Document:

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                                                                    EXHIBIT 10.3

                           FIRST FEDERAL OF THE SOUTH

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

                        (Effective as of October 1, 2002)

                              (SANDRA H. STEPHENS)

         THIS AGREEMENT is entered into as of the 1st day of October, 2002 (the
"Effective Date"), by and between First Federal of the South (the "Association")
and Sandra H. Stephens (the "Employee").

         WHEREAS, the Employee has heretofore been employed by the Association
as Executive Vice-President and Chief Operating Officer and is experienced in
all phases of the business of the Association; and

         WHEREAS, the parties desire by this writing to establish and to set
forth the employment relationship between the Association and the Employee.

         NOW, THEREFORE, it is AGREED as follows:

         1.       Employment. The Employee is hereby employed as the Executive
Vice President and Chief Operating Officer. The Employee shall render such
administrative and management services for the Association 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
Association. The Employee's other duties shall be such as the Board of Directors
of the Association ("Board") may from time to time reasonably direct, including
normal duties as an officer of the Association.

         2.       Base Compensation. The Association agrees to pay the Employee
during the term of this Agreement a salary at the rate of $125,000 per annum,
payable in cash not less frequently than monthly. The Board shall review, not
less often than annually, the rate of the Employee's salary, and in its sole
discretion may decide to increase her salary.

         3.       Performance Bonus. Beginning on the Effective Date, and in
addition to Employee's base salary, Employee shall be eligible to receive such
performance bonuses as may be determined in the sole discretion of the Board.

         4.       (a)      Participation in Retirement, Medical and Other Plans.
The Employee shall participate in any plan that the Association 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.

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                  (b)      Employee Benefits; Expenses. The Employee shall
participate in any fringe benefits which are or may become available to the
Association's senior management employees, including for example: any stock
option or incentive compensation plans, club memberships, and any other benefits
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 she shall incur in connection
with her services under this Agreement upon substantiation of such expenses in
accordance with the policies of the Association.

         5.       Term. The Association hereby employs the Employee, and the
Employee hereby accepts such employment under this Agreement, for the period
commencing on the Effective Date and ending 24 months thereafter (or such
earlier date as is determined in accordance with Section 9). Additionally, on
each annual anniversary date from the Effective Date, this Agreement and the
Employee's term of employment shall 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; Full Time and Attention.

                  (a)      During the period of her employment hereunder and
except for illnesses, reasonable vacation periods, and reasonable leaves of
absence, the Employee shall devote all her full business time, attention, skill,
and efforts to the faithful performance of her duties hereunder; 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 any conflict of interest with the Association or any of its
subsidiaries or affiliates, or unfavorably affect the performance of 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 her employment under this Agreement, the Employee shall not
engage in any business or activity contrary to the business affairs or interests
of the Association, 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 Association, or, solely
as a passive or minority investor, in any business.

         7.       Standards. The Employee shall perform her duties under this
Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Association will provide Employee with the
working facilities and staff customary for similar executives and necessary for
her to perform her duties.

         8.       Vacation and Sick Leave. The Employee shall be entitled,
without loss of pay, to absent herself voluntarily from the performance of her
duties under this Agreement in

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accordance with the terms set forth below, 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 Association.

                  (b)      The Employee shall not receive any additional
compensation from the Association on account of her 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 herself voluntarily
from the performance of her employment obligations with the Association for such
additional periods of time and for such valid and legitimate reasons as the
Board may in its discretion approve. 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 the 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 the provisions of
Section 11 hereof, the Employee's employment hereunder may be terminated under
the following circumstances:

                  (a)      Death. The Employee's employment under this Agreement
shall terminate upon her death during the term of this Agreement, in which event
the Employee's estate shall be entitled to receive the compensation due the
Employee through the last day of the calendar month in which her death occurred.

                  (b)      Disability. The Association may terminate the
Employee's employment after having established, through a determination by the
Board, 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 her duties under this Agreement and which results in the
Employee becoming eligible for long-term disability benefits under the
Association's long-term disability plan (or, if the Association has no such plan
in effect, which impairs the Employee's ability to substantially perform her
duties under this Agreement for a period of one hundred eighty (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 Executive's termination of employment
pursuant to this Section 9(b).

