Document:

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                                  EXHIBIT 10.1

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                      FIRST FEDERAL BANK ROSWELL NEW MEXICO

                              EMPLOYMENT AGREEMENT
                                       FOR
                                JERRY R. SPURLIN

        This Agreement (this "Agreement") is entered into as of the ____ day of
_____________, 2004 by and between First Federal Bank, Roswell, New Mexico (the
"Bank"), a federally chartered savings association, with its principal
administrative office at 300 North Pennsylvania Avenue, Roswell, New Mexico
88201, and Jerry R. Spurlin ("Executive"). All references to "Company" herein
shall refer to First Federal Banc of the Southwest, Inc., the holding company of
the Bank.

        WHEREAS, contemporaneously herewith, the Bank has entered into an
Agreement and Plan of Merger dated as of ____________, 2004 (the "Merger
Agreement"), by and between First Federal Bank of the Southwest, Inc. and GFSB
Bancorp, Inc. ("GFSB") pursuant to which GFSB shall merge with and into the
Company (the "Merger"), and the separate existence of GFSB shall cease; and

        WHEREAS, Executive is currently employed as the Chief Financial Officer
of GFSB; and

        WHEREAS, Executive and Gallup Federal Savings Bank ("Gallup Federal"), a
wholly owned subsidiary corporation of GFSB, previously entered into a Change in
Control Severance Agreement dated as of August 22, 2003 (the "Severance
Agreement"), which provides that if Executive is involuntarily terminated within
twenty-four (24) months following a change in control of Gallup Federal or GFSB,
Executive shall be paid an amount equal to 200% times his base annual salary in
effect on the last day of the calendar year first preceding the year of
Executive's termination of employment, plus the costs of maintaining coverage
for Executive under Gallup Federal's medical and dental insurance plan for a
period of one year; and

        WHEREAS, the Merger may qualify as a change in control under the
Severance Agreement, thereby entitling Executive to receive payments thereunder,
and the parties hereto have agreed that the consummation of the Merger will
constitute a constructive termination under said Severance Agreement; and

        WHEREAS, the Bank desires to retain the services of Executive for the
period hereunder, and in order to induce Executive to join the employ of the
Bank, the Bank and Executive desire to enter into this Agreement to effect the
terms of Executive's employment by the Bank.

        NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:

1.      POSITION AND RESPONSIBILITIES

        During the period of his employment hereunder, Executive agrees to serve
as Senior Vice President of the Bank.

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2.      EFFECTIVE DATE, TERMS AND DUTIES

        (a)     EFFECTIVE DATE. The Effective Date of this Agreement shall occur
immediately following the closing of the Merger. The "Effective Date" shall be
the "Closing Date" of the Merger (as such term is defined in the Merger
Agreement).

        (b)     The period of Executive's employment under this Agreement shall
begin as of the date first above written and shall continue for twenty-four (24)
full calendar months thereafter.

        (c)     During the period of his employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence approved by the Board, Executive shall devote
substantially all his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including activities and services
related to the organization, operation and management of the Bank.

3.      COMPENSATION AND REIMBURSEMENT

        (a)     The compensation specified under this Agreement shall constitute
the salary and benefits paid for the duties described in Section 2(c). The Bank
shall pay Executive as compensation a salary of not less than $100,000 per year
("Base Salary"). Such Base Salary shall be payable biweekly, or in accordance
with the normal payroll practices of the Bank. During the period of this
Agreement, the Board may increase, but not decrease, Executive's Base Salary
(any increase in Base Salary shall become the "Base Salary" for purposes of this
Agreement). In addition to the Base Salary provided in this Section 3(a), the
Bank shall provide Executive at no cost to Executive with all such other
benefits as are provided uniformly to permanent full-time employees of the Bank.

