EXHIBIT 10.08
EMPLOYMENT AGREEMENT
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(as amended June 17, 1998)
THIS AGREEMENT is made effective as of January 1, 1996 (the "Effective
Date"), by and between FirstFed Bancorp, Inc. (the "Company") and X.X. Xxxxxxx,
III (the "Employee") and supersedes the Employment Agreement by and between the
Company and the Employee dated February 1, 1995.
WHEREAS, the Company wishes to assure retention of the services of the
Employee for the period provided in the Agreement; and
WHEREAS, the Employee is willing to serve in the employ of the Company for
said period.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is employed as the President and Chief
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Executive Officer of the Company. The Employee shall render such administrative
and management services for the Company as are currently rendered and as are
customarily performed by persons situated in a similar executive capacity. The
Employee shall also promote, by entertainment or otherwise, as and to the extent
permitted by law, the business of the Company. The Employee's other duties shall
be such as the Board of Directors of the Company ("Board") may from time to time
reasonably direct, including normal duties as an officer of the Company.
2. Consideration from Company: Joint and Several Liability. In lieu of
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paying the Employee a base salary during the term of this Agreement, the Company
hereby agrees that to the extent permitted by law, it shall be jointly and
severally liable with its subsidiary, First Federal Savings Bank (the "Bank"),
for the payment of all amounts due under the employment agreement of even date
herewith between the Bank and the Employee. Nevertheless, the Board may in its
discretion at any time during the term of this Agreement agree to pay the
Employee a base salary for the remaining term of this Agreement. If the Board
agrees to pay such salary, the Board shall thereafter review, not less often
than annually, the rate of the Employee's salary, and in its sole discretion may
decide to increase his salary.
3. Discretionary Bonuses. The Employee shall participate in an equitable
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manner with all other senior management employees of the Company in
discretionary bonuses that the Board may award from time to time to the
Company's senior management employees. No other compensation provided for in
this Agreement shall be deemed a substitute for the Employee's right to
participate in such discretionary bonuses.
4. (a) Participation in Retirement, Medical and Other Plans. The
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Employee shall participate in any plan that the Company maintains for the
benefit of its employees if the plan relates to (i) pension, profit-sharing, or
other retirement benefits, (ii) medical insurance or the reimbursement of
medical or dependent care expenses, or (iii) other group benefits, including
disability and life insurance plans.
(b) Employee Benefits; Expenses. The Employee shall participate in
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any fringe benefits which are or may become available to the Company's senior
management employees and which are commensurate with the responsibilities and
functions to be performed by the Employee under this Agreement. The Employee
shall be reimbursed for all reasonable out-of-pocket business expenses which he
shall incur in connection with his services under this Agreement upon
substantiation of such expenses in accordance with the policies of the Company.
(c) Liability Insurance; Indemnification. The Company shall provide
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the Employee (including his heirs, executors and administrators) with coverage
under a standard directors' and officers' liability insurance policy at the
Company's expense, or in lieu thereof, shall indemnify the Employee (and his
heirs, executors and administrators) to the fullest extent permitted under
Delaware 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 Company
(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 Company; provided, however, that such indemnification shall
not extend to matters as to which the Employee is finally adjudged to be liable
for willful misconduct or gross negligence in the performance of his duties as a
director or officer of the Company.
5. Term. The Company hereby employs the Employee, and the Employee hereby
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accepts such employment under this Agreement, for the period commencing on the
Effective Date and ending 36 months thereafter (or such earlier date as is
determined in accordance with Section 9). Additionally, on each annual
anniversary date from the Effective Date, the Employee's term of employment may
be extended for an additional one-year period beyond the then effective
expiration date, provided the Board determines in a duly adopted resolution that
the performance of the Employee has met the Board's requirements and standards
and that this Agreement shall be extended.