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                  (c)      For Cause. The Board may, by written notice to the
Employee, immediately terminate her employment at any time, for Cause. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for Cause. Termination for "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, or material
breach of any provision of this Agreement. Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated for 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 (excluding the Employee if a member 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 second sentence of this Subsection (c) and specifying the
particulars thereof in detail.

                  (d)      Without Cause. Subject to the provisions of Section
11 hereof, the Board may, by written notice to the Employee, immediately
terminate her employment at any time for any reason; provided that if such
termination is for any reason other than pursuant to Sections 9 (a) (b) or (c)
above, the Employee shall be entitled to receive the following compensation and
benefits: (i) the salary provided pursuant to Section 2 hereof, up to the date
of expiration of the term (including any renewal term then in effect) of this
Agreement (the "Termination Date"), plus said salary for an additional 12-month
period, and (ii) the cost to the Employee of obtaining all health, life and
disability benefits which the Employee would have been eligible to participate
in through the Termination Date, based upon the benefit levels substantially
equal to those that the Association provided for the Employee at the date of
termination of employment. Said sum shall be paid, at the option of the
Employee, either (I) in periodic payments over the remaining term of this
Agreement, as if the Employee's employment had not been terminated, or (II) in
one lump sum within ten (10) days of such termination; provided however, that
the amount to be paid by the Association to the Employee hereunder shall not
exceed two (2) times the Employee's "average annual compensation". The
Employee's "average annual compensation" shall be the average of the total
annual "compensation" acquired by the Employee during each of the five (5)
fiscal years (or the number of full fiscal years of employment, if the
Employee's employment is less than five (5) years at the termination thereof)
immediately preceding the date of termination. The term "compensation" shall
mean any payment of money or provision of any other thing of value in
consideration of employment, including, without limitation, base compensation,
bonuses, pension and profit sharing plan, director fees or committee fees,
fringe benefits and deferred compensation accruals.

                  (e)      Voluntary Termination by Employee. Subject to the
provisions of Section 11 hereof, the Employee may voluntarily terminate
employment with the Association 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 her compensation, vested rights and employee
benefits accrued up to the date of her termination.

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         10.      No Mitigation. The Employee shall not be required to mitigate
the 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.

                  (a)      Notwithstanding any provision herein to the contrary,
if the Employee's employment under this Agreement is terminated by the
Association, without the Employee's prior written consent and for a reason other
than for Cause, death or disability in connection with or within twenty-four
(24) months after any change in control of the Association or SouthFirst
Bancshares, Inc. (the "Corporation"), the Employee shall be paid an amount equal
to the difference between (i) the product of 2.99 times her "base amount" as
defined in Section 28OG(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 28OG(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. The term
"change in control" shall mean (1) an increase in the ownership of, or the
holding of, or the power to vote, by any person, or by any persons acting as a
"group" (within the meaning of Section 13(d) of the Securities Exchange Act of
1934), the Association's or Corporation's voting stock, to an amount which is
more than 25% of the issued and outstanding shares thereof, (2) a change in the
ownership of, or possession of, the ability to control the election of a
majority of the Association's or Corporation's directors, (3) a change in the
ownership of, or possession of, the ability to exercise a controlling influence
over the management or policies of the Association or the Corporation, by any
person, or by any 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 Association, or its board of
directors, by the Corporation 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
Corporation or the Association (the "Company Board") (the "Continuing
Directors") cease for any reason to constitute at least two-thirds thereof,
provided that any individual whose election or nomination for election as a
member of the Company Board 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), individuals
acting in concert or as a "group", or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.

                  (b)      Notwithstanding any other provision of this Agreement
to the contrary, the Employee may voluntarily terminate her employment under
this Agreement within twelve (12) months following a change in control of the
Association or the Corporation, 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 ninety (90) days
thereafter, which have not been consented to in advance by the Employee in
writing: (i) the requirement that the Employee move her personal residence, or
perform her principal executive functions, more than thirty-five (35) miles from
her primary office as of the date of the change in

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control; (ii) a material reduction in the Employee's base compensation as in
effect on the date of the change in control, as the same may be increased from
time to time; (iii) the failure by the Association 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 her under any of the employee benefit plans in
which the Employee now or hereafter becomes a participant, or the taking of any
action by the Association which would directly or indirectly reduce any of such
benefits or deprive the Employee of any material fringe benefit enjoyed by her
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 her position as referenced at Section 1; (v) a failure to elect or reelect
the Employee to the Board of Directors of the Association if the Employee is
serving on such 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 her employment with
the Association.