        (b)     In addition to the Base Salary set forth in Section 3(a) hereof,
the Bank and the Company agree to honor the Severance Agreement, pursuant to the
following terms:

        (i)     The Bank shall pay to Executive a lump sum cash payment of FIFTY
THOUSAND AND 00/100 DOLLARS ($50,000.00) on the Closing Date, to be applied and
credited against the outstanding balance of the cash severance benefits payable
to Executive under the Severance Agreement. The Bank, the Company and Executive
hereby agree that after crediting such $50,000.00 payment to the aggregate
benefits due to Executive under the Severance Agreement, the remaining balance
payable to Executive is ONE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS
($150,000.00);

        (ii)    Provided Executive is employed on a full-time basis for the full
two (2) year term of this Agreement, the Bank shall pay to Executive the
remaining balance owed to Executive under the Severance Agreement in a lump sum
payment within thirty (30) days following the end of the term of this Agreement.
For purposes of this Section 3(b)(ii), the Executive shall earn payment, subject
to the other terms of this Agreement, at a rate of 1/24 per month on the balance
payable to the Executive under the Severance Agreement ("Earned Payment);

        (iii)   During the term of this Agreement, if Executive voluntarily
terminates employment with the Bank for any reason or for no reason, the Bank
shall pay to Executive the

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Earned Payment of any benefits due to Executive under Section 3(b)(ii) hereof.
If, during the term of this Agreement, the employment of the Executive is
terminated for cause, the Bank shall have no obligation to pay Executive any
benefits due the Executive under Section 3(b)(ii) hereof. If, during the term of
this Agreement, the employment of the Executive is involuntarily terminated by
the Bank for any reason other than cause, the Bank shall pay Executive all of
the benefits provided under Section 3(b)(ii) hereof.

        (c)     The Executive will be entitled to participate in or receive
benefits under any employee benefit plans of the Bank or the Company including,
but not limited to, retirement plans, health-and-accident plans, medical
coverage and any other employee benefit plan or arrangement made available by
the 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 and bonuses as provided in any plan of the Bank in which
Executive is eligible to participate. Nothing paid to Executive under any such
plan or arrangement will be deemed to be in lieu of other compensation to which
Executive is entitled under this Agreement.

        (d)     In addition to the Base Salary provided for by paragraph (a) of
this Section 3, the Bank shall pay or reimburse Executive for all reasonable
travel and other reasonable expenses incurred by Executive performing his
obligations under this Agreement and may provide such additional compensation in
such form and such amounts as the Board may from time to time determine. The
Bank shall reimburse Executive for his ordinary and necessary business expenses,
and travel and entertainment expenses, incurred in connection with the
performance of his duties under this Agreement, upon presentation to the Bank of
an itemized account of such expenses in such form as the Bank may reasonably
require.

4.      PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION

        The provisions of this Section shall in all respects be subject to the
terms and conditions stated in Sections 3(b)(ii), 3(b)(iii), 7 and 13.

        (a)     The provisions of this Section shall apply upon the occurrence
of an Event of Termination (as herein defined) during Executive's term of
employment under this Agreement. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following:

        (i)     the termination by the Bank of Executive's full-time employment
hereunder for any reason other than Termination for Cause as defined in Section
6 hereof; or

        (ii)    Executive's resignation from the Bank's employ.

        (iii)   Upon the occurrence of an Event of Termination, as defined in
Section 4(a)(i), or (ii), on the Date of Termination, as defined in Section 7(b)
or, if different, within the time frame set forth in any sub-paragraph below,
the Bank shall pay, provide or credit to Executive those payments required by
Section 3(b)(iii). The Bank shall have no obligation to pay Executive any
remaining salary due under this Agreement.

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5.      TERMINATION UPON DEATH

        In the event of Executive's death during the term of the Agreement, his
estate, legal representatives or named beneficiaries (as directed by Executive
in writing) shall be paid the remaining balance owed to Executive under the
Severance Agreement, whether or not such remaining balance has been earned by
the Executive.

