inc. Grantor Trust (the "Trust") that was approved by the
Board of Directors of the Company on June 17, 1998, an amount that the Holding
Company reasonably projects to be
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sufficient to fund the payment of all severance benefits that are or may become
payable, pursuant to this Section, after the closing date of the change in
control, and (ii) provide the trustee of the Trust with a written direction both
to hold said amount and any investment return thereon in a segregated account
for the benefit of the Executive, and to follow the procedures set forth in the
next paragraph as to the payment of such amounts from the Trust. The provisions
of this Section shall be null and void only if the Executive provides a written
release of all claims under this Agreement.
During the fifteen (15) consecutive month period after a change in control,
the Executive may provide the trustee of the Trust with a written notice
directing the trustee to pay to the Executive an amount designated in the notice
as being payable pursuant to this Agreement. Within three business days after
receiving said notice, the trustee of the Trust shall pay such amount to the
Executive, and coincidentally shall provide the Holding Company or its successor
with notice of such payment. Upon the earlier of the Trust's final payment of
all amounts due under the preceding paragraph or the date 15 months after the
change in control, the trustee of the Trust shall pay to the Holding Company the
entire balance remaining in the segregated account maintained for the benefit of
the Executive. The Executive shall thereafter have no further interest in the
Trust.
8. Executive will follow the policies as established by the Board of the
Savings Bank from time to time in supervising and conducting the affairs of the
Savings Bank.
9. It is agreed that any indulgence granted by either party to the other
shall not be construed as a wavier of any rights under this Agreement.
10. All payments provided in this Agreement shall be paid in cash or check
from the general funds of the Savings Bank, as the case may be, and no special
or separate fund shall be established and no other segregation of assets shall
be made to assure payment. The Holding Company, however, guarantees payment and
provision of all amounts and benefits due hereunder to Executive and, if such
amounts and benefits due from the Savings Bank are not timely paid or provided
by the Savings Bank, such amounts shall be paid or provided by the Holding
Company.
11. Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, hypothetication, or to execution,
attachment, xxxxx, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to
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affect any such action shall be null, void and of no effect. This Agreement
shall be binding upon, and inure to the benefit of, the Executive and the
Savings Bank and their respective successors and assigns.
12. This Agreement contains the entire agreement between the parties and
cannot be varied by an instrument in writing signed by both parties. This
Agreement contains any and all understandings between the parties, and there can
be no other oral or implied agreements except as noted herein.
13. This Agreement shall be construed and enforced in accordance with the
laws of the State of Alabama except where superseded by Federal law.
14. The parties hereto agree that this Agreement will be amended in the
event any tax consideration or regulatory actions arise which necessitate an
amendment consistent with the intent hereof.
15. If for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect. If any provision of this Agreement is
determined to conflict with the requirements of 12 C.F.R. Section 563.39(b), the
latter requirements will control.
16. Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrators award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the date of termination during the pendancy of any
dispute or controversy arising under or in connection with this Agreement. Any
arbitration proceeding shall be governed by and subject to Alabama arbitration
law.
17. All reasonable costs and legal fees paid or incurred by Executive
pursuant to any dispute or question of interpretation relating to this
Agreement, or its specific performance, shall be paid or reimbursed by the
Savings Bank, if Executive is the prevailing party.
18. The Savings Bank shall provide Executive (including his heirs,
executors and administrators) with coverage under a standard directors' and
officers' liability insurance policy at the Savings Bank's expense, or in lieu
thereof, shall indemnify Executive (and his heirs, executors and administrators)
to the fullest extent permitted under
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Alabama law against all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved by reason of his having been a director or officer of the Savings
Bank (whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities); such expenses and liabilities to
include, but not limited to, judgments, court costs and attorneys' fees and the
cost of reasonable settlements, and such settlements to be approved by the Board
of Directors of the Savings Bank, if such action is brought against Executive in
his capacity as an officer or director of the Savings Bank; provided, however,
that such indemnification shall not extend to matters as to which Executive is
finally adjudged to be liable for willful misconduct or gross negligence in the
performance of his duties.
19. In the event of voluntary termination by Executive all rights and
benefits shall immediately terminate upon the effective date of termination,
except as provided in Section 7 hereof.
WHEREFORE, the undersigned hereby approve this Amendment and Restatement of
the Agreement.
Date of Execution: December __, 1995
C. XXXXX XXXXX
---------------------------------
FIRSTFED BANCORP, INC.