                  (c)      Notwithstanding any other provision of this Agreement
to the contrary, the Employee may voluntarily terminate her employment under
this Agreement within twelve (12) months following a change in control of the
Corporation or the Association, and the Employee shall thereupon be entitled to
receive the payment described in Section 11(a) of this Agreement.

                  (d)      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.

                  (e)      In the event that any dispute arises between the
Employee and the Association as to the terms or interpretation of this
Agreement, including this Agreement, whether instituted by formal legal
proceedings or otherwise, including any action that the Employee takes to
enforce the terms of this Agreement or to defend against any action taken by the
Association, 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 shall have obtained a final judgement by a
court of competent jurisdiction in favor of the Employee. Such reimbursement
shall be paid within ten (10) days of Employee's furnishing to the Association
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.

         12.      Requirements of Applicable Regulations of OTS

                  (a)      The Association's board of directors may terminate
the Employee's employment at any time, but any termination by the Association's
board of directors, other than termination for cause, shall not prejudice the
Employee's right to compensation or other benefits under this Agreement. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for cause (as defined in Section 9(c) hereof).

                  (b)      If the Employee is suspended and/or temporarily
prohibited from participating in the conduct of the Association's affairs by a
notice served under section 8(e)(3)

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or (g)(1) of Federal Deposit Insurance Act (12 U.S.C. 1818 (e)(3) and (g)(1)),
the Association's obligations under this Agreement shall be suspended as of the
date of service unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, the Association may in its discretion (i) pay the Employee
all or part of the compensation withheld while its obligations were suspended,
and (ii) reinstate (in whole or in part) any of its obligations which were
suspended.

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

                  (d)      If the Association is in default (as defined in
section 3(x)(1) of the Federal Deposit Insurance Act), all obligations under
this Agreement shall terminate as of the date of default, but this Section 12(d)
shall not affect any vested rights of the parties.

                  (e)      All obligations under this Agreement shall be
terminated, except to the extent determined that the continuation of this
Agreement is necessary of the continued operation of the Association:

                           (i)      By the Director of the Office of Thrift
Supervision (the "Director") or his or her designee, at the time the Federal
Deposit Insurance Corporation or Resolution Trust Corporation enters into an
agreement to provide assistance to or on behalf of the Association under the
authority contained in 13(c) of the Federal Deposit Insurance Act; or

                           (ii)     By the Director or his or her designee, at
the time the Director or his or her designee approves a supervisory merger to
resolve problems related to operation of the association or when the association
is determined by the Director to be in an unsafe or unsound condition.

                           Any rights of the Employee that have already vested,
however, shall not be affected by such action.

                  (f)      Should any provision of this Agreement give rise to a
discrepancy or conflict with respect to any applicable law or regulation, then
the applicable law or regulation shall control the relevant construction and
operation of this Agreement.

         13.      Successors and Assigns.

                  (a)      This Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the Association which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Association.

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                  (b)      since the Association is contracting for the unique
and personal skills of the Employee, the Employee shall be precluded from
assigning or delegating her rights or duties hereunder without first obtaining
the written consent of the Association.

         14.      Amendments. No amendments or additions to this Agreement shall
be binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.

         15.      Applicable Law. Except to the extent preempted by Federal law,
the laws of the State of Delaware shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.

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

         17.      Entire Agreement. This Agreement, together with any
understanding or modifications thereof as agreed to in writing by the parties,
shall constitute the entire agreement between the parties hereto.

                  [Remainder of Page Intentionally Left Blank.]
                    [Signatures Begin on the Following Page.]

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

ATTEST:                             FIRST FEDERAL OF THE SOUTH

                                    BY:
-------------------------                   -----------------------------------
Secretary                                     Allen G. McMillan, III
                                              Chairman of the Board of Directors

ATTEST:                             FIRST FEDERAL OF THE SOUTH

                                    BY:
-------------------------                   -----------------------------------
Secretary                                     Joe K. McArthur, President and
                                              Chief Executive Officer

WITNESS:

-------------------------                   -----------------------------------
                                              Sandra H. Stephens ("Employee")

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                                                                    EXHIBIT 10.4

                   PENSION & BENEFIT FINANCIAL SERVICES, INC.