6.      TERMINATION FOR CAUSE

        The term "Termination for Cause" shall mean termination because of
Executive's personal dishonesty, incompetence, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, or regulation (other than minor
traffic violations or similar offenses) or final cease-and-desist order, or
material breach of any provision of this Agreement. In determining incompetence,
the acts or omissions shall be measured against standards generally prevailing
in the savings institution industry. For purposes of this paragraph, no act or
failure to act on the part of Executive shall be considered "willful" unless
done, or omitted to be done, by Executive not in good faith and without
reasonable belief that Executive's action or omission was in the best interest
of the Bank. Notwithstanding the foregoing, Executive shall not be deemed to
have been Terminated for Cause unless and until there shall have been delivered
to him a copy of a resolution duly adopted by the affirmative vote of not less
than three-fourths of the members of the Board at a meeting of the Board called
and held for that purpose (after reasonable notice to Executive and an
opportunity for him, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, Executive was guilty of
conduct justifying Termination for Cause and specifying the particulars thereof
in detail. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause.

7.      NOTICE

        (a)     Any purported termination by the Bank or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.

        (b)     "Date of Termination" shall mean (A) if Executive's employment
is terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).

        (c)     If, within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, except upon the voluntary
termination by Executive, in which case the Date of Termination shall be the
date

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specified in the Notice, the Date of Termination shall be the date on which the
dispute is finally determined, either by mutual written agreement of the
parties, by a binding arbitration award, or by a final judgment, order or decree
of a court of competent jurisdiction (the time for appeal having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Bank will continue to pay Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue Executive as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement,
provided such dispute is resolved within the term of this Agreement. If such
dispute is not resolved within the term of the Agreement, the Bank shall not be
obligated, upon final resolution of such dispute, to pay Executive compensation
and other payments accruing beyond the term of the Agreement. Amounts paid under
this Section shall be offset against or reduce any other amounts due under this
Agreement.

8.      POST-TERMINATION OBLIGATIONS

        (a)     All payments and benefits to Executive under this Agreement
shall be subject to Executive's compliance with paragraph (b) of this Section
during the term of this Agreement and for one (1) full year after the expiration
or termination hereof.

        (b)     Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party.

9.      NON-COMPETITION

        (a)     During the term of this Agreement, and for a period of two (2)
years following any termination of Executive's employment hereunder, Executive
agrees not to compete with the Bank and/or the Company following such
termination in any city, town or county in which the Bank and/or the Company has
an office or has filed an application for regulatory approval to establish an
office, determined as of the effective date of such termination, except as
agreed to pursuant to a resolution duly adopted by the Board. Executive agrees
that during such period and within said area, cities, towns and counties,
Executive shall not work for or advise, consult or otherwise serve with,
directly or indirectly, any entity whose business materially competes with the
depository, lending or other business activities of the Bank and/or the Company.
The parties hereto, recognizing that irreparable injury would result to the Bank
and/or the Company, its business and property in the event of Executive's breach
of this Subsection 9(a), agree that in the event of any such breach by
Executive, the Bank and/or the Company would be entitled, in addition to any
other remedies and damages available, to an injunction to restrain the violation
hereof by Executive, Executive's partners, agents, employers, employees and all
persons acting for or with Executive. Nothing herein shall be construed as
prohibiting the Bank and/or the Company from pursuing any other remedies
available to the Bank and/or the Company for such breach or threatened breach,
including the recovery of damages from Executive.

        (b)     Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Bank and affiliates
thereof, as it may exist from time to time, is a valuable, special and unique
asset of the business of the Bank. Executive will not, during or after the term
of his employment, disclose any knowledge of the past, present, planned or
considered business activities of the Bank or affiliates thereof to any person,
firm, corporation, or other entity for any

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reason or purpose whatsoever (except for such disclosure as may be required to
be provided to any federal banking agency with jurisdiction over the Bank or
Executive). Notwithstanding the foregoing, Executive may disclose any knowledge
of banking, financial and/or economic principles, concepts or ideas which are
not solely and exclusively derived from the business plans and activities of the
Bank, and Executive may disclose any information regarding the Bank or the
Company which is otherwise publicly available. In the event of a breach or
threatened breach by Executive of the provisions of this Section, the Bank will
be entitled to an injunction restraining Executive from disclosing, in whole or
in part, the knowledge of the past, present, planned or considered business
activities of the Bank or affiliates thereof, or from rendering any services to
any person, firm, corporation or other entity to whom such knowledge, in whole
or in part, has been disclosed or is threatened to be disclosed. Nothing herein
will be construed as prohibiting the Bank from pursuing any other remedies
available to the Bank for such breach or threatened breach, including the
recovery of damages from Executive.