By Attest:
-------------------------------------- -------------------------
Its Chairman of the Board and
Chief Executive Officer CORPORATE SEAL
FIRST FEDERAL SAVINGS BANK
By Attest:
-------------------------------------- -------------------------
Its Chairman of the Board and
Chief Executive Officer CORPORATE SEAL
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EXHIBIT "A"
FIRST FEDERAL SAVINGS BANK &
FIRSTFED BANCORP, INC.
EMPLOYMENT AGREEMENT
-------------------------------
ELECTION OF PAYMENT METHOD
AFTER A CHANGE IN CONTROL
-------------------------------
AGREEMENT, made this ____ day of ________, 19__, by and between the
undersigned officer (the "Employee"), First Federal Savings Bank (the "Bank"),
and FirstFed Bancorp, Inc. (the "Company"), with respect to distribution of the
Employee's benefits ("Benefits") that have accrued under the Employment
Agreement entered into between the Bank, the Company, and the Employee on
January 1, 1996 (the "Agreement") and have or become payable due to a change in
control (as defined in the Agreement).
NOW THEREFORE, it is mutually agreed as follows:
1. Form of Payment. The Employee shall receive Benefits in cash that
---------------
is paid --
[ ] in one lump sum equal to the present value of the Employee's accrued
but unpaid Benefits.
[ ] in substantially equal annual payments over a period of _____ years
(no more than 10), with interest accruing, on the unpaid present value
of the Employee's Benefits, at a rate equal to 120% of the applicable
federal rate, compounded semiannually, as determined under Section
1274(d) of the Code, and the regulations thereunder.
2. Time of Payment. The Employee shall begin to receive Benefits as soon
---------------
as practicable after --
[ ] a Change in Control closes.
[ ] the January 1st after a Change in Control closes.
[ ] the _________ annual anniversary of the January 1st after a Change in
Control closes.
1
Employment Agreement
Payment Election Form
Page 2
3. Frequency of Payment. The Employee shall receive Benefits on a ______
--------------------
monthly, ______ quarterly, _____ semi-annual, or _____ annual basis.
4. Form of Payment to Beneficiary. In the event of the Employee's death,
------------------------------
Benefits shall be distributed --
[ ] in one lump sum payment, determined in the manner described in
paragraph 1 hereof.
[ ] in accordance with the payment schedule selected in paragraphs 1, 2,
and 3 hereof (with payments made as though the Employee survived to
collect all benefits, and as though the Employee terminated service
on the date of death, if payments had not already begun).
5. Designation of Beneficiary. In the event of the Employee's death
--------------------------
before payment of all benefits due under the Agreement, the Employee hereby
directs that any amounts unpaid under the Agreement be distributed to the
beneficiary or beneficiaries designated under subparagraphs a and b of this
paragraph 5 in the manner elected pursuant to paragraph 4 above:
a. Primary Beneficiary. The Employee hereby designates the person(s)
-------------------
named below to be primary beneficiary and to receive the balance of any unpaid
benefits under the Agreement.
================================================================================
Name of Percentage of
Primary Beneficiary Mailing Address Death Benefit:
--------------------------------------------------------------------------------
%
--------------------------------------------------------------------------------
%
================================================================================
2
Employment Agreeement
Payment Election Form
Page 3
b. Contingent Beneficiary. In the event that the primary beneficiary
----------------------
or beneficiaries named above are not living at the time of the Employee's death,
the Employee hereby designates the following person(s) to be contingent
beneficiary for purposes of the Agreement:
================================================================================
Name of Percentage of
Contingent Beneficiary Mailing Address Death Benefit
--------------------------------------------------------------------------------
%
--------------------------------------------------------------------------------
%
================================================================================
6. Effect of Election. The elections made in paragraphs 1, 2, and 3
------------------
hereof shall become irrevocable on the date 90 days before the closing of a
change in control. The Employee may at any time and from time to time change any
designation of, and manner of payment to, a beneficiary. Such election shall,
however, become irrevocable upon the Employee's death.
7. Mutual Commitments. The Bank and the Company agree to make payment of
------------------
all amounts due the Employee in accordance with the terms of the Agreement and
the elections made by the Employee herein. The Employee agrees to be bound by
the terms of the Agreement, as in effect on the date hereof and as properly
amended hereafter. The parties recognize and agree that this Agreement
supersedes and nullifies any prior distribution election to the extent it is
inconsistent herewith.
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Employment Agreement
Payment Election Form
Page 4
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the
day and year first above-written.
FIRST FEDERAL SAVINGS BANK
Witnessed by:
By
--------------------------- -----------------------------------
An authorized Director
FIRSTFED BANCORP, INC.
Witnessed by:
By
--------------------------- -----------------------------------
An authorized Director
EMPLOYEE
Witnessed by:
By
--------------------------- -----------------------------------
An authorized Director
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