                              EMPLOYMENT AGREEMENT

                  (Amended and Restated as of October 1, 2002)

                               (J. MALCOMB MASSEY)

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of this
first day of October, 2002 (the "Effective Date"), by and between Pension &
Benefit Financial Services, Inc. (D/B/A "Pension & Benefit Trust Company"), an
Alabama corporation (the "Company") and the wholly-owned operating subsidiary of
First Federal of the South, a federal savings association (the "Bank"), and J.
Malcomb Massey (the "Employee").

         WHEREAS, the Employee has heretofore been employed by the Company and
is experienced in all phases of the planning, designing, implementation,
administration and duties required of a trustee, of employee benefit plans; and

         WHEREAS, the parties desire by this writing to establish and to set
forth the employment relationship between the Company and the Employee.

         NOW, THEREFORE, it is AGREED as follows:

         1.       Employment. The Employee is hereby employed as the President
and Chief 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. Further, the
Employee may, from time to time, with the approval of the Board of Directors of
the Company (the "Board"), in his individual capacity as a licensed insurance
broker or insurance agent, enter into agreements with insurance companies and
insurance agencies (each an "Insurance Agreement") and, thereby and thereunder,
provide insurance brokerage or insurance agency services and, further, may
undertake to perform his obligations under any such Insurance Agreement during
Company business hours or otherwise; provided that, during the term of this
Agreement and thereafter, all compensation to which Employee is, or becomes,
entitled to receive under any such Insurance Agreement, for services rendered or
insurance products sold during the term of his employment with the Company,
shall be for the benefit of the Company and shall be either assigned to the
Company (if permissible), paid over to the Company by the Employee upon receipt,
or, with explicit and particular approval of the Board, offset against the
Employee's salary (as set forth in Section 2 of this Agreement). The Employee
shall report on a monthly basis, for so long as any Insurance Agreement is in
effect, all such compensation earned by Employee during the previous month. The
Employee's other duties shall be such as the Board may from time to time
reasonably direct, including normal duties as

<PAGE>

an officer of the Company. The Employee's obligations under this Section 1 shall
survive termination of this Agreement.

         2.       Compensation.

                  (a)      The Company agrees to pay the Employee during the
term of this Agreement, a salary at the rate of One Hundred Fifty Thousand
Dollars ($150,000) per annum, payable in cash not less frequently than monthly
(the "Base Salary"); provided, however, that the Company shall be entitled to
offset against the Employee's salary, by up to $150,000 per annum, that amount
of compensation which the Employee receives under any Insurance Agreements, and
which is neither assigned to the Company nor paid over to the Company by the
Employee upon receipt (the "Salary Offset"). If the Salary Offset shall equal
$150,000 for any one year, the Employee shall be obligated to assign or pay over
to the Company the excess of $150,000 of compensation received which otherwise
would have been offset against the Employee's salary as a Salary Offset. For
purposes of Sections 10 and 11 of this Agreement, regardless of whether the
Company offsets any amount against the Employee's salary as a Salary Offset, the
Employee's Base Salary shall equal $150,000. The Board shall review, not less
often than annually, the rate of the Employee's salary, and, in its sole
discretion, may decide to increase his salary;

                  (b)      In further consideration of Employee's services,
Employee has, on April 11, 1997, received Fifteen Thousand Five Hundred Twelve
(15,512) shares (the "Compensatory Shares") of $.01 par value common stock (the
"Common Stock") of SouthFirst Bancshares, Inc., the parent and holding company
of the Bank (the "Corporation"), which shares vest in the Employee at a rate of
one-fifteenth (1/15) per year, beginning on the first anniversary of April 11,
1997, and upon each anniversary of that date, until April 11, 2012, at which
time the Compensatory Shares shall be fully vested; and

                  (c)      The Company further agrees to furnish the Employee a
mutually acceptable automobile. The cost of maintenance, fuel, insurance and
upkeep to be borne by the Company.

         3.       Earnings and Distribution of Compensatory Shares; Voting
                  Rights.

                  (a)      Compensatory Shares; Forfeitures.

                           (1)      General Rules. The Compensatory Shares
awarded hereunder shall be earned and non-forfeitable by the Employee at the
rate of one-fifteenth per year until April 11, 2012.