10.     SOURCE OF PAYMENTS

        All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank.

11.     NO ATTACHMENT

        (a)     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, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.

        (b)     This Agreement shall be binding upon, and inure to the benefit
of, Executive and the Bank and their respective successors and assigns.

12.     ENTIRE AGREEMENT; MODIFICATION AND WAIVER

        (a)     This Agreement contains the entire agreement of Executive and
the Bank relating to the subject matter hereof, and supersedes in its entirety
any and all prior agreements, understandings or representations between the
parties relating to the subject matter hereof.

        (b)     This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.

        (c)     No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.

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13.     REQUIRED REGULATORY PROVISIONS

        (a)     The Bank may terminate Executive's employment at any time.

        (b)     If Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Bank's affairs by a notice
served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act (12
USC ss.1818(e)(3) and ss.1818(g)(1)), the 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 Bank may in its
discretion (i) pay Executive all or part of the compensation withheld while its
contract obligations were suspended and (ii) reinstate (in whole or in part) any
of the obligations which were suspended.

        (c)     If 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 8g(1) of the Federal Deposit Insurance Act (12 USC
ss.1818(e)(4) and ss.1818(g)(1)), all obligations of the 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.

        (d)     If the Bank is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act (12 USC ss.1813(x)(1)), all obligations of the
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.

        (e)     All obligations of the 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 Bank by the Director of the Office
of Thrift Supervision ("OTS") or his designee at the time (i) the Federal
Deposit Insurance Corporation ("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 Federal Deposit Insurance Act (12 USC ss.1823(c)); or (ii) the
Director of the OTS or his designee approves a supervisory merger to resolve
problems related to the operation of the Bank or when the Bank is determined by
the Director of the OTS 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.

        (f)     Notwithstanding anything herein contained to the contrary, any
payments to Executive by the Bank pursuant to this Agreement are subject to and
conditioned upon their compliance with Section 18(k) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated
thereunder in 12 C.F.R. Part 359.

14.     SEVERABILITY

        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.

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15.     HEADINGS FOR REFERENCE ONLY

        The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

16.     GOVERNING LAW

        This Agreement shall be governed by the laws of the State of New Mexico
but only to the extent not superseded by federal law.

17.     ARBITRATION

        Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the employee within
twenty-five miles of Roswell, New Mexico, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.

18.     PAYMENT OF LEGAL FEES

        All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Bank, provided that the dispute or interpretation has been
settled by Executive and the Bank or has been resolved in Executive's favor.

19.     RELEASE

        In consideration for the payments required in Section 3(b) of this
Agreement, Executive hereby agrees to release and hold harmless the Bank, its
officers, directors, employees, affiliates, agents, successors and assigns, from
any and all liability from any claim (whether in law or equity) arising from
Executive's employment with the Bank, the Company, Gallup Federal Savings Bank
or GFSB Bancorp, Inc.

[Remainder of Page Intentionally Blank]

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                                   SIGNATURES

        IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by
its duly authorized officer, and Executive has signed this Agreement, effective
as of the date first above written.

ATTEST:                        FIRST FEDERAL BANK

____________________           By:
                                  ----------------------------------------------
Secretary                          Aubrey L. Dunn, Jr.
                                   President and Chief Executive Officer

WITNESS:                       EXECUTIVE:

____________________           By:
                                  ----------------------------------------------
                                   Jerry R. Spurlin

                                       9<PAGE>

                                  EXHIBIT 10.2

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                      FIRST FEDERAL BANK ROSWELL NEW MEXICO

                              EMPLOYMENT AGREEMENT
                                       FOR
                              WILLIAM W. HEAD, JR.