6. Loyalty; Noncompetition.
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(a) During the period of his employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all his full business time, attention, skill, and efforts
to the faithful performance of his duties hereunder to the Company and its
subsidiaries; provided, however, from time to time, Employee may serve on the
boards of directors of, and hold any other offices or positions in, companies or
organizations which will not present, in the reasonable opinion of the Board,
any conflict of interest with the Company or any of its subsidiaries or
affiliates, or unfavorably affect the performance of the Employee's duties
pursuant to this Agreement, or will not violate any applicable statute or
regulation. "Full business time" is hereby defined as that amount of time
usually devoted to like companies by similarly situated executive officers.
During the term of his employment under this Agreement, the Employee shall not
engage in any business or activity contrary to the business affairs or interests
of the Company, or be gainfully employed in any other position or job other than
as provided above.
(b) Nothing contained in this Paragraph 6 shall be deemed to prevent
or limit the Employee's right to invest in the capital stock or other securities
of any business dissimilar from that of the Company, or, solely as a passive or
minority investor, in any business.
7. Standards. The Employee shall perform his duties under this Agreement
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in accordance with such reasonable standards as the Board may establish from
time to time. The Company will provide the Employee with the working facilities
and staff customary for similar executives and necessary for him to perform his
duties.
8. Vacation and Sick Leave. At such reasonable times as the Board shall
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in its discretion permit, the Employee shall be entitled, without loss of pay,
to absent himself voluntarily from the performance of his employment under this
Agreement, all such voluntary absences to count as vacation time; provided that:
(a) The Employee shall be entitled to an annual vacation in
accordance with the policies that the Board periodically establishes for senior
management employees of the Company.
(b) The Employee shall not receive any additional compensation from
the Company on account of his failure to take a vacation, and the Employee shall
not accumulate unused vacation from one fiscal year to the next, except in
either case to the extent authorized by the Board.
(c) In addition to the aforesaid paid vacations, the Employee shall
be entitled without loss of pay, to absent himself voluntarily from the
performance of his employment with the Company for such additional periods of
time and for such valid and legitimate reasons as the Board may in its
discretion determine. Further, the Board may grant to the Employee a leave or
leaves of absence, with or without pay, at such time or times and upon such
terms and conditions as such Board in its discretion may determine.
(d) In addition, the Employee shall be entitled to an annual sick
leave benefit as established by the Board.
9. Termination and Termination Pay. Subject to Section 11 hereof (which
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shall only be applicable during the twelve-month period following a "Change in
Control" as defined therein), the Employee's employment hereunder may be
terminated under the following circumstances:
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(a) Death. The Employee's employment under this Agreement shall
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terminate upon his death during the term of this Agreement, in which event the
Employee's estate shall be entitled to receive the compensation due the Employee
for the remaining term of the contract, payable in a lump sum if election is
made by the spouse within 30 days of Employee's death or otherwise on a monthly
basis, plus any accrued and unpaid discretionary bonus due Employee at the time
of his death, payable in a lump sum amount within 30 days of the Employee's
death. In addition, the Bank shall maintain the existing medical insurance for
the Employee's spouse for six months after the Employee's death.
(b) Disability. (1) The Company may terminate the Employee's
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employment after having established the Employee's Disability. For purposes of
this Agreement, "Disability" means a physical or mental infirmity which impairs
the Employee's ability to substantially perform his duties under this Agreement
and which results in the Employee becoming eligible for long-term disability
benefits under the Company's long-term disability plan (or, if the Company has
no such plan in effect, which impairs, or can be expected to impair, the
Employee's ability to substantially perform his duties under this Agreement for
a period of 180 consecutive days). The Employee shall be entitled to the
compensation and benefits provided for under this Agreement for (i) any period
during the term of this Agreement and prior to the establishment of the
Employee's Disability during which the Employee is unable to work due to the
physical or mental infirmity, or (ii) any period of Disability which is prior to
the Employee's termination of employment pursuant to this Section 9(b).