                           (2)      Exception for Terminations Due to Death or
Disability. Notwithstanding the general rule contained in Section 3(a)(1) above,
all Compensatory Shares held by the Employee at the date of the termination of
Employee's service with the Company due to death, disability (as determined by
the Board), or the termination of his employment "without cause" under the
provisions of Section 10(d) of this Agreement, shall be deemed earned and fully
vested as of such date and shall be distributed as soon as practicable
thereafter.

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                           (3)      Exception for a Change in Control.
Notwithstanding the general rule contained in Section 3(a)(1) above, all
Compensatory Shares held by the Employee shall be deemed to be immediately 100%
earned, fully vested and non-forfeitable in the event of a "change in control"
of the Company, the Bank or the Corporation (collectively and/or separately, as
the context shall require, the "Relevant Corp" ) and shall be distributed as
soon as practicable thereafter. For purposes of this paragraph, "change in
control" shall mean the occurrence of any one of the following events: (1) an
increase in the ownership of, the holding of, or the power to vote, by any
person, or by any persons acting as a "group" (within the meaning of Section
13(d) of the Securities Exchange Act of 1934), the Relevant Corp's voting stock,
to an amount which is more than 25% of the issued and outstanding shares
thereof, (2) a change in the ownership of, or possession of, the ability to
control the election of a majority of the Relevant Corp's directors, (3) a
change in the ownership of, or the possession of, the ability to exercise a
controlling influence over the management or policies of the Relevant Corp by
any person, or by any 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 Relevant Corp (or its board of
directors) by the Bank or by the Corporation, as the case may be, 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 Relevant Corp. (the "Continuing Directors") cease for any
reason to constitute at least two-thirds thereof, provided that any individual
whose election or nomination for election as a member of such board of directors
was approved by a vote of at least two-thirds of the Continuing Directors then
in office shall be considered a Continuing Director. For purposes of this
subparagraph only, the term "person" refers to an individual (other than the
Employee), individuals acting in concert or as a "group," a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.

                           (4)      Discretionary Acceleration of Vesting. In
its sole and absolute discretion, the Board may, at any time, with respect to
the Employee, accelerate the vesting schedule according to which the Employee's
Compensatory Shares become earned and become non-forfeitable by the Employee, if
the Board concludes that it is in the best interests of the Company to do so.

                  (b)      Accrual of Dividends. Whenever Compensatory Shares
are distributed to the Employee under Section 3(c) below, the Employee shall
also be entitled to receive, with respect to each Compensatory Share
distributed, an amount equal to any cash dividends and a number of shares of
Common Stock equal to any stock dividends declared and paid with respect to a
share of Common Stock after the date the relevant Compensatory Shares were
awarded.

                  (c)      Distribution of Compensatory Shares.

                           (1)      Timing of Distributions. Except as provided
in Section 3(c)(2) below, the Corporation shall distribute Compensatory Shares
and accumulated cash from

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<PAGE>

dividends and interest, if any, to the Employee or his Beneficiary, as the case
may be, as soon as practicable after they have been earned. No fractional shares
shall be distributed.

                           (2)      Form of Distribution. The Employee may file
a written request with the Corporation to have the Compensatory Shares
distributed, as soon as practicable, in the form of a transfer to the Employee
of Common Stock subject to forfeiture of any portion thereof which does not
become vested under the applicable vesting provisions hereunder. In such event,
the Corporation may, in its sole and absolute discretion, transfer to the
Employee Common Stock certificate(s) in the name of the Employee, whereupon the
Employee shall become a stockholder of the Corporation with respect to such
Common Stock and shall have all the rights of a stockholder, including but not
limited to the right to receive all dividends paid on such shares and the right
to vote such shares. All shares of said Common Stock, which, pursuant to the
provisions of this Agreement, have not become vested on or before the Employee's
termination of services with the Company, shall be forfeited by the Employee and
returned to the Company or the Corporation. The certificate(s) for the shares of
the Common Stock distributed to the Employee hereunder shall bear the following
legend reflecting that the shares represented thereby are subject to
restrictions against transfer and to forfeiture, in accordance with this
Agreement:

                  "The transferability of this certificate and the shares of
                  stock represented thereby are subject to the terms and
                  conditions (including forfeiture) contained in the Employee's
                  Employment Agreement between Pension & Benefit Financial
                  Services, Inc. and J. Malcomb Massey. Copies of such
                  Employment Agreement are on file in the offices of the
                  Secretary of Pension & Benefit Financial Services, Inc., 260
                  Commerce Street, Montgomery, Alabama 36104."