        This Agreement (this "Agreement") is entered into as of the ____ day of
_____________, 2004 by and between First Federal Bank, Roswell, New Mexico (the
"Bank"), a federally chartered savings association, with its principal
administrative office at 300 North Pennsylvania Avenue, Roswell, New Mexico
88201, and William W. Head, Jr. ("Executive"). All references to "Company"
herein shall refer to First Federal Banc of the Southwest, Inc., the holding
company of the Bank.

        WHEREAS, contemporaneously herewith, the Bank has entered into an
Agreement and Plan of Merger dated as of ____________, 2004 (the "Merger
Agreement"), by and between First Federal Bank of the Southwest, Inc. and GFSB
Bancorp, Inc. ("GFSB") pursuant to which GFSB shall merge with and into the
Company (the "Merger"), and the separate existence of GFSB shall cease; and

        WHEREAS, Executive is currently employed as the Vice President of Gallup
Federal Savings Bank ("Gallup Federal"); and

        WHEREAS, Executive and Gallup Federal, a wholly owned subsidiary
corporation of GFSB, previously entered into a Change in Control Severance
Agreement dated as of August 22, 2003 (the "Severance Agreement"), which
provides that if Executive is involuntarily terminated within twenty-four (24)
months following a change in control of Gallup Federal or GFSB, Executive shall
be paid an amount equal to 200% times his base annual salary in effect on the
last day of the calendar year first preceding the year of Executive's
termination of employment, plus the costs of maintaining coverage for Executive
under Gallup Federal's medical and dental insurance plan for a period of one
year; and

        WHEREAS, the Merger may qualify as a change in control under the
Severance Agreement, thereby entitling Executive to receive payments thereunder,
and the parties hereto have agreed that the consummation of the Merger will
constitute a constructive termination under said Severance Agreement; and

        WHEREAS, the Bank desires to retain the services of Executive for the
period hereunder, and in order to induce Executive to join the employ of the
Bank, the Bank and Executive desire to enter into this Agreement to effect the
terms of Executive's employment by the Bank.

        NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:

1.      POSITION AND RESPONSIBILITIES

        During the period of his employment hereunder, Executive agrees to serve
as Vice President of the Bank.

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2.      EFFECTIVE DATE, TERMS AND DUTIES

        (a)     EFFECTIVE DATE. The Effective Date of this Agreement shall occur
immediately following the closing of the Merger. The "Effective Date" shall be
the "Closing Date" of the Merger (as such term is defined in the Merger
Agreement).

        (b)     The period of Executive's employment under this Agreement shall
begin as of the date first above written and shall continue until 5:00 p.m.
local time on December 31, 2005.

        (c)     During the period of his employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence approved by the Board, Executive shall devote
substantially all his business time, attention, skill and efforts to the
faithful performance of his duties hereunder including activities and services
related to the organization, operation and management of the Bank.

3.      COMPENSATION AND REIMBURSEMENT

        (a)     The compensation specified under this Agreement shall constitute
the salary and benefits paid for the duties described in Section 2(c). The Bank
shall pay Executive as compensation a salary of not less than $76,253 per year
("Base Salary"). Such Base Salary shall be payable biweekly, or in accordance
with the normal payroll practices of the Bank. During the period of this
Agreement, the Board may increase, but not decrease, Executive's Base Salary
(any increase in Base Salary shall become the "Base Salary" for purposes of this
Agreement). In addition to the Base Salary provided in this Section 3(a), the
Bank shall provide Executive with all such other benefits as are provided
uniformly to permanent full-time employees of the Bank.