(c) Just Cause. The Board may, by written notice to the Employee,
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immediately terminate his employment at any time, for Just Cause. The Employee
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause. Termination for "Just Cause" shall mean
termination because of, in the good faith determination of the Board, the
Employee's 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, material breach
of any provision of this Agreement, or removal and/or permanent prohibition of
the Employee from participating in the conduct of the Bank's affairs by an order
issued by the Office of Thrift Supervision, or any successor agency. No act, or
failure to act, on the Employee's part shall be considered "willful", unless he
has acted, or failed to act, with an absence of good faith and without a
reasonable belief that his action, or failure to act, was in the best interest
of the Company. Notwithstanding the foregoing, the Employee shall not be deemed
to have been terminated for Just Cause unless there shall have been delivered to
the Employee a copy of a resolution duly adopted by the affirmative vote of not
less than a majority of the entire membership of the Board at a meeting of the
Board called and held for the purpose (after reasonable notice to the Employee
and an opportunity for the Employee to be heard before the Board), finding that
in the good faith opinion of the Board the Employee was guilty of conduct set
forth above in the third sentence of this Subsection (c) and specifying the
particulars thereof in detail.
(d) Without Just Cause. The Board may, by written notice to the
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Employee, immediately terminate his employment at any time for a reason other
than Just Cause, in which event the Employee shall be entitled to receive the
following compensation and benefits (unless such termination occurs within the
time period set forth in Section 11(b) hereof, in which event the benefits and
compensation provided for in Section 11 shall apply): (i) the salary provided
pursuant to Section 2 hereof, up to the date of termination of the term
(including any renewal term) of this Agreement (the "Expiration Date"), plus
said salary for an additional 12-month period, and (ii) at the Employee's
election, either (A) cash in an amount equal to the cost to the Employee of
obtaining all health, life, disability and other benefits which the Employee
would have been eligible to participate in through the Expiration Date based
upon the benefit levels substantially equal to those that the Company provided
for the Employee at the date of termination of employment or (B) continued
participation under such Company benefit plans through the Expiration Date, but
only to the extent the Employee continues to qualify for participation therein.
All amounts payable to the Employee shall be paid, at the option of the
Employee, either (I) in periodic payments through the Expiration Date, or (II)
in one lump sum within 10 days of such termination.
(e) Voluntary Termination by Employee. Subject to Section 11 hereof,
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the Employee may voluntarily terminate employment with the Company during the
term of this Agreement, upon at least 60 days' prior written notice to the Board
of Directors, in which case the Employee shall receive only his compensation,
vested rights
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and employee benefits up to the date of his termination (unless such termination
occurs pursuant to Section 9(d)(2) hereof or within the time period set forth in
Section 11(a) hereof, in which went the benefits and compensation provided for
in Section 9(d) or 11, as applicable, shall apply.
10. No Mitigation. The Employee shall not be required to mitigate the
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amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.
11. Change in Control.
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(a) Notwithstanding any provision herein to the contrary, in the
event that (1) the Employee's employment under this Agreement is terminated by
the Company, without the Employee's prior written consent and for a reason other
than Just Cause, in connection with or within 12 months after any change in
control, or (2) the Employee voluntarily terminates employment for any reason
within the 30-day period beginning on the date of any change in control, the
Employee shall be paid an amount equal to the difference between (i) the product
of 2.99 times his "base amount" as defined in Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended (the "Code") and regulations promulgated
thereunder, and (ii) the sum of any other parachute payments (as defined under
Section 280G(b)(2) of the Code) that the Employee receives on account of the
Change in Control. Said sum shall be paid in one lump sum within ten (10) days
of such termination, and shall be paid in lieu of the payment of any benefits
under Section 9 hereof. The Bank shall also maintain existing insurance for six
months after termination of the Employee's employment, or if Employee dies
within such six months, the Bank shall maintain health insurance for the
Employee's spouse, if living, for the remainder of the six month period. At the
election of the Employee, which election is to be made within 30 days of
Employee's termination, such payments shall be made in a lump sum or paid
monthly during the remaining term of this Agreement following the Employee's
termination, and shall be payable, in the event of the Employee's death before
full payment is made, to the Employee's surviving spouse, if any, and otherwise
to his estate. In the event that no election is made, payment to the Employee
will be made on a monthly basis during the remaining term of this Agreement.