         As the Employee earns the Common Stock, the Employee (or, in the event
of the Employee's death, the legal representative of his estate, or if the
personal representative of the Employee's estate shall have assigned the
estate's interest in the Common Stock, the person or persons to whom his rights
under such Common Stock shall have passed by assignment pursuant to his will or
to the laws of descent and distribution) may surrender the Common Stock
certificates bearing the foregoing legend, whereupon the Corporation shall cause
such certificate(s) to be reissued without the legend. If the Employee forfeits
any or all of such Common Stock, the Employee shall, within thirty (30) days
after terminating employment, return to the Company or to the Corporation all
shares of the Common Stock which were forfeited and, further, pay to the Company
or the Corporation an amount equal to the dividends paid by the Corporation with
respect to the shares of the forfeited Common Stock.

                           (3)      Acquisition for Investment. Employee
understands and acknowledges that the shares of Common Stock which he may
acquire pursuant to the terms of this Agreement are being acquired by him solely
for his own account, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act of 1933 (the "Securities Act").

                                      -4-
<PAGE>

                           (4)      Unregistered Securities. Employee further
understands and acknowledges that the shares of Common Stock which he may
acquire under this Agreement have not been registered under the Securities Act
or the securities laws of any state, and will not at the time of issuance and
delivery of such shares as contemplated by the terms of this Agreement have been
so registered, in reliance upon certain exemptions from the registration and
prospectus delivery requirements of the Securities Act and such laws. Employee
understands that the shares of Common Stock so acquired by him must be held
indefinitely, and that he must therefore bear the economic risk of such
investment indefinitely, unless a subsequent disposition thereof is registered
under the Securities Act and any applicable state securities laws, or is exempt
from such registration to the satisfaction of counsel for the Corporation.
Employee further acknowledges that the availability of the exemptions described
in the first sentence of this Section depend upon, among other things, the bona
fide nature of his investment intent expressed herein, upon which the Company
hereby expressly relies.

                  (d)      Voting of Compensatory Shares. All of the
Compensatory Shares not otherwise distributed to Employee hereunder shall be
voted by the Company as directed by the Employee.

         4.       Discretionary Bonuses. The Employee shall participate in an
equitable 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.

         5.       Participation in Retirement, Medical and Other Plans.

                  (a)      The 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)      The Employee shall participate in any fringe benefits
which are or may become available to the Company's senior management employees,
including for example: any stock option or incentive compensation plans, club
memberships, and any other benefits 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.

         6.       Term. The Company hereby employs the Employee, and the
Employee hereby accepts such employment under this Agreement, for the period
commencing on the Effective Date and ending 24 months thereafter (or such
earlier date as is determined in accordance with Section 10). Additionally, on
each annual anniversary date from the Effective Date, this Agreement and the
Employee's term of employment shall be extended for an additional one-year
period beyond the then effective expiration date, provided the Board determines
in a duly

                                      -5-
<PAGE>

adopted resolution that the performance of the Employee has met the Board's
requirements and standards, and that this Agreement shall be extended.

         7.       Loyalty; Full Time and Attention.

                  (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; 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 any conflict of interest with the Company, the Bank or the
Corporation or any of their respective subsidiaries or affiliates, or
unfavorably affect the performance of 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, the
Bank or the Corporation, or be gainfully employed in any other position or job
other than as provided above.

                  (b)      Nothing contained in this Paragraph 7 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, the Bank or the
Corporation or, solely as a passive or minority investor, in any business.

         8.       Standards. The Employee shall perform his duties under this
Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Company will provide Employee with the working
facilities and staff customary for similar executives and necessary for him to
perform his duties.

         9.       Vacation and Sick Leave. The Employee shall be entitled,
without loss of pay, to absent himself voluntarily from the performance of his
duties under this Agreement in accordance with the terms set forth below, 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 obligations with the Company for such
additional periods of time and for such valid and

                                      -6-
<PAGE>

legitimate reasons as the Board may in its discretion approve. 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 the 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.