        (b)     In addition to the Base Salary set forth in Section 3(a) hereof,
the Bank and the Company agree to honor the Severance Agreement, pursuant to the
following terms:

        (i)     The Bank, the Company and Executive hereby agree that the
aggregate benefits due to Executive under the Severance Agreement is ONE HUNDRED
FIFTY-TWO THOUSAND FIVE HUNDRED SIX AND 00/100 DOLLARS ($152,506.00);

        (ii)    The payment due Executive under Section 3(b)(i) hereof shall be
divided into twenty-four (24) as nearly equal payments as possible. For every
full or partial month worked by Executive, the balance payable to the Executive
under the Severance Agreement shall be reduced at a rate of 1/24 per month
beginning as of the Effective Date of this Agreement (the "Adjusted Payment");

        (iii)   During the term of this Agreement, if Executive voluntarily
terminates employment with the Bank for any reason or for no reason, subject to
compliance with Section 3(b)(iv) hereof, the Bank shall pay to Executive the
Adjusted Payment of any benefits due to Executive under Section 3(b)(ii) hereof.
If, during the term of this Agreement, the employment of the Executive is
terminated for cause, the Bank shall have no obligation to pay Executive any
benefits due the Executive under Section 3(b) hereof. If, during the term of
this Agreement, the employment of the Executive is involuntarily terminated by
the Bank for any reason other than cause, the Bank shall pay Executive all of
the benefits provided under Section 3(b)(ii) hereof.

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        (iv)    In the event Executive voluntarily terminates employment with
the Bank for any reason or for no reason, Executive must provide the Bank with
ninety (90) days advance written notice of his intension to voluntarily
terminate his employment with the Bank.

        (c)     The Executive will be entitled to participate in or receive
benefits under any employee benefit plans of the Bank or the Company including,
but not limited to, retirement plans, health-and-accident plans, medical
coverage and any other employee benefit plan or arrangement made available by
the 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 and bonuses as provided in any plan of the Bank in which
Executive is eligible to participate. Nothing paid to Executive under any such
plan or arrangement will be deemed to be in lieu of other compensation to which
Executive is entitled under this Agreement.

        (d)     In addition to the Base Salary provided for by paragraph (a) of
this Section 3, the Bank shall pay or reimburse Executive for all reasonable
travel and other reasonable expenses incurred by Executive performing his
obligations under this Agreement and may provide such additional compensation in
such form and such amounts as the Board may from time to time determine. The
Bank shall reimburse Executive for his ordinary and necessary business expenses,
and travel and entertainment expenses, incurred in connection with the
performance of his duties under this Agreement, upon presentation to the Bank of
an itemized account of such expenses in such form as the Bank may reasonably
require.

4.      PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION

        The provisions of this Section shall in all respects be subject to the
terms and conditions stated in Sections 3(b), 7 and 13.

        (a)     The provisions of this Section shall apply upon the occurrence
of an Event of Termination (as herein defined) during Executive's term of
employment under this Agreement. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following:

        (i)     the termination by the Bank of Executive's full-time employment
hereunder for any reason other than Termination for Cause as defined in Section
6 hereof; or

        (ii)    Executive's resignation from the Bank's employ.

        (iii)   Upon the occurrence of an Event of Termination, as defined in
Section 4(a)(i), or (ii), on the Date of Termination, as defined in Section 7(b)
or, if different, within the time frame set forth in any sub-paragraph below,
the Bank shall pay, provide or credit to Executive those payments required by
Section 3(b)(iii), subject to the terms of this Agreement. The Bank shall have
no obligation to pay Executive any remaining salary due under this Agreement.

                                       3
<PAGE>

5.      TERMINATION UPON DEATH

        In the event of Executive's death during the term of the Agreement, his
estate, legal representatives or named beneficiaries (as directed by Executive
in writing) shall be paid the amount owed to Executive under the Severance
Agreement, whether or not such remaining amount have been reduced as set forth
in this Agreement.