The term "Change in Control" shall mean (1) the ownership, holding or power
to vote more than 25% of the Bank's or the Company's voting stock, (2) the
acquisition of the ability to control of the election of a majority of the
Bank's or the Company's directors, (3) the acquisition of a controlling
influence over the management or policies of the Company by any person or by
persons acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934) (except in the case of (1), (2) and (3) hereof,
ownership or control of the Bank by the Company itself shall not constitute a
"Change in Control"), or (4) during any period of two consecutive years,
individuals who at the beginning of such period constitute the board of
directors of the Bank or the Company (the "Continuing Directors") cease for any
reason to constitute at least two-thirds thereof; provided, however, that any
individual whose election or nomination for election as a member of the board of
directors of the Bank or the Company was approved by a vote of at least two-
thirds of the Continuing Directors then in office shall be considered a
Continuing Director. The term "person" means an individual other than the
Employee, or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein. The decision of the Continuing
Directors as to whether a Change in Control has occurred shall be conclusive and
binding.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the Employee may voluntarily terminate his employment under this
Agreement within 12 months following a Change in Control of the Company, and the
Employee shall thereupon be entitled to receive the payment described in Section
11(a) of this Agreement, upon the occurrence of any of the following events, or
within 90 days thereafter, which have not been consented to in advance by the
Employee in writing: (i) the requirement that the Employee move his personal
residence, or perform his principal executive functions, more than 30 miles from
his primary office as of the date of the Change in Control; (ii) a material
reduction without reasonable cause in the Employee's base compensation as in
effect on the date of the Change in Control or as the same may be increased from
time to time; (iii) the failure by the Company to continue to provide the
Employee with compensation and benefits provided for under this Agreement, as
the same may be increased from time to time, or with benefits substantially
similar to those provided to him under any of the employee
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benefit plans in which the Employee now or hereafter becomes a participant, or
the taking of any action by the Company which would directly or indirectly
reduce any of such benefits or deprive the Employee of any material fringe
benefit enjoyed by him at the time of the Change in Control; (iv) the assignment
to the Employee of duties and responsibilities materially different from those
normally associated with his position as referenced at Section 1; (v) a failure
to nominate the Employee to the Board, if the Employee is serving on the Board
on the date of the Change in Control; or (vi) a material diminution or reduction
in the Employee's responsibilities or authority (including reporting
responsibilities) in connection with his employment with the Company. Said sum
shall be paid in lieu of the payment of any benefits under Section 9 hereof.
(c) Any payments made to the Employee pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
(d) Special Distribution Elections. Notwithstanding the foregoing,
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any severance benefits that became payable under this Section 11 shall be paid
in the manner selected by the Employee in a duly executed election in the form
attached hereto as Exhibit "A"; provided that such an election will be honored
and given effect only if it is properly made and delivered to the Company more
than 90 days before the closing date of the Change in Control. The Employee 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 identity or manner of
payment to his beneficiary. In the absence of a valid election, severance
benefits will be paid in accordance with the terms of Section 11(a) hereof.
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.
(e) Trust. Not later than three business days after a change in
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control as defined in Section 11(a) of this Agreement, the 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 Company reasonably projects to be 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 Employee, 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 Employee provides a written release of all claims under this
Agreement.
During the fifteen (15) consecutive month period after a change in
control, the Employee may provide the trustee of the Trust with a written notice
directing the trustee to pay to the Employee 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
Employee, and coincidentally shall provide the 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 Company the entire balance
remaining in the segregated account maintained for the benefit of the Employee.
The Employee shall thereafter have no further interest in the Trust.
12. Arbitration; Reimbursement of Expenses.
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(a) Arbitration. Any dispute or controversy arising under or in
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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 arbitration award in any court having
jurisdiction; provided, however, that until the Expiration Date the Employee
shall be entitled to such specific performance of his right to be paid 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.