         10.      Termination and Termination Pay. Subject to the provisions of
Section 11 hereof, the Employee's employment hereunder may be terminated under
the following circumstances:

                  (a)      Death. The Employee's employment under this Agreement
shall 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 through the last day of the calendar month in which his death occurred.

                  (b)      Disability. The Company may terminate the Employee's
employment after having established, through a determination by the Board, 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 the Employee's ability to substantially perform his duties under this
Agreement for a period of one hundred eighty (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 Executive's termination of employment pursuant
to this Section 10(b).

                  (c)      For Cause. The Board may, by written notice to the
Employee, immediately terminate his employment at any time, for Cause. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for Cause. Termination for "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, or material
breach of any provision of this Agreement. Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated for 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 (excluding the Employee if a member 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 second sentence of this Subsection (c) and specifying the
particulars thereof in detail.

                                      -7-
<PAGE>

                  (d)      Without Cause. Subject to the provisions of Section
11 hereof, the Board may, by written notice to the Employee, immediately
terminate his employment at any time for any reason; provided that if such
termination is for any reason other than pursuant to Sections 10 (a), (b) or (c)
above, the Employee shall be entitled to receive the following compensation and
benefits: (i) the Base Salary provided pursuant to Section 2 hereof, up to the
date of expiration of the term (including any renewal term then in effect) of
this Agreement (the "Termination Date"), plus the Base Salary for an additional
12-month period, and (ii) the cost to the Employee of obtaining all health,
life, and disability benefits in which the Employee would have been eligible to
participate in through the Termination Date based upon the benefit levels
substantially equal to those that the Company provided for the Employee at the
date of termination of employment. Said sum shall be paid, at the option of the
Employee, either (I) in periodic payments over the remaining term of this
Agreement, as if the Employee's employment had not been terminated, or (II) in
one lump sum within ten (10) days of such termination; provided however, that
the amount to be paid by the Company to the Employee hereunder shall not exceed
two (2) times the Employee's "average annual compensation." The Employee's
"average annual compensation" shall be the average of the total annual
"compensation" acquired by the Employee during each of the five (5) fiscal years
(or the number of full fiscal years of employment, if the Employee's employment
is less than five (5) years at the termination thereof) immediately preceding
the date of termination. The term "compensation" shall mean any payment of money
or provision of any other thing of value in consideration of employment,
including, without limitation, Base Salary (less any Salary Offset),
compensation received under any Insurance Agreements against which the
Employee's Base Salary is offset by a Salary Offset, bonuses, pension and profit
sharing plans, directors fees or committees fees, fringe benefits and deferred
compensation accruals.

                  (e)      Voluntary Termination by Employee. Subject to the
provisions of Section 11 hereof, 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 and employee benefits accrued
up to the date of his termination.

         11.      Change in Control.

                  (a)      Notwithstanding any provision herein to the contrary,
if 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 for
Cause, death or disability in connection with or within twenty-four (24) months
after any change in control of the Company, the Bank or the Corporation
(collectively and/or separately, as the context shall require, the "Relevant
Corp"), 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"), whereby, for
purposes of this Section 11, the Employee's gross income for taxable years in
the "base period" (as defined in Section 280G(d)(2) of the Code) shall include
compensation received under any Insurance Agreements against which the
Employee's Base Salary was offset by a Salary Offset, and (ii) the sum of any
other "parachute payments" (as defined under Section 280G(b)(2) of the Code)
that the Employee receives based on the change in control. Said sum shall be
paid in one lump sum within ten (10) days of such

                                      -8-
<PAGE>

termination. The term "change in control" shall have the same meaning as
contained in Section 3(a)(3) of this Agreement.

                  (b)      Notwithstanding any other provision of this Agreement
to the contrary, the Employee may voluntarily terminate his employment under
this Agreement within twelve (12) months following a change in control of the
Relevant Corp, 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 ninety (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 thirty-five (35) miles from his primary office as
of the date of the change in control; (ii) a material reduction in the
Employee's base compensation as in effect on the date of the change in control,
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 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 elect or reelect the Employee to the board of directors of the
Company, the Bank or the Corporation, as the case may be, if the Employee is
serving on such board of directors 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.