6.      TERMINATION FOR CAUSE

        The term "Termination for Cause" shall mean termination because of
Executive's personal dishonesty, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, or regulation (other than minor traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. For purposes of this paragraph, no
act or failure to act on the part of Executive shall be considered "willful"
unless done, or omitted to be done, by Executive not in good faith and without
reasonable belief that Executive's action or omission was in the best interest
of the Bank. Notwithstanding the foregoing, Executive shall not be deemed to
have been Terminated for Cause unless and until there shall have been delivered
to him a copy of a resolution duly adopted by the affirmative vote of not less
than three-fourths of the members of the Board at a meeting of the Board called
and held for that purpose (after reasonable notice to Executive and an
opportunity for him, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, Executive was guilty of
conduct justifying Termination for Cause and specifying the particulars thereof
in detail. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause.

7.      NOTICE

        (a)     Any purported termination by the Bank or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.

        (b)     "Date of Termination" shall mean (A) if Executive's employment
is terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).

        (c)     If, within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, except upon the voluntary
termination by Executive, in which case the Date of Termination shall be the
date specified in the Notice, the Date of Termination shall be the date on which
the dispute is finally determined, either by mutual written agreement of the
parties, by

                                       4
<PAGE>

a binding arbitration award, or by a final judgment, order or decree of a court
of competent jurisdiction (the time for appeal having expired and no appeal
having been perfected) and provided further that the Date of Termination shall
be extended by a notice of dispute only if such notice is given in good faith
and the party giving such notice pursues the resolution of such dispute with
reasonable diligence. If such dispute is not resolved within the term of the
Agreement, the Bank shall not be obligated, upon final resolution of such
dispute, to pay Executive compensation and other payments accruing beyond the
term of the Agreement. Amounts paid under this Section shall be offset against
or reduce any other amounts due under this Agreement.

8.      POST-TERMINATION OBLIGATIONS

        (a)     All payments and benefits to Executive under this Agreement
shall be subject to Executive's compliance with paragraph (b) of this Section
during the term of this Agreement and for one (1) full year after the expiration
or termination hereof.

        (b)     Executive shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the Bank
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party.

9.      NON-COMPETITION

        (a)     During the term of this Agreement, and for a period of two (2)
years following any termination of Executive's employment hereunder, Executive
agrees not to compete with the Bank and/or the Company following such
termination in any city, town or county in which the Bank and/or the Company has
an office or has filed an application for regulatory approval to establish an
office, determined as of the effective date of such termination, except as
agreed to pursuant to a resolution duly adopted by the Board, except as a
licensed practicing attorney representing a client. Except as a licensed
practicing attorney representing a client, the Executive agrees that during such
period and within said area, cities, towns and counties, Executive shall not
work for or advise, consult or otherwise serve with, directly or indirectly, any
entity whose business materially competes with the depository, lending or other
business activities of the Bank and/or the Company. The parties hereto,
recognizing that irreparable injury would result to the Bank and/or the Company,
its business and property in the event of Executive's breach of this Subsection
9(a), agree that in the event of any such breach by Executive, the Bank and/or
the Company would be entitled, in addition to any other remedies and damages
available, to an injunction to restrain the violation hereof by Executive.
Nothing herein shall be construed as prohibiting the Bank and/or the Company
from pursuing any other remedies available to the Bank and/or the Company for
such breach or threatened breach, including the recovery of damages from
Executive.

        (b)     Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Company, the Bank
and affiliates thereof, as it may exist from time to time, is a valuable,
special and unique asset of the business of the Company and/or the Bank.
Executive will not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Company, the Bank or affiliates thereof to any person, firm, corporation, or
other entity for any

                                       5
<PAGE>

reason or purpose whatsoever (except for such disclosure as may be required to
be provided to any federal banking agency with jurisdiction over the Bank or
Executive). Notwithstanding the foregoing, Executive may disclose any knowledge
of banking, financial and/or economic principles, concepts or ideas which are
not solely and exclusively derived from the business plans and activities of the
Company and/or the Bank, and Executive may disclose any information regarding
the Bank or the Company which is otherwise publicly available. In the event of a
breach by Executive of the provisions of this Section, the Company and/or the
Bank will be entitled to an injunction restraining Executive from disclosing, in
whole or in part, the knowledge of the past, present, planned or considered
business activities of the Company, the Bank or affiliates thereof, or from
rendering any services to any person, firm, corporation or other entity to whom
such knowledge, in whole or in part, has been disclosed. Nothing herein will be
construed as prohibiting the Company and/or the Bank from pursuing any other
remedies available to the Company or the Bank for such breach, including the
recovery of damages from Executive.