(b) Reimbursement of Employee for Enforcement Proceedings. In the
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event that any dispute arises between the Employee and the Company as to the
terms or interpretation of this Agreement, whether instituted by formal legal
proceedings or otherwise, including any action that the Employee takes to defend
against any action taken
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by the Company or the Company, the Employee shall be reimbursed for all costs
and expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, provided that the Employee obtains either a written
settlement or a final judgement by a court of competent jurisdiction
substantially in his favor. Such reimbursement shall be paid within ten days of
the Employee's furnishing to the Company written evidence, which may be in the
form, among other things, of a canceled check or receipt, of any costs or
expenses incurred by the Employee.
13. Federal Income Tax Withholding. The Company may withhold all Federal
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and State income or other taxes for any benefit payable under this Agreement as
shall be required pursuant to any law or governmental regulation or ruling.
14. Successors and Assigns.
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(a) Company. This Agreement shall not be assignable by the Company;
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provided, however, that this Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the Company which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Company.
(b) Employee. Since the Company is contracting for the unique and
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personal skills of the Employee, the Employee shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the written
consent of the Company; provided, however, that nothing in this paragraph shall
preclude (i) the Employee from designating a beneficiary to receive any benefit
payable hereunder upon his death, or (ii) the executor, administrator or other
legal representatives of the Employee or his estate from assigning any rights
hereunder to the person or persons entitled thereunto.
(c) Attachment. Except as required by law, no right to receive
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payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to exclusion, attachment, levying or similar process or assignment by operation
of law, and any attempt, voluntarily or involuntarily, to effect any such action
shall be null, void and of no effect.
15. Amendments. No amendments or additions to this Agreement shall be
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binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
16. Applicable Law. Except to the extent preempted by Federal law, the
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laws of the State of Alabama shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
17. Severability. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
18. Entire Agreement. This Agreement, together with any understanding or
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modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.
ATTEST: FIRSTFED BANCORP, INC.
By:
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Secretary
WITNESS:
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X.X. Xxxxxxx, III
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EXHIBIT "A"
FIRSTFED BANCORP, INC.
EMPLOYMENT AGREEMENT WITH X. X. XXXXXXX, III
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ELECTION OF PAYMENT METHOD
AFTER A CHANGE IN CONTROL
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AGREEMENT, made this ____ day of ________, 19__, by and between X. X.
Xxxxxxx, III (the "Employee") 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 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 his Benefits in cash that
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is paid --
[_] in one lump sum equal to the present value of his accrued but
unpaid Benefits.
[_] in substantially equal annual payments over a period of _____
years (no more than 10), with interest accruing, in accordance
with the Agreement, on the unpaid present value of his Benefits.
2. Time of Payment. The Employee shall begin to receive Benefits as soon
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as practicable after --
[_] A Change in Control closes.
[_] the January 1/st/ after a Change in Control closes.
[_] the _________ annual anniversary of the January 1st after a
Change in Control closes.
3. Frequency of Payment. The Employee shall receive Benefits on a ______
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monthly, ______ quarterly, _____ semi-annual, or _____ annual basis.
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4. Form of Payment to Beneficiary. In the event of the Employee's death,
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his 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 his death, if payments had not
already begun).
5. Designation of Beneficiary. In the event of the Employee's death
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before he has collected all of the benefits payable 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)
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named below to be his primary beneficiary and to receive the balance of any
unpaid benefits under the Agreement.
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Name of Percentage of
Primary Beneficiary Mailing Address Death Benefit
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%
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%
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b. Contingent Beneficiary. In the event that the primary
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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
his contingent beneficiary for purposes of the Agreement:
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Name of Percentage of
Contingent Beneficiary Mailing Address Death Benefit
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%
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%
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6. Effect of Election. The elections made in paragraphs 1, 2, and 3
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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 his
designation of, and manner of payment to, a beneficiary. Such election shall,
however, become irrevocable upon the Employee's death.
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7. Mutual Commitments. The Company agrees to make payment of all amounts
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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.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the
day and year first above-written.
EMPLOYEE
Witnessed by:
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X .X. Xxxxxxx, III
FIRSTFED BANCORP, INC.
Witnessed by:
By
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An authorized Director
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