                  (c)      Notwithstanding any other provision of this Agreement
to the contrary, the Employee may voluntarily terminate his employment under
this Agreement within twelve (12) months following a change in control of the
Company, the Bank or the Corporation, and the Employee shall thereupon be
entitled to receive the payment described in Section 11(a) of this Agreement.

                  (d)      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.

                  (e)      In the event that any dispute arises between the
Employee and the Company as to the terms or interpretation of this Agreement,
including this Section 11, whether instituted by formal legal proceedings or
otherwise, including an action that the Employee takes to enforce the terms of
this Section 11 or to defend against any action taken by 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 shall have obtained a final judgement by a court of competent
jurisdiction in favor of the Employee. Such reimbursement shall be paid within
ten (10) days of 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.

                                      -9-
<PAGE>

         12.      Requirements of Applicable Regulations of OTS.

         (a)      The Company's board of directors may terminate the Employee's
employment at any time, but any termination by the Company's board of directors,
other than termination for cause, shall not prejudice the Employee's right to
compensation or other benefits under this Agreement. The Employee shall have no
right to receive compensation or other benefits for any period after termination
for cause (as defined in Section 10(c) hereof).

         (b)      If the Employee is suspended and/or temporarily prohibited
from participating in the conduct of the Company's affairs by a notice served
under section 8(e)(3) or (g)(1) of Federal Deposit Insurance Act (12 U.S.C. 1818
(e)(3) and (g)(1)), the Company's obligations under this Agreement shall be
suspended as of the date of service unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, the Company may in its discretion (i)
pay the Employee all or part of the compensation withheld while its obligations
were suspended, and (ii) reinstate (in whole or in part) any of its obligations
which were suspended.

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

         (d)      If the Company is in default (as defined in section 3(x)(1) of
the Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this Section 12(d) shall not affect any
vested rights of the parties.

         (e)      All obligations under this Agreement shall be terminated,
except to the extent determined that the continuation of this Agreement is
necessary of the continued operation of the Company:

                  (i)      By the Director of the Office of Thrift Supervision
(the "Director") or his or her designee, at the time the Federal Deposit
Insurance Corporation or Resolution Trust Corporation enters into an agreement
to provide assistance to or on behalf of the Bank under the authority contained
in 13(c) of the Federal Deposit Insurance Act; or

                  (ii)     By the Director or his or her designee, at the time
the Director or his or her designee approves a supervisory merger to resolve
problems related to operation of the Bank or when the Bank is determined by the
Director to be in an unsafe or unsound condition.

         Any rights of the Employee that have already vested, however, shall not
be affected by such action.

         (f)      Should any provision of this Agreement give rise to a
discrepancy or conflict with respect to any applicable law or regulation, then
the applicable law or regulation shall control the relevant construction and
operation of this Agreement.

                                      -10-
<PAGE>

         13.      Non-Solicitation of Employees. Employee agrees that he will,
for so long as he is engaged hereunder, and for a period of three (3) years
after termination of his employment, refrain from recruiting or hiring, or
attempting to recruit or hire, directly or by assisting others, any other
employee of the Company who is employed by the Company or any successor or
affiliate of the Company; provided, however, that the provisions of this Section
13 shall not apply, and shall terminate, upon a termination of the Employee's
employment without cause, pursuant to Section 10(d) hereof, or upon a "change in
control" of the Company, the Bank and/or the Corporation, as defined in, and
contemplated by, Section 3(a)(3) hereof.

         14.      No Mitigation. The Employee shall not be required to mitigate
the 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.

         15.      Successors and Assigns.

                  (a)      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)      Since the Company is contracting for the unique and
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.

         16.      Amendments. No amendments or additions to this Agreement shall
be binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.

         17.      Applicable Law. Except to the extent preempted by Federal law,
the laws of the State of Alabama shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.

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

         19.      Entire Agreement. This Agreement, together with any
understanding or modifications thereof as agreed to in writing by the parties,
shall constitute the entire agreement between the parties hereto.

                         [SIGNATURES ON FOLLOWING PAGE]

                                      -11-
<PAGE>

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

ATTEST:                             PENSION & BENEFIT FINANCIAL
                                    SERVICES, INC.

                                    By:
------------------------------          ---------------------------------------
Secretary                               Ruth M. Roper, Executive Vice-President

                                        ----------------------------------------
                                        J. Malcomb Massey ("Employee")

                                      -12-

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