10.     SOURCE OF PAYMENTS

        All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank.

11.     NO ATTACHMENT

        (a)     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, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.

        (b)     This Agreement shall be binding upon, and inure to the benefit
of, Executive and the Bank and their respective successors and assigns.

12.     ENTIRE AGREEMENT; MODIFICATION AND WAIVER

        (a)     This Agreement contains the entire agreement of Executive and
the Bank relating to the subject matter hereof, and supersedes in its entirety
any and all prior agreements, understandings or representations between the
parties relating to the subject matter hereof.

        (b)     This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.

        (c)     No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.

                                       6
<PAGE>

13.     REQUIRED REGULATORY PROVISIONS

        (a)     The Bank may terminate Executive's employment at any time.

        (b)     If Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Bank's affairs by a notice
served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act (12
USC ss.1818(e)(3) and ss.1818(g)(1)), the 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 Bank may in its
discretion (i) pay Executive all or part of the compensation withheld while its
contract obligations were suspended and (ii) reinstate (in whole or in part) any
of the obligations which were suspended.

        (c)     If 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 8g(1) of the Federal Deposit Insurance Act (12 USC
ss.1818(e)(4) and ss.1818(g)(1)), all obligations of the 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.

        (d)     If the Bank is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act (12 USC ss.1813(x)(1)), all obligations of the
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.

        (e)     All obligations of the 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 Bank by the Director of the Office
of Thrift Supervision ("OTS") or his designee at the time (i) the Federal
Deposit Insurance Corporation ("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 Federal Deposit Insurance Act (12 USC ss.1823(c)); or (ii) the
Director of the OTS or his designee approves a supervisory merger to resolve
problems related to the operation of the Bank or when the Bank is determined by
the Director of the OTS 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.

        (f)     Notwithstanding anything herein contained to the contrary, any
payments to Executive by the Bank pursuant to this Agreement are subject to and
conditioned upon their compliance with Section 18(k) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated
thereunder in 12 C.F.R. Part 359.

14.     SEVERABILITY

        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.

                                       7
<PAGE>

15.     HEADINGS FOR REFERENCE ONLY

        The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

16.     GOVERNING LAW

        This Agreement shall be governed by the laws of the State of New Mexico
but only to the extent not superseded by federal law.

17.     ARBITRATION

        Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the employee within
twenty-five miles of Roswell, New Mexico, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.

18.     PAYMENT OF LEGAL FEES

        All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Bank, provided that the dispute or interpretation has been
settled by Executive and the Bank or has been resolved in Executive's favor.

19.     RELEASE

        In consideration for the payments required in Section 3(b) of this
Agreement, Executive hereby agrees to release and hold harmless the Bank, its
officers, directors, employees, affiliates, agents, successors and assigns, from
any and all liability from any claim (whether in law or equity) arising from
Executive's employment with the Bank, the Company, Gallup Federal Savings Bank
or GFSB Bancorp, Inc.

[Remainder of Page Intentionally Blank]

                                       8
<PAGE>

                                   SIGNATURES

        IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by
its duly authorized officer, and Executive has signed this Agreement, effective
as of the date first above written.

ATTEST:                           FIRST FEDERAL BANK

____________________              By:
                                     -------------------------------------------
Secretary                            Aubrey L. Dunn, Jr.
                                     President and Chief Executive Officer

WITNESS:                          EXECUTIVE:

____________________              By:
                                     -------------------------------------------
                                     William W. Head, Jr.

                                       